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‘Philippine labor market turning less bad’
MANILA, Philippines — The country’s labor market is slowly shifting to a “less bad” situation as the economy reopens but private consumption remains a drag in the overall recovery, a global think tank said.
In its latest economic monitor, UK-based Pantheon Macroeconomics said there are still some upsides even as the local job market has become more volatile following the spread of the Delta variant, with unemployment jumping to 8.1 percent.
Pantheon senior Asia economist Miguel Chanco said the underemployment rate, pertaining to the proportion of workers who were looking for more hours of work, has settled back down to its long-run downtrend.
Underemployment rate in August eased to 14.7 percent or 6.48 million Filipinos from 20.9 percent or 8.69 million the previous month.
“At the very least, the labor market is turning ‘less bad,’ which should alleviate some of the drag on confidence,” Chanco said.
“Nevertheless, we still believe that the economy is nearing the point where companies will need to start hiring more workers, as the pool of people who are willing and able to work longer stabilizes at its pre-pandemic size,” he said.
The government’s economic team already said further easing of restrictions as COVID-19 cases start to decline and more Filipinos get vaccinated would aid in the labor market’s recovery.
“This trend will support the further reopening of the economy and the use of granular lockdowns to allow the majority to return to work and earn a living,” they said.
Still, Chanco maintained that upward wage pressures will stay non-existent, with the rise in applicants still outstripping stagnant openings.
On the other hand, Pantheon emphasized that private consumption in the Philippines remains subdued following the lockdown in August, with trips to retail and recreation venues falling to 68 percent of the pre-pandemic norm from 76 percent in July.
Chanco said private consumption is still bleak, with the level of sales barely moving over the last six months.
“The supposed resilience in spending during the worst of the Delta wave has come at the expense of the speed of the longer-term recovery,” Chanco said.
The central bank’s latest consumer expectation survey also revealed that the proportion of households with savings fell in the third quarter, which means that rainy day funds played a huge part in keeping consumption steady.
“We maintain that the rebuilding of the huge savings lost since the pandemic started – a process which has been setback by the Delta squeeze – will weigh heavily on the post-COVID recovery in private consumption over the next 12 months, at the very least,” Chanco said.
He added that risks to consumption are still tilted to the downside as the country is not fully out of danger from the Delta variant.
Chanco noted that consumers will also remain under pressure amid rising inflation rate.
Source: https://www.philstar.com/business/2021/10/12/2133411/philippine-labor-market-turning-less-bad