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24 May 2014

Understanding the

TRENDS & Patterns

In the Philippine Labor Market

Philippine Statistics Authority

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(1) Serious disconnect between the structures of GDP and Employment

 

Often results in jobless growth Underscores the structural nature of the unemployment problem

Philippine Statistics Authority

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GDP and Employment Shares by Sector: 2013

Sector GDP share (%) Employment share (%) Agriculture Industry Services 10.4

32.7

56.8

31.0

15.6

53.4

Philippine Statistics Authority

4 GDP AND EMPLOYMENT : Divergence in growth patterns Jobless growth:

High GDP growth rate but low employment creation

(i.e., 2008, 2012, 2013)

Or the reverse:

Low GDP growth rate but high employment creation

(i.e., 2009 - part-time employment in services sector)

Philippine Statistics Authority

5 GDP AND EMPLOYMENT, 2013

GROWTH RATE (%)

Sector

Agriculture Industry Services

All Sectors

GDP Growth Rate (%)

1.1

9.5

7.1

7.2

Employment Growth Rate (%)

-2.1

3.4

2.9

1.4



High GDP growth rate with low employment creation (jobless growth)



Structural nature of employment problem Philippine Statistics Authority

6 EMPLOYMENT STRUCTURE

SECTORAL EMPLOYMENT SHARE

(% to total employment)

Selected ASEAN Countries, 2009

Country

Indonesia Malaysia Thailand Philippines

Agriculture

39.7

13.5

41.5

35.2

Industry

18.8

27.0

19.6

14.5

Services

41.5

59.5

38.9

50.3

Source: Norio Usui, Taking the right road to inclusive growth, Asian Development Bank (2012).

   Share of employment in industry lowest in the Philippines Robust growth in industry output will not translate to more jobs and lower unemployment – because of low employment base in industry For growth to make a dent on unemployment rate – growth should occur in agriculture with large employment base. But in the long-run the shift in labor resources should occur from agriculture to industry. This is where right policies and programs can make a difference as shown by the experiences of neighboring ASEAN countries.

Philippine Statistics Authority

7 OUTPUT STRUCTURE

SECTORAL SHARE

(% to GDP)

Selected ASEAN Countries, 2009

Country

Indonesia Malaysia Thailand Philippines

Agriculture

15.9

9.5

11.5

12.5

Industry

49.6

44.3

43.3

31.5

Services

34.5

46.2

45.2

56.0

Source: Norio Usui, Taking the right road to inclusive growth, Asian Development Bank (2012).

 Share of industry output lowest in the Philippines

Philippine Statistics Authority

8 GDP PER CAPITA PPP (at constant 2011 international $) Selected ASEAN Countries

Country

Indonesia Malaysia Thailand Philippines Vietnam Cambodia Lao,PDR

2000

5,554 15,688 8,939 4,243 2,650 1,368 2,327 Source: World Bank, World Development Indicators.

2005

6,513 17,921 10,901 4,804 3,485 1,957 2,930

2012

8,856 21,897 13,586 6,005 4,912 2,789 4,388

Philippine Statistics Authority

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According to NEDA, it is not unusual for high unemployment even with economic growth. It is normal, 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 people looking for work.

Further, 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.

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(2) Economic growth consumption led fuelled by remittances

Share of capital formation stagnant Share of trade (X-M) negligible

Philippine Statistics Authority

11 Gross National Income and Gross Domestic Product by Expenditure Share: 2000, 2005 and 2010 - 2013 (at constant 2000 prices)

Percent distribution

Type of Expenditure 2000 2005 2010 2011 2012

1. Household Final Consumption Expenditure 2. Government consumption 3. Capital Formation 4. Export-Import (X-M)

Gross Domestic Product

- Net Primary Income from Rest of the World (ROW) 61.6

9.7

15.7

-1.7

85.3

14.7

58.6

7.4

16.8

-3.2

79.6

20.4

57.6

8.3

17.3

0.0

83.2

16.8

59.2

8.3

17.1

-0.7

83.9

16.1

59.3

8.7

15.6

0.6

84.2

15.8

Gross National Income 100.0

Source: Philippine Statistics Authority, National Accounts of the Philippines.

100.0

100.0

100.0

100.0

2013

58.2

8.8

17.1

-0.7

83.9

16.1

100.0

    

Consumption - a main growth driver Gov’t expenditure on the uptrend Capital formation (Investment) the engine growth contributed less than one-fifth to GNI - its share to GNI erratic Export-Import share low or negative – bad for employment Share of remittances (net primary income from ROW) erratic – boosting consumption Danger of too much dependence on remittances Philippine Statistics Authority

12 Annual Growth Rate in Capital Formation, Philippines: 2002 - 2013 (at constant 2000 prices)

40 30

p e

20

r c e

10

n t

0 -10 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013     -20

Source: Philippine Statistics Authority, National Accounts of the Philippines.

2002 15.7

2003 -0.4

2004 -2.2

2005 3.0

2006 -15.1

2007 -0.5

2008 23.4

2009 -8.7

2010 31.6

2011 2.0

2012 -3.2

Trend in capital formation highly erratic Declines occurred in 2003, 2004, 2006, 2009, 2011 and 2012 – this means lack or absence of investment, but significant upswing in 2013 No investment >>> lower outputs and fewer jobs Foreign direct investment lowest among original ASEAN 2013 18.2

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(3) Quality Employment - a function of GDP growth

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Annual Growth Rates in GDP and Full-time Employment 14

 Both move in almost identical direction -

2012 With few exception e.g.,

 Full-time employment expands in times of economic upturn/recovery and contracts during economic slowdown

Philippine Statistics Authority

Annual Growth Rates in GDP and Part-time Employment 15

 Moved in opposite direction  Part-time employment expands during economic downturn/slowdown but decline during economic upturn/recovery  With few exception e.g., 2008

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(4) Employment grew in “Boom and Bust Pattern”

• Monsoon economy - - - - - - - > Climate change • Economic crisis (Asian economic crisis/1988 and global financial crisis/2008-2009 • Political events

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ANNUAL EMPLOYMENT GROWTH RATE (%) 2007 - 2013 17

 Employment trend characterized by erratic movement or “boom and bust”  May not be observed at all times

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

Boom & Bust - More pronounced year-on-year

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(5) DUALISM IN THE LABOR MARKET

Formal sector ----------------



Precarious employment Informal sector --------------



Vulnerable employment Philippine Statistics Authority

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In 2013

FORMAL SECTOR

(Wage and salary) Private establishment 17.114 million Gov’t/GOCC 3.037 million Precarious employment Private household 1.969 million Employer 1.272 million

Own family-operated farm or business

0.127 million

INFORMAL SECTOR

Self-employed 10.668 million Vulnerable employment Unpaid family workers 3.930 million

Philippine Statistics Authority

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(6) Climate change and employment instability -

agriculture, fishery and forestry sector employment a big

drag

growth in employment

 El Nino phenomenon (1998, 2000, 2003 & 2005)  Destructive typhoons ( 1998, 2004,2006, 2009, 2012 & 2013)

Philippine Statistics Authority

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Employment instability is often caused by fluctuations in agriculture, fishery and forestry sector due to extreme weather (climate change)

Industry employment is small sector (15.6% of total employment) to make a dent on employment growth. Moreover, it has remained stagnant across time.

- Service sector employment (53.4%) is generally stable and

increasing overtime.

- Agricultural sector employment (31%) subject to weather

disturbances: steep/mark decline in recent years (2010, 2012,2013) a throwback of the 1998 and 2000 El Nino years Philippine Statistics Authority

23 ANNUAL EMPLOYMENT INCREMENTS (‘000) BY SECTOR Philippine Statistics Authority

ANNUAL EMPLOYMENT GENERATION: 2007 – 2013 (‘000) 24

Annual employment generation below 1 million - except in 2011 (largely part-time)

Philippine Statistics Authority

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(7) Underemployment -

more serious than unemployment problem (1 out of 5 employed is underemployed; its magnitude is 2x the unemployed)



Highly correlated with poverty



Variation most pronounced across regions (spatial)

Philippine Statistics Authority

UNDEREMPLOYMENT RATE : 2006 - 2013

(‘000)

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• Declining gradually from 2006 to 2010 • Relatively unchanged in the past three years

Philippine Statistics Authority

27 REGIONAL STATISTICS ON UNDEREMPLOYMENT: 2013

1. Bicol Region 2. Caraga 3. Northern Mindanao 4. Eastern Visayas 5. MIMAROPA

TOP 5 REGIONS

37.3

27.1

25.7

25.1

23.4

1. NCR 2. ARMM 3. Cagayan Valley 4. Ilocos Region 5. Central Luzon

BOTTOM 5 REGIONS

12.1

12.4

12.9

20.0

14.5

Philippine Statistics Authority

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(8) Unemployment - structural –

little change since 2006

(employment and labor force growing at the same pace, translates to unemployment rate unchanged)

- largely a problem of the youth (48.5% of

unemployed in 2013) Rate more than twice the national rate - Educated workforce – college graduates at around one-fifth of the unemployed

Philippine Statistics Authority

UNEMPLOYMENT RATE: 2006-2013 (%)

 Unemployment rate moving within a very narrow band: 7-7.5% in 2007-2013

TOTAL UNEMPLOYED PERSON: 2006 2013 (‘000) 29

 Total unemployed persons stagnant at less than three million since 2006

Philippine Statistics Authority

Annual growth rate (%)

 Employment is barely catching up with the growth in labor force

Unemployment rate (%) 30

   Unemployment rate stays virtually stagnant.

UR down when E > LF UR up when LF > E

Philippine Statistics Authority

31 REGIONAL STATISTICS ON UNEMPLOYMENT: 2013 (in percent) TOP 5 REGIONS

1. NCR 10.3

2. CALABARZON 3. Central Luzon 4. Davao Region 5. Western Visayas 9.2

8.7

6.9

6.9

BOTTOM 5 REGIONS

1. Cagayan Valley 2. Zamboanga Peninsula 3. MIMAROPA 4. SOCCSKSARGEN 5. CAR 3.2

3.5

4.1

4.4

4.5

Philippine Statistics Authority

As a general rule, high unemployment is associated with low underemployment and vice versa UNEMPLOYMENT RATE (%) 2013 3.2% 3.5% 4.1% 4.4% 4.5% 4.6% 5.3% 5.7% 6.0% 6.3% 6.5% 6.9% 6.9% 7.1% 8.3% 8.7% 9.2% 10.3% R2 R9 R4-B R12 CAR ARMM UNDEREMPL OYM ENT RATE (%) 2013 37.3% R8 R10 Caraga R7 R5 R11 R6 PHIL R1 R3 R4-A NCR 27.1% 25.7% 25.1% 23.4% 22.7% 22.7% 21.8% 20.0% 19.3% 17.9% 17.2% 15.1% 14.5% 14.1% 12.9% 12.4% 12.1% 32 R5 Caraga R10 R8 R4-B R12 R6 R9 R1 PHIL R4-A R11 R7 R3 CAR R2 ARMM NCR Philippine Statistics Authority

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(9) Flukes in the labor market

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Flukes (blips) in the labor market

- Underemployment rate surged to 22.8% (+1.470 million) in July 2012 ∞ - Part-time employment shot up by 18.4% (+2.514 million) in April 2012 and dipped by 18.9% (-3.064 million ) in April 2013

This phenomenon could be a conclusion could “fluke” or temporary in nature that needs further validation in the next survey round - hence any attempt on be premature (not conclusive)

.

Philippine Statistics Authority

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 

(9) Bright spots in the labor market -

Sustained rise in private establishment employment Vulnerable employment on the decline Strong growth in industry employment Philippine Statistics Authority

(1) Employment in Private Establishments on the Steady Rise

(in percent)

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20,000 15,000 10,000 5,000 0 (in ‘000) 12,423 2006 12,950.00

2007 13,283.00

2008 13,824.00

2009 14,565.00

2010 15,431.00

2011 16,377.00

2012 17,114.00

2013  Employment share of wage workers in private establishments rose steadily from 38.1% in 2006 to 44.9% in 2013  This suggests that more jobs are now being created in the economy by the private sector in recent years

Philippine Statistics Authority

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-1 -2 -3 4 3 2 1 0 7 6 5 ………….on the back of strong growth in industry employment in recent years 2007 2008 2009 2010 2011 2012 2013 Agriculture Industry Services Sector Agriculture Industry Services 2007 0.9

2.5

4.4

2008 2.1

-1.4

2.1

2009 0.1

0.9

5.4

2010 -0.7

6.0

4.2

2011 2.6

2.4

3.8

2012 -1.4

3.9

1.9

2013 -2.1

3.4

2.9

Philippine Statistics Authority

(2) Proportion of Vulnerable Employment on the Downtrend 38

•

Declining trend in the proportion of self-employed and unpaid family workers from 44.5% in 2006 to 38.3% in 2013

•

A measure (MDGs) of vulnerable employment – one of the employment indicators in the Millennium Development Goals Philippine Statistics Authority

(3) Employment creation in BPO remained robust

Annual Employment Growth rate (%): 2007-2013

8.4

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Note the change in in in industry classification of BPO 2007-2011 – Real estate, renting and business activities 2012 – Break in data series 2013 – Administrative and support service activities

Philippine Statistics Authority

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DATA LIMITATIONS



Short reference period (snapshot or stock of economically active persons)



Absence of provincial data



Data reliability subject to proxy respondents



Break in the data series due to changes in reference period, coverage and population projection benchmark



Change in unemployment definition in April 2005 on Philippine Statistics Authority

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SOME GUIDELINES IN USING LFS DATA

1. Never use the term ”Job” as synonymous to EMPLOYMENT. The LFS is counting people at work and not number of “jobs”. 2.

Comparison of data should be made on a “year -on year” basis not on monthly/“survey round” basis – note: LFS data series is subject to seasonality.

3. Never use the term ”Quarter”. The LFS is based on a “past week” reference period not “QUARTER”.

4.

Always bear in mind the “break” in the LFS data series, the existing data series covers the period 2006 to present. 5. Be cautious in comparing LFS with other sources of data.

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Employment:

Persons or individuals at work - the LFS counts person at work not jobs - in the LFS, a person can be counted only once regardless of the number of jobs he/she held

Job

: an activity that a person does for a living - a set of tasks and duties which are carried out by, or can be assigned to, one or more - in establishments (payroll person (ILO definition) –statistics), a person can be counted several times depending on the number of jobs held

Philippine Statistics Authority

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 The term job is really a misnomer counting of activities or tasks or duties - counting is tedious and cumbersome .

- in practice, the generation of job statistics does not exactly involve the - it does not make sense to do this counting  The object of measurement in job statistics is the same with LFS i.e., “person at work” or “employed person” . But the difference lies on the statistical measurement or manner of counting.

 In the LFS, a worker is counted only once during the reference week

regardless of the jobs held –in accordance with mutually exclusive principle in the LFS

.

 In the job statistics, a worker is counted every time

appears in one payroll because he/she holds more than one job or changes jobs during the reference period.

his/her name

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THANK YOU!

URL: http://www.psa.gov.ph

Philippine Statistics Authority