by Nicasio Angelo Agustin
Unemployment rate as of January 2010 was registered at 7.30%, a tenth of a percentage point better that the figure posted for the whole year of 2009 which was 7.40%. In absolute term, the unemployed people in the Philippines as of January were estimated at 2.8 million. The reality, however, is that while the unemployment rate – as a ratio to the labor force – is decreasing, the actual number of unemployed people has been increasing over the years.
Given that, even if the unemployment rate has decreased a bit – which should be seen as an indicator of a good performance in reducing the percentage of unemployed people to the total labor force, celebration is not a likely a desirable reaction. My personal opinion is that the figure is a gross understatement of the actual unemployment situation in the country. The government defines the unemployed people as those who are simultaneously without work for a certain period of time (at least 6 months), presently looking for work and immediately available for any kind of work.
“Working” is likewise broadly and vaguely defined to include unpaid work for family businesses (a small farm or a small variety or sari-sari store) and working for oneself (street vendors, jeepney drivers, house helpers). Just a simple iteration of the figures: if the estimated four million unpaid workers in family businesses, and even just half of the over 10 million who declare themselves “self-employed” were included, the jobless count in the country would be more than 10 million people among those 15 years and older, or three times – or even more – more than the posted official unemployment figure.
I would like to view the story from another angle. Poverty in the country has remained a major challenge. The 2006 government survey on poverty (the latest figure that we have) reveals that more than 27.6 million Filipinos or 32.9 percent of our total population are poor. The figure includes those who could not “provide in a sustained manner for their minimum basic needs for food, health, education, housing, and other social amenities of life”. The number of “subsistence poor”—those unable to provide enough to eat—was over 12.2 million. That was in 2006, but I am inclined to believe that the figures are undoubtedly worse today. In fact, the SWS survey in August 2009 indicated that “one out of two Filipino families, or 50 percent, considered themselves as poor while another 27 percent rated themselves on the borderline”.
While the unemployment rate is seemingly improving, poverty is worsening. This trend shows us several pictures. One, many of those “employed” individuals do not necessarily get a level of salary which is sufficient to provide for the basic needs of their household members. This means that having work does not necessarily mean that households could lift themselves out of poverty. This brings us to another picture. Two, the available work in the market is low paying and, perhaps, also of low quality. Three, inequality in the distribution of income is high. Many employed individuals enjoy high income and many more employed individuals get low income. This is confirmed by the Gini index for the country which is 45.8 (where 100 Gini index means perfect inequality and zero means perfect equality).
Several causes of this trend could also be mentioned. One, additional investments in the country is low; thereby, there is difficulty in creating additional jobs. Two, there is an observable mismatch between the supply of, and demand for, labor. The available labor supply is not able to meet the requirements of the industries in terms of skills and capacities. This could lead to the next item. Three, the level of labor productivity is low; hence, productivity of industries is low which, in turn, leads to low level of profit for the firms and low salaries or wages for labor.
By the end of the first quarter and the whole second quarter of 2010, the unemployment rate is expected to rise again as new college graduates will be joining the labor force. We expect, however, that everything will even out at the end of the year. As they say, employment and unemployment in the country follow a seasonal trend. Yet, it remains that the greater and more significant concern is poverty.
Fell free to send your comments to nic_agustin@yahoo.com.
