Labor Market
Labor Market is the place where workers and employees interact with each other. In the labor market, employers compete to hire the best, and the workers compete for the best satisfying job. (The Economic Times, n.d.).
For further understanding, let us first define the terms needed in this topic. The people involved in the labor market are those who are either employed, underemployed, or unemployed. The following are based on the definition given by the Philippine Statistics Authority.
First, employed persons include all those who are either at work or people with a job but not currently working. Those who are “at work” are those who do any work even for one hour during reference period for pay or profit, or work without pay on the farm or business enterprise operated by a member of the same household related by blood, marriage, or adoption. While the people “with a job but not at work” are those who have a job or business but are not at work because of temporary illness or injury, vacation, or other reasons. Persons who expect to report for work or to start operation of a farm or business enterprise within two weeks from the date of the enumerator’s visit are considered employed. To be included in this category, a person must at least be 15 years old and above. (Philippine Statistics Authority, 2012).
Second, underemployed persons include all employed persons who express the desire to have additional hours of work in their present job, or an additional job, or to have a new job with longer working hours. These are the people who work for less than 40 hours during the reference period and want additional hours of work. (Philippine Statistics Authority, 2012).
Third, unemployed persons include all those who are 15 years old and over and those who don’t have work, currently seeking for work or not seeking work due to the following reasons: discouraged workers, awaiting results of previous job application, temporary illness or disability, bad weather, and/or waiting for rehire or job recall. (Philippine Statistics Authority, 2012).
Status Quo of the Philippine Labor Market
All datas shown in this part of the paper are based on the record posted by the Philippine Statistics Authority. This was recorded through the Labor Force Survey (LFS). The Labor Force Survey (LFS) is a nationwide quarterly survey of households conducted by the Philippine Statistics Authority (PSA) to gather data on the demographic and socio-economic characteristics of the population. Through LFS, we were able to get the statistics on levels and trends of employment, unemployment, and underemployment for the country. (Philippine Statistics Authority, 2012).
For the employment, underemployment, and unemployment rate of the Philippines, it is separated by region and with a total population of 70.897 million that are 15 years old and over. Out of the said population, 62.2 percent are part of the labor force and from this 94.7 percent are employed, 5.3 percent are unemployed, and 18 percent are underemployed. For the highest and lowest by region, the region with the highest labor force participation rate is Region X (Northern Mindanao) with a total of 72 percent out of 3.301 million people while the lowest is the Autonomous Region in Muslim Mindanao (ARMM) with a rate of 46.1 percent out of 2.369 million people. For the region with highest employment rate, ARMM is ranked highest with a rate of 97.4 percent while the lowest is the National Capital Region (NCR) having a rate of 92.2 percent.
Employment, Underemployment, and Employment Rate by Region
Region
Total Population 15 Years Old and Over (in ‘000)
Labor Force Participation Rate
Employment Rate
Unemployment Rate
Underemployment Rate
Philippines
70,897
62.2%
94.7%
5.3%
18.0%
NCR
9,142
60.6%
92.2%
7.8%
7.2%
CAR
1,264
62.2%
96.4%
3.6%
14.8%
I- Ilocos Region
3,502
63.3%
93.3%
6.7%
27.9%
II- Cagayan Valley
2,389
65.3%
95.8%
4.2%
24.8%
III- Central Luzon
7,853
60.7%
94.6%
5.4%
11.5%
IVA – CALABARZON
9,973
62.9%
93.3%
6.7%
13.1%
IVB-MIMAROPA
2,077
65.9%
96.0%
4.0%
22.4%
V- Bicol Region
4,079
62.0%
96.0%
4.0%
33.8%
VI- Western Visayas
5,439
62.0%
95.1%
4.9%
22.9%
VII – Central Visayas
5,280
63.1%
94.2%
5.8%
24.4%
VIII – Eastern Visayas
3,137
61.6%
96.3%
3.7%
19.4%
IX – Zamboanga Peninsula
2,609
59.3%
96.6%
3.4%
16.1%
X – Northern Mindanao
3,301
72.0%
97.0%
3.0%
21.0%
XI – Davao Region
3,479
62.2%
95.3%
4.7%
17.8%
XII – SOCCSKSARGEN
3,131
62.4%
96.2%
3.8%
17.9%
Caraga
1,875
67.1%
96.0%
4.0%
24.7%
ARMM
2,369
46.1%
97.4%
2.6%
8.1%
As for the breakdown of the type of jobs, workers in the Philippines are grouped into three broad sectors, namely, Agriculture, Industry, and Services sector. Services sector comprised the largest proportion of the population who are employed, followed by Agriculture Industry, and then Industry sector being the smallest group. The table below shows all the jobs related to its sector.
Services
55.9%
Agriculture
26.0%
Industry
18.1%
Wholesale and retail trade; repair of motor vehicles and motorcycles
35.4
Agriculture, hunting, and forestry
90.5%
Mining and quarrying
2.9
Transportation and storage
14.2
Fishing
9.5
Manufacturing
47.0
Accommodation and food service activities
7.4
Electricity, gas, steam, and air conditioning supply
1.4
Information and communication
1.6
Water supply; sewerage, waste management and remediation activities
0.6
Financial and insurance activities
2.1
Construction
48.2
Real estate activities
0.9
Professional, scientific and technical activities
1.0
Administrative and support service activities
6.8
Public administration and defense; compulsory social security
10.3
Education
5.1
Human health and social work activities
2.1
Arts, entertainment and recreation
1.5
Other service activities
11.6
Activities of extraterritorial organizations and bodies
0.0
Demand and Supply Statistics
Results from January 2018 and 2017 Labor Force Survey
Philippines
January 2018/
January 2017
Population 15 years and over (in 000)
70,897
69,414
Labor Force Participation Rate (%)
62.2%
60.6%
Employment Rate (%)
94.7%
93.4%
Unemployment Rate (%)
5.3%
5.6%
Underemployment Rate (%)
18.0%
16.3%
Reference Number: 2018-043
Based on the table above, employment rate increased by 1.3%. According to Ernesto M. Pernia, Secretary of Socioeconomic Planning, the improvements in the labor market indicate that more Filipinos are encouraged to join and re-join the labor force, and that more people are being employed. (Leyco, 2018). “This signals that the economy is responding positively to the economic reforms and programs that the government has been laying down,” Pernia said.
As employment rose, those looking for additional hours of work or additional jobs increased, indicating the need for more quality employment. (Valencia, 2018). As per underemployment, it increased by 1.7%. Rural regions (i.e Bicol, Eastern Visayas, and Soccsksargen) had higher underemployment rates than the urbanized regions (i.e. NCR, Davao, Calabarzon, and Central Luzon). (Dy, 2018). According to Rolando Dy, these are the following factors that affect the increase of underemployment in the rural sector:
“First and well-known, agriculture has high seasonality. For example, irrigated palay and corn have usually two harvests a year. Second, the widespread low farm productivity requires low labor demand. Coconut is harvested only four times a year due to low yield (easily 70 percent below potential). Most of the coconut farms are senile, unfertilized and not intercropped. But there is also a deeper reason. A farm family can supply two working members. At 250 person-days a year, the total family labor supply will be 500 person-days.” (Dy, 2018).
Dy also gave ways on how to reduce rural underemployment. First is by increasing farm productivity and farm diversification. The following actions will induce labor demand: (1) higher farm productivity by higher yields and higher cropping intensity, (2) crop diversification, (3) productivity plus diversification creates scale for raw materials of processing industries for domestic and export markets, and (4) cultivation of idle lands. (Dy, 2018).
Again, as employment rose, this resulted to the decrease of unemployment rate. As we can see on the table above, it decreased by 0.3%. “Our labor market was boosted by better employment opportunities in the industry and services sectors. This performance also brought the unemployment rate to its second lowest in the decade, with the lowest recorded in October last year,”. (NEDA, 2016).
Government Intervention
The government intervenes in the price setting through setting the minimum wage a worker can receive a day. The minimum wage of a worker in the Philippines varies depending on the sector or industry of his or her job and where the job is located. This is done in order to protect the workers from being underpaid by employers and it also gives a guarantee of sufficient income for them to be able to purchase their basic needs.
Currently, the minimum wage of a worker in the Philippines varies among regions and among sectors,. According to the Department of Labor and Employment’s (DLE) National Wages and Productivity Commission, the current minimum wage of a Filipino worker daily are:
Summary of Current Regional Daily Minimum Wage Rates (Non-Agriculture, Agriculture)
As of April 2018
As seen in the table above, the lowest minimum wage a worker can receive in a non-agriculture type of job (industry and services) is Php 265 in ARMM while the highest is Php 475 in NCR. As for the agricultural sector, the lowest wage a worker can get is Php 245 with a non-plantation type of job in Region VIII while the highest wage is also Php 475 in NCR.
Possible Threats to the Philippine Labor Market
First possible threat is technology innovation. When this happens, structural unemployment may occur. This refers to a mismatch between the jobs available and the skill levels of the unemployed. (Amadeo, 2018). It occurs when an underlying shift in the economy makes it difficult for some groups to find jobs. (Amadeo, 2018).
An example I can give related to this is typewriter. A news shared by ABS-CBN tells the story of Ramon Avena who sells one of the last remaining typewriter shops in the country. (Lacuata, 2016). Through this, we can see how this type of product slowly faded throughout the years because of technology innovation. People who sell this before may have experienced structural unemployment for quite awhile.
Second is poverty and lack of skills. Since some people who look for jobs do not meet the requirements, there will be more vacant slots for jobs. At the same time, poverty causes some Filipinos to have incomplete education. This is a disadvantage for people who look for jobs because they don’t have enough knowledge to perform their duties as an employee. This leads to a shortage of qualified personnel.
“The productivity of the workers often cannot match the high cost of mandated minimum wages. Factor in the various forms of benefits that employers are required for regular employees, then the gap in wage and productivity got even wider. This applied to companies that are in export industry which require a high degree of labor. Contractualization is also commonly used by enterprises operating and selling their products in the domestic market.” (Sicat, 2016).
Third is the cause of immigration.In the light of the concern raised by PCCI, the question
is posed: Where are the thousands of engineers and technical specialists that our local colleges and Technical Education and Skills Development Authority (Tesda) educate, train and graduate every year? (Palabrica, 2017). A possible answer may be the majority of them are in the Middle East or in a another foreign country. (Palabrica, 2017). We can consider this as a threat since some of the potential workers in our country transfer to another country. In that way, the Philippines tend to lose possible great employers.
ay in here…