Not so bad, but not so good eitherBy Cielito F. Habito |Philippine Daily Inquirer
Jobless Filipinos breached the three-million mark last April, according to the quarterly Labor Force Survey (LFS) of the National Statistics Office (NSO). Coming with a stellar 7.8-percent economic growth in the first quarter, it seemed to negate what would otherwise be a streak of good economic news that we hadn’t seen for a while. In my usual “PiTiK test”—for presyo (prices), trabaho (jobs) and kita (income)—the good news is two out of three. Inflation has been low and steady (at 2.6 percent), aggregate output and income have been growing fast and accelerating, but—and this is the black eye—jobs appear to have declined.
The April LFS data showed total jobs falling by 21,000 since last year. Last October, the LFS reported a shocking 882,000 year-on-year job decline. The January 2013 data reflected a more reassuring 606,000 year-on-year gain. But one has to be alarmed when the data reflect actual job contraction in two out of the last three consecutive quarters, whereas we should be consistently expanding jobs by about a million every year to match the number of new labor force entrants. Recently, I ventured that against the impressive output growth numbers, these job numbers didn’t make sense. Well, it turns out there’s a simple explanation for the puzzling data, and President Aquino had in fact painstakingly tried to explain it himself when the jobs data were released. But it seems hardly anybody listened to, or understood (or maybe believed?), his quite logical explanation.
The story is familiar to me because I distinctly recall having had to explain the exact same thing on at least one occasion back in the 1990s when it was still my job to announce and interpret these data, as then head of the National Economic and Development Authority. Last April’s LFS data showed the agricultural sector losing 624,000 jobs, even as industry and services posted otherwise impressive gains of 224,000 and 380,000 jobs, respectively, over the past year. But it turns out that the agricultural job head count taken last April was not directly comparable to the same head count taken in April 2012. It’s somewhat like measuring your weight on an empty stomach today, after having measured it yesterday following a big meal, and believing that your diet is working because the scales say you’re one pound lighter.
In the case of the LFS, the jobs survey will normally take place within the cropping season, especially for our major crops of rice and corn. The employment survey was apparently taken at the height of the planting season last year. This year, however, the NSO says that the survey was taken when there was still little farm activity. This was because either climate-change-induced shifts in weather patterns or simply unusually adverse weather this year had prompted a delay in the cropping timetable. The result, then, was like the dieter’s dubious weight loss. That the recorded job loss in agriculture was so large seems to lend credence to the explanation. Given this, I’m inclined to think that the apparent decline in actual number of jobs from last year’s levels was actually illusory. The jobs picture wouldn’t be so alarming if, instead of the dubious loss of 624,000 farm jobs recorded, we instead used the actual average yearly increase of around 100,000 farm jobs, based on the past six years’ data. Rather than losing 21,000 jobs in aggregate, then, we would have actually registered a gain of more than 700,000 jobs last April—not so bad, but then still not so good either.
Even with this adjustment, there remain underlying weaknesses in our employment picture that cannot be denied. One, we are still barely able to generate enough jobs just to match the growth in our labor force. This makes overseas employment a continuing necessity, rather than a mere option, for most of our migrant workers. Two, much of the employment available in our economy, especially in agriculture, remains too highly seasonal and informal, hence unable to gainfully employ our rural workers steadily throughout the year. We need more nonfarm job opportunities that will occupy those workers in the off seasons, such as when last April’s labor survey was taken. A key direction to me is to make agricultural processing a more widely dispersed, small- and medium-enterprise-based activity than it is now, where single large-scale processors located in market centers tend to dominate the scene. It will not only expand rural employment; it will also raise prices that farmers receive for their products, as it will no longer be set by a single large processor dictating his buying price at his whim.
Three, even as industry jobs have begun to show encouraging uptrends in recent years, signaling a nascent resurgence in manufacturing, we need to see even more vigorous and more sustained growth there. The data clearly suggest that domestic investors have become much more forthcoming with their bets on our own economy. Yet we continue to be at the tail end among our neighbors on attracting foreign direct investments. Much still needs to change in our infrastructure, our peace and order, our bureaucracy and our rules if we are to get abreast of our neighbors in investment rates, and consequently, employment rates.
Franklin D. Roosevelt once said: “Not only our future economic soundness but the very soundness of our democratic institutions depends on the determination of our government to give employment to idle men.” He didn’t mean that the government should directly create those jobs, of course. But there is certainly much that it can do to entice the job creators to step right up.
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