Unemployment data raises questions of validity

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THE unemployment data for the month of July was released on Friday, and while the first impression was that the results of the latest labor force survey were very good news indeed, a closer examination raises a number of questions about whether the country’s jobs picture is as rosy at it seems.

According to the Philippine Statistics Authority (PSA), the country’s employment rate in July was 94.6 percent, which means the corresponding unemployment rate is 5.4 percent. In its statement accompanying the release of the official data, PSA pointed out that is the lowest unemployment rate since 2005.

Unemployment is a universally important economic indicator, because it shows how the population of a country is actually faring under prevailing economic conditions. An indicator like GDP shows a very broad picture, whereas unemployment more particularly describes how growth (or a downturn) affects the economy at the level of individuals and households. For that reason, and also because the unemployment rate is used as a point of comparison with other nations’ economies, it is critical that the figure is reliable and consistent in the methodology used to calculate it.

The manner in which the PSA presents the unemployment figure and the component figures used to determine the ‘official’ unemployment rate do not, upon further review, appear to be unquestionably reliable or consistent, as they should be.


The first red flag, although probably a minor issue, is the curious way in which the official statement accompanying the released data highlights the employment rather than the unemployment rate. It is not technically incorrect to apply obvious positive spin to the description of the country’s employment environment, but it is unnecessarily unconventional; virtually all countries use the unemployment figure as the key indicator. Doing it backward only makes the government look as though it is trying to mislead the public, or otherwise cover up some uncomplimentary facts.

What may be a more substantial problem, however, is the apparent inconsistency in the size of the working-age population, which comprises people over the age of 15 up to age 64, although it is other agencies (like the Department of Labor) that specify an upper age limit, whereas the PSA does not.

Going back one year to the July 2015 Labor Force Survey, the PSA reported at that time that the working-age population was 66.613 million people. In the October 2015 LFS, the number had only increased by 9,000 people to 66.622 million. As of the next LFS in January 2016, the working-age population had grown to 67.153 million, an addition of almost 531,000. In the April 2016 LFS, however, the PSA started using updated population estimates based on the 2010 census, which reduced the working-age population to 66.805 million. Up to that point, every population estimate has some kind of plausible explanation. In the most recent LFS for July, however, the population figure was an astonishing 68.436 million. In other words, in three months, the size of the working-age population has ballooned by 1.63 million, or more than three times the growth rate in recent LFS estimates, and after a general downward adjustment in estimates of the country’s overall population.

There may be a perfectly reasonable explanation for such a huge apparent discrepancy, and if so, we would certainly be happy to listen to it. But as it is now, taken together with PSA’s offhand admission that up to a third of those recorded as employed are either “self-employed” or “unpaid family workers,” it leaves a great deal of doubt as to what the true employment situation of the country is.

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4 Comments

  1. That is a lie. A blatant lie. A lie in the highest degree! Kung meron man, hindi nakakabuhay ng pamilya. Tell “Put..In..” to concentrate more on the economy side by side with drug problems.

  2. If you believe the unemployment rate is 5.4 per cent then your one of the many uneducated retards comprising the population of the Philippines. There are more beggers than that unless they counted begging as employed.

  3. if you have a sari-sari store which every second house has, all your children and everyone else living with you is counted as employed, even these people are never paid. 5.4 percent unemployed ? not a chance

    • Sari sari store is a losing game. Together with driving a tricycle driver. It is a waste money. It will deplete the capital slowly. Again, tell “Put..In..” to encourage investors not to to scare them by his bad mouth.