High unemployment, poverty remain despite GDP gains

MANILA, Philippines — Filipinos will face difficulty seeking work until 2022 despite the gains made in recovering jobs lost last year, forcing the Department of Finance (DOF) to push for the distribution of cash aid to the poorest families.

The DOF yesterday said challenges on bringing down the poverty and unemployment rates will persist until next year, even as the economic team expects the gross domestic product (GDP) to grow by seven to nine percent with the reopening of industries.

With joblessness seen to spill over, the DOF said this, in turn, may affect the government’s goal of reducing poverty incidence to 14 percent.

The DOF projects unemployment rate to hover around 6.7 to 7.6 percent next year. The government managed to bring down the jobless rate to a pandemic low of 7.1 percent in March, but this jumped to 8.7 percent in April and settled at 7.7 percent in May and June with reverts to lockdown in select areas.

As such, the DOF appealed for the distribution of cash transfers to the poorest 50 percent of the population. Finance Secretary Carlos Dominguez has yet to clarify, however, if this translates to expanding ongoing programs like the conditional cash transfer, or distributing another round of social amelioration.

“In a base case scenario, the unemployment rate can still be within the range of 6.7 to 7.6 percent in 2022,” the DOF said.

“On the other hand, poverty incidence may gradually improve but further measures are needed to reach the original target 14 percent by 2022 which includes transfers to the bottom 50 percent of the population,” it said.

According to the Philippine Statistics Authority, at least 16.7 percent or 17.7 million Filipinos live in poverty in 2018, and this figure may just worsen due to the economic impact of the pandemic on household income.

In cases where an area is placed under enhanced community quarantine, the government gives out financial assistance to cover for income losses due to the lockdown. In Metro Manila, about P11 billion was downloaded to local governments to distribute P1,000 per individual to a cap of P4,000 per family.

Metro Manila is placed under the strictest measures for two weeks from Aug. 6 to 20. Based on estimates, some 10.9 million Filipinos living in the nation’s capital are set to get cash aid from the government.

For the long term, the DOF said speeding up the vaccination pace to achieve herd immunity by year end will give policymakers the room to loosen quarantine measures and reopen industries.

Economic managers place their hopes that the Philippines has vaccinated at least 70 percent of its population by the end of 2021 for their assumption of a seven to nine percent growth next year to materialize.