Drop in unemployment rate encouraging but not enough

The reported drop in unemployment rate from 17.7% in April to 10% in July is natural because the economy opened. However, compared to unemployment in July 2019, the current level of unemployment remains high as a result of the economic crisis due to the pandemic and the government’s conservative approach to recovery.

The reported jobs recovery, especially those tied mainly to market responses, will not be enough to cut the unemployment rate further by the end of this year or until 2021 without more aggressive stimulus program.

First, wage and salary employment especially in private establishments remain short by 1.9 million compared to its level in July 2019 when economic conditions were normal. Second, jobs recovery occurred in self-employment and unpaid family work: self-employment increased by 563 thousand while unpaid family workers increased by 550 thousand. Third, underemployment is higher by 1.3 million in July 2020 compared to its level in July 2019. The fact that underemployment rate still increased from 13.6% in July 2019 to 17.3% in July 2020 and because this coincides with increase in self-employment means that although workers found employment, the income they earn from work is not enough so they are forced to look for additional work. These trends also imply that many firms have not yet recovered from the economic crisis.

A more aggressive public employment program (PEP) and support for struggling firms especially MSMEs , we believe, is the bold and necessary action the government must undertake to address massive job displacement, recover lost jobs and create new employment opportunities based on defined social needs.

The unemployment rate in NCR, Calabarzon, and Central Luzon remain in double digit, while the underemployment rate in most parts of the country hardly moved down. And we fear that both the unemployment and underemployment numbers may still be affected by business decisions this month when employers decide on whether to keep their workers floating or not as required under the 6-month rule under DOLE’s Labor Advisory No. 17.

Jobs generated under emergency employment being implemented under TUPAD, at this point in time, cannot significantly address the unemployment problem of displaced workers as it only provides 10 to not longer than 30 days of temporary employment. We demand that a more elaborate TUPAD, or a new adequately funded PEP that is attuned to new social tasks or imperatives be rolled out under the 2021 budget and the process in making this happen be made participatory.

PEPs have been an effective program in addressing unemployment and poverty many jurisdictions worldwide like in the case of India and South Africa. Lessons and best practices can be learned from their experience as well as with our own implementation of temporary employment programs since the 60s. A Bayanihan for Work can be specifically designed to address this need.

We also demand more aggressive support for struggling firms, many of which are MSMEs. The state must also extend support to firms to help them restructure their workplaces to ensure that they do not become transmission hotspots for COVID-19. We also urge the government to strictly impose health and safety regulations in workplaces, after all, COVID-19 remains a health crisis.

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Source of data: PSA. Available at: https://psa.gov.ph/content/employment-situation-july-2020. Accessed 3 September 2020.