No new jobs seen for 20% of displaced workers
GIVEN existing mobility restrictions, around 20 percent of those who lost their jobs last year may not be able to find new employment this year, according to a former Socioeconomic Planning Secretary.
In a presentation at the Ateneo Eagle Watch forum “Preparing your Business and Institution in Prioritizing for Recovery,” Cielito F. Habito, Senior Fellow at the Ateneo Center for Economic Research and Development (Acerd), said around 22 percent of workers last year became “idle” due to lockdowns imposed to prevent the spread of Covid-19.
Those who became idle came from the agriculture, industry, and services sectors. However, Habito said, most of those workers who stopped working last year came from the services sector.
“This has been the major hit really when it comes to people in the economy, it’s the jobs that were hit. And under these circumstances, 20 percent of workers will not find work and so it will continue to be the biggest challenge because of complications such as poverty and social welfare,” said Habito, a former chief of the National Economic and Development Authority (Neda).
Habito said that while farm jobs rose by 432,000 based on data from the Philippine Statistics Authority (PSA) last year, industry and services jobs declined.
The PSA data showed a total of 2.55 million jobs were lost last year ‚with 2.09 million in the services sector and 896,000 in the industry sector.
Transportation, food services
BASED on another survey data presented by Habito, 33 percent of transportation and storage workers lost their jobs during the crisis while 30 percent of accommodation and food services workers did not have jobs.
Further, some 29 percent of the construction, education, and manufacturing workers surveyed were jobless since the crisis, along with 25 percent working in the human health and social work as well as other service sectors.
“A big chunk of the workers went to idleness, 22 percent not working in fact. but some agri workers went to industry, we find a bit of that, and some to services, but more of industry workers and services workers going to agri and of course to idleness,” Habito said.
To prevent a significant impact on social welfare, Habito said there is a need to provide additional ayuda or subsidy for these workers.
Extending another round of ayuda will also help stimulate demand and boost the economy. Since the self-inflicted “corona coma” of the Philippine economy, consumption spending suffered significantly.
Consumption spending is the primary driver of the Philippine economy. This has also been the reason for the low inflation experienced by Filipinos last year and the contraction in GDP growth, particularly at the height of the lockdowns.
“What we need is for ordinary people to have enough money to spend, enough to have small businesses feel it worthwhile to stay open. So we need another round of ayuda, whether or not displaced workers have been able to return to [partial] work,” Habito said in the Q&A chatbox during the webinar.
“Note that the US government made no distinction; they gave money to all. We can’t afford that, of course. BSP financing of government spending would be better than BSP pouring money into the banking system—subject to monitoring inflationary pressures,” he added.
Ibon: Hike wages
IBON Foundation Inc. proposes another solution: to increase wages. The think tank said this is still timely considering that the Duterte administration was the first post-marcos administration to see real wages contract.
Based on Ibon’s estimates, real wages under the current administration contracted 7.2 percent. Real wages, it explained, is the value of wages after adjusting for inflation.
At the start of Duterte’s term, real wages in Metro Manila were at P468.06. But after inflation and two wage hikes later, the value of real wages are now down to P434.47, the lowest real wage in over 8.5 years or 103 months.
“It has been more than two years or 27 months since the Duterte administration’s last wage hike to P537 in November 2018. This is the longest period without an increase since July 2004 under the Arroyo administration when the wage increase came after a dry spell of 29 months,” Ibon said.
Since these estimates did not yet include the recent spike in commodity prices, Ibon also recommends that the government extend new cash subsidies of P10,000 monthly for at least 2-3 months when unemployment and falling household incomes are expected to remain unresolved.
Ibon said the December 2020 inflation rate of 3.5 percent is the highest in 21 months, mainly due to higher inflation in food and non-alcoholic beverages, health and transport. It added that prices of pork, ampalaya, sitao, cabbage, carrots, string beans, tomato, potato and eggplant spiked from anywhere between P40 and P120 per kilo since December last year.
Price increases were even worse for the poor est 30 percent of households nationwide who experienced a 4.3 percent inflation rate in December, Ibon said.
The think tank proposed as well price controls on food items where prices are soaring, especially amid reports of alleged exploitative pricing by wholesale and retail traders.
“It is incumbent on the government to come up with schemes to enable a wage hike that increases incomes of low-income households and which will also stimulate aggregate demand in the economy,” Ibon said.