Employment decline belies govt claims of upbeat labor market — IBON

December 8, 2022

by IBON Foundation

The nearly half-million drop in employment in October 2022 from September 2022 shows that the government’s claim of an upbeat jobs situation is exaggerated, said research group IBON. The Marcos Jr administration is overstating recovery and downplaying the jobs crisis to avoid helping millions of struggling Filipinos with urgent and much-needed wage hikes, cash assistance and subsidies, said the group.

The National Economic and Development Authority (NEDA) recently said that the country’s “upbeat labor market” is leading to a strong economic recovery from the pandemic. However, IBON said this is an overstatement that dismisses the significant decline in employment and growing number of discouraged workers.

Looking at month-on-month labor force figures, the group noted that the number of employed persons fell by 476,000 to 47.1 million in October 2022 from the month prior. This is the second straight month of employment decline after the 287,000 decrease from 47.9 million in August 2022 to 47.6 million in September 2022.

The number of employed in October 2022 is already 285,000 smaller than the 47.4 million in July 2022. The group pointed out that the normal trend is for employment to increase between July and October with only very few exceptions in the last decades.

IBON said that the decline in employment did not reflect in an increase in unemployment because many likely dropped out of the labor force altogether due to persistently poor job prospects. The reported labor force fell by a huge 732,000 to 49.3 million in October 2022 from 50.1 million the previous month. Those leaving the labor force accounted for most of the big 826,000 hike in persons considered not in the labor force, which grew from 26.8 million in September to 27.6 million in October.

IBON also noted that informality remains widespread with 19.8 million informal workers accounting for 42% of total employed in October 2022. Informal workers consist of domestic workers (2 million), the self-employed (13.1 million), and those in own family-operated farms or businesses (4.7 million, which includes 3.4 million unpaid family workers); this does not yet include informal workers in private establishments.

The number of informal workers decreased by 407,000 from 20.2 million in September 2022. The group said much of this could be due to Filipinos deciding to quit their poor quality jobs altogether and dropping out of the labor force. Nonetheless, reflecting job creation being more in informal than formal work, the 19.8 million informal workers in October 2022 is still much larger than the 16.8 million informal workers in pre-pandemic January 2020.

By industry, the group observed that the biggest job losses from September to October 2022 were in manufacturing (by a conspicuous 785,000), agriculture and forestry (by 368,000), and wholesale and retail trade (by 333,000). The employment decrease in the manufacturing sector could be due to recent layoffs and temporary closure of factories particularly in the garment industry, while agriculture job losses are linked to the destruction caused by Tropical Cyclone Paeng. The employment decline in wholesale and retail trade could be a result of layoffs amid the decline in online sales such as the recent retrenchment of Shopee employees.

IBON said that the decline in employment and rampant job informality combined with surging prices and low incomes will make the coming holiday season and new year difficult for many poor and vulnerable Filipino families. The government can choose to stop downplaying the worsening jobs situation and take meaningful action to address this. It can start by providing immediate and substantial wage hikes, cash assistance and subsidies for small businesses and production sectors towards real economic recovery.