The number of jobless Filipinos declined in January from a year earlier, the government reported on Friday, which one analyst said is an encouraging sign for the economy even though the gain may be short-lived.
Results of the latest round of Labor Force Survey (LFS) released by the Philippine Statistics Authority (PSA) showed that unemployment rate in the country slipped to 5.8 percent in January from 6.6 percent a year earlier.
The unemployment rate in January 2015 did not include the island of Leyte that was hit by Supertyphoon Yolanda in November 2013.
Including Leyte in the January 2016 LFS had almost no effect on the country’s overall unemployment rate of 5.8 percent, according to the PSA.
The National Economic and Development Authority (NEDA) said the latest unemployment rate means that the number of jobless persons declined by 279,000 to 2.4 million from 2.679 million a year ago.
The agency traced the gains to broad-based improvements coming from most regions, across all age groups, almost all educational levels, and for both men and women.
“Our labor market was boosted by better employment opportunities in the industry and services sectors. This performance also brought the unemployment rate to its second lowest in the decade, with the lowest recorded in October last year,” Socioeconomic Planning Secretary Emmanuel Esguerra, said in a statement.
“With the favorable labor market situation in January 2016 and the continued slowdown in the national unemployment rate, the Philippine Development Plan target of 6.5 percent to 6.7 percent for unemployment rate in 2016 is likely to be achieved,” added Esguerra, who is also NEDA director general.
The PSA data also showed that the number of Filipinos who acquired jobs during the period also improved from January 2015.
Employment rate stood at 94.2 percent, up from 93.4 percent a year ago, which reflects the continued dynamism of the economy, according to NEDA.
The agency explained that number of employed Filipinos grew by 2 percent to 39.2 million with an estimated 752,000 additional jobs created between January 2015 and January 2016.
The industry and services sectors generated 508,000 and 1.18 million additional jobs, respectively, in January 2016, NEDA said.
Despite the improvement, the PSA data showed the number of underemployed persons, or those who work for less than 40 hours in a week worsened during the period.
The underemployment rate rose to 19.7 percent from 17.9 percent year-on-year, it said.
The NEDA said there were approximately 7.7 million underemployed persons, most of whom were wage and salary workers in private establishments.
“Despite the increase in underemployment, positive results in indicators of quality of work, such as the mean hours of work, class of workers and the full-time employment, signal that efforts to foster more remunerative employment are gaining traction,” Esguerra said.
The agency said the number of remunerative and stable wage and salary workers increased by 2.7 million and their share in total employment greatly surged to 63.3 percent in January 2016 from 57.5 percent in January 2015.
The number of full-time workers also increased by 2.8 million, NEDA said.
The increase in full-time employment was in contrast to an overall decline in the labor force participation rate (LFPR), which according to the PSA data declined to 63.3 percent in January from 63.8 percent a year earlier.
Excluding Leyte, the LFPR also eased to 63.4 percent from 63.7 percent a year earlier.
The NEDA explained that the slight decline in LFPR was partly due to the decision among the youth to opt out of the labor force to attend school and become full-time students.
Encouraging, but possibly short-lived
Justino Calaycay Jr., analyst at A&A Securities Inc., said the LFS numbers are encouraging as more people with jobs generally translates to higher consumer spending to provide a boost to the economy, but suggested the benefit could be temporary.
“The improvement could be cyclical, as some may have found temporary employment with election campaign organizations leading up to the May polls,” he said.
Calaycay said this could also partly explain the divergent move in underemployment.
“Election-related jobs are for the most part unsustainable. We may see a ‘re-normalization’ of the rates in the next quarters as these jobs are ‘eliminated’ from the list. Nevertheless, a 5.8 percent unemployment rate level is technically a ‘full-employment’ condition which I think is not exactly where we are at present,” he said.
Improving skills, agriculture
To further improve the employment situation in the country, NEDA said the government should focus efforts on equipping students with industry-relevant competencies and skills, and increasing opportunities for work experience.
Esguerra stressed the need to urgently address the continued lag in employment in the agriculture sector, which recorded a net employment loss of 935,000.
This is consistent with the weak agricultural output given the El Niño phenomenon, which peaked in December 2015.
“Agriculture accounts for over a quarter of total employment. This highlights the need to further improve the resiliency of farmers to mitigate effects of unfavorable weather conditions such as the El Niño which may persist until May 2016,” the NEDA chief said.
“Also, enhancing skills and improving capacities of affected farm workers is important for them to have a smoother transition to more stable work,” he added.