Job losses despite quarantine easing may be early sign of economic contraction – IBON

November 5, 2021

by IBON Foundation

Research group IBON said that the Duterte administration should not be dismissive of the significant drop in employment and rise in unemployment in September 2021. The group said that these latest labor force figures are signs that the Philippine economy is still floundering despite quarantine restrictions easing and vaccinations increasing. IBON stressed that the job losses only underscore the need for substantial stimulus such as much-needed cash aid for vulnerable Filipinos and support for production sectors and small businesses, which the government still refuses to give.

IBON executive director Sonny Africa said that the large 642,000 decrease in employment and 373,000 increase in unemployment between August and September 2021 deserves much more concern than the economic managers seem to be showing.

Average monthly employment in the third quarter of the year (43.16 million) dropped by a huge 1.2 million from the second quarter (44.35 million). “If this is an early sign of a quarter-on-quarter gross domestic product (GDP) contraction, then this will be the second straight quarter of the economy contracting,” he said. “This is a clear sign that the economy is not gaining any momentum despite the easing of quarantine restrictions and the hyped pace of vaccinations.”

The 4.3 million unemployed in September is the most in 14 months or since the 4.6 million reported in July 2020, noted Africa. Combined with likely low earnings even among those with work, this means that consumption is severely repressed. The Bangko Sentral ng Pilipinas also recently reported that some 3 out of 4 Filipino households do not have any savings. “Recovery and especially easing of economic distress will be very slow with the government’s continued refusal to give a significant cash assistance to some 18-19 million poor and vulnerable households,” Africa said.

Majority of the job losses in September have been in the agriculture sector, which government claims is due to the close of harvest season and bad weather. However, this ignores the impact of government’s long-time neglect of agriculture and thus employment in the sector.  Africa said, “The end of the harvest season and bad weather conditions seem like plausible short-term explanations of the huge 850,000 contraction in agriculture. But because these are normal and predictable events, this just raises the question of why the government still pays so little attention to making agriculture more resilient to poor weather and to ensuring stable rural livelihoods.”

Africa also observed that the problem of so much informal and irregular work is also worsening. While there was virtually no change in the number of full-time workers between August and September, there was a large 265,000 increase in those “with a job, not at work” and a huge 931,000 part-time workers going out of work. He said that employment in private establishments is still a huge 658,000 less than before the pandemic — most likely reflecting closures or retrenchments in MSMEs.

IBON said that the country needs a government that prioritizes the welfare of the many Filipinos affected by job and income losses even before the pandemic began. It should shell out necessary and substantial stimulus that will help jobless and cash-strapped Filipinos cope and recover, and boost production sectors like agriculture and small businesses to create more jobs and spur economic progress, said the group. ###