Research group IBON said that economic managers shouldn’t celebrate too soon over seemingly positive third quarter growth as more and more Filipinos lose jobs and increasingly make do with informal work. Economic growth is also still slowing with many sectors years from recovery. The group said the government can do much more to stabilize employment by injecting a substantial stimulus into the economy.
Jobless growth
IBON said that while the Philippine economy posted 7.1% year-on-year gross domestic product (GDP) growth in the third quarter of 2021, employment in the same period however dropped significantly while informal work has become more prevalent. The group said this indicates that millions of Filipinos are not feeling the effects of the hyped recovery.
The group noted that average monthly employment fell by a whopping 1.2 million from 44.4 million in the second quarter of 2021 to just 43.2 million in the third quarter despite the reported positive growth. Average monthly underemployment also increased by 668,000 from 6.5 million in the second quarter to 7.1 million in the third quarter.
By industry, IBON observed that positive economic growth in many sectors did not translate to growth in employment. For instance, the service sector which accounts for the largest share of the economy grew by 8.2% in the third quarter, but employment here dropped significantly by 859,000 from 25.6 million in the second quarter to just 24.7 million in the third quarter. The wholesale and retail trade subsector for instance posted 6.4% growth, but employment fell by 902,000 to 9.4 million in the third quarter. The education sector had 13.8% growth, but employment fell 249,000 to 1.3 million.
IBON also said that those employed in informal or irregular work continue to increase despite economic growth. By class of worker, the biggest increase was in those working as domestic help in private households which increased by 673,000 to 2.5 million in the third quarter. The number of wage and salary workers in private establishments on the other hand fell to 20.9 million in the third quarter, although by just a statistically insignificant 22,000. This in any case clearly indicates that small businesses are still not recovering.
The group pointed out that claims of recovery are also belied by how unemployment has been increasing throughout the third quarter to reach 4.3 million in September 2021 which is the highest since the 4.6 million reported 14 months ago in July 2020
Slowing growth
IBON said that slowing growth is another sign of a floundering economy. Looking at economic growth in the first nine months of 2021 and comparing this to the same period in previous years, the group pointed out that the country is still on a downward trajectory. GDP growth has been slowing from 7.2% in 2016 to 7.0% in 2017, 6.3% in 2018, 5.9% in 2019, negative 10.1% in 2020, and now to just 4.9% in 2021. This is unchanged even if the 5% high end of government growth targets for the year is achieved.
The group also noted that the level of economic output of Php13.3 trillion in the first nine months of the year is still just as low as it was three years ago in 2018. In effect, over 19 months of pandemic lockdowns without compensatory stimulus has caused the economy to lose three years of economic output.
By the same measure, many economic sectors have also suffered serious losses in economic output. IBON estimated that the worst hit sectors were transportation and storage (7 years lost), mining (8 years), accommodation and food services (9 years), and other services (11 years). Other sectors also badly hit include agriculture, forestry and fishing (2 years lost), wholesale and retail trade and education (3 years each), manufacturing and professional and business services (4 years each), construction (5 years), and real estate (6 years).
The health sector momentarily dipped to Php228.6 billion in Q1-Q3 2020 but recovered to its upward trajectory with Php262.3 billion in the same period this year. Meanwhile, electricity, steam, water and waste management, financial and insurance activities, information and communication, and public administration all kept growing even through the lockdowns.
However, IBON expressed alarm that net primary income from abroad which includes earnings of overseas Filipinos was the worst hit and is at its lowest in over two decades with at least 11 years lost as far as records allow comparison for.
Off-track
The group stressed that the economy is far from returning to pre-pandemic growth levels. Even hitting the present growth target will still not reverse the slowing growth under the Duterte administration even before the pandemic, said IBON. Annual economic growth has dropped from 7.1% in 2016 to 6.9% in 2017, 6.3% in 2018, and 6.1% in 2019 with a sharp lockdown-driven contraction of 9.6% in 2020. Even if fourth quarter growth in 2021 is enough to achieve the full-year 4-5% GDP growth target, this is still lower than the previous years of slowing pre-pandemic economic growth under Duterte.
IBON said that a substantial fiscal stimulus remains critical to overcome joblessness and spur recovery. Cash assistance to help vulnerable Filipinos recover incomes will also help recover livelihoods and strengthen production sectors and small businesses. The group said that amid the worst crisis of lost livelihoods and joblessness in decades, the government should be more candid about the real economic situation to be able to find real solutions instead of using mere positive growth numbers as a propaganda device to distract from unsound economic management.
