Bare Truth by Rose de la Cruz
Bare Truth

Growth of informal sector is due to lack of jobs

Jul 16, 2022, 5:18 AM
Rose De La Cruz

Rose De La Cruz


Looking at employment data, unemployment seems to have eased, but that does not mean more are now employed. The unemployed simply tried to earn from whatever product or services they could sell just to make ends meet.

Thus, economic and labor leaders should not use this data to boast about their successes, which they do not have. It is simply that the poor and the unemployed are doing everything they can to survive on their own—no matter how minimal they earn just so they have something to put on their family tables.

As Rene Ofreneo of the Freedom from Debt Coalition and former dean of the UP School of Labor and Industrial Relations said

“during the election fever, many Filipinos were able to secure extra jobs because of rich politicians. But most of the jobs are short-term.”

He told Business Mirror that it is possible that unemployment is declining but underemployment is on the rise

Ofreneo said while the elections brought Filipinos opportunities to be employed, many of these jobs were temporary. This indicates “inadequate employment” opportunities in the Philippines will continue.

“The reality is that there is a need to have a more comprehensive concept of ‘inadequate employment’ —inadequate in terms of hours of work, inadequate in terms of expected compensation or income, inadequate in terms of skills-jobs matching, etc.,” he said.

“If unemployment does not increase, this means jobs in the informal sector continue to increase. Informal (jobs are) those that belong to the category of ‘with jobs’ but inadequate,” he added.

Making do

The Ibon Foundation said the problem of increasing informality in the economy is that Filipinos continue to “make do” with whatever work is available, even if these are “unsecure, irregular and not decent.”

By class of worker, Ibon said, the drop in the number of wage and salary workers is concerning since this means more informal jobs, said the group.

The number of wage and salary workers fell by 469,000 to 28.2 million in May 2022 from 28.7 million in April 2022. Declines were mostly among those that worked in government or government corporations (by 281,000) and private establishments (by 179,000).

Another indication of worsening informality among employed persons is the growing number of self-employed and unpaid family workers.

It noted that the number of self-employed without any paid employees rose by 569,000 to 13.2 million from 12.6 million. Unpaid family workers increased by 542,000 to 3.8 million from 3.2 million.

Boosting the production sectors

“The new administration’s plan to just increase ‘employability’ through education, training and skills development is not enough. Boldly reforming the economy starting with boosting the country’s own production sectors-- not the big and foreign profit-driven businesses-- will deliver steady jobs, decent incomes, higher productivity, and a genuinely livelier economy, said the group,” Ibon said.

More Filipinos are also ending up in part-time jobs, said the group. By hours worked, the number of those that worked less than 40 hours increased by 439,000 to 16.7 million in May 2022 from 16.3 million in April 2022.

Ibon said since February, the number of part-time workers has been increasing by a monthly average of 922,000.

Less full-time workers

Further, Ibon said full-time workers or those who worked 40 hours and over decreased by 6,000 while those “with a job, not at work” increased by 18,000.

“The country’s economic instability will only worsen the jobs crisis. Government not acting and providing real economic stimulus through cash assistance to poor households, wage subsidies and support to small businesses and producers amplifies the effects of a weakening economy,” Ibon said.

On Thursday, the Philippine Statistics Authority (PSA) reported that 2.93 million Filipinos are unemployed while 6.67 million are underemployed in May.

The PSA noted that this translated to an unemployment rate of 6 percent and underemployment rate of 14.5 percent in May 2022. In May last year, unemployment was at 7.7 percent and underemployment was at 12.3 percent.

PSA data showed a total of 4.52 million Filipinos were visibly underemployed and 2.144 million, invisibly underemployed.

The number of Filipinos considered invisibly underemployed increased by 620,000 between May 2021 and May 2022; while visibly underemployed workers increased by 557,000 during the 12-month period.

Underemployed persons are employed persons who expressed a desire to have additional hours of work in their present job or to have an additional job, or to have a new job with longer hours of work.

Invisible underemployment is experienced by underemployed persons who are working at least 40 hours in a week, while visible underemployment is experienced by underemployed persons working less than 40 hours in a week.

My take

The sectors that will truly provide gainful employment and sustainable economic growth are agriculture and manufacturing—both of which government must enhance and boost to the max and not infrastructure which provides only temporary employment and an artificial trickle down to communities where such infrastructure is being erected. After that, nada.

Agriculture and building the downstream sector—meaning processing for value adding and stability of supplies of food items—will bring permanent benefits in farms and other communities involved in processing of farm products.

Manufacturing will enable the country to rely on its products, instead of importing from abroad, so that money is circulated in the country and not being used to pay for imported clothes, bags, handicraft, technical and technological products.

We have too much raw materials in the country—from minerals to commercial wood and to garments and leather products that we do not need to import anything – whether production input or final products.

It is time that we look into our own resources and our own market. At least for once in our lifetime, we must push for buying and making (things) local. This is not just a job for the Department of Trade but for the entire government and nation. Now is when we can show our love of country by patronizing and producing our own products from our own gifted talents and ingenious minds.

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