Sunday, June 17, 2007

RP's 6.9 percent GDP growth is trickling down, but...

Was the 6.9 percent growth rate achieved by the Philippine economy in the first quarter of 2007 trickling down to ordinary people? The latest labor force survey by the National Statistics Office seems to indicate so.

As shown in the box, the country’s jobless rate went down to 7.4 percent (using the ILO definition) from the previous year’s figure of 8.2 percent. That’s significant an improvement, more so that underemployment has also gone down to 18.9 percent from 25 percent.

Are wages rising? It’s possible. That is quite observable in the case of the fast growing industry like the call centers, other cyberservices, and electronics. It’s also possible that the continued flow of skilled workers abroad has started to tighten labor supply. Or it’s also possible that the 6.9 percent growth rate may have really created more job opportunities. The rise in underemployment may suggest that those who are working simply took advantage of the opportunity by moving into those higher paying jobs. Maybe. That’s only my initial thoughts after looking at the aggregate numbers.

Now let’s look deeper. The NSO does not provide much details but
Table 1 seems to provide some indicators. If seen by industry, it’s obvious that the share of agriculture in employment has increased. So the farms are contributing significantly despite the fact that agricultural growth has been stable at 4.2 percent. The share of construction is also rising. This is quite consistent with the supposed recovery in the real estate sector. And then it’s obvious that private households are hiring.

By occupation, it’s clear that the share of machine operators and assemblers rose. It seems to suggest the factories are a little busier. Laborers and unskilled labor also have the same trend. This is quite obvious because the farms employ lots of seasonal workers.

By class of workers, there is clearly an improvement in the share of wage and salary earners while that of own account workers declined. Is the availability of quality jobs improving? One could be tempted to think that way. Private establishments are definitely hiring; so are private households. The only problem is that those who are employed in private households are mostly unpaid family members. There’s the rub.

As shown in
Table 2, reduced underemployment is largely confined in the industry and services. That seems to validate my earlier observations that so far the major beneficiaries of the recent surge in the economy are urban dwellers. Speaking about the limits to a services-driven economy

So should we be happy? Sure—why not? But let’s cross our fingers that we continue growing 6 percent or higher so we could eventually spread the benefits of higher growth to the broader sectors of society.

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