Unemployment: bad since 2005

THE HEADLINE of BusinessWorld (BW) last Monday was: “Unemployment increasing: 11.3 million Filipino adults jobless, says SWS.”

What does this new report really mean? Let us examine the trend (that is, movements over time) and status (that is, the current situation) of unemployment.

The trend of unemployment. The BW report is pointing out that the SWS unemployment figure of 27.2 percent in March 2011 is due to successive increases from 23.5 percent in November 2010 and 18.9 percent in September 2010. From a three-quarter perspective, that’s unfavorable, and surely the administration and all development agents should be concerned.

Yet, from a perspective of the last six years, such high unemployment is not unusual. The annual averages of the SWS quarterly unemployment percentages in recent years have all been in the twenties: 22.6 in 2005, 26.4 in 2006, 25.3 in 2007, 28.6 in 2008, 29.0 in 2009, and 22.5 in 2010. From 2005 to 2010, unemployment even exceeded 30 percent three times (with a record high 34.2 percent in February 2009), and was below 20 percent only four times.

SWS tracking of unemployment began in September 1993, as a by-product of its quarterly surveys of adults. The outstanding revelation of the entire SWS series is that unemployment had formerly been much lower, in 1993-2004, before rising to the heights of 2005-2011. This is quite clear from the line chart on BW’s front page and in the SWS website.

Here are the averages of the earlier SWS quarterly unemployment percentages: 13.6 in 1993 (2 quarters), 10.3 in 1994, 10.2 in 1995, 8.7 in 1996, 8.7 in 1997, 8.7 in 1998, 9.0 in 1999, 10.7 in 2000, 9.8 in 2001, 8.0 in 2002, 10.8 in 2003, and 15.8 in 2004.

The fact that unemployment went into high double-digits starting 2005 clearly implies that the structure of economic growth turned relatively jobless compared to earlier years. Is it mere coincidence that the long-term perspectives of unemployment and of hunger are so similar to each other (see my April 9 column “Hunger: the most urgent problem”)?

Current unemployment. The March 2011 SWS survey found that, out of the projected national population of 55.3 million adults, some 30.2 million have work at present (“may trabaho sa kasalukuyan”), and 11.3 million do not have work but are looking for it. Therefore the estimated labor force is 30.2 + 11.3 = 41.5 million, i.e. this excludes those not looking for work. Dividing the number unemployed by the size of the labor force gives the SWS unemployment rate of 27.2 percent.

Unemployment in March 2011 is a fantastic 59 percent among those aged 18-24, an average 27 percent among those 25-34, and drops steadily with age, to 17 percent among those 55+ years old. It is 39 percent among women, or more than double the 18 percent among men.

Among the families of the unemployed, 19.3 percent suffer from moderate hunger, and 8.4 percent suffer from severe hunger. Among families of the employed, moderate and severe hunger are only 14.0 percent and 4.5 percent, respectively. The correlation is clear.

When classified by job history, the most common type of unemployed are those who had resigned from their jobs. They account for 10 of the 27 percent unemployment. Did they expect better work and/or better pay? Were their jobs and talents mismatched? Could they not get along with superiors and workmates? These are issues of the job market and the workplace.

Almost as common are those who involuntarily lost their jobs, due to non-renewal of their engagements or projects, outright lay-off, or closure of their employers. They account for 9 percentage points of unemployment, and are the consequence of poor performance of the economy in general.

Finally come the first-time job-seekers, accounting for 7 points of unemployment. Born 18 to 24 years ago, they survived to adulthood, and now need jobs. There would not have been as many, if families had been more able to achieve their desired number of children.

* * *

Comparison of definitions. The SWS data series has always defined the unemployed as those (a) without work, and also (b) looking for work. This is the traditional definition, in use in Philippine statistics ever since the 1950s, if not earlier. Maintaining a consistent standard of measurement is critical, for the data to be valid for analysis over long time-periods.

The official definition of the unemployed had been the traditional one, until it was revised in April 2005 to also require (c) a declaration of availability for work within two weeks if an opportunity arises. This typically reduces the size of official unemployment, and the size of the official labor force.

For instance, with application of the availability-criterion to the SWS March 2011 survey, the officially-seen unemployed would become only 16.8 percent of the officially-defined labor force. So it is understandable why some uncharitable people might call it window-dressing.

Unfortunately, the revision also resulted in a discontinuity in official unemployment data, with official numbers starting April 2005 no longer comparable with earlier official ones based on the traditional definition. This discontinuity benefits the Macapagal-Arroyo administration.

Another difference (but a minor one) between the SWS and the official statistics on unemployment is the age-coverage, namely 18+ years for the SWS data versus 15+ years for the official data.

(I thank Malou Laxamana of SWS for special tabulations used here.)

* * *

Contact SWS: www.sws.org.ph or mahar.mangahas@sws.org.ph.