One of the common knocks against “Aquinomics” is that there is a painfully obvious hollowness to it – yes, the economy is growing at an impressive rate from a certain point of view, but the results of this growth are not being felt, the evidence for which is the persistence of three negative indicators: Unemployment, poverty, and income inequality which have remained at fairly consistent levels and perhaps even increased a bit during the Philippines’ ‘remarkable’ positive economic run.
One of those indicators, however, may be a little more complicated than it appears. In a just-released policy note, Jose Ramon G. Albert, a senior research fellow at the Philippine Institute for Development Studies (PIDS), makes a strong case that the Philippines is not really experiencing “jobless growth.”
If you think about it, the assertion makes sense in a very general way. Given that the size of the workforce constantly increases at a rate similar to the growth in the overall population, the persistence of the unemployment rate at about 7 percent—the official rate has ranged between 6.4 percent and 7.5 percent throughout President Aquino’s term so far—means that some jobs have indeed been created, at least enough to absorb the increase in labor force.
Dr. Albert—who knows a thing or two about statistics, having obtained a doctorate in this particularly mind-bending discipline and serving as the Secretary General of the National Statistical Coordination Board (NSCB)—presents a variety of data to bolster his argument that economic growth in the Philippines is not really “jobless,” and that the conventional way of looking at common indicators may tend to camouflage the actual reality.
For instance, the correlation between poverty and joblessness does not exist in quite the way we think it does, something which other PIDS researchers have picked up on as well. In all three of the most recent Family Income and Expenditure Surveys (FIES)—2006, 2009, and 2012—poverty incidence was higher among employed people than among the unemployed, roughly 6 percent higher in 2006 and 2009, with the gap narrowing to about 3 percent in 2012. That bit of information squares with other research results that have found that unemployment is significantly lower among the poor than other income classes. The simple explanation for that is the poor do not have the luxury of not working for an extended period of time; survival depends on engaging in some kind of productive activity.
Another important relationship is between economic growth (measured by GDP) and employment growth. Albert presents data that shows that since at least 2007, growth in full-time employment has paralleled GDP growth, while part-time employment has the opposite pattern (grows when the economy declines). The only exceptions were in 2008, when part-time employment declined along with full-time employment and GDP as a result of the global financial crisis; and 2012, when full-time employment growth eased as GDP growth improved, for reasons that are not explained. The data suggests that the opposite movements of full- and part-time employment partly explain why changes in the unemployment rate are consistently incremental; the net of part-time, mostly agricultural jobs lost and full-time jobs gained in the industry or services sectors (or vice versa), tends to be small.
Albert’s study in toto leads to a couple of important conclusions. First, while the country’s economic growth trend cannot be accurately described as jobless, the rate of job growth is nevertheless too slow, and more importantly, not enough of the right kinds of jobs are being created. Albert makes the recommendation that in order to reduce unemployment in the short term, employment growth in agriculture should be encouraged, but because the agricultural sector is highly volatile, the long-term goal should be to expand industrial employment—the same path followed by the Philippines’ regional neighbors that are continuing to outpace this country in development.
The second conclusion that comes out of the report is that there is probably very little that the government can do to “create jobs,” apart from large public works projects, which the current government does not directly engage in anyway, and which, in any case, are only a temporary solution. Policy actions to encourage job creation can help, but since their effect is indirect, they should be planned appropriately.
The thrust of the present government’s efforts are not, in view of the foregoing, appropriate at all. Because of the mistaken belief in the mantra “create jobs to relieve poverty” most of the government’s efforts are directed toward the poor in the population, i.e., through “skills enhancement” and “livelihood programs,” rather than toward specific economic sectors, particularly manufacturing and industry. This may, as Albert’s data suggests, actually work in the opposite direction, entrenching poverty more deeply by expanding the class of the “working poor.”
Albert makes the pointed recommendation that the private sector, particularly that part controlled by the taipan class that serves as the primary engine of the economy, do its part to improve the employment landscape by shifting away from contractual labor and focusing on more productive long-term investments, but he leaves the implications of those suggestions open to interpretation. The basic point, however, is perfectly obvious: Job quality, not quantity, is the bigger economic issue.
* * *
A small personal note: I would like to wish my parents, Lou and Loraine Kritz, who are enjoying their retirement in sunny Florida, a very happy 49th wedding anniversary.