JOBLESSNESS IS A MARKET FAILURE; QUALITY OF EMPLOYMENT DETERIORATED

MANILA, FEBRUARY 4, 2012 (MALAYA) BENJAMIN DIOKNO (photo) ‘The degree of hunger has been stubbornly high since the second half of Mrs. Arroyo’s term. Sadly, the change in administration has not changed it a bit.’

THE unemployment rate dropped slightly from 7.3 percent in 2010 to 7.0 percent in 2011, while the number of employed workers rose from 36.0 million to 37.2 million or by 1.2 million. Administration officials must be rejoicing with these jobs numbers.

They shouldn’t.

If one goes behind the headline jobs number, nothing much has changed. The state of joblessness has remained serious, three years after the Great Recession.

Joblessness, poverty, and hunger are closely correlated. The absence of a steady source of income dooms one’s family to a life of poverty and hunger. The recent hunger incidence survey results by the Social Weather Stations show that one in four families -- 22.5 percent to be exact -- have experienced moderate and severe hunger in the fourth quarter of 2011.

But the degree of hunger has been stubbornly high since the second half of Mrs. Arroyo’s term. Sadly, the change in administration has not changed it a bit. For an open and caring society, such high degree of hunger is simply unacceptable.

But back to the jobs market. I’m afraid there is more good news than bad news. The good news is that number of unemployed dropped from 2,859,000 in 2010 to 2,814,000 in 2011, or by 45,000. The bad news is that the number of underemployed -- those who are employed but are unhappy with their present jobs, or want paying jobs, or want more hours of work-- have increased from 6,762,000 to 7,163,000, or by 401,000.

Here’s more bad news. The number of unpaid family workers remains large and has increased -- from 4,144,000 to 4,314,000, or by 170,000. There are now 4.3 million workers who are counted as employed but do not receive pay. This category of workers is approximately 11 percent of employed laborers. Put more bluntly, more than 1 in 10 workers are considered employed, but not paid.

The quality of employment has deteriorated. The number of part-time workers -- those who worked less than 40 hours per week -- has increased from 12.6 million in 2010 to 13.5 million, or by 815,000 workers. In other words, the number of workers who have worked from one hour to less than 40 hours a week have grown by close to a million. The numbers do not show the degree of underemployment, unfortunately.

The face of the unemployed has remained basically the same: young (50.4 percent are from age 15 to 24 years and another 29.7 percent from 25 to 34 years), mostly male (63 percent) and mostly educated (42 percent are college undergraduates or graduates and 33.6 percent are high school graduates).

Some 10,000 more college graduates went jobless last year -- from 558,000 in 2010 to 568,000. This is discouraging news for those who will receive their university diplomas in March 2012.

Underemployment continues to be rampant in agriculture (43.4% from 45.3% in 2010) and services (40.7% from 39.3% in 2010).

More than a million jobs were created last year, of which the bulk was generated in the agricultural sector. This sector is the largest source of jobs: 12.3 million, up from 12.0 million in 2010, or by 309, 000. Quite frankly, jobs growth in agriculture is not reassuring. Development theory argues that as the economy develops, less jobs will be needed in the agricultural sector, so workers will then shift to the industrial and services sectors.

With rising jobs in the agricultural sector, where would that leave us then? Is the Philippines becoming a more backward society?

Here’s a bit of good news. Industry created 136,000 new jobs -- from 5.41 million in 2010 to 5.54 million in 2011. 60 million new jobs were created in manufacturing and another 65 million new jobs were created in construction.

But the 3 percent increase in construction jobs (from 2,018,000 to 2,083,000 or by 65,000 workers) is a puzzle. Why? Because construction output dropped by 6.4% in 2011. How can falling output lead to rising employment? Unless more repairs and maintenance work were done, which is labor-intensive, than new construction; or there were many labor-intensive, small-scale projects than capital-intensive, large-scale projects; or full-time jobs were split into several part-time jobs.

In the services sector, there are two major job-generating sub-sectors: first, sales and repairs which created 374,000 new jobs and second, real estate, renting and business activities which created 111,000 new jobs.

The sub-sector wholesale and retail trade, repair of motor vehicles, motorcycles and personal and household goods is the biggest employer in the services sector. This sub-sector accounts for about 7.4 million jobs -- more than the 5.5 million jobs employed in the entire industrial sector.

Here’s another puzzle: the number of jobs in the trade and repairs sector grew by 374,000 or by 5.1%; yet output in this sector grew by only 2.6% in 2011. A clear case of declining labor productivity.

The real estate, renting and business activities is associated with the BPO business. The good news is that it was responsible for generating 111,000 new jobs last year. The bad news, however, is that the BPO industry is being threatened on many fronts. Back in the US, because of rising protectionism and persistent unemployment, there are serious moves to bring this offshoring business back home. The supply of talented workers is tightening. Power rate is rising. And the profit margin of many BPO firms is thinning with the continuous appreciation of the peso. The long-term sustainability of the BPO industry deserves a careful review.

Unemployment is a form of market failure. As such, the government has a role to play in finding solutions to the problem. It shouldn’t ignore the agonies and fears of the 2.8 million unemployed and the 7.2 million underemployed, and those who depend on them for survival.


Chief News Editor: Sol Jose Vanzi

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