Too much uncertainty on unemployment


AT first glance, the report that unemployment in the Philippines in April declined from levels measured last year and in the January Labor Force Survey (LFS) seemed like good news. But a deeper look at the figures reveals a labor sector that appears to be stuck in a rut – unemployment is not getting worse, but it does not seem to be improving, either.

By the numbers, unemployment in April dropped slightly to 6.4 percent from 6.6 percent in January, and was also notably lower than the 7.0 percent recorded in April 2014. Likewise, the underemployment rate – the percentage of workers who are seeking additional work hours at their present jobs, seeking an additional job, or seeking a job with longer working hours – decreased to 17.8 percent in April, a modest improvement over the 18.2 percent recorded a year earlier.

Unfortunately, there is a great deal of uncertainty about these numbers, enough that we may very well question whether unemployment is actually easing.

In one measure, the data suggests it is not. One indicator measured by the PSA is the “labor force participation rate,” which is the number of people of working age who are either actually working or seeking work (as opposed to being students or people otherwise unable or unwilling to work for some reason). The 0.6-percent increase in the rate of employment between April 2014 and April 2015 exactly corresponded to a 0.6-percent decrease in the labor force participation rate, from 65.2 percent to 64.6 percent. This suggests that unemployment may not have actually decreased at all, but simply appears lower now due to a bit of smart statistical presentation.

Another very obvious issue that raises skepticism is the continuing absence of data from Leyte in the employment indicators. The reason for this as given by the Philippine Statistical Authority (PSA) is still the same as it was in the aftermath of Typhoon Yolanda in November 2013: Because so many people were displaced by the disaster, the ‘sampling frame’ based on the listing of households in Leyte (dating back to 2003) is no longer valid.

That was understandable for perhaps the first few LFS after the typhoon – surveys in January, April, and October 2014, for instance – but is becoming a very stale excuse, now that 19 months have passed. Although comparative past data is adjusted to compensate for the missing Leyte data, the results are not, no matter what the government says, a complete picture of the Philippines’ employment situation.

To be fair, and in the spirit of optimism, it should be stressed that even based on uncertain figures, unemployment did not increase with the latest LFS; an unemployment rate that remains static while the labor force grows in numbers does mean that some jobs are being created, and that’s a promising development.

But clearly not enough is being done, and uncertainty about the reliability of employment data will not help develop effective policies to significantly reduce unemployment. A review of the methodology being used by the PSA and other concerned agencies – including finding a way to stop using a nearly two-year-old natural disaster as an excuse for providing partial data – should be carried out as soon as possible, and more reliable procedures developed. Only if we have a true picture of the labor sector can we assess and seek solutions to its real problems.


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