Job hunters to face tough challenges until 2022

MANILA, Philippines — Job hunting will be harder for most Filipinos in the next two years as the economy recovers slowly and the influx of new graduates and returned overseas workers heighten competition for positions in a tough environment, the country’s economic planning agency said.

In updates made to the Philippine Development Plan 2017-2022, the National Economic and Development Authority (NEDA) said unemployment is seen to rise to between seven and nine percent  through 2022.

This is a sharp adjustment from the original medium-term target of an unemployment rate of 3.4 to 5.1 percent in 2021 and three to five percent in 2022.

The prolonged pandemic lockdown that started in March last year continues to limit economic activity and consumption.

To keep costs down, some firms have trimmed their staff while some industries such as the construction sector suffer from a shortfall in skilled manpower because of limitations in public transportation.

Some workers who used to work full time, meanwhile, had to shift to part-time work or stop working altogether to accompany their children at home as schools remain closed or learning remains limited to online means.

“We think it will still be very difficult. It will be a difficult labor market situation. This tells us that we will need more of social protection and it will still be a very challenging employment situation,” said NEDA Undersecretary Rosemarie Edillon in a briefing yesterday.

The entry of new graduates from the first full batch of the K-12 program next year as well as those finishing college coming from the program will also pump a significant number of young workers into a depressed job market where they will also compete with returned overseas workers for available positions.

“So there is a big additional supply of workers and that explains why unemployment will be temporarily higher. Not only due to the effect of the pandemic which we expect to improve by that time but due to the temporary increase in the labor force,” said Acting Socioeconomic Planning Secretary Karl Chua.

“But after that we will see the economy adjust.”

As the economy recovers and more jobs are made, young workers will bear the brunt of an ultra-competitive labor market. And in the process, unemployment among the youth – those aged 14 to 24 years – is seen to rise to a rate of 14.5 to 16.5 percent this year, and 20.5 percent to 22.5 percent in 2022.

This will be in sharp contrast to the original targets of reducing unemployment among young workers to a rate of 8.6 percent in 2021 and eight percent in 2022.

To address this looming pressure on unemployment, Edillon said it would be imperative for the government to immediately roll out retraining and retooling programs for workers to equip them with skills applicable to jobs that would be created in the so-called new normal.

“We think for 2021 and 2022 it’s still about transforming the work force so it will be ready for challenges in the new normal,” she said.

“And we are already thinking of having more of these retraining and retooling programs and even more scholarships in order to increase employability in the labor force.”

The economy is already beginning to show signs of recovery but is expected to grow slower than originally seen at a rate of 6.5 to 7.5 percent this year throughout 2022 from the original PDP targets of seven to eight percent.

As such, the goal of reaching upper middle-income status for the country would most likely be achieved by 2022

Edillon noted that the gross domestic product (GDP) growth target for 2022 in the updated PDP is lower than the eight to 10 percent assumption made by the Development Budget Coordination Committee (DBCC) in December because the update was conducted mid-2020 when the country was just emerging from a strict lockdown.

Considering recent developments, she said hitting the DBCC assumption for economic growth next year may still be possible.

“We came up with this target early on as we were updating the PDP but given the recent developments, we at the DBCC are setting a higher target and we think that we have the wherewithal to grow much faster,” she said.

With current incomes continuing to be below pre-pandemic levels, poverty incidence is expected to spike to 15.5 to 17.5 percent this year when the next Family Income and Expenditure Survey (FIES) is conducted.

Results of the last FIES in 2018 showed that poverty incidence fell to 16.7 percent in 2018 from the revised 23.3 percent in 2015. This meant some six million Filipinos were lifted out of poverty during this time.

This pertains to the proportion of Filipinos whose per capita income is not enough to meet basic food and non-food needs.

In turn, this translates to 17.6 million Filipinos living below the poverty threshold of P10,727 monthly for a family of five in 2018, the minimum income needed to satisfy basic food and non-food needs.

A target for the reduction of poverty incidence in 2022, the end of the plan period, has not been set in the updated PDP but NEDA remains confident that driving down the poverty incidence rate to the midpoint of 14 percent by the end of the Duterte administration.