Unemployment, politics, and politicians
FROM FAR AND NEAR - Ruben Almendras (The Freeman) - July 28, 2020 - 12:00am

On the basis of the “lagging” indicators like the manufacturers index, retail sales volume, and the BSP surveys, the Philippine economy may have bottomed in June as volumes and positive sentiments have increased starting July. We are still in an economic recession as the GDP shrunk by .4 of 1% in the first quarter and 7% in the second quarter, but hopefully by only 4% in the third quarter. The Philippine economy really cratered and it would be a welcome surprise if the full year 2020 GDP reduction will be -7% or better. The “leading” indicators like the stock market and the projected capital expenditures of the major conglomerates are down, which means that the economic recovery will be slow and may not happen until 2022. Even if the economy grows by 7% in 2021, it will just bring us back to where we were in 2019. This is where the unemployment issue becomes the problem.

As of June, unemployment data was at 18% of the workforce or 8 million without jobs, the highest ever since we started getting this statistic. Including the repatriated OFWs, the ABS-CBN workers/related industries and the unregistered informal economy workers, there are probably 10 million workers who will have no livelihood by August, or 20% of the labor force. As the post pandemic economic recovery will not be a “V” or “U” but a “?”, (like the Nike “Swoosh” logo), job generation or rehiring will be slow and will take up to 18 months to get us back to the 2019 level. During this period, we will also have added another 1 million able-bodied persons to the workforce from school graduates and out-of-school-youths.

The government’s program to continue the infrastructure construction to create jobs is in the right direction, but a shift to private-public partnership instead of government funded may move projects faster and create more jobs sooner. While these may absorb the OFWs in construction work from the Middle East and some of the maritime workers, the skills mismatch will preclude many service workers into becoming construction workers. The salespeople, waiters, entertainers, cooks, hotel personnel, and other service workers cannot be easily transitioned to construction work. Then, there is also the slow re-entry into the economy of the businesses that have closed as they recapitalize and gauge the recovery of the expected volume of business, so the rehiring will be gradual and over a longer period. The deferred and measured expansion plans of big business due to the pandemic and uncertainty of the government’s antipathy towards them will delay the new hiring of additional employees until after a friendlier government.

The quotation, “It is the economy, stupid” was coined because every politician knows that a declining economy is bad for politics and politicians, particularly an incumbent administration. In the current American political scenario, this is why Trump is eager to revive the US economy post pandemic by preventing/removing the lockdowns that is stifling their economy. Unemployment and the loss of earning capacity of the people will even be worse for politics and politicians. The disappointment and loss of self-esteem makes people vote with their stomach, hearts, and minds. They will remember those who caused them to lose their jobs and those who helped them. And they will influence their families and friends. Even if it is just the incremental unemployed who are turned off by the politicians, that would still be seven million people and will translate to 35 million voters.

Factoring out the “command votes” of entrenched political dynasties, the critical swing vote in Philippine elections is the middle class who are most affected by unemployment. They comprise 70% of voters and are now more exposed to digital information and technology. Money politics will still be a factor, but with a critical and informed middle class the effectiveness of vote buying cannot be assured. The coming 2022 elections should be an interesting event.

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