* My article in BusinessWorld on June 11, 2019.
The Philippine Statistics Authority (PSA) released the
Labor Force Survey (LFS) April 2019 last week and the result was generally good
compared to April 2018: both unemployment and underemployment rates in 2019
have significantly declined, and labor force participation rate (LFPR) has
increased. Thus, the labor force Q1 data seem to contradict the GDP Q1 data
where growth has decelerated further.
Are things in the labor force really improving? To answer
this question, I backtracked and got data for the past five years, not just the
last year. The numbers are interesting (see table 1).
One, the LFPR is declining. Meaning more people are
postponing joining the labor force, choosing instead to pursue more studies or
internships, or bum around. The K+12 must have contributed to this trend too.
When LFPR is declining, both unemployment and underemployment rates tend to
decline because those who join the LF are more equipped and more confident that
they will be hired as full-time or part-time workers or entrepreneurs.
Two, both rates of unemployment and underemployment
(people who work below 40 hours a week, or those already working above 40 hours
but want additional work) are indeed declining and hence, the employment rate
is increasing.
Three, compare election years 2016 (Aquino) and 2019
(Duterte) — higher LFPR in the former. In terms of absolute numbers in LF, 43.3
million vs. 44.5 million, or an increase of only 1.2 million in LF over three
years, an average of 0.4 million per year was added to the LF under the Duterte
administration. This is not good.
Therefore, labor force Q1 2019 data is actually not as
rosy as it initially looks, and the numbers support — not contradict — the
macro GDP growth deceleration: 6.9% in 2016, 6.7% in 2017, 6.2% in 2018, 5.6%
in 2019 Q1.
Among the employed people, how is the labor productivity
of the Philippines compared with its neighbors in East Asia?
I checked the International Labor Organization (ILO) Database (ILOSTAT) for Key Indicators of the Labour Market (KILM).
Numbers show that ours is lower than Indonesia, Thailand, Malaysia, but higher
than average for world lower middle income (see table 2).
I also checked the same database from ILOSTAT-KILM for
the unemployment rate covering many countries. There seems to be wrong data for
the Philippines 2017: an unemployment rate of 2.6%, and a combined rate of
unemployment and potential labor force (LU3) of 5.9%. What??
The market-oriented reforms for efficiency (MORE) for the
Philippines in the labor sector — more competition and deregulation, more
investments and entrepreneurship, investors hiring more workers or people
hiring themselves as entrepreneurs — mean faster growth.
The main hindrances to this — more/higher taxes and fees,
more bureaucracies and business permits that take a long time to be secured,
government-created monopolies and oligopolies via congressional franchising,
agency and local government franchising, and low respect for rule of law.
We need fewer hindrances, we need more growth, more
employment, more labor productivity and, hence, higher income for workers and
entrepreneurs.
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See also:
BWorld 336, Inflation target below 2% is possible, June 10, 2019
BWorld 337, Smart energy: Use more conventional sources, June 11, 2019
Taylor's Productivity Improvement and Operator Remuneration - Incentive System
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