STATEMENT SECRETARY ARSENIO M. BALISACAN July 2013 Labor Force Survey Press Briefing 10 September 2013 NEDA Board Room

 Good morning. We are here to present highlights of the results of the July 2013 Labor Force Survey conducted by the National Statistics Office, which is an attached agency of NEDA.

In July 2013, the number of employed Filipinos reached 38.2 million – a 1.7-percent increase from 37.6 million registered in the same month last year. In the same period, some 620,000 jobs were created, which represents a 38.4-percent increase from the 448,000 net employment created in July 2012. This is largely attributable to the recovery of agriculture, which posted a 1.5 percent increase in employment—a break from contraction for four consecutive rounds of the survey.

Agriculture and forestry subsector was able to generate 116,000 additional employment, while the fishing subsector gained 57,000 more workers. This expansion is attributable to the increased planting and harvesting activities, as well as more favorable weather conditions in some regions.

Aside from agriculture’s recovery, the growth in employment was also driven by the subsectors of services and construction, where employment grew by 1.9 percent and 4.3 percent respectively. Services generated 383,000 jobs, while construction generated 101,000 jobs.

The largest number of employment generated was in the wholesale and retail trade subsector which generated 506,000 jobs. This was followed by transportation and storage with 154,000, and administrative and support services activities with 124,000 jobs created.

Despite the employment generated, the employment rate slightly decreased to 92.7 percent from 93.0 percent, because of job losses in the accommodation and food service activities subsector, which registered a net employment loss of 238,000. There were also declines in employment in manufacturing (-28,000), mining and quarrying (-14,000) and water supply; sewerage; waste management and remediation activities (-6,000). Moreover, the labor force grew faster at 1.9 percent during the period.

Though quite contrary to expectations given the Philippine economy’s recent growth performance, these developments are not entirely unusual. As the economy grows and its structure transforms, it is normal, as shown by experiences of other emerging economies, for employment to exhibit volatility as labor markets adjust. Growth tends to increase optimism among the working-age population such that more people become inclined to look for work. Some jobs are destroyed and new ones emerge in the course of structural transformation. But while jobs are created, current skill sets of the labor force may not be able to meet the growing and shifting demand for labor. This may thus result in an increase in unemployment rate at certain times during the process of structural change.

The latest LFS shows that the Philippine unemployment rate slightly increased to 7.3 percent in July 2013 from 7.0 percent in July 2012. The pool of unemployed persons consists largely of young people who lack competency and experience, which are important requirements of firms and are also key factors for successful entrepreneurship. High school graduates constituted the biggest share of the unemployed at 32.8 percent, followed by college graduates with 21.8 percent, and college undergraduates at 13.6 percent.

These figures stress the importance of intensifying government efforts to make education programs more responsive to the needs of the business sector as well as to encourage entrepreneurship in the country.

In terms of the quality of work, the number of wage and salary workers decreased by 1.6 percent while the number of unpaid family workers went up by 6.4 percent in July 2013 compared to the previous period. In terms of hours worked, part-time employment grew faster at 3.9 percent compared to full-time employment, which increased only by 0.5 percent in July 2013. These suggest to us that recent gains in improving the quality of available employment have yet to take root. Hence, the urgency  to ensure that the growth momentum is sustained and supported by  strategies that will create the conditions for  stable, productive, remunerative, and  decent employment.

Meanwhile, the underemployment rate improved to 19.2 percent in July 2013 from 22.8 percent in July 2012.  Even though this decline does not indicate a sustainable downtrend, underemployment decreased across all major industry groups. Double-digit declines were recorded in the sectors of agriculture by 13.9 percent, industry by 13.0 percent, and services 15.1 percent. Moreover, underemployment also decreased across all categories of class of workers: Wage and salary workers down by 20.8 percent, own family-operated farms or business by 23.4 percent, unpaid family workers by 10.2 percent, self-employed without any paid employee by 1.3 percent.

Ultimately, these figures show that employment creation remains a big challenge in the country.  Also, while positive growth in agriculture employment is encouraging, this was accompanied by employment losses in manufacturing and accommodation and food services activities sectors, which are crucial employment-generating sectors in an emerging economy. This is why it is necessary to accelerate the revival of the manufacturing subsector. This can be done through well-designed and carefully-targeted interventions in certain sectors of the economy that have the potential to deliver massive employment creation and meaningful growth. The manufacturing sector has the highest backward and forward linkages with the other production sectors of the economy. It generates jobs in the sector itself, as well as in several other backward-linked and forward-linked sectors. Also, manufacturing is the heaviest user of agricultural output, meaning that growing the sector means increasing demand for agricultural output, which means better business and more gainful work for our farmers and fishermen. The government and the private sector working together have already developed industry roadmaps; these should be further reviewed and strategically implemented. We also urgently need to address infrastructure gaps, particularly in logistics and power.

Overall, the government must relentlessly continue its catalytic role in job creation in the country, as pointed out in the current updating of the Philippine Development Plan. Sustaining and improving enabling conditions for the private sector to invest in productive sectors of the economy would help rapidly increase employment opportunities. Also, maintaining a positive sentiment from local investors, entrepreneurs, and households is crucial in building up the confidence of foreign direct investors in the country.

With this, we assure everyone that the government is aware of the enormous tasks that must be undertaken  in pursuit of our goal of inclusive growth through massive employment generation and substantial poverty reduction. This is a reminder that the government should continue implementing the needed positive actions through economic and social programs to realize its goals and for the benefit of the Filipino people.

Salamat at mabuhay tayong lahat.