Jobless rate falls in March but inflation may spoil recovery

MANILA, Philippines — The number of unemployed Filipinos fell in March amid easing pandemic curbs, but analysts believe rising commodity prices could spoil the job market’s nascent recovery.

There were 2.87 million Filipinos who were either jobless or out of business in March, the Philippine Statistics Authority reported Friday, This was lower than the 3.13 million people recorded in February.

The latest reading was equivalent to an unemployment rate of 5.8% in March, lower than 6.4% recorded in the preceding month.

The unemployment rate eased as the Omicron onslaught waned, which prompted more workers to look for jobs. PSA data showed there were 49.85 million Filipinos aged 15 years old and above who actively sought work in March, up from 48.61 million a month ago.

“We have already seen a significant recovery in badly hit sectors such as tourism and leisure,” Socioeconomic Planning Secretary Karl Kendrick Chua said in a statement.

But the jobs they found do not pay well, prompting many workers to look for more working hours to make ends meet. There were 7.42 million Filipinos who looked for additional jobs in March, higher than 6.38 million recorded in February.

The agriculture sector — where available work is usually not stable — was the biggest employment generator in March after adding 904,000 jobs month-on-month, data showed. Sought for comment, Nicholas Mapa, senior economist at ING Bank in Manila, said jobs related to pre-election activities also likely boosted the underemployment figures.

"Let’s hope the next president has a firm grasp on economics and is able to chart a sustainable recovery path for job creation," Mapa said.

Leonardo Lanzona, a labor economist at Ateneo De Manila University, agreed with Mapa. "People cannot afford to be unemployed and thus accept lower paying jobs as a way of coping."

“This reflects the fragility of our institutions, particularly the lack of social protection. Specifically, unemployment insurance is currently not available and hopefully addressed in the coming administration," Lanzona added.

Inflation a threat

Moving forward, Lanzona believes a quickening inflation could emerge as a big threat to employment recovery. Latest data showed inflation accelerated to a three-year high of 4.9% in April, breaching the government’s 2-4% target.

Already, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the Monetary Board may consider firing off its first rate increase in years in June. Rate hikes are meant to fight price spikes by tempering consumer demand which, in turn, may prompt businesses to pause hiring or worse lay off workers.

"The inflation situation worsens the employment outlook and the huge debt further limits the options of the government," Lanzona said.

Sonny Africa, executive director at IBON Foundation, a non-profit think tank, said: "Rate hikes to contain inflation might just choke employment recovery further. Inflation is rising mostly because of higher oil prices on the supply side. Raising interest rates to control inflation by reducing producer and consumer demand is a mechanical monetarist response that will hinder economic and employment recovery."