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Philippines: Firms seen expanding, hiring more workers
MANILA, Philippines — Businesses have revived plans to pursue expansion programs and hire more workers next year in anticipation of a strong economic rebound from the pandemic-induced recession, according to the Bangko Sentral ng Pilipinas (BSP).
Redentor Paolo Alegre, director of the BSP’s Department of Economic Statistics, said the result of the latest Business Expectation Survey (BES) showed that the employment outlook index for the first quarter of 2021 returned to the positive territory at 5.3 percent after plunging to -5.5 percent in the third quarter due to the COVID-19 pandemic.
Likewise, Alegre said the employment outlook index for the next 12 months also turned positive at 7.8 percent from the previous quarter’s -2.1 percent.
“The employment outlook index returned to the positive territory for the first quarter of 2021 and the next 12 months, suggesting that firms are looking forward to hiring people in the first quarter of 2021 and the next 12 months,” Alegre said.
Latest data from the Philippine Statistics Authority (PSA) showed the unemployment rate in the country fell to 10 percent in July from a record 17.7 percent in April as the economy reopened after Metro Manila shifted to general community quarantine in June.
Furthermore, Alegre said the survey showed a higher percentage of businesses with expansion plans for the first quarter of next year at 16.9 percent from the previous quarter’s 11 percent, as well as 28 percent for the next 12 months from 20.4 percent.
“The percentage of firms that expressed expansion plans for the next quarter and the next 12 months increased across all industry sub-sectors, except for the agriculture, fishery, and forestry sub-sector, which declined,” he said.
Alegre also said that insufficient demand resulting in low sales volume, as well as the stiff competition, are viewed by 45.6 percent and 36.7 percent of respondents, respectively, as major risks to businesses.
“Further, majority of the respondents that specified other factors indicated the continued adverse effects of the COVID-19 pandemic as additional business constraint,” he said.
For the first quarter of 2021, businesses turned more optimistic, with the overall confidence index rising to 37.4 percent from the previous quarter’s 16.8 percent on the back of the expected gradual recovery from the COVID-19 pandemic with the anticipated availability of the vaccine.
This after the overall confidence index returned to positive territory at 10.6 percent in the fourth quarter after slumping to -5.3 percent in the third quarter amid the reopening of businesses and adapting to the new normal, easing of community quarantines nationwide as well as seasonal factors such as uptick in demand during the holiday season and start of milling season.
The Philippines slipped into recession with the gross domestic product (GDP) contracting by 10 percent from January to September. The contraction slowed to 11.5 percent in the third quarter from a record 16.9 percent in the second quarter as the economy partially reopened in June.
Economic managers are expecting a deeper GDP contraction of 8.5 to 9.5 percent instead of 4.4 to 6.6 percent this year before bouncing back with a growth of 6.5 to 7.5 percent next year.
Alegre said businesses expect the peso to appreciate for the next quarter, but depreciate for the next 12 months and inflation as well as interest rate to rise during the period.
“However, inflationary pressures may ease in the first quarter of 2021 and the next 12 months as the number of respondents that expected higher inflation declined vis-a?-vis the Q3 2020 survey results,” he said.
Source: https://www.philstar.com/business/2020/12/14/2063556/firms-seen-expanding-hiring-more-workers