Incredible but true: Two of three underemployed workers are not paid

The twin problem of joblessness and poverty will define President Benigno S. C. Aquino III’s presidency.

After five years in office, he has failed to put a dent on the unemployment and underemployment problem; in fact, one can make a strong case that it has worsened under his watch. During the same period, poverty incidence has been virtually unchanged.

Unemployment and underemployment is a form of market failure. This provides a clear case for government intervention. The depth and persistency of the problem suggest that reliance on the market to create enough decent jobs is grossly inadequate.

Below are some relevant official labor statistics from 2010 to April 2015. Despite the above normal economic expansion from 2012 to 2014, after the slowdown in 2011, the following observations appear warranted.

1 Job creation continues to lag behind labor force expansion. Some 1.1 million workers join the labor force annually. Regrettably, the economy is able to create only roughly half a million new jobs annually.

2 The total number of unemployed and underemployed climbed from 9,621,000 workers in 2010 to 9,664,000 in April 2015. The number of unemployed dropped marginally -- from 2,859,000 workers in 2010 to 2,681,000 in April 2015 or by 178,000 workers. But the number of underemployed swelled from 6,762,000 workers in 2010 to 6,983,000 in April 2015, or by 221,000 workers.

3 The quality of jobs continues to deteriorate. Surprisingly, two of three underemployed are unpaid family workers. One of the indicators of the quality of jobs is the number of unpaid family workers. They are those who are deemed employed under the ‘one-hour-last week’ employment concept, but are unpaid. Seriously? Does such a class of employed workers really exist? Yes, it’s incredible but true.

Sadly, this class of workers continues to be huge and rising. The number of unpaid family workers rose by 202,000 -- from 4,145,000 in 2010 to 4,347,000 in April 2015. The percentage of unpaid family workers to total underemployed is on the rise again: from 61.3% in 2010, it improved to 52.4% in 2013, and then increased to 62.3% in April 2015.

4 This dire unemployment and underemployment picture is worse than what official labor statistics show. The jobs market numbers in the last two and a half years mask the severity of the problem. For both 2013 and 2014, the annual estimates of labor statistics do not include Eastern Visayas. For the January and April 2015, the labor statistics do not include the labor estimates for the Province of Leyte, which suffered severely as a result of super-typhoon Yolanda. Since estimates of labor statistics in the typhoon-ravaged areas can be expected to be worse than the national average, their exclusion understates the seriousness of the joblessness situation nationwide.

The high levels of unemployment and underemployment and the continuing deterioration of the quality of jobs seem to contradict the claim that recent economic growth is inclusive.


Benjamin E. Diokno is a former secretary of Budget and Management

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This column article was originally published on Business World Online and republished here with permission from the author.

Benjamin E. Diokno
Author: Benjamin E. Diokno
Professor Diokno is a professor of Economics at the University of the Philippines School of Economics. He served the Government of the Philippines in various capacities including as secretary of budget and management, fiscal adviser to the Philippine Senate, chairman and CEO of the Philippine National Oil Company and chairman of Local Water Utilities Administration. He provides policy advice and conducts research in the following areas of public economics: structure and scope of government; tax policies and tax reform; government expenditure analysis; national budget and public debt; fiscal decentralization; public expenditure management, and public policy analysis.