The government conducts a Labor Force Survey every January, April, July and October of the year. In December last year, the government reported that the country’s unemployment rate in the October 2013 survey month was estimated at 6.5 percent.
The October 2013 LFS shows that the country’s population 15 years and over reached 63.1 million. With a labor force participation rate of 63.9 percent, total labor force was placed at around 40 million. Of that 6.5 percent or 2.621 million were unemployed. Of the employed 17.9 percent were also found to be underemployed.
Now here comes the report from the Social Weather Station (SWS) which says that the total number of unemployed Filipinos in the last quarter of 2013 reached more than 12 million which makes the 7.2 percent growth in the country’s gross domestic product (GDP) last year, considered the second-fastest after China, far from inclusive. The SWS data placed the country’s unemployment rate in the last quarter of 2013 at 27.5 percent. This figure is more than four times the 6.5 percent unemployment rate reported by the government from its October LFS.
Seeing the SWS data, my friend Pert Cabataña called my attention in the Facebook. He wrote, “Professor Perry Fajardo, quite honestly, this report confuses me, SWS reports unemployment rate at 27.5% (Dec. 2013), while the Labor Force Survey reports unemployment rate of 6.5% (Oct. 2013). Even if we take into account the difference in definition, the difference between 27.5% and 6.5% cannot be fully explained by that definition. In fact the LFS figures should be higher than the SWS figure because it covers the younger age group 15-18 which are not expected to work anyway. Could it be that the SWS rate is really a combination of unemployment and underemployment?
My response was this, “Pert, different methods and definition of terms used in the survey give different results. Government Labor Force Survey every quarter consistently shows more or less 6 to 7 percent unemployment rate and 18 to 20 percent underemployment rate. Taken together, they more or less tally with the with SWS result for its total unemployment rate figure. Also to be noted is that under government definition of the unemployed, one must be out of work but actively seeking work to be counted as unemployed. Once you stop looking for work after some defined period, even if you are jobless, you are no longer counted as unemployed. When this happens the labor force participation rate (LFPR) declines. This usually happens when jobs are very scarce.
Once jobs are plentiful, the LFPR increases because those without work now have more incentives to look for jobs.”
In addition, it was also possible that those persons considered not part of the labor force using government definition of what constitute the labor force, including the underemployed, part-time employed or seasonally unemployed workers may have reported themselves to be unemployed when asked in the SWS survey.
Another factor contributing to the difference in the result of the SWS survey and the government’s LFS is the sampling method, size of the sample and the way the questions are phrased. They differ markedly in the two surveys mentioned.
Whatever is the difference, however, it must also be admitted that when compared with other ASEAN member countries or the rest of Asia we find that the unemployment rate figure for the Philippines is one of the highest. The reason for this is that for so long in the past our GDP growth had also been one of the lowest, which coupled with our rapid population growth also resulted in our high incidence of poverty.
After the last war, most of our more progressive neighbors in Asia were also poor and suffering from high unemployment rates. But their rapid economic growth which was sustained for many years eventually allowed them to bring down their unemployment and poverty rates.
As for the Philippines, there were times in the past when our economic growth reached 5 percent or more annually but only for a year or two. Former President Gloria Macapagal-Arroyo claimed that the performance of the Philippine economy was the fastest during her time in the first decade of the new century. That was correct but at an average of less than 5 percent annually and with a population which also grew by around 2 percent a year, that left us only with less than 3 percent annual increase in our per capita income. At this rate it would take us up to 25 years to double our per capita income. Compare this with China’s almost zero population growth or even negative and a 10 percent annual economic growth which it sustained for almost 3 decades until the coming of the last global recession which allowed their per capita income to double every 7 years.
Consider also the new development in technology and the globalization of the market. With these, we also find that business could not help but be forced to use as little labor as possible despite the availability of cheap labor and rising production and sales.
Thus, it is not surprising to see the country still exhibiting high unemployment rate and widespread poverty.
The way out is inclusive growth which requires broad-based participation in production and higher wages for the workers but based on the experience of our progressive neighbors, this could not be achieved with less than 5 percent annual or erratic economic growth. In fact, this is the reason that in the beginning of his term, Pres. Benigno Aquino III aimed to grow the economy by 7 to 8 percent annually.
The last two years seem to show that this is achievable but some observers also said that leadership change in 2016 may not guarantee that this trend will continue.
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