Philippines Faces Slow Job Creation Amidst Influx of Workers

The Philippine unemployment rate rose to 4.9% in June, as more workers entered the labor force, but weak economic growth and a contraction in investment suggest the economy is struggling to generate enough jobs to absorb the influx, analysts said. The Philippine Statistics Authority (PSA) reported that approximately 650,000 jobseekers sought to enter the workforce for the first time in June, but only about 310,000 found employment. The underemployment rate also increased to 12.1% from 11.4% a year earlier, while the unemployment rate stood at 3.7% in the same period last year. Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, explained that the weak second-quarter economic growth and decline in investment contribute to the economy's inability to absorb new entrants into the labor force. He further highlighted that the problem extends beyond the sheer number of jobs created, pointing to the high level of informality in the labor market. Studies from the Philippine Institute for Development Studies and the University of the Philippines estimate that informal workers could constitute as high as 82% of the labor force, indicating that a vast majority of Filipino workers suffer from low wages and low productivity. Ser Percival K. Peña-Reyes, a senior research fellow at the Ateneo Center for Economic Research and Development, analyzed that the June figures reflect an economy that is absorbing workers but not at a pace sufficient to provide productive employment for everyone entering the market. More importantly, he noted, the 12.1% underemployment rate signifies that the issue is not merely a shortage of jobs. Many Filipinos who are technically employed still desire more working hours, a second job, or a better position. In essence, the economy is generating employment, but a significant portion may not offer adequate income, hours, stability, or productivity. Both analysts emphasized that addressing these weaknesses necessitates structural transformation, involving reforms across various sectors including macroeconomic policy, industrial and technology policy, agricultural productivity, labor, education, health, and institutional strengthening. Mr. Sta. Ana stressed the need for the government to establish a clear strategic plan for such a transformation, expressing concern that the current long-term development vision, Ambisyon Natin 2040, is no longer realizable. Mr. Peña-Reyes recommended that the government focus not only on creating more jobs but also on building an economy capable of producing more stable, productive, and better-paying work. Priorities he identified include rebuilding the country's tradable and industrial base, ensuring infrastructure supports economic productivity, improving the transition of young workers from school to employment, addressing regulatory and competition barriers that hinder firm growth, and ensuring productivity gains translate into higher wages. He also called for preparing the labor market for the age of artificial intelligence (AI) and integrating regional development into the national jobs policy. Furthermore, Mr. Sta. Ana stated that restoring investor confidence is an immediate priority, especially as the country aims to expand productive industries and employment. He pointed out that confidence has been eroded by widespread corruption, policy reversals, uncertainty, and political polarization. Source: BusinessWorld Economy