Next admin should address deepening jobs crisis–IBON

March 15, 2016

by IBON Foundation

#BeyondElections2016 | Research group IBON warned that the steadily falling labor force participation rate (LFPR) and growing underemployment are signs of underlying problems in the labor market, even as unemployment reportedly fell in January 2016. The next administration will need to reverse the neoliberal policies of the Aquino administration to improve the jobs situation, said the group.

The recent January labor force survey (LFS) reports employment increasing by 756,000 from 38.5 million in January 2015 to 39.2 million in January 2016. The number of unemployed fell by 288,000, from 2.7 million to 2.4 million, and the unemployment rate decreased from 6.6% to 5.8 percent.

According to IBON, the decline in unemployed Filipinos and in the unemployment rate since 2014 are played up as signs of an improving economy. Yet though important these are not the sole indicators of the employment situation. On the contrary, taking the LFPR and underemployment into account points to deep labour market problems.

The group noted that the LFPR, which  measures the share of the working age population working or looking for work, has fallen to economic crisis levels in January 2016. The reported 63.4% LFPR is practically as low as the 63.3% rate in January 2009 or right after the global financial crisis erupted in 2008. It is also already the lowest in over 30 years since averaging just 62.9% annually during the 1981-1985 economic crisis period in the closing years of the Marcos dictatorship.

The working age population grew by 1.1 million in January 2016 from the year before but the labour force only grew by a much smaller 468,000, IBON observed. These results are consistent with growing numbers of discouraged workers. Unemployed workers are dropping out of the labour force, potential new participants are not bothering to join the labour force, or both. Lower labour force participation also lowers the reported unemployment rate.

IBON said that there are moreover signs that the quality of employment is getting worse. The number of underemployed rose by a significant 843,000 from 6.9 million in January last year to 7.7 million this year. The 19.7% underemployment rate in January 2016 is slightly higher than the 19.4% in January 2011 at the start of the Aquino administration. As it is, some four out of 10 workers are non-regular or agency-hired while over six out of ten employed are non-regular, agency-hired and in the informal sector.

The group attributes the worsening jobs situation to neoliberal economic policies that have stunted Filipino industry and kept local agriculture backward. This structural problem is aggravated by growing labor flexibilization and contractualization. The next administration must not continue these policies if it does not want the jobs situation to deteriorate further, IBON warned.