MANILA, Philippines – High unemployment is expected to persist despite the country’s strong economic performance, according to the National Economic and Development Authority.
“Don’t expect initially unemployment and underemployment to drop sharply with economic growth,“ NEDA Director General Arsenio Balisacan said during the release of the Labor Force Survey (LFS) results on Tuesday, September 10.
The July 2013 LFS showed that unemployment in the country rose to 7.3% in July from 7% in the same month in 2012 despite a 7.6% economic growth for the first half of 2013.
Balisacan explained that the country’s better-than-expected economic performance encouraged more workers to join the labor force.
“The confidence that we create in (the) economy also expands the participation of people to get into the market,” he noted.
Balisacan pointed out that the 620,000 new jobs generated were not enough as labor entrants also increased to 1.9% in July 2013 compared to the 1.7% recorded in the same period last year.
“The growth rate of the labor force was high. More entered the labor force compared to the capacity of our economy to add jobs. We absorbed 620,000 jobs, but the labor force increased by 777,000, “ the NEDA chief noted.
This trend, Balisacan said could continue as the economy expands.
“Labor market is very volatile because we are experiencing this rapid growth which is over a couple of quarters lang, we expect that to stabilize down the road when we have grown sufficiently, over a long period of time, “he added.
Aside from more entrants to the labor force, Balisacan noted, that higher unemployment is also caused by the shift in employment from one sector to another.
“Some growth in a dynamic economy can mean that inefficient industries are swiped and new ones come in,” Balisacan said.
Agriculture sector to shed more jobs
The latest labor force survey showed that jobs in the agriculture sector increased by 1.5% in July 2013 from a year ago, after contracting in the last 4 quarters.
Balisacan, however, warned that unemployment in the agriculture sector is expected to rise as the country slowly shifts to industrialization.
“If economy continues to grow, with industry and services taking off, the sector that would be shedding jobs would be agriculture, “ he added.
The industry sector grew by 10.3% while services sector posted a growth of 7.4% in the second quarter of 2013, based on data from the National Statistical Coordination Board.
The agriculture sector, which employs 1/3 of the labor force, posted a negative 0.3% growth in the same period.
The NEDA chief said this volatility in the labor force is common for emerging economies experiencing rapid growth.
“The experiences of emerging countries, especially those coming from the same base like us, as they grow rapidly, unemployment and underemployment can still persist to be high. Reason for that is a lot of job switching [that] could be taking place,” Balican explained.
Revive the manufacturing sector
With the expected decrease in the number of jobs available in the agriculture sector, Balisacan said manufacturing subsector should be revived to provide high-quality and higher paying jobs for the agricultural workers.
“Manufacturing is the heaviest user of agricultural output… That growing the sector means increasing demand for agricultural output, which means better business and more gainful work for our farmers and fishermen, “ he noted.
While more jobs were created for the agriculure sector, manufacturing subsector posted negative growth in employment at negative 0.9%
Balisacan said more investments in the industrial sector, particularly in manufacturing would address problems in unemployment and underemployment.
“The quality of jobs that we generate depends on the amount of investment we are generating especially in non-informal and non-agri, particularly manufacturing and industrial sector. Pag lumalakas ang investment dun dumadami ang quality jobs (When investments in industrial and manufacturing are strong, quality jobs also increase), “ the NEDA chief added.
Balisacan said if the economic growth of the country can be sustained, then unemployment could be reduced to 6.5% by 2016.
“We’re in the process of validating that (targets) because that presumes that [the] economy is growing at a certain rate — 7% to 8% — and that certain sectors in the economy are growing at a certain rate. There is a certain relation between output growth and emplyoment growth, “ he said. – Rappler.com