TRENDS

& Patterns
Understanding the

In the Philippine Labor Market

24 May 2014
1

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(1) Serious disconnect

between the structures

of GDP and Employment
Often results in jobless growth
Underscores the structural nature of
the unemployment problem

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GDP and Employment Shares by Sector: 2013

Sector

GDP share (%)

Employment share (%)

Agriculture

10.4

31.0

Industry

32.7

15.6

Services

56.8

53.4

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GDP AND EMPLOYMENT : Divergence in growth patterns

Jobless growth: High GDP growth rate but low employment creation (i.e.,
2008, 2012, 2013)

Or the reverse: Low GDP growth rate but high employment creation (i.e.,
2009 - part-time employment in services sector)
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GDP AND EMPLOYMENT, 2013

GROWTH RATE (%)

Sector

Agriculture
Industry
Services
All Sectors

GDP Growth Rate (%)

Employment Growth
Rate (%)

1.1
9.5
7.1
7.2

-2.1
3.4
2.9
1.4

High GDP growth rate with low employment creation

(jobless growth)
Structural nature of employment problem
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EMPLOYMENT STRUCTURE
SECTORAL EMPLOYMENT SHARE
(% to total employment)
Selected ASEAN Countries, 2009

Country

Indonesia
Malaysia
Thailand
Philippines

Agriculture

Industry

Services

39.7
13.5
41.5
35.2

18.8
27.0
19.6
14.5

41.5
59.5
38.9
50.3

Source: Norio Usui, Taking the right road to inclusive growth, Asian Development Bank (2012).

Share of employment in industry lowest in the Philippines

Robust growth in industry output will not translate to more jobs and lower unemployment
because of low employment base in industry
For growth to make a dent on unemployment rate growth should occur in agriculture with
large employment base. But in the long-run the shift in labor resources should occur from
agriculture to industry. This is where right policies and programs can make a difference as
shown by the experiences of neighboring ASEAN countries.

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OUTPUT STRUCTURE
SECTORAL SHARE
(% to GDP)
Selected ASEAN Countries, 2009

Country

Indonesia
Malaysia
Thailand
Philippines

Agriculture

Industry

Services

15.9
9.5
11.5
12.5

49.6
44.3
43.3
31.5

34.5
46.2
45.2
56.0

Source: Norio Usui, Taking the right road to inclusive growth, Asian Development Bank (2012).

Share of industry output lowest in the Philippines

Philippine
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GDP PER CAPITA

PPP (at constant 2011 international $)
Selected ASEAN Countries

Country

2000

2005

2012

Indonesia
Malaysia
Thailand
Philippines
Vietnam
Cambodia
Lao,PDR

5,554
15,688
8,939
4,243
2,650
1,368
2,327

6,513
17,921
10,901
4,804
3,485
1,957
2,930

8,856
21,897
13,586
6,005
4,912
2,789
4,388

Source: World Bank, World Development Indicators.

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According to NEDA, it is not unusual for high unemployment even with

economic growth. It is normal, as shown by experiences of other emerging
economies.
As the economy grows and its structure transforms, employment exhibits
volatility as the labor market adjusts---optimism increases among the
working age population resulting to more people looking for work.
Further, in the course of structural change, jobs are destroyed and new
ones are created.
But the current skills of the labor force may not be able to match the
growing and shifting demand for labor.
This may result to increase in unemployment rates at certain points during
the transformation process.

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(2) Economic growth consumption led fuelled by remittances

Share of capital formation stagnant
Share of trade (X-M) negligible

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10

Gross National Income and Gross Domestic Product by Expenditure Share:

2000, 2005 and 2010 - 2013 (at constant 2000 prices)
Percent distribution
Type of Expenditure

2000

2005

2010

2011

2012

2013

1. Household Final Consumption Expenditure

61.6

58.6

57.6

59.2

59.3

58.2

2. Government consumption

9.7

7.4

8.3

8.3

8.7

8.8

3. Capital Formation

15.7

16.8

17.3

17.1

15.6

17.1

4. Export-Import (X-M)

-1.7

-3.2

0.0

-0.7

0.6

-0.7

Gross Domestic Product

85.3

79.6

83.2

83.9

84.2

83.9

14.7

20.4

16.8

16.1

15.8

16.1

100.0

100.0

100.0

100.0

100.0

100.0

- Net Primary Income from Rest of the

World (ROW)

Gross National Income

Source: Philippine Statistics Authority, National Accounts of the Philippines.

Consumption - a main growth driver

Govt expenditure on the uptrend
Capital formation (Investment) the engine growth contributed less than one-fifth
to GNI - its share to GNI erratic
Export-Import share low or negative bad for employment
Share of remittances (net primary income from ROW) erratic boosting consumption
Danger of too much dependence on remittances
11

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Annual Growth Rate in Capital Formation, Philippines: 2002 - 2013

(at constant 2000 prices)
40
30
p
20
e
r
c 10
e
n 0
t

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

-10
-20

Source: Philippine Statistics Authority, National Accounts of the Philippines.

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

15.7

-0.4

-2.2

3.0

-15.1

-0.5

23.4

-8.7

31.6

2.0

-3.2

18.2

Trend in capital formation highly erratic

Declines occurred in 2003, 2004, 2006, 2009, 2011 and 2012
this means lack or absence of investment, but significant
upswing in 2013
No investment >>> lower outputs and fewer jobs
Foreign direct investment lowest among original ASEAN
12

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(3) Quality Employment - a

function of GDP growth

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13

Annual Growth Rates in GDP and Full-time Employment

Both move in almost identical direction - With few exception e.g.,

2012

Full-time employment expands in times of economic

upturn/recovery and contracts during economic slowdown
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14

Annual Growth Rates in GDP and Part-time Employment

Moved in opposite direction

Part-time employment expands during economic downturn/slowdown

but decline during economic upturn/recovery
With few exception e.g., 2008
15

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(4) Employment grew in

Boom and Bust Pattern

Monsoon economy - - - - - - - > Climate change

Economic crisis (Asian economic crisis/1988 and global

financial crisis/2008-2009
Political events

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16

ANNUAL EMPLOYMENT GROWTH RATE (%)

2007 - 2013

Employment trend characterized by erratic movement or

boom and bust
May not be observed at all times
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 Boom & Bust - More pronounced year-on-year

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(5) DUALISM IN THE LABOR

MARKET
Formal sector ---------------- Precarious
employment

Informal sector -------------- Vulnerable

employment
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In 2013
FORMAL SECTOR
(Wage and salary)

Private establishment
17.114 million

Precarious employment

Private household

Own family-operated
farm or business
0.127 million

1.969 million

Govt/GOCC

Employer

3.037 million

1.272 million

INFORMAL SECTOR

Vulnerable employment

Self-employed

Unpaid family workers

10.668 million

3.930 million

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20

(6) Climate change and

employment instability
- agriculture, fishery and forestry sector
employment a big drag in employment
growth

El Nino phenomenon (1998, 2000, 2003 & 2005)

Destructive typhoons ( 1998, 2004,2006, 2009, 2012 & 2013)

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Employment instability is often caused by fluctuations in

agriculture, fishery and forestry sector due to extreme
weather (climate change)
- Industry employment is small sector (15.6% of total
employment) to make a dent on employment growth.
Moreover, it has remained stagnant across time.

- Service sector employment (53.4%) is generally stable and

increasing overtime.
- Agricultural sector employment (31%) subject to weather
disturbances: steep/mark decline in recent years (2010,
2012,2013) a throwback of the 1998 and 2000 El Nino years

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ANNUAL EMPLOYMENT INCREMENTS (000) BY SECTOR

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23

ANNUAL EMPLOYMENT GENERATION: 2007 2013

(000)

Annual employment generation below 1 million - except in 2011

(largely part-time)

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24

(7) Underemployment

more serious than unemployment problem

(1 out of 5 employed is underemployed;
its magnitude is 2x the unemployed)

Highly correlated with poverty

Variation most pronounced across
regions (spatial)

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UNDEREMPLOYMENT RATE : 2006 - 2013

(000)

Declining gradually from 2006 to 2010

Relatively unchanged in the past three years
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REGIONAL STATISTICS ON UNDEREMPLOYMENT: 2013

TOP 5 REGIONS
1. Bicol Region

37.3

2. Caraga

27.1

3. Northern Mindanao

25.7

4. Eastern Visayas

25.1

5. MIMAROPA

23.4
BOTTOM 5 REGIONS

1. NCR

12.1

2. ARMM

12.4

3. Cagayan Valley

12.9

4. Ilocos Region

20.0

5. Central Luzon

14.5
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27

(8) Unemployment
- structural little change since 2006
(employment and labor force growing at the
same pace, translates to unemployment rate
unchanged)
- largely a problem of the youth (48.5% of
unemployed in 2013)
Rate more than twice the national rate
- Educated workforce college graduates at
around one-fifth of the unemployed

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28

UNEMPLOYMENT RATE: 2006-2013 (%)

Unemployment rate moving within a very narrow band: 7-7.5%

in 2007-2013
TOTAL UNEMPLOYED PERSON: 2006-2013 (000)

Total unemployed persons stagnant at less than three million since 2006
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29

Annual growth rate (%)

Employment is barely catching up with the growth in labor force

Unemployment rate (%)

Unemployment rate stays virtually stagnant.

UR down when E > LF

UR up when LF > E
30

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REGIONAL STATISTICS ON UNEMPLOYMENT: 2013

(in percent)
TOP 5 REGIONS
1. NCR

10.3

2. CALABARZON

9.2

3. Central Luzon

8.7

4. Davao Region

6.9

5. Western Visayas

6.9
BOTTOM 5 REGIONS

1. Cagayan Valley

3.2

2. Zamboanga Peninsula

3.5

3. MIMAROPA

4.1

4. SOCCSKSARGEN

4.4

5. CAR

4.5
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As a general rule, high unemployment is associated with low

underemployment and vice versa
10.3%

UNEMPLOYMENT RATE (%)

2013
8.3%

5.3%

3.2%

R2

3.5%

R9

4.1%

R4-B

4.4%

4.5%

4.6%

R12

CAR

ARMM

R8

5.7%

R10

6.0%

Caraga

6.3%

6.5%

R7

R5

6.9%

6.9%

7.1%

R11

R6

PHIL

8.7%

R1

9.2%

R3

R4-A

NCR

UNDEREMPLOYM ENT RATE (%)

2013
37.3%

27.1%

25.7%

25.1%

23.4%

22.7%

22.7%

21.8%

20.0%

19.3%

17.9%

17.2%

15.1%

R5

Caraga

R10

R8

R4-B

R12

R6

R9

R1

PHIL

R4-A

R11

R7

14.5%

R3

14.1%

CAR

12.9%

12.4%

12.1%

R2

ARMM

NCR

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(9) Flukes in the labor

market

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Flukes (blips) in the labor market

- Underemployment rate surged to 22.8%
million) in July 2012

(+1.470

- Part-time employment shot up by 18.4% (+2.514

million) in April 2012 and dipped by 18.9%
(-3.064 million ) in April 2013
This phenomenon could be a fluke or temporary in
nature that needs further validation in the
next survey round - hence any attempt on
conclusion could be premature (not
conclusive).
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34

(9) Bright spots in the labor

market
- Sustained rise in private establishment employment
Vulnerable employment on the decline

Strong growth in industry employment

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(1) Employment in Private Establishments on the Steady Rise

(in percent)

20,000

15,000

(in 000)
12,423

12,950.00

13,283.00

2006

2007

2008

15,431.00

17,114.00

14,565.00

16,377.00

13,824.00

2009

2010

2011

2012

2013

10,000
5,000

Employment share of wage workers in private establishments rose

steadily from 38.1% in 2006 to 44.9% in 2013
This suggests that more jobs are now being created in the
economy by the private sector in recent years
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36

.on the back of strong growth in industry employment in recent

years
7
6
5
4
3
2
1
0
-1
-2
-3

2007

2008

2009

Agriculture

37

2010

2011

Industry

2012

2013

Services

Sector

2007

2008

2009

2010

2011

2012

2013

Agriculture

0.9

2.1

0.1

-0.7

2.6

-1.4

-2.1

Industry

2.5

-1.4

0.9

6.0

2.4

3.9

3.4

Services

4.4

2.1

5.4

4.2

3.8

1.9

2.9

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(2) Proportion of Vulnerable Employment on the Downtrend

Declining trend in the proportion of self-employed and unpaid

family workers from 44.5% in 2006 to 38.3% in 2013

A measure of vulnerable employment one of the

employment indicators in the Millennium Development Goals
(MDGs)
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(3) Employment creation in BPO remained robust

Annual Employment Growth rate (%): 2007-2013
8.4

Note the change in in in industry classification of BPO

2007-2011 Real estate, renting and business activities
2012 Break in data series
2013 Administrative and support service activities
39

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DATA LIMITATIONS
Short reference period (snapshot or stock of
economically active persons)
Absence of provincial data
Data reliability subject to proxy respondents
Break in the data series due to changes in
reference period, coverage and population
projection benchmark
Change in definition
unemployment
40

in

April

2005

on
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SOME GUIDELINES IN USING LFS DATA

1.

Never use the term Job as synonymous to EMPLOYMENT.

The LFS is counting people at work and not number of jobs.

2.

Comparison of data should be made on a year-on-year basis

not on monthly/survey round basis note: LFS data series
is subject to seasonality.

3.

Never use the term Quarter. The LFS is based

on a past week reference period not QUARTER.

4.

Always bear in mind the break in the LFS data series,

the existing data series covers the period 2006 to present.

5.

Be cautious in comparing LFS with other sources of data.

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41

Employment:
Persons or individuals at work
- the LFS counts person at work not jobs
- in the LFS, a person can be counted only once regardless of the
number of jobs he/she held

Job:
an activity that a person does for a living
- a set of tasks and duties which are carried out by, or can be
assigned to, one or more person (ILO definition)
- in establishments (payroll statistics), a person can be counted
several times depending on the number of jobs held

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42

 The term job is really a misnomer.

- in practice, the generation of job statistics does not exactly involve the
counting of activities or tasks or duties
- counting is tedious and cumbersome
- it does not make sense to do this counting

The object of measurement in job statistics is the same with

LFS i.e., person at work or employed person. But the difference lies on
the statistical measurement or manner of counting.

In the LFS, a worker is counted only once during the reference week
regardless of the jobs held in accordance with mutually exclusive principle
in the LFS.

In the job statistics, a worker is counted every time

his/her name
appears in one payroll because he/she holds more than one job or changes
jobs during the reference period.

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43

THANK YOU!
URL: http://www.psa.gov.ph

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