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Do we care about our unemployed?

/ 09:13 AM September 16, 2011

The most recent report says that Philippine unemployment remained high in July at 7.1 percent, lower than April’s reported unemployment rate of 7.2 percent but higher than last July 2010’s 7.0 percent. Improved or not, the country’s unemployment rate is still high when compared with many of our neighbors in Southeast Asia.

The situation is even worse if we consider that in July, some 19.1 percent of those reported employed are actually holding part-time jobs, which, although down from 19.4 percent in April, is still much higher than the 17.9 percent reported in the same month last year. Counting both, it means that in July this year one in four working-age Filipinos are either unemployed or looking for more work. The figure matches closely also to our last government report on poverty incidence in the country.

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The high unemployment and underemployment rates were expected because of the continued economic slowdown in the first half of the year. The economy grew only by 3.4 percent in the second quarter, down from 4.9 percent in the first quarter and from 8.2 percent in the same quarter last year.

It was easy for the government to cite the cause of the slowdown. These were due largely on overseas developments such as the rising price of oil, the earthquake and nuclear disasters in Japan, the slowdown in the US and European economies, and the trouble in the Middle East and North Africa. These are true because of their negative impact on our exports and investments. But part of the blame also goes to the inability of the new government to fully spend what was already programmed for the first half of the year because lower government expenditures also impact on the economy negatively.

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By spending less than what was programmed, the government was able to post a much lower deficit in the first four quarters or in the first year of its existence. This was very helpful in improving the competitiveness ranking of the country as reported by the World Economic Forum in its 2011-12 Global Competitiveness Report. Lower government deficit is good for macroeconomic stability and this is one of the factors considered by the WEF in its ranking. But by spending less than programmed, the government also contributed to the slowdown of the economy meantime. This is bad especially at a time when exports and investments are not doing well.

In many other countries, especially in the US where it has a specific law mandating the government to achieve full employment after suffering from massive unemployment during the Great Depression in the 1930s, the employment data is a closely watched indicator. In the US they monitor and report the employment situation every month. When the unemployment rate goes up, it becomes a national concern and actions to bring it down usually follow.

Unlike in the US, however, we monitor our employment situation only every three months. And unlike in the US, nobody here seems to care really whatever the result of the employment report is. But not so with inflation that the Philippine government, through the Bangko Sentral ng Pilipinas, is monitoring closely every month. Let the inflation report says that the inflation rate is running above the target and you can immediately see the BSP raising the rate of interest to curtail demand to bring down the inflation rate. And mind you, the BSP would do this even if the unemployment rate is still very high.

What happens to the unemployment rate when the BSP raises the interest rate? Higher interest rate discourages investment, including consumption. Both are components of aggregate demand that supports production and lowering them will mean lowering production. But by lowering production, where else will the unemployment rate go but up?

Remember that we also add more workers every year as our young people join the labor force. In July this year, we had 39.900 million people in the labor force, up from 38.933 million in the same month last year. Meaning that in one year alone, we increase our labor by 967,000 or by 2.5 percent. The fact that our unemployment has increased from 7.0 percent in July last year to 7.1 percent this year means that we have not created enough jobs to match the growth of our labor force.

But do we care if our unemployment is going up? No, because unlike the BSP that acts immediately when the inflation rate goes, not one agency in the government moves when the report on rising unemployment comes. Not even Congress whose members are more concerned with making their pork barrels or their share of the government projects going to their districts bigger every year. High unemployment had been with us for so long already. Have we heard of anyone in Congress writing a Full Employment Bill similar to the US Full Employment Act? No. What about Malacañang? Never heard yet. What about the Department of Labor and Employment?

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TAGS: Department of Labor and Employment (DOLE), job, jobless rate, Unemployment
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