Luzon lockdown threatens livelihoods of 11M workers, informal sector earners

March 17, 2020

by IBON Foundation

The Duterte administration’s declaration of an enhanced community quarantine over the whole of Luzon threatens to displace nearly 11 million workers and informal sector earners, said research group IBON. The group said that while government is correct to take all necessary measures to stop the spread of the COVID-19 virus, it is failing to do this in a way that protects the poorest and most vulnerable Filipinos.

The government declared an enhanced community quarantine, colloquially called a lockdown, over the whole of Luzon for nearly a month starting March 17, 2020 until April 13, 2020. In covering the eight regions of Luzon, the lockdown effectively spans three-fourths (73%) of the economy measured by gross domestic product (GDP) as of 2018. Luzon also covered 24.2 million or 57% of total employment as of 2019.

IBON estimated that the lockdown will potentially displace some 11 million workers and informal sector earners. This was computed using the latest available 2018 labor force survey (LFS) data and approximating the impact of the lockdown guidelines announced last night by Cabinet Secretary and Inter-Agency Task Force (IATF) spokesperson Karlo Nograles.

Sec. Nograles said that only private establishments providing basic necessities and production related to food and medicines will be allowed to operate. Exceptions explicitly stated include business process outsourcing (BPO) firms and export-oriented industries. All establishments still operating will be required to adopt a strict skeletal workforce. Notably, mass public transport will be suspended spanning buses, jeepneys, tricycles and trains to restrict the movement of the population. Classes and school activities are suspended at all levels. Most work in the Executive branch is also suspended.

IBON correspondingly estimated varied degrees of displacement from the outright suspensions, not being covered by exceptions, a skeletal workforce, and a drop in customer traffic. Given the structure of economic activity, the biggest number of affected jobs are going to be in the following sectors: 2.4 million construction jobs (assuming almost all affected); 2.4 million wholesale and retail trade jobs (50% affected); 1.5 million transport and storage jobs (75%); 891,000 accommodation and food service jobs (75%); and 832,000 other service jobs (50%).

These are followed by: 731,000 information & communication and administrative & support service jobs (50% affected); 618,000 manufacturing jobs (25%); 395,000 agricultural jobs (assuming 10% affected from a skeletal workforce in agricultural establishments); 381,000 real estate and professional, scientific & technical jobs (assuming almost all affected); 360,000 education jobs (50%); 269,000 arts, entertainment and recreation jobs (assuming almost all affected); and conservatively 132,000 public sector jobs (10% affected assuming continued pay but a skeletal workforce).

The relatively least amount of potential displacements is in: 95,000 financial jobs (25% affected); 34,000 health and social work jobs (10%); 24,000 mining and quarrying jobs (25%); and 10,000 utility jobs (10%).

The group said that any disruptions in the livelihoods of displaced workers and informal sector earners will have grave consequences. There are approximately 14.3 million families in Luzon. IBON initially estimated that 3.9 million of these families have a monthly income of around Php11,000 or less, 2.2 million of between Php11,000-15,000, and 2.3 million of between Php15,000-20,000. These 8.4 million families of around 32.5 million Filipinos have very low incomes and little savings.

Poor and low-income families are the most at risk from even short-term disruptions in earnings, said the group. Many among the 4.5 million families in Luzon with monthly incomes between Php11,000-20,000 even risk being pushed into poverty without expedient government support.

IBON said that the government needs to act quickly and decisively to help the poorest and most vulnerable households. Among the most important support the Duterte administration can give during this serious public health emergency is to declare a freeze on workers’ employment status and ensuring that they will continue to receive their full pay. Luzon establishments can afford this considering, for instance, the Php1.9 trillion in profits they made in 2017, the group said.

Informal sector earners can also be supported with a direct cash subsidy, said the group. The administration had previously given unconditional cash transfers to the poorest 10 million families as a smokescreen for its regressive tax reforms. The mechanism created for this can be used to give a health emergency subsidy of Php1,500 per family for a total of just Php15 billion. This is about as much as the government is giving to support the tourism industry in its COVID-19 response package.

Stopping the spread of the COVID-19 virus does not need to mean the spread of poverty, said IBON. ###