Rapid economic growth but with less jobs

The year 2012 was a banner year for the Aquino government, what with the government hitting or even surpassing the high end of its 5 percent to 6 percent gross domestic product (GDP) growth target set for the year and its other successes in removing from office the Chief Justice who was perceived to be corrupt and in passing the controversial Reproductive Health and Sin Tax bills.

Coming from a disappointing 3.4 percent GDP growth in 2011, the year that just ended was indeed a banner year for the Philippines economically. This is remarkable in light of the slowing global economy which up to now is still hampered by lingering effects of the 2008 to 2009 Great Recession. It is also sweet this time when we find that the Philippines, which lagged behind its more prosperous neighbors in Asia in GDP growth for many decades in the past, is suddenly on top in the GDP growth race.

But the national economy should not be judged solely by its growing efficiency or ability to produce more goods and services, including its capacity to maintain stability as shown by the lower inflation rates reported for most of the months last year. It must also be judged by the extent through which it generates jobs, especially among the poor, so that they can partake of the good things that come with higher GDP.

Using government statistics, what I found out was that in the October 2012 Labor Force Survey (LFS), the last quarterly LFS for the year and the month in which the economy is supposed to be on high gear in preparation for the Christmas Season, the employment rate was placed at 93.2 percent which corresponded to a 6.8 percent unemployment rate. This was lower than the 93.6 percent employment rate (6.4 percent unemployment rate) recorded for the same month of October in the previous year.

The above information looked good enough if not for the fact that the total number of employed workers actually declined by close to a million or by 909,500 from October 2011 to October 2012. In light of the reported rapid economic growth in 2012, how was this decline in employment made possible?

I look more deeply into the result of the October 2012 LFS and these were the things I found. First, the population 15 years old and over increased by 1.7 percent from 62.168 million in October 2011 to 63.253 million in October 2012. Second, the labor force participation rate (LFPR) decreased from 66.3 percent in October 2011 to 63.9 percent in October 2012. When the LFPR decreases it could actually be a sign that jobs are scarce so that many people opted to be out of the labor force by not actively seeking work that they believe are non-existent or harder to find.

As a result of the lower LFPR, I found out that despite the increase in the working age group the total labor force actually declined from 41.217 million in October 2011 to 40.419 in October 2012. Based on the reported employment rates, I also found out that in October 2012 only 37.670 million were employed, which was lower than the 38.580 total employed workers in October 2011. This represented a loss of 909,500 workers. Not surprisingly, the total number of unemployed also increased by 111,000 from 2.638 million in October 2011 to 2.749 million in October 2012. In the National Statistics Office press release of the October 2012 LFS only the labor force participation, employment, unemployment and underemployment rates were mentioned but the actual data can be found in the accompanying tables which I also compared with the October 2011 LFS tables.

Why am I concerned with the dismal employment record and do not just focus on the phenomenal GDP growth last year? It is because what matters first to our people, especially the poor, is to be employed or self-employed in order to earn for the sustenance of their families. Growth without jobs added is useless to many people who are either unemployed or underemployed. Together, the total unemployed and the underemployed reached 9.906 million or 24.5 percent of the labor force last October. This is not a joke not only because of the extent of the country’s waste of manpower but also of the distress that many workers have to suffer daily in looking for food and other basic necessities in life for their loved ones when they are unemployed or underemployed.

Rapid economic growth without enough jobs being created to absorb the unemployed and underemployed and new entrants to the labor is not participatory, not inclusive and not sustainable. When economic growth is exclusive, there is no way that we can wipe out much of our poverty in the country which in the last count in 2009 still remained high at about a fourth of our population based on the new method applied by the government to measure poverty or a third of the population using the old method. A country that is populated by many poor people cannot sustain rapid economic growth. For lack of domestic demand, it is bound to falter which means that in the long run economic growth will remain mediocre in the future and no different from what we experienced in the last four or five decades when we were left behind by our neighbors.

Confronted with this grim job statistics, what is the Aquino government going to do? One thing it can do, for example, is to redouble its effort in creating new jobs by encouraging more private sector investments in new industries, particularly in exports, and direct government investments in infrastructure and education that the country needs so badly to become more competitive globally in attracting more investments and raising national productivity.