High jobless rate hints at quality of PH growth, says think tank

The Philippine economy has not seen consistent job creation despite a strong economic growth rate of 6.3 percent in the second quarter, indicating potential structural issues that affect the quality of economic growth, according to a report from GlobalSource Partners.

The New York-based think tank noted that the jobless rate went up to 4.7 percent in August from 3.1 percent in July.

This happened despite inflation easing to 3.3 percent year-on-year in August from 4.4 percent in the previous month.

READ: July unemployment rate at 4.7%, up from 3.1% in June

GlobalSource said that this pattern suggests a trade-off between inflation and unemployment in the short run. As such setting low unemployment targets can be risky, as inflation may also be influenced by inflationary expectations which could cause stagflation – a situation in which high inflation and high unemployment occur together.

“This seems to be happening in the Philippines in June and July. But a factor that could also explain it is structural,” GlobalSource said.

The underemployment rate – referring to those who want longer work hours or an additional job, or a new job with longer hours – fell to 12.1 percent in July from 15.9 last year. However, this was unchanged from the previous month.

The government noted that youth unemployment is a key factor behind the rise in the overall unemployment rate.

In July, 1.02 million or 42.8 percent of the 2.38 million unemployed Filipinos were aged 15 to 24. up from 37.1 percent last year and 35.9 percent in June.

Such an increase was partly attributed to the influx of recent graduates entering the job market, as around half a million new graduates started looking for work in June after the school year ended.

“On this basis, aside from its structural causes, the rising trend may also be considered seasonal in nature,” GlobalSource said.

Meanwhile, the think tank noted that the government remained steadfast in prioritizing plans to attract investments in sectors that create high-quality jobs.

The report cited the government’s efforts to attract job-generating investments, scale up social and physical infrastructure to enhance employment prospects, and implement reskilling and upskilling programs to improve job security and adaptability.