The latest release from the June 2009 SWS survey, ?Adult unemployment eases to 25.9%,? led to some reactions that struck me as looking at the trees, but missing the forest.
Looking at the trees. Calling it ?good news,? deputy presidential spokesman for economic affairs Gary Olivar said, per last Tuesday?s BusinessWorld (BW): ?It?s further evidence of the success of the president?s economic stimulus plan, which in turn was made possible by the fiscal reforms and the momentum from eight years of continuous growth on her watch.?
On the other hand, University of the Philippines professor of labor and industrial relations Rene Ofreneo tried to question the improvement in unemployment by saying that it ?can only be explained by a surge in underemployment, for example, a rise in part-time, seasonal, low-paying jobs.?
Was there an improvement, or not? Well, it was correct for the report to say that unemployment ?eases,? because it did fall from a record-high of 34.2 percent in the previous SWS survey last February. The significant 8.3 percent decline is something to be thankful for; yet the new rate of 25.9 percent is still much too high for comfort. I would say that unemployment was terrible at the start of this year, and improved by becoming merely very bad by the middle of the year.
View the forest from one end to the other. From the entire chart of the SWS statistical series of adult unemployment from September 1993 to June 2009, as published on the front page of the Sept. 8 issue of BW, and filed on the SWS website, it is striking to see that the unemployment rate was always below 15 percent before mid-2004, and always above it afterwards.
To be precise, adult unemployment ranged between 5.4 percent (in February 1998) and 14.6 percent (in September 1993) during the 11-year period from mid-1993 to mid-2004. In those years, unemployment can be described as ranging from low to moderate.
Beginning August 2004, however, adult unemployment ranged between a bad 16.5 percent and the terrible record-high of 34.2 percent in February 2009. In short, unemployment grew swiftly, and has been very high throughout the last five years.
Below are the simple annual averages of the rates of adult unemployment in the SWS survey series. In parentheses is the number of surveys on which each annual average is based:
The numbers above depict two contrasting forests?one forest in 1993-2004 with the average percent unemployment either single-digit or in the teens, and another forest in 2005-2009 with the average percent in the twenties, or more. They make it apparent that the ?eight years of continuous growth? cited by Mr. Olivar have not trickled down to the unemployed, any more than they have trickled down to the hungry, as I have often argued in this space.
A narrow comparison of the two unemployment rates of June 2009 and February 2009, without considering the history of unemployment rates in the entirety of the past 16 years, is only a look at two nearby trees in the same forest. Thus the unemployment rate, which averages 30 percent this year so far, needs to be reduced by 15 or more points to recover the situation of 1993-2003. That means cutting it in half, a tall order indeed.
Job history of the unemployed. When space in the quarterly SWS questionnaire permits, we find out if the unemployed respondent (traditionally defined as not working, but looking for work): (a) is looking for work for the first time, (b) voluntarily left his/her previous job, (c) lost work because the employing company shut down, (d) completed a work contract, with no renewal or replacement, or (e) was laid off by the previous employer. The last three categories cover those who lost employment due to poor business conditions.
In the past five quarters, the first-time job seekers have been stable at 5 or 6 percent of the labor force. Those who said they had left their previous jobs, presumably in search of better pay and/or working conditions and environment, have fluctuated widely, from 9 to 14 percent of the labor force; the low 9 percent figure was that of June 2009. Those without work due to closure of their employers have been from 1 to 3 percent of the labor force.
Those unemployed due to non-renewed contracts plus those laid off constitute those retrenched by employers who stayed in business. Such retrenchment ranged from 8 to 12 percent in the last five quarters. Those with non-renewed contracts were a stable 1-3 percent of the labor force, in four surveys from June 2008 to February 2009, but expanded to 7 percent in June 2009. On the other hand, those laid off were a stable 8-9 percent in the said four surveys, but fell to only 1 percent of the labor force in June 2009. This may be a sign that companies are changing the composition of their workforces?away from hiring regular employees and towards hiring contractual employees instead.
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Contact SWS: www.sws.org.ph or mahar.mangahas@sws.org.ph.
