StatFocus

 

EMERGING TRENDS AND CHANGING STRUCTURES

 

StatFocus

EMERGING TRENDS AND CHANGING STRUCTURES
TAKING STOCK OF THE BRIGHT SPOTS IN THE LABOR MARKET IN RECENT YEARS

by Teresa V. Peralta 1
(Posted 15 November 2013)


The Philippine economy expanded at a rate of 5.2% per annum over the past decade. Measured in terms of Gross Domestic Product (GDP), the economy experienced uninterrupted growth but the rate of expansion was erratic and modest compared with its neighboring ASEAN countries. It grew the fastest during the period 2003 to 2007, at least 4.8% but the pace slowed down in 2008 (4.2%) and 2009 (1.1%) with the onset of the global financial crisis.  It posted a strong rebound in 2010 (7.6%) with the global economic recovery; slowed down to 3.6% in 2011; and upped to 6.8% in 2012 on the back of the strong recovery in manufacturing and merchandise exports.

Over the same period, employment grew but at a slower pace on at 2.4% annually. This follows the global trend of employment lagging behind economic growth and productivity (ILO, Global Employment Trends in Brief, and January 2006).  Moreover, the movement of employment over time was highly erratic, following an almost “boom and bust pattern”, and was not in sync with the growth in GDP. Volatility in employment can be traced in large part to the effect of extreme weather disturbances (dry spells and destructive typhoons) which had a negative impact on agricultural employment (2003, 2006, 2009, 2010 and 2012). This occurred because the agriculture, forestry and fishery sector still accounts for a fairly large share (32% to 37%) of the country’s total employment.

 

Annual Growth Rates in GDP, Employment and Labor Productivity, Philippines: 2003-2012
(in percent)

Indicator

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Real GDP 5.0 6.7 4.8 5.2 6.6 4.2 1.1 7.6 3.6 6.8
Employment 1.9 3.2 2.2 2.0 2.8 1.6 2.9 2.8 3.2 1.1
   Full-time 3.8 2.8 4.2 (0.6) 4.7 3.9 (0.5) 6.3 1.5 (0.2)
   Part-time 0.2 2.7 0.2 6.3 0.3 (2.6) 8.4 (2.2) 6.3 3.5
Labor productivity 3.0 3.4 2.5 3.2 3.7 2.5 (1.7) 4.7 0.4 5.7

Sources: National Statistical Coordination Board, National Accounts of the Philippines
National Statistics Office, Labor Force Survey

 

To a greater extent, the “disconnection” between growth in output and growth in employment can be attributed to the incongruence between GDP and employment with respect to their sectoral structures. In 2012, for instance, the agriculture, forestry and fishery sector accounted for only one-ninth (11.1%) of real GDP although it absorbed about one third (32.2%) of the country’s total employed. In contrast, the industry sector which contributed for a third (32.0%) of domestic output comprised only a small share (15.3%) of total employed.  On the other hand, output and employment shares of the services sector were about the same at 56.9% and 52.6%, respectively. The connection between output and employment can be better viewed when employment is disaggregated into its full-time and part-time components. With few exceptions, full-time employment tended to rise and fall with the growth and decline in domestic output. In contrast, part-time employment generally increases in times of economic slowdown and contracts in times of economic recovery. 

Labor productivity parallels that of GDP growth; in particular, it improves with growth in full-time employment.  It dips because of lower output due to lesser hours of work.  As the economy recovers and is able to provide more full-time work, labor productivity likewise increases.

On Employment

In recent years, employment has been exhibiting a downtrend despite the improving economy. As noted in the last five rounds of the Labor Force Survey (LFS), employment growth has been sluggish and the level has even gone down twice in October 2012 (-2.3%) and April 2013 (-0.1%). The decline was partly attributed to “base effect” following unusually large expansion in the previous comparable periods particularly in October 2011 when employment rose by a record 2.062 million.  It is observed that this increment was largely made up of part-time employment (1.506 million or 73%).  Further, growth in labor productivity bottomed to 0.4%, the lowest recorded in the past decade.

Despite the decline in the quantity of employment, there are encouraging signs that reinforce the positive trends which has emerged in recent years as evident in the data series starting July 2010.  These trends if sustained in the future could indicate a changing labor market structure as reflected in the robust growth in industry employment; the rapid expansion in private establishment employment; the shifting in employment share towards wage employment complemented by the steady decline in the proportion of self-employed and unpaid family workers to total employment (an MDG indicator on employment); and the progress made in labor productivity

  • Employment in the industry sector continued to expand, averaging at 3.3%, from July 2010 to July 2013.  Its growth outpaced those of services (2.8%) and agriculture, forestry and fishery (0.1%) sectors.  While industry share to total employment remained the smallest, this has improved from 14.9% in July 2010 to 15.6% in July 2013.

  • The share of wage and salary employment increased from 53.4% in July 2010 to 58.2% in July 2013. Of particular interest was the shift in the share of private establishment employment which jumped from 39.7% to 44.6% over three years – increasing from 14.394 million in July 2010 to 17.040 million in July 2013 or an increase of 2.646 million.  This figure represents about 93.0% of the total increase in wage and salary employment at 2.846 million.

  • The proportion of self-employed and unpaid family workers in total employment has been declining steadily since July 2010 (42.7%) to 38.4% in July 2013.  In July 2012, the proportion fell below 40.0% for the first time and has been below this figure since then.  This indicates a shift to the more productive and remunerative paid employment.

On Unemployment

One development of interest is the uptrend in unemployment rate in 2013 which is a sharp departure from the generally declining trend observed since 2006 when the rates steadily fell from its 8.0% peak. On a quarterly basis, unemployment rate has been on the downtrend from July 2010 to October 2012 (7.0% to 6.8%). These falling rates are within the 2011-2016 Philippine Development Plan (PDP) target of 6.8% to 7.2%, except in January 2011 (7.4%).

In 2013, unemployment rate rose, though marginally, for three consecutive survey rounds of the LFS exceeding the 7% mark: 7.1% in January, 7.5% in April and 7.3% in July. Correspondingly, the number of unemployed persons breached 3.0 million in April and July 2013 after staying almost stagnant at around 2.8 million for many years.  This is rather odd amidst the strengthening domestic economy and some quarters will deem this as a case of “jobless growth” for the Philippines. This view is contrary to another school of thought that the recent uptick in unemployment rate is part of the changing structure of the labor market along with the changes in employment as described above.

As explained by Secretary Balisacan of NEDA, “It is not unusual for high unemployment to persist even with economic growth as shown by experiences of other emerging economies. As the economy grows and its structure transforms, employment exhibits volatility as the labor market adjusts. Optimism increases among the working age population resulting to more persons entering or re-entering the labor market. Moreover, in the course of structural change, jobs are destroyed and new ones are created. But the current skills of the labor force may not be able to match the growing and shifting demand for labor. This may result to increase in unemployment rates at certain points during the transformation process”.

It should be emphasized that the use of unemployment rate as a single indicator of overall labor market performance has long been held as flawed since it does not capture the realities of the labor markets in many developing countries like the Philippines. In the country, unemployment is basically a problem of the youth which comprised about one-half (48.9% in July 2013) of total unemployed. Consequently, youth unemployment rate (16.8%) is more than twice the national figure (7.3%).

During economic downturns, such as in 2008 and 2009, the absence of unemployment benefits and inadequate safety nets often led workers to take any available jobs or create their own.  Marginal their employment may be, individuals in these inadequate employment situations are included as part of the employed. The current measure of unemployment excludes these groups.

On underemployment

The BLES in many occasions has advocated the use of other measures of labor underutilization to complement unemployment rate in signaling situations of insufficient labor absorption among persons in employment with unmet need for work for pay or profit (Beyond the Unemployment Figures, LABSTAT Updates, Vol. 16 No. 31, November 2012). These indicators generally capture similar groups of persons that share some characteristics with the unemployed but who are included in the statistics among the employed.

One such indicator is underemployment which is a more serious problem than unemployment in many regions of the country. Statistics indicate that underemployment rate remained high and exhibited more volatility than unemployment rate fluctuating between the range of 17.9% (July 2010) and 22.8% (July 2012). This means that one in every five employed persons expressed the desire for additional hours of work/job because they were in low-paid employment or due to job mismatch.

Unlike unemployment which mainly affects the youth, underemployment cuts across age and sex groups and is particularly pronounced among the less educated workforce and in regions were agriculture is the dominant sector (The Underemployed Persons in 2011, LABSTAT Updates, Vol. 16 No. 18, June 2012). Past studies have shown that poverty in the Philippines is more correlated with the problem of underemployment than unemployment. A recent study by the Institute for the Study of Inequality and Poverty based in the UP School of Economics revealed that poverty incidence is worse among the employed (23%) than among the unemployed (17%).  But it is among the underemployed that poverty incidence is the worst at 36% which is more than twice the incidence among the unemployed. More telling is the latest NSCB statistics on poverty incidence among families (1st semester 2012) which showed the top seven regions poorest regions also reporting the highest underemployment rate for the same period, except for ARMM.

Employment Challenges

While it is true that the Philippines experienced sustained and accelerated growth - averaging 5.2% over the past decade – this was modest compared to ASEAN countries and not enough to make a dent on the problems of unemployment, underemployment and poverty.

The key objective of the 2011-2016 PDP is for the economy to achieve a growth in real GDP averaging 7-8% per year in order to create enough jobs that will reduce unemployment, underemployment, and poverty incidence and hence achieve inclusive growth for all. This figure implies a tripling of per capita income to about US $5,000 in two decades. This can be achieve only if the GDP growth rate of more than 7-8% can be sustained over a long period and break the “boom and bust” pattern that characterized the past growth.

More importantly, as articulated in the PDP, the higher growth path should be accompanied by the transformation of the structure of economy as well as the country’s social and political institutions. In particular, the enlargement of the  industrial base as the major growth engine, the modernization of the agricultural sector, massive investments in transport, water, energy and other infrastructure, lower power cost, higher foreign investment, good governance, and human resource development, among other things.

The PDP further noted that in the labor and employment sector, the policy challenge is to increase decent and productive employment and to enhance inclusive job-rich growth. To achieve this goal, the country can pursue supply-side strategies (such as enhancing the human resource base), as well as demand-side approaches (such as enhancing the returns to human and physical or entrepreneurial capital).

Particularly critical to poverty alleviation and inclusive growth is the modernization of the agricultural sector where most of the poor Filipinos are engaged in. According to the 2013 World Bank report, increasing agricultural productivity and income through easy access to technology, credit and markets will ensure lower prices for food which comprised nearly half of the total expenditure of families in both urban and rural areas. Bringing down the prices of food will increase the real income and purchasing power of the ordinary Filipino families.  This will also make the Philippines competitive and attractive to foreign investments, which is key in achieving growth and development.

 

Reactions and views are welcome thru email to the author at terevperalta@gmail.com

 

______________________

1 OIC Director. Bureau of Labor and Employment Statistics (BLES), Department of Labor and Employment (DOLE) is also the Chairperson of the Inter Agency Committee on Labor and Productivity Statistics (IACLPS) of the NSCB. The author thanks NSCB Secretary General Jose Ramon G. Albert, Mr. Manuel L. Laopao of the DOLE-BLES, Mr. Gerald Junne L. Clariño and Ms. Simonette A. Nisperos of the NSCB for the assistance in the preparation of the article.

 

 

Table 1. Total employment

Indicator 2010 2011 2012 2010 2011 2012 2013
Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul p
Employment (000) 36035 37192 37600 36237 36488 36293 36820 37106 38550 37334 37842 37555 37670 37940 37819 38175
Employment generation (000) 974 1157 408 729 1010 292 1407 869 2062 1041 1022 449 -880 606 -23 620
Year-on-year growth rate (%) 2.8 3.2 1.1 2.1 2.8 0.8 4.0 2.4 5.7 2.9 2.8 1.2 -2.3 1.6 -0.1 1.7

p Preliminary.
Source: National Statistics Office, Labor Force Survey.

 

Table 2. Employment by hours of work

Indicator 2010 2011 2012 2010 2011 2012 2013
Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul p
Total employed (000) 36035 37192 37600 36237 36488 36293 36820 37106 38550 37334 37842 37555 37670 37940 37819 38175
 Part-time (less than 40 hours) 12654 13448 13925 12574 12773 13167 13677 12671 14279 13700 16191 12684 13126 12854 13127 13173
 Full-time (40 bours or more) 22906 23258 23201 23379 23276 22636 22480 24075 23841 23196 20838 24587 24185 24710 24031 24718
 With a job, not at work 475 486 474 284 439 490 663 360 430 437 813 284 359 376 661 284
   
Year-on-year change (000) 974 1157 408 729 1010 292 1407 869 2062 1041 1022 449 -880 606 -23 620
 Part-time (less than 40 hours) -291 794 477 462 -111 858 718 97 1506 533 2514 13 -1153 -846 -3064 489
 Full-time (40 bours or more) 1362 352 -57 333 1203 -616 765 696 565 560 -1642 512 344 1514 3193 131
 With a job, not at work -96 11 -12 -66 -81 50 -75 76 -9 -53 150 -76 -71 -61 -152 0
   
Year-on-year growth rate (%) 2.8 3.2 1.1 2.1 2.8 0.8 4.0 2.4 5.7 2.9 2.8 1.2 -2.3 1.6 -0.1 1.7
 Part-time (less than 40 hours) -2.2 6.3 3.5 3.8 -0.9 7.0 5.5 0.8 11.8 4.0 18.4 0.1 -8.1 -6.2 -18.9 3.9
 Full-time (40 bours or more) 6.3 1.5 -0.2 1.4 5.5 -2.6 3.5 3.0 2.4 2.5 -7.3 2.1 1.4 6.5 15.3 0.5
   
% of employed  100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
 Part-time (less than 40 hours) 35.1 36.2 37.0 34.7 35.0 36.3 37.1 34.1 37.0 36.7 42.8 33.8 34.8 33.9 34.7 34.5
 Full-time (40 bours or more) 63.6 62.5 61.7 64.5 63.8 62.4 61.1 64.9 61.8 62.1 55.1 65.5 64.2 65.1 63.5 64.7
 With a job, not at work 1.3 1.3 1.3 0.8 1.2 1.4 1.8 1.0 1.1 1.2 2.1 0.8 1.0 1.0 1.7 0.7


Table 3. Employment by sector

Indicator 2010 2011 2012 2010 2011 2012 2013
Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul p
Total employed (000) 36035 37192 37600 36237 36488 36293 36820 37106 38550 37334 37842 37555 37670 37940 37819 38175
 Agriculture, forestry and fishery 11956 12267 12093 12244 12265 11952 12155 12100 12861 12112 12467 11635 12156 11542 11844 11808
 Industry 5399 5530 5743 5408 5375 5264 5619 5629 5608 5516 5860 5907 5692 5867 6085 5969
 Services 18682 19394 19764 18585 18850 19074 19045 19376 20082 19708 19515 20015 19822 20531 19889 20398
   
Year-on-year change (000) 974 1157 408 729 1010 292 1407 869 2062 1041 1022 449 -880 606 -23 620
 Agriculture, forestry and fishery -88 311 -174 304 193 146 643 -144 596 160 312 -465 -705 -570 -623 173
 Industry 307 131 213 135 221 -59 132 221 233 252 241 278 84 351 225 62
 Services 758 712 370 291 600 201 631 791 1232 634 470 639 -260 823 374 383
   
Year-on-year growth rate (%) 2.8 3.2 1.1 2.1 2.8 0.8 4.0 2.4 5.7 2.9 2.8 1.2 -2.3 1.6 -0.1 1.7
 Agriculture, forestry and fishery -0.7 2.6 -1.4 2.5 1.6 1.2 5.6 -1.2 4.9 1.3 2.6 -3.8 -5.5 -4.7 -5.0 1.5
 Industry 6.0 2.4 3.9 2.6 4.3 -1.1 2.4 4.1 4.3 4.8 4.3 4.9 1.5 6.4 3.8 1.0
 Services 4.2 3.8 1.9 1.6 3.3 1.1 3.4 4.3 6.5 3.3 2.5 3.3 -1.3 4.2 1.9 1.9
   
% of employed 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
 Agriculture, forestry and fishery 33.2 33.0 32.2 33.8 33.6 32.9 33.0 32.6 33.4 32.4 32.9 31.0 32.3 30.4 31.3 30.9
 Industry 15.0 14.9 15.3 14.9 14.7 14.5 15.3 15.2 14.5 14.8 15.5 15.7 15.1 15.5 16.1 15.6
 Services 51.8 52.1 52.6 51.3 51.7 52.6 51.7 52.2 52.1 52.8 51.6 53.3 52.6 54.1 52.6 53.4

p Preliminary.
Source: National Statistics Office, Labor Force Survey.

 

Table 4. Employment by class of worker

Indicator 2010 2011 2012 2010 2011 2012 2013
Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul p
Total employed (000) 36035 37192 37600 36237 36488 36293 36820 37106 38550 37334 37842 37555 37670 37940 37819 38175
Wage and salary workers  19626 20538 21492 19366 19773 19849 20250 20897 21155 20664 21113 22578 21613 22832 21735 22212
   - in private establishments  14565 15431 16377 14394 14742 14855 15241 15736 15893 15514 16208 17334 16454 17503 16743 17040
Employer in own family operated  
  farm or business  1394 1354 1335 1388 1400 1318 1297 1301 1499 1308 1245 1451 1338 1340 1145 1287
Self-employed  10858 10994 10626 11138 11035 11030 10904 10941 11101 11025 10959 9901 10619 10191 10812 10821
Unpaid family workers  4157 4306 4147 4346 4280 4096 4369 3966 4795 4337 4525 3624 4100 3576 4126 3856
   
Year-on-year change (000) 974 1157 408 729 1010 292 1407 869 2062 1041 1022 449 -880 606 -23 620
Wage and salary workers  945 912 954 -279 776 -233 967 1531 1382 815 863 1681 458 2168 622 -366
   - in private establishments  741 866 946 -97 666 -43 1015 1342 1151 659 967 1598 561 1989 535 -294
Employer in own family operated  
  farm or business  -44 -40 -19 -157 -36 -204 33 -87 99 -10 -52 150 -161 32 -100 -164
Self-employed  134 136 -368 651 219 457 218 -197 66 -5 55 -1040 -482 -834 -147 920
Unpaid family workers  -61 149 -159 515 51 272 190 -380 515 241 156 -342 -695 -761 -399 232
   
Year-on-year growth rate (%) 2.8 3.2 1.1 2.1 2.8 0.8 4.0 2.4 5.7 2.9 2.8 1.2 -2.3 1.6 -0.1 1.7
Wage and salary workers  5.1 4.6 4.6 -1.4 4.1 -1.2 5.0 7.9 7.0 4.1 4.3 8.0 2.2 10.5 2.9 -1.6
   - in private establishments  5.4 5.9 6.1 -0.7 4.7 -0.3 7.1 9.3 7.8 4.4 6.3 10.2 3.5 12.8 3.3 -1.7
Employer in own family operated  
  farm or business  -3.1 -2.9 -1.4 -10.2 -2.5 -13.4 2.6 -6.3 7.1 -0.8 -4.0 11.5 -10.7 2.4 -8.0 -11.3
Self-employed  1.2 1.3 -3.3 6.2 2.0 4.3 2.0 -1.8 0.6 0.0 0.5 -9.5 -4.3 -7.6 -1.3 9.3
Unpaid family workers  -1.4 3.6 -3.7 13.4 1.2 7.1 4.5 -8.7 12.0 5.9 3.6 -8.6 -14.5 -17.5 -8.8 6.4
   
% of employed 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Wage and salary workers  54.5 55.2 57.2 53.4 54.2 54.7 55.0 56.3 54.9 55.3 55.8 60.1 57.4 60.2 57.5 58.2
  -  in private establishments  40.4 41.5 43.6 39.7 40.4 40.9 41.4 42.4 41.2 41.6 42.8 46.2 43.7 46.1 44.3 44.6
Employer in own family operated  
  farm or business  3.9 3.6 3.6 3.8 3.8 3.6 3.5 3.5 3.9 3.5 3.3 3.9 3.6 3.5 3.0 3.4
Self-employed  30.1 29.6 28.3 30.7 30.2 30.4 29.6 29.5 28.8 29.5 29.0 26.4 28.2 26.9 28.6 28.3
Unpaid family workers  11.5 11.6 11.0 12.0 11.7 11.3 11.9 10.7 12.4 11.6 12.0 9.6 10.9 9.4 10.9 10.1

p Preliminary.
Source: National Statistics Office, Labor Force Survey.

 

Table 5. Unemployment

Indicator 2010 2011 2012 2010 2011 2012 2013
Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul p
Unemployment (000) 2859 2814 2826 2709 2799 2917 2871 2822 2644 2892 2803 2847 2763 2894 3087 3002
Unemployment rate (%) 7.4 7.0 7.0 7.0 7.1 7.4 7.2 7.1 6.4 7.2 6.9 7.0 6.8 7.1 7.5 7.3

p Preliminary.
Source: National Statistics Office, Labor Force Survey.

 

Table 6. Youth unemployment

Indicator 2010 2011 2012 2010 2011 2012 2013
Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul p
Youth labor force,15-24 yrs. old (000) 8276 8675 8734 8225 8288 8309 8637 8388 9366 8609 9062 8560 8703 8589 8953 8726
 Employed 6816 7258 7322 6806 6910 6883 7201 6890 8057 7206 7611 7106 7363 7162 7466 7257
 Unemployed  1460 1417 1412 1419 1378 1426 1436 1498 1310 1402 1450 1455 1341 1427 1487 1469
Youth LFPR (%) 45.4 46.7 46.1 45.1 45.2 45.0 46.5 45.1 50.1 45.8 48.0 45.2 45.7 44.8 46.5 45.1
Youth unemployment rate (%) 17.6 16.3 16.2 17.3 16.6 17.2 16.6 17.9 14.0 16.3 16.0 17.0 15.4 16.6 16.6 16.8
% of total unemployed 51.1 50.4 50.0 52.4 49.2 48.9 50.0 53.1 49.5 48.5 51.7 51.1 48.5 49.3 48.2 48.9

p Preliminary.
Source: National Statistics Office, Labor Force Survey.

 

Table 7. Underemployment

Indicator 2010 2011 2012 2010 2011 2012 2013
Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul p
Underemployment (000) 6762 7163 7514 6502 7141 7050 7127 7095 7381 7018 7313 8565 7160 7934 7251 7341
Underemployment rate (%) 18.8 19.3 20.0 17.9 19.6 19.4 19.4 19.1 19.1 18.8 19.3 22.8 19.0 20.9 19.2 19.2

p Preliminary.
Source: National Statistics Office, Labor Force Survey.

 

 

 


comments powered by Disqus

 

The PSA Office
PSA CVEA Building,
East Avenue, Quezon City
Tel. No. (632) 462-6600; Fax No. (632) 462-6600
URL: http://psa.gov.ph
E-mail: info@psa.gov.ph

 

About Us | News | Statistics | Events || Terms of Use

Back to top


Updated 28 January 2016

Ver. 7.2014.234-11.04

1997-2015, Philippine Statistics Authority, East Avenue, Quezon City, Philippines