Low Jobless Rates Hide Worsening Labor Conditions

Lower figures do not mean less jobless Filipinos, but merely the result of government’s revised and more stringent definition of unemployment

By Joseph Yu

IBON Features

Posted by Bulatlat 

Government recently announced unemployment figures that are substantially lower than those recorded in past labor survey rounds. But these figures should not be a cause for celebration because they actually conceal the country’s deteriorating labor conditions.

According to the July 2005 Labor Force Survey (LFS), some 2.72 million Filipinos were unemployed, or a nationwide unemployment rate of 7.7 percent. This was substantially lower than unemployment figures recorded in past recent LFS rounds.

But these lower figures were the result of a new, more stringent definition of unemployment, which the government said it adopted to align local employment figures with international standards.

Starting with the April LFS, the unemployed include persons 15 years and above who are without work and are currently available for work and seeking work, or are not seeking work due to the belief that there is no work, but sought work within the past six months.

In the old definition, the unemployed are defined as those without work and seeking work or not seeking work because they believe there are no work and other valid reasons such as bad weather, temporary illness/disability or waiting for the results of a job application. Those who were without work and not actively seeking work were no longer automatically included in the labor force and unemployment figures.

The stricter definition naturally results in lower unemployment figures without government having to actually generate jobs. For example, despite the lower unemployment figures, only 889,000 new jobs were created from July 2004.

Obscuring the true employment situation

Hence, the new definition actually obscures the true extent of joblessness in the country. Under the old definition, the unemployment rate for July would be 10.9% or an unemployment level of almost 4 million. The difference of 1.3 million Filipinos between the two definitions doesn’t mean that they were gainfully employed, but simply that they were no longer considered part of the labor force and hence were no longer counted as unemployed even if they remained jobless.

But even official employment figures underestimate the actual amount of productive work in the economy because of the government’s loose definition of employed. According to the NSO, the employed include persons who have worked even for only one hour during the past week before the survey period or persons who may not have worked at all during the week prior to the survey but may actually have jobs or businesses they are temporarily not attending to.

Government justifies this reference period by arguing that in the Philippines, an underdeveloped country, one hour of work is already important since a person can generate much needed income for their family even in such a short period of time.

Hence, a college student who helps in a small family-owned business for short periods after her classes would be classified as employed even if he or she were not actually gainfully employed.

It should also be noted that government does not count overseas Filipino workers (OFWs) in determining local employment and unemployment even if the phenomenon of overseas work is a by-product of the lack of jobs in the country. Government justifies this exclusion from labor surveys by saying such surveys are conducted to measure domestic employment; since OFWs are employed abroad, it is logical to exclude them. But this misses the point that these workers leave the country because they cannot find jobs here.

Worsening labor situation

Local job scarcity is further aggravated by the deterioration in the quality of employment as seen in the increasing number of underemployed workers. The underemployed include those who work less than 40 hours a week and those whose salaries are not enough to meet their needs and hence have to find additional income. Underemployed workers increased to 6.7 million in July 2005 from 5.6 million in the same period last year.

The high number of underemployed also highlights how wages have remained stagnant relative to the high and rising cost of living. For example, the prevailing legislated daily minimum wage in Metro Manila is P325, of which P50 is an emergency cost-of-living allowance which is not included in the computation of 13^th month pay and other benefits.

But IBON estimates that the daily cost of living for a family of five in Metro Manila as of August is P531.03, substantially more than the minimum wage. It should also be noted that the purchasing power of the peso (or the amount of goods and services P1 can buy) is down to 75 centavos.

The combined effect of high prices and low wages has resulted in increased unrest among workers, as seen in the higher number of workers involved in strikes and lockouts this year.  Although the number of strikes as of June 2005 fell to 12 from 13 in the same period last year, the number of workers involved increased by 80% to 4,601 from 2,550.

But workers’ power to defend their rights by organizing themselves into unions has also decreased due to widespread contractualization, or workers being hired under short-term contracts. Although there are no official figures on the extent of this practice, one indicator of how prevalent it has become can be seen in its use in the ShoeMart (SM) chain of malls of Henry Sy, among the country’s largest employers.

According to a 2003 position paper of the union Samahang Manggagawa ng Shoemart (SMS), SM employs 20,000 contract workers and only 4,000 regular employees. These contract workers (called “trainees” by SM management) are dismissed every three months and replaced by new workers to avoid being regularized and avoid paying benefits and allowances.

Maintaining a workforce composed mainly of contract workers also prevents unionization from gaining a strong foothold in SM, since contract workers are prohibited under the law from joining unions. This practice is not limited to SM but is prevalent in other retail establishments as well.

Appreciating labor

By altering the definition of unemployment, government understates the true extent of joblessness in the country. According to IBON’s estimates, the employment rate is actually less than 60 percent compared to the official 92 percent rate. Furthermore, 18.5 million workers, including overseas Filipino workers and those potentially employable but not included in the labor force, scarcity comprising more than 40 percent of the total labor force suffer from local job scarcity.

By obscuring the true state of joblessness in the country, government hopes to conceal its lack of political will to attack the structural causes of widespread unemployment in the country. For example, it chooses to become a top global exporter of labor instead of undertaking a national industrialization program that would provide genuine employment opportunities for Filipinos. IBON Features/Posted by Bulatlat

© 2005 Bulatlat ■  Alipato Publications

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