Record high jobless rate ‘understated’ — economist

MANILA, Philippines — The record high 17.7 percent unemployment rate in April may be an “understatement” of the country’s employment condition, according to a new research brief by the Ateneo de Manila University.

In a policy brief titled “A Closer Look at the Impact of COVID-19 and the Lockdown on Employment and Poverty,” economist Geoffrey Ducanes argued that the employment rate is unable to capture those who reported to have a job during the period but did not work and likely earned no income.

This would be the case for non-regular employees who were paid per day, per hour, or per output, as well as those paid on a commission basis.

The unemployment figures also do not capture the situation of farmers and fishermen who might have worked but were not able to sell their produce or catch because they cannot transport their products during the lockdown.

Likewise, those of overseas Filipino workers who have returned to the country after losing their jobs.

“The unemployment rate gives an incomplete picture of the true employment condition in April 2020, which was much worse than what the unemployment rate of 17.7 percent suggests,” Ducanes said in the policy brief.

“Effectively, the total number who became jobless is much larger as it includes not only those who lost their employment, but also those who otherwise would have been employed among the new entrants to the labor force if not for the lockdown, as well as those who technically had jobs but earned no income because they were not able to work.”

The Philippine Statistics Authority (PSA) reported last week that some 7.3 million Filipinos were jobless in April as the enforcement of the enhanced community quarantine restricted the mobility of workers and delayed the entry of young workers in the labor market.

Results of the April 2020 round of the Labor Force Survey (LFS) showed unemployment rose at a rate of 17.7 percent, the highest since the 8.4 percent rate in April 2005 when a change in the definition of unemployment was implemented.

As of April 2020, the pool of potential workers aged 15 years old and above was larger at 73.7 million compared with 71.8 million in April 2019.

However, fewer participated in the labor force in April 2020 at around 41 million, three million heads fewer than the 44 million workers in April 2019.

This brought down the labor force participation rate to 55.6 percent in April 2020, the lowest in history. This compares with 63.1 percent in April 2019.

Employment rate thus fell to 82.3 percent in April 2020, translating to 33.8 million Filipinos employed, lower compared with 41.8 million employed in April 2019 and 42.7 million employed in January 2020.

On the other hand, the underemployment rate, which measures the number of workers who want more work to earn more, also increased to 18.9 percent in April 2020 from 13.4 percent in April 2019.

This corresponds to about 6.4 million underemployed workers in April 2020, from 5.6 million in April 2019, an increase of about 781,000 underemployed workers.

As the job market becomes more competitive with more people chasing after fewer jobs as mobility restrictions are eased, Ducanes said more people may be plunged into poverty this year.

“There would be an even larger relative increase in poverty gap and poverty severity, meaning that not only would there be more poor but they would be farther from the poverty line, on average, and there would also be more in extreme poverty,” he said.

The government, he said, can soften the impact of the employment crisis by continuing an improved social amelioration program and ensuring food inflation is under control as food counts heavily in the poor’s consumption basket.

“Ensuring food inflation is under control means ensuring the food supply chain is working properly and that farmers have the capital to engage in their usual production. Many farmers and fishermen likely used up whatever capital they had during the lockdown months,” Ducanes said.

The noted that the impact on poverty will ultimately depend on the speed of employment recovery, government programs for affected low income households, and private sector and civil society support.

He also noted the importance of employment support programs, including emergency employment and re-training for workers unlikely to recover soon.