Official unemployment figures understate historic jobs crisis

IBON said that
the unemployment crisis is actually even worse than official figures show. The
group estimates that the real unemployment rate is likely around 22% and the
real number of unemployed around 14 million. The 20.4 million real unemployed
and underemployed today is the worst crisis of mass unemployment in the
country’s history.

The Philippine
Statistics Authority (PSA) reported 7.3 million unemployed and 6.4 million
underemployed in April 2020. As it is, this is the worst government-recorded
unemployment (7.3 million) and combined unemployment and underemployment (13.7
million) in the country’s history.

IBON pointed out,
however, that the technical definition of unemployment does not count as much
as 4.1 million Filipinos who did not formally enter the labor force because of
the ECQ and another 2.6 million that the revised unemployment definition since
April 2005 stopped counting.

The drastic drop
in the labor force participation rate (LFPR) to 55.6% is most of all due to the
ECQ, said the group. The jobless Filipinos who did not enter the labor force
will not be counted as unemployed because the technical definition of
unemployed requires them to be in the labor force to begin with. If the LFPR
had stayed the same at 61.3% in April 2019, there would be an additional 4.1
million in the labor force.

The
methodology for counting the unemployed was revised in April 2005. Since then,
jobless Filipinos who did not look for work in the last six months or are
unable to immediately take up work are no longer considered unemployed and
removed from the labor force. This lowered officially reported unemployed
Filipinos and stopped comparability with data from previous years.

The revised
unemployment definition tends to underestimate the magnitude of unemployment by
35% and the unemployment rate by 3.3 percentage points. An initial correction
for this would mean an additional 2.6 million jobless Filipinos who should be
counted as unemployed according to the previous definition, said the group.

IBON said that it is important to see historical trends in the country’s unemployment situation to get an accurate picture of the long-term implications of economic policies. Having data that is comparable over time will give a much clearer indication of the structural economic changes the economy is undergoing which will enable better policymaking.

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