Unemployment rate down, job quality improved in March

MANILA, Philippines (Updated, 11:03 a.m.) — Unemployment fell in March, while the quality of jobs improved as the labor market tries to recover amid a reopened economy. 

Results of a nationwide survey of 11,093 households showed there were 2.42 million Filipinos who were either jobless or out of business in March, lower than 2.47 million unemployed persons recorded in February, the Philippine Statistics Authority said on Monday.

That translated to an unemployment rate of 4.7% in March, retreating from the preceding month's rate of 4.8%.

Meanwhile, PSA data revealed that there were 5.44 million Filipino seeking to work longer hours to augment their monthly income in March. 

That translated to an underemployment rate of 11.2% in March, lower compared to the February outturn of 12.9%. 

The labor market started showing signs of recovery from pandemic misery towards the final quarter of 2022, as the domestic economy reopened itself for business.

Underemployment in the Philippines hit its lowest on record, according to government data. National Statistician Claire Dennis Mapa reckoned this was the lowest print since April 2005, when the definition of underemployment was revised then.

Data broken down showed top industries that shed the highest number of jobs in March were agriculture and forestry (-607,000), financial and insurance activities (-156,000), manufacturing (-136,000), human health and social work activities (-130,000), and information and communication (-78,000).

Leonardo Lanzona, an economist at Ateneo De Manila University, noted that despite the easing in underemployment, jobs deemed as “quality” by the state, such as those in manufacturing and financial activities, are in decline.

“It is hard to say where these jobs are coming from. It seems likely that the jobs being created are temporary and informal in nature…,” he said.

Data showed economic subsectors that boosted its workforce in March were transport and storage (+533,000), accommodation and food service (+447,000), wholesale and retail trade; repair of motor vehicles and motorcycles (+407,000), construction (+384,000) and other service activities (+344,000).

“A significant amount of these can be in the gig sector. Most workers seem context to having any kind of job than nothing at all,” Lanzona added.

'Sweet spot'

As it is, the fluctuations in jobs across economic subsectors in March painted a mixed scenery within the labor market. There is employment to be had in sectors eyeing to maximize gains from relaxed mobility restrictions, while some industries are feeling the crunch of expensive borrowing costs as a result of the Bangko Sentral ng Pilipinas’ inflation fight.

The latest jobs data will likely weigh on the BSP’s next rate-setting action. Experts like Domini Velasquez, chief economist at China Banking Corp., and Nicholas Antonio Mapa, senior economist at ING Bank in Manila, think so.

“We think that the current unemployment rate can already be considered to be the sweet spot of the labor market,” Velasquez said in a Viber message.

“The recent figures bode well for the state of the economy and the BSP wil likely asses the monetary tightening’s impact on businesses and their ability to provide jobs for Filipinos,” she added.

These rate hikes take six to 18 months before it seems into the domestic economy. Currently at 6.25%, interest rate increases are introduced by central banks, like the BSP, to discourage consumers and firms from taking out credit, and temper price growth.

“BSP is a data-driven central bank and no doubt unemployment data will be considered. That being said, BSP will likely weigh varying data variables according to its mandate with price stability still its primary mandate followed by financial market sustainability, conducive to sustainable growth,” Mapa said.

ING’s Mapa expects the labor market to hover at levels that the economy has seen in past months, projecting an uptick in joblessness, even underemployment towards the end of 2023, as growth momentum is forecast to moderate.