Growth fails to generate jobs

MANILA, Philippines - Despite higher-than-expected economic growth in the fourth quarter, a total of 2.68 million people found themselves without work in January, pushing the unemployment rate back to the 7% level from October’s 30-year low. Unemployment worsened to 7.4% in January, from 6.3% in October, according to the National Statistics Office (NSO) which released its Philippine Labor Force Survey on Tuesday. It was, however, a slight improvement from the 7.8% recorded in the same month last year. From October to January, around 175,000 people were added to the ranks of the unemployed, showing that the economy had failed to create enough jobs for those actively seeking work, economists told BusinessWorld. This was despite the strong 7.4% gross domestic product (GDP) growth recorded in the last quarter of 2007. Employment generation significantly declined as only 150,000 jobs were created in the past 12 months to January, bringing the employment rate to 92.6% from 92.2% last year. "A closer look at the data will fail to impress even the administration drumbeaters. Total net jobs created for the whole year was only 150,000, which was even lower than the corresponding figure of 483,000 in October 2007, and definitely way below the government’s target of one million jobs a year," University of Asia and the Pacific economist Victor Abola said. National Economic and Development Authority (NEDA) Director-General Augusto B. Santos admitted that job creation was below the 1.4-1.6 million yearly target in the Medium Term Philippine Development Plan. He said local companies’ hiring decisions had been affected by the global economic weakness. "Employment in the manufacturing sector decreased by 2.6% as the weakness in the global economy and the strength of the peso sneaked in. This offsets the gains in the industry sector contributed mainly by the buoyant construction sector," Mr. Santos said in a statement. The January survey showed the manufacturing sector having shed a total of 88,000 jobs over the one year period, and 99,000 in particular since October last year. The service sector also lost 26,000 positions in the twelve months to January, offsetting the 153,000 new jobs created in the agriculture sector. The industry sector, meanwhile, added 22,000 as of January. Of the estimated 33.7 million employed persons, about half (50.2%) were in the services sector, more than a third (35%) in agriculture and the rest (14.8%) in the industry sector. Mr. Abola said the latest figures were "hardly conducive to a sustained growth" as more people opted to seek employment in the informal sector. Workers in the own-account and unpaid family workers now constitute 48.3% of the total labor force, from 46.6% in January last year. "Another way of viewing the weak employment generation is that employers preferred to make their existing workers work longer rather than employ new people. This is reflected in the decline in the number of employed persons working less than 40 hours per week which was more than compensated for by the number working more than 40 hours," he said. Underemployment thus improved to 18.9% from 21.5% a year ago. However, this was still a bit higher than the 18.1% chalked up in October. The underemployed are defined as people who already have jobs but are looking for more employment to augment their income. Underemployed people are also those who are working less than 40 hours a week. More people also chose to stay away from the labor market as the labor force participation rate reached only 63.4%, or 36.4 million people out of the estimated 57.4 million population 15 years and over. Last year’s rate was 64.8%. In particular, about 1.3 million more people were not part of the labor force in January, more than the 1.2-million increase in the working age population. "This reflects the quality of jobs that are being made available in the labor market. And it reflects in general the country’s jobless growth. Somehow, it confirms the increase in poverty incidence among Filipinos," Ateneo de Manila University economist Leonardo Lanzona said. Among the regions, the National Capital Region had the highest unemployment rate of 12.5%. Among the jobless, five in every 10 were in the 15-25 year age group while three in 10 were aged 25-34. Around 40% of the unemployed had attained college level and 33.5% were high school graduates. - BusinessWorld