Business World, 19 December 2012


Here’s a puzzle for policy makers: If the economy truly grew by 6.5% in the first three quarters of the year, why did the number of employed persons decline by 882,000, and the number of jobless workers rose by 120,000, from October 2011 to October 2012?

What we’re observing is not only a case of jobless growth. Worse, it’s a case of job-shedding growth. If so, how can we expect economic growth, assuming it could even be sustained for many years, to be inclusive?

Economic growth that creates many decent jobs is desirable; growth that does not create enough jobs, worse eliminates them, is deplorable.

The recently released October 2012 jobs statistics suggest the hard challenges facing our policy makers. One such challenge is how the government can put a dent on the stubbornly high unemployment and underemployment numbers. The harsh reality is that on top of close to the three million unemployed, over one million new, young workers join the jobs market every year.

This means that the economy has to create about 1.5 million new and decent jobs annually. Yet, the October labor survey results show that on a year-to-year basis, from October 2011 to October 2012, 882,000 jobs were lost. Disappeared. Evaporated.

The agricultural sector shed 709,000 jobs. The expectation is that rural, agricultural workers would be absorbed by the services sector. But even in the services sector, 309,000 jobs were lost.

During the same period, 136,000 new jobs were created in the industrial sector. But at the same time, 35,000 decent and steady factor jobs were lost.

Another challenge for the government is the falling labor force participation rate (LFPR). The LFPR has gone down from 66.3% in October last year to 63.9% this year. Those who are actively looking for a job has declined by 789,720 workers — from 41,217,000 to 40,419,000. This suggests that some idle workers have become less enthusiastic in looking for a job.

Here’s another puzzle for policy makers: how does one reconcile the expanding working-age population with the shrinking labor force. How does one explain why fewer people are looking for gainful employment?

How many of those who are not looking for a job doing so out of frustration? And what’s the future of those who have given up on finding a decent job? I like to believe that many workers prefer to work than accept dole-outs. Having a decent job is uplifting; not having one, especially after serious search, is depressing and alienating.

Another challenge for policy makers is the educated unemployed. Of the 2,763,000 unemployed, some 41.2% are college graduates, undergraduates or post-secondary graduates. That translates into 1,138,000 educated men and women who are jobless; this is 7,000 more than last year’s.

Failure to find a decent, full-time job after years of hard work and studies could be frustrating. With every year of joblessness, such feeling of frustration and alienation will increase, which could then lead to loss of self-esteem. Worse, the frustration of the unemployed could lead to conflicts at home and the immediate community.

Finally, another challenge for policy makers is the persistently high youth unemployment. The October labor force survey shows that close to half (48.5%) of the unemployment are between 15 and 24 years old.

Policy lesson: robust growth does not always lead to strong job creation. And for growth to be inclusive, strong growth should be accompanied by job creation, not job destruction. And since the population had grown rapidly in the last quarter century, the pressure for job creation will continue to mount.

For a labor surplus economy like the Philippines, the design of its future economic growth should have a strong bias for job creation.