The unemployment sierra

The headline “Unemployment up—SWS” in last Thursday’s BusinessWorld compares the adult unemployment rates of 24.0 percent in December 2011 and 20.2 percent in September 2011, found by the last two SWS national surveys.

For 20+ percent of Filipino adults to be unemployed is, of course, a very serious social and economic problem. However, it is more important to recognize that this problem has prevailed, not just for the past two quarters, but for the past seven years!

On mountains … In 2011, the percentage of the unemployed was 27.2 in March, 22.9 in June, 20.2 in September, and 24.0 in December, or an average of 23.6 for the entire year. This was slightly above the average unemployment rate of 22.5 percent in 2010.

However, the average percentage of the unemployed was even worse in the previous four years: 29.1 in 2009, 28.6 in 2008, 25.3 in 2007, and 26.4 in 2006. The first time that the average unemployment rate exceeded 20 percent was in 2005, at 22.6 percent.

Formerly, on plains … Yet adult unemployment in the Philippines has not always been so severe.  When SWS initially measured it in 1993, it was only 13.7 percent (the average of two surveys).

In the years that followed, the average percentages were: 10.3 in 1994, 10.2 in 1995, 8.7 in 1996, 8.7 again in 1997, 8.7 again in 1998, 8.4 in 1999, 10.7 in 2000, 9.8 in 2001, 8.0 in 2002, 10.9 in 2003, and 15.8 in 2004.

Thus, unemployment was low in the 11-year stretch of 1993-2003, before climbing to a foothill of 15.8 percent in 2004. Then, from 2005 to the present, it has been mountainously high—traversing a veritable “unemployment sierra”—peaking at 34.2 percent in February 2009.

The topography of unemployment, poverty and hunger.  The sierra of unemployment described here is strikingly contemporaneous with the “terrace of poverty” at about 50 percent in 2004-2011 (see my column, Inquirer, 11/19/2011), and the “hunger plateau” of 18 to 20 percent in 2007-2011 (see my column, Inquirer, 10/29/2011).

I think the timings of these three forms of economic suffering are too close to be dismissed as accidental.  Ferreting out the common determinants, in the past several years, of failures in creation of jobs and in maintenance of the real value of earnings from work deserves to be high on the agenda of economic historians and econometricians. So far, what is definite is that growth of the gross domestic product has not resulted in any measurable relief of these sufferings.

Unemployment significantly increases household-vulnerability to hunger.  It was reported recently (BusinessWorld, 1/30/2012) that 22.5 percent of Filipino households suffered from involuntary hunger in the last quarter of 2011. Moderate hunger (experienced only once or a few times) was 17.7 percent, and severe hunger (experienced often or always) was 4.7 percent.

Since the survey looked into both unemployment and hunger, it is possible to examine these factors together. Tabulations show that households to which unemployed adults belong have a hunger rate of 29.3 percent, i.e. well above average. (This phrasing is precise, though awkward, because hunger is surveyed as describing the household in toto, not its members individually.)  Among such households, the moderate hunger rate is 20.7 percent, and the severe hunger rate is 8.6 percent.

On the other hand, households to which employed adults belong have a hunger rate of 18.6 percent, i.e. well below average. These households have a moderate hunger rate of 14.6 percent and a severe hunger rate of 4.0 percent.

This means that the households of the unemployed have moderate hunger that is 6.1 points, amounting to 6.1/14.6 = 42 percent, higher than that of the households of the employed. Worse yet, their severe hunger is 4.6 points, or 4.6/4.0 = 115 percent, higher than that of the households of the employed.

Unemployment slightly increases household self-ratings as poor.  It was also reported (BusinessWorld, 1/20/2012) that 45 percent of household heads rate their families as mahirap (poor), and that 36 percent of them rate their families’ food as mahirap, as of December 2011.

Tabulations show that self-rated poverty is 49 percent among households of the unemployed, compared to 43 percent among households of the employed, or a slight disadvantage of 6 points. Self-rated food poverty, on the other hand, is 39 percent among households of the unemployed, compared to 35 percent among households of the employed, or a slight disadvantage of 4 points.

This analysis shows that unemployment has much more impact on suffering from hunger than on the feeling of being poor. The government could verify this with official data if it would use its quarterly Labor Force Survey to measure, not only unemployment, but also hunger and poverty.

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The SWS unemployment rates pertain to adults, i.e. persons 18 years old and over, because they are a byproduct of surveys of the voting-age population. Official unemployment rates, on the other hand, pertain to persons 15 years old and over, because 15 is the official minimum working age.

The SWS surveys use the simple, time-honored definition of the unemployed as persons currently not working but looking for work. The definition is the same at all points of the data series, and so has no effect on the time-path of measured unemployment.

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Contact SWS: www.sws.org.ph or [email protected]. Thanks go to Josefina Mar of SWS for tabulations specially done for this column.