THE unemployment rate rose to 4.9% in June as more workers entered the labor force, but weak economic growth and a contraction in investment suggest the economy is struggling to generate enough jobs to absorb the influx, analysts said.
The Philippine Statistics Authority (PSA) said around 650,000 jobseekers sought to enter the workforce for the first time in June, but only about 310,000 found jobs. The underemployment rate increased to 12.1% from 11.4% a year earlier. The year-earlier unemployment rate had been 3.7%.
The economy grew 2.3% in the second quarter, slowing from 5.4% in the same quarter last year and 2.8% in the first quarter.
Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, said weak second-quarter growth and decline in investment help explain why the economy was unable to absorb new entrants to the labor force.
But the problem extends beyond the number of jobs being created, he said, pointing to the high level of informality in the labor market.
“Studies from the Philippine Institute for Development Studies and the University of the Philippines estimate that the percentage of informal workers could go as high as 82% of the labor force. That suggests that the overwhelming number of Filipino workers suffer from low wages and low productivity,” he told BusinessWorld via Viber.
Mr. Sta. Ana said most workers in the formal sector are found in what he described as “fledgling” micro, small and medium enterprises (MSMEs), while almost 90% of corporations registered with the Securities and Exchange Commission (SEC) are MSMEs.
Ser Percival K. Peña-Reyes, a senior research fellow at the Ateneo Center for Economic Research and Development, said the June figures point to an economy that is absorbing workers but not fast enough to provide productive employment for everyone entering the labor market.
More importantly, he said, the 12.1% underemployment rate shows that the problem is not simply a shortage of jobs.
“Many Filipinos who are technically employed still want more hours, another job, or a better job. In other words, the economy is generating employment, but a significant share may not provide enough income, hours, stability, or productivity,” he told BusinessWorld via Viber.
Mr. Peña-Reyes said employment generation is therefore one of the key tests of whether economic growth is becoming more inclusive and productivity-enhancing.
“That makes employment generation one of the key tests of whether Philippine economic growth is becoming genuinely inclusive and productivity-enhancing, rather than simply producing higher aggregate output.”
Mr. Sta. Ana said addressing these weaknesses would require structural transformation, involving reforms across several areas, including macroeconomic policy, industrial and technology policy, agricultural productivity, labor, education, health and institutional strengthening.
“To be sure, what the economy needs is structural transformation that will generate good or quality jobs,” he said.
He said such reforms would take years or decades to complete and need to be guided by a clear plan.
“A plan with a road map is necessary,” he said.
Mr. Sta. Ana said the government has yet to establish a clear strategic plan for such a transformation, arguing that Ambisyon Natin 2040, the long-term development vision formulated by the National Economic and Development Authority, is primarily aspirational.
“Ambisyon 2040 is but a statement of aspirations, and it sadly is no longer realizable,” he said.
Mr. Peña-Reyes said the government should focus not only on creating more jobs but also on building an economy capable of producing more stable, productive and better-paying work.
Among the priorities he identified were rebuilding the country’s tradable and industrial base, making infrastructure support economic productivity, improving the transition of young workers from school to employment, addressing regulatory and competition barriers that keep firms small, and ensuring that productivity gains translate into higher wages. He also called for preparing the labor market for artificial intelligence (AI) and treating regional development as part of the country’s jobs policy.
Mr. Sta. Ana said restoring investor confidence should be an immediate priority, particularly as the country seeks to expand productive industries and employment.
“As [a] first step, though, we have to restore investor confidence. Confidence has been shattered by the massive corruption, policy reversals, uncertainty, [and] political polarization.”
The June LFS showed that 6.11 million Filipinos remained underemployed, meaning they wanted additional hours of work or another job.
Mr. Peña-Reyes said the data underscore the need to look beyond the headline unemployment rate when assessing the health of the labor market.
The challenge, he said, is not simply whether Filipinos have jobs, but whether the economy is producing enough work that provides adequate income, stability and opportunities for higher productivity. — Mark Joseph M. Sanchez
