Trends and Patterns v.5 052414

8/10/2019 Trends and Patterns v.5 052414

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Understand ing the TRENDS& PatternsIn the Phi l ipp ine Labo r Market

24 May 2014


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(1)Serious disconnectbetween the structuresof GDP and Employment

Often results in jobless growth

Underscores the structural nature of

the unemployment problem


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GDP and Employment Shares by Sector: 2013

Sector GDP share (%) Employment share (%)

Agriculture 10.4 31.0

Industry 32.7 15.6

Services 56.8 53.4


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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)


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Sector GDP Growth Rate (%)Employment Growth

Rate (%)

Agriculture 1.1 -2.1

Industry 9.5 3.4

Services 7.1 2.9

All Sectors 7.2 1.4

GDP AND EMPLOYMENT, 2013

GROWTH RATE (%)

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

Structural nature of employment problem


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Country Agriculture Industry Services

Indonesia 39.7 18.8 41.5

Malaysia 13.5 27.0 59.5

Thailand 41.5 19.6 38.9

Philippines 35.2 14.5 50.3

EMPLOYMENT STRUCTURESECTORAL EMPLOYMENT SHARE

(% to total employment)Selected ASEAN Countries, 2009

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 rategrowth 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.


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Country Agriculture Industry Services

Indonesia 15.9 49.6 34.5

Malaysia 9.5 44.3 46.2

Thailand 11.5 43.3 45.2Philippines 12.5 31.5 56.0

OUTPUT STRUCTURESECTORAL SHARE

(% to GDP)Selected ASEAN Countries, 2009

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

Share of industry output lowest in the Philippines


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Country 2000 2005 2012

Indonesia 5,554 6,513 8,856

Malaysia 15,688 17,921 21,897

Thailand 8,939 10,901 13,586Philippines 4,243 4,804 6,005

Vietnam 2,650 3,485 4,912

Cambodia 1,368 1,957 2,789

Lao,PDR 2,327 2,930 4,388

GDP PER CAPITAPPP (at constant 2011 international $)Selected ASEAN Countries

Source: World Bank, World Development Indicators.


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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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Gross National Income and Gross Domestic Product by Expenditure Share:2000, 2005 and 2010 - 2013 (at constant 2000 prices)Percent distr ibu t ion

Type of Expenditure 2000 2005 2010 2011 2012 2013

1. Household Final Consumption Expenditure 61.6 58.6 57.6 59.2 59.3 58.2

2. Government consumption 9.7 7.4 8.3 8.3 8.7 8.8

3. Capital Formation 15.7 16.8 17.3 17.1 15.6 17.1

4. Export-Import (X-M) -1.7 -3.2 0.0 -0.7 0.6 -0.7

Gross Domestic Product 85.3 79.6 83.2 83.9 84.2 83.9- Net Primary Income from Rest of the

World (ROW)14.7 20.4 16.8 16.1 15.8 16.1

Gross National Income 100.0 100.0 100.0 100.0 100.0 100.0

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

Consumption - a main growth driver Govt 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 negativebad for employment Share of remittances (net primary income from ROW) erraticboosting consumption

Danger of too much dependence on remittances


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

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

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

15.7 -0.4 -2.2 3.0 -15.1 -0.5 23.4 -8.7 31.6 2.0 -3.2 18.2

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

-20

-10

0

10

20

30

40

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

p

e

r

c

e

n

t


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(3)Quality Employment - a

function of GDP growth


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Both move in almost identical direction - With few exception e.g.,2012

Full-time employment expands in times of economic

upturn/recovery and contracts during economic slowdown

Annual Growth Rates in GDP and Full-time Employment


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Moved in opposite direction

Part-time employment expands during economic downturn/slowdown

but decline during economic upturn/recovery

With few exception e.g., 2008

Annual Growth Rates in GDP and Part-time Employment


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(4)Employment grew inBoom 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

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 LABORMARKET

Formal sector ---------------- Precariousemployment

Informal sector -------------- Vulnerableemployment


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FORMAL SECTOR

(Wage and salary)

Private establishment17.114 million

Govt/GOCC3.037 million

Own family-operatedfarm or business

0.127 million

Private household1.969 million

INFORMAL SECTOR

Self-employed10.668 million

Unpaid family workers3.930 million

Vulnerable employment

Precarious employment

Employer

1.272 million

In 2013


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(6)Climate change andemployment instability- agriculture, fishery and forestry sector

employment a big dragin employmentgrowth

El Nino phenomenon (1998, 2000, 2003 & 2005)

Destructive typhoons ( 1998, 2004,2006, 2009, 2012 & 2013)


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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 totalemployment) to make a dent on employment growth.

Moreover, it has remained stagnant across time.

- Service sector employment (53.4%) is generally stable andincreasing overtime.

- Agricultural sector employment (31%) subject to weatherdisturbances: steep/mark decline in recent years (2010,

2012,2013) a throwback of the 1998 and 2000 El Nino years


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ANNUAL EMPLOYMENT INCREMENTS (000) BY SECTOR


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ANNUAL EMPLOYMENT GENERATION: 20072013(000)

Annual employment generation below 1 million - except in 2011

(largely part-time)


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(7)Underemployment

- mo re serious than unemploym ent prob lem(1 out of 5 employed is underemployed;

i ts magn i tude is 2x the unemployed)

Highly correlated with poverty

Variation most pronounced across

regions (spatial)


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

UNDEREMPLOYMENT RATE : 2006 - 2013(000)


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(8) Unemployment- structurallittle change since 2006

(employment and labor fo rce grow ing at thesame pace, translates to unemployment rateunchanged)

- largely a problem of th e you th (48.5% ofunemp loyed in 2013)

Rate more than tw ice the national rate

- Educated wo rkforce

co l lege graduates ataround one-f i f th of the unemp loyed


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TOTAL UNEMPLOYED PERSON: 2006-2013 (000)

Total unemployed persons stagnant at less than three million since 2006

UNEMPLOYMENT RATE: 2006-2013 (%)

Unemployment rate moving within a very narrow band: 7-7.5%

in 2007-2013


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Employment is barely catching up with the growth in labor force

Annual growth rate (%)

Unemployment rate (%)

Unemployment rate stays virtually stagnant.

UR down when E > LF

UR up when LF > E


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TOP 5 REGIONS

1. NCR10.3

2. CALABARZON 9.2

3. Central Luzon 8.7

4. Davao Region 6.9

5. Western Visayas 6.9

BOTTOM 5 REGIONS

1. Cagayan Valley 3.2

2. Zamboanga Peninsula 3.5

3. MIMAROPA 4.1

4. SOCCSKSARGEN 4.4

5. CAR 4.5

REGIONAL STATISTICS ON UNEMPLOYMENT: 2013(in percent)


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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 R8 R10 Caraga R7 R5 R11 R6 PHIL R1 R3 R4-A NCR

UNEMPLOYMENT RATE (%)2013

As a general rule, high unemployment is associated with lowunderemployment and vice versa

37.3%

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%

R5 Caraga R10 R8 R4-B R12 R6 R9 R1 PHIL R4-A R11 R7 R3 CAR R2 ARMM NCR

UNDEREMPL OYMENT RATE (%)2013


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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% (+1.470million) 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 flukeor temporary innature that needs further validation in thenext survey round - hence any attempt onconclusion could be premature (notconclusive).


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(9)Bright spots in the labormarket

- Sustained rise in private establishment employment Vulnerable employment on the decline - Strong growth in industry employment


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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

12,423 12,950.00 13,283.00 13,824.00

14,565.00 15,431.00 16,377.00 17,114.00

0

5,000

10,000

15,000

20,000

2006 2007 2008 2009 2010 2011 2012 2013

(1) Employment in Private Establishments on the Steady Rise

(in 000)

(in percent)


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-3

-2

-1

0

1

2

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2007 2008 2009 2010 2011 2012 2013

Agriculture Industry Services

.on the back of strong growth in industry employment in recent

years

Sector 2007 2008 2009 2010 2011 2012 2013

Agriculture 0.9 2.1 0.1 -0.7 2.6 -1.4 -2.1

Industry 2.5 -1.4 0.9 6.0 2.4 3.9 3.4

Services 4.4 2.1 5.4 4.2 3.8 1.9 2.9


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Declining trend in the proportion of self-employed and unpaid

family workers from 44.5% in 2006 to 38.3% in 2013

A measure of vulnerable employment one of theemployment indicators in the Millennium Development Goals(MDGs)

(2) Proportion of Vulnerable Employment on the Downtrend


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(3) Employment creation in BPO remained robust

Annual Employment Growth rate (%): 2007-2013

Note the change in in in industry classification of BPO

2007-2011Real estate, renting and business activities

2012Break in data series

2013Administrative and support service activities

8.4


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DATA LIMITATIONS

Short reference period (snapshot or stock ofeconomically 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 populationprojection benchmark

Change in definition in April 2005 onunemployment


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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.

3. Never use the term Quarter. The LFS is basedon 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.

2. Comparison of data should be made on a year-on-year basisnot on monthly/survey round basis note: LFS data series

is subject to seasonality.


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Job:an activitythat a person does for a living

- a set of tasks and duties which are carried out by, or can be

assigned to, one or moreperson (ILO definition)- in establishments (payroll statistics), a person can be counted

several times depending on the number of jobs held

Employment:

Personsor 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


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The term job is really a misnomer.- in practice, the generation of job statistics does not exactly involve the

counting of activities or tasks or duties- counting is tedious and cumbersome- it does not make sense to do this counting

The object of measurement in job statistics is the same withLFS i.e., personat workor employedperson. But the difference lies on

the statistical measurement or manner of counting.

In the LFS, a worker is counted only once during the reference weekregardless of the jobs held in accordance with mutually exclusive principle

in the LFS.

In the job statistics, a worker is counted every time his/her nameappears in one payroll because he/she holds more than one job or changes

jobs during the reference period.


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THANK YOU!

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

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Trends and Patterns v.5 052414