Employment rose: What about productivity?

Earlier this week, DOF Secretary Ralph Recto reported that the December 2023 Labor Force Survey results showed that the Philippines “recorded a historic-low unemployment rate, declining underemployment, and faster growth in the labor force––all reflecting the continued improvement of the country’s jobs market and quality of employment for Filipinos.” Overall, the employment rate rose to 96.9% in December 2023 from 95.7% in the same period in 2022,” he added.

Reportedly, the “majority of the 1.5 million new workers who joined the workforce in December 2023 came from the construction sector followed by agriculture and forestry as well as accommodation and food service activities.” Moreover, in December 2023, a “total of 50.5 million people were employed and more than half of them were in services (57.3%), about a quarter from agriculture (24.4%), and less than a fifth from industry (18.3%) sectors, Sec. Recto added. Overall, he expressed optimism on the December 2023 Labor Force Survey results.

Indeed, this is a very encouraging development. Curiously, however, this report talks about aggregates. Also, these figures are national in scope. Therefore, we can simply surmise that the growth in both the industry and services sectors are largely in highly urbanized cities. These are places where business process outsourcing and gaming companies thrive. These are the places too where theme parks are sprouting. Moreover, these are places where hotels and restaurants are mushrooming. Well, where else?

Indeed, as has always been the case, the service and industry sectors are driving the economy as, among others, tourism, business process outsourcing and gaming activities continued to contribute and government spending on infrastructure are sped up. Despite the reported employment rise, however, the reality that the agriculture sector remains lethargic is a bitter pill to swallow. Yes, it performed a little bit better than 2022’s 0.5% as it registered an increase of 1.2% in 2023. Yet, this is not impressive as we still import a lot of basic agricultural commodities from neighboring ASEAN member states.

If the employment rise in agriculture sector resulted in increase in productivity, then, this development is good. However, looking intently at the numbers that count, the agriculture sector remained disappointing. In recent years, we saw the rise of the industry and service sectors and the fall of the agriculture sector. To recall, in just a few years, we saw the drop of the agriculture sector from a double-digit contribution to our GDP to a single digit at 8.9%. This can be well summarized by the call of NEDA Chief Balisacan that there is a need for “a lot of investment in agriculture, for warehousing, logistics, and transport services.”

Well, we have a ready excuse for this as the labor force in the same sector went down from what used to be in the vicinity of 30% several years ago to just 24.4% in 2023. It should have been good though if the reduction resulted to productivity increases as we may be able to conclude that this could be due to modernization or mechanization. Apparently, however, it is not, as the contribution of the sector to our economy went down to just 8.9%. If there is one obvious reason, it is due primarily to rural exodus. It simply means, farmers or farm workers left their farms and tried their luck in highly urbanized areas. The mean reason, abject poverty.

Admittedly, majority of those in dire strait are in the agriculture sector. In fact, if examined closely, those who are mired in poverty in the highly urbanized cities’ slum areas are rural migrants. These are offshoots of the continuing rural exodus on account of the feeling and perception of helplessness in the countryside. So that, if there were increases in employment in the agriculture sector, this is probably due to some frustrations and miseries in the urban areas. Simply put, they returned to their respective provinces.

Notably though, there have been enacted reforms, such as the Ease of Doing Business and Efficient Government Service Delivery Act and the Revised Corporation Code, that are supposedly essential in boosting employment creation by fostering Micro, Small and Medium Enterprises (MSMEs) growth in the country. Sadly, however, there had been multitudes of perceived solutions to these woes (that didn’t work out) in the agriculture sector that were already presented on the table in the past.

Lest we forget, we are so productive at crafting laws but are so terrible in implementing them.