Philippines Tackles High Unemployment Rate Amid Economic Crisis

MANILA -- Unemployment rate in the Philippines is expected to remain high in the next few months as the global economic crisis crimps business activities, analysts said.

The Philippines has one of the highest unemployment level in Southeast Asia, standing at 6.8 percent as of October 2008, according to the country's National Statistics Office.

The global economic turmoil has dampened demand in Japan, the United States and Western Europe -- large markets for Philippine export goods, services and migrant workers. As these markets contracted, so did the demand for Philippine labor.

"Workers will always be the victims in a recession," said Father Edwin Corros, executive secretary of the Catholic Bishops Conference of the Philippines' Episcopal Commission on Migrants and Itinerants.

"When there's no demand for your products, how can you continue to hire people to make your products?" said Rene Cristobal, vice president of the Employers Confederation of the Philippines, Inc. (ECOP). 

Cristobal said several of ECOP's member-companies have to lay off workers as they either close shops or reduce their output.

Analysts said the most vulnerable workers are those in the export-oriented industries such as electronics and textile manufacturing. "The recession in our trading partners has hit our exports sector hard," said Philippine Socio-Economic Planning Secretary Ralph Recto. Philippine economic planners expect export receipts to fall this year and this doesn't bode well for workers, especially for those employed in labor-intensive manufacturing companies.

Indeed, several companies reported either laying off workers or cutting working hours as the crisis reduced demand for Philippine exports.

In Luzon, northern Philippines, Intel Corp., the first US semiconductor firm that established a facility in the Philippines, shut down its factory and retrenched 1,800 workers. In Cebu, southern Philippines, furniture maker and exporter Giardini del Sole Inc. has temporarily shut down and laid off about 250 workers as a result of the financial crisis.

The Philippine Labor Department reported that 40,000 workers were retrenched, 33,000 workers are experiencing shorter working hours while over 5,400 overseas Filipino workers were displaced because of the crisis.

Dennis Arroyo, director of national planning and policy of the National Economic and Development Authority, forecast that as much as 200,000 workers may be laid off as the crisis continues to hurt the local economy.

However, the director doesn't expect the unemployment level to hit double-digit levels which were recorded several years ago. In a paper issued last month, Josef T. Yap, president of the Philippine Institute for Development Studies, expect unemployment levels to stay at current levels.

"Assuming that the economy will not decelerate further in 2009, there is reason to be cautiously optimistic that the unemployment rate will not rise beyond 6.8 percent in the next few months," he said.

Recto conceded the crisis will pressure the employment situation, but he believed that the strong macroeconomic fundamentals combined with the 330-billion-peso (about 6.84 billion US dollars) stimulus package will cap the growth in unemployment rate.

For this year, despite the global recession, the Philippine GDP is expected to expand at 3.7 percent to 4.4 percent. Recto said the easing of inflation (estimated to hit 3.9 percent this year compared to last year's 9.3 percent) will boost consumption and keep the economy afloat. The stimulus package -- the bulk of which will be used to build infrastructures -- will create 800,000 new jobs.

Luz Lorenzo, regional economist of the ATR Kim Eng Securities, agrees that the consumption driving Philippine economy will be resilient this year. But such economic growth, she said, is not high enough to absorb the burgeoning labor force.

"The economy will not fall in the deep end. But neither will it be a bed of roses. Unemployment will remain a problem," she said. Migration: by need not by choice

The lack of opportunities in the Philippines will force most Filipinos to seek greener pastures abroad. Every year, around one million Filipinos go overseas, mostly forced to leave their families to provide them with a better life.

Father Corros said most of the retrenched migrant workers that the Episcopal Commission on Migrants and Itinerants has been assisting in the past few months still prefer to work overseas instead of just staying in their own country.

"Migrating is the only option for them because they can't find jobs here," he said, adding that "we go back to the same problem. They go abroad because it's difficult to look for jobs here."

The Philippines is one of the world's biggest labor exporters, with 10 percent of its over 80 million population living abroad. Migration has long been part of the Philippine government's strategy to solve the unemployment problem.

This policy started in the 1970s when then Philippine President Ferdinand Marcos, faced with huge levels of foreign debt and the oil crisis, sent construction workers to the Middle East. This was done to rein in the rising unemployment levels and avoid growing social unrest. Thirty years later, Filipinos continue to leave in droves -- working as entertainers, domestic helpers, nurses, caregivers, seafarers and programmers.

The global crisis may have slowed businesses and even retrenched more than 5,000 Filipino migrant workers but analysts and government officials believed that there will be demand for Philippine labor abroad.

Philippine President Gloria Macapagal- Arroyo directed the Philippine Overseas Employment Administration to aggressively market Filipino labor and expertise abroad.

This kind of policy has long been criticized by migrant rights advocates, explaining that migration, although it brought in the much needed remittances, also caused social problems. Numerous migrant workers have been physically and sexually abused and have to endure exploitative working conditions.

The separation also breaks family ties and hurt the children who were left behind by their parents. What is needed, they said, is for the government to develop an economy that will provide decent jobs and will make migration a choice, not a necessity, for most of the country's labor force.

The current global economic crisis, however, doesn't offer such option. The country's economic managers said one of the factors that will support the consumption-driven economy is the steady inflow of remittances. Labor deployment will therefore remain a key government policy.

"We see a steady labor demand in the Middle East, Australia and elsewhere which are responding to the crisis by embarking on infrastructure projects with their own stimulus packages," Recto said in last week's economic briefing.

Analysts said most Filipinos in the United States -- one of the top destination countries for Filipino migrants -- will keep their jobs as they're usually employed in the recession-proof healthcare sectors. Industrialized economies with aging populations will continue to seek cheap, English-proficient and skilled nurses and caregivers from countries like the Philippines.

The Philippines is one of the world's biggest exporters of health care workers. Every year, over 8,000 Filipino nurses and 14, 000 caregivers were deployed. Outsourcing industry offers new jobs

There are some bright spots in the domestic labor market. The business process outsourcing (BPO) industry is expected to remain bullish. BPO revenues are forecasted to grow by 20 percent to 30 percent this year and companies expected to hire 100,000 new workers.

"A lot of companies are under a lot of pressure to cut cost so I think it will accelerate outsourcing," said Alfredo Ayala, CEO of LiveIt Solutions, Inc., the holding company for Ayala Corporation's investments in business process outsourcing.

Call centers will remain the biggest revenue earner and employer in the BPO sector. But BPO executives believe that the growing demand for the high-value non-voice outsourcing sectors such as animation, software development and back office will offer opportunities to the country's programmers, graphic designers and accountants.

"Right now, we're really leading in the contact center sector. But now we're trying to change that. We're trying to expand to the higher value non-voice services," said Ma. Cristina Coronel, president of the Philippine Software Industry Association.

Job openings, however, will not necessarily translate into full- time employment. BPOs offer a lot of perks and benefits to its employees but very few are qualified to work in the industry. To solve this problem, BPOs are offering workshops and scholarships to expand its talent pool.

Dennis Posadas, deputy executive director of the Philippine Congressional Commission on Science, Technology and Engineering, said that as far as outsourcing in the information technology sector is concerned, very few are qualified to take the jobs because many are not adequately trained. "We still need to improve basic education in our pubic schools. They need to emphasize on science and math education," he said.

Insight from the Article


A man willing to work, and unable to find work, is perhaps the saddest sight that fortune's inequality exhibits under this sun. 

Yes, there are lots of lazy people around the world. But whether we like it or not we need to find jobs to sustain our living. Life wouldn't  be as easy as of that when we were younger. Coz in reality, life is a struggle between YOU versus billions.


With our present condition we need to excel among others if we wanted to land on a good job. There is this competition for the limited slots for job vacancy.


I remember what my father always told me with regards to employment, that instead of competing to other in filling those vacant jobs, why not help the government in creating jobs? He definitely has a point. Philippines do have lots of  resources that we could maximize and create a new product that would surely open jobs to many.


You know what contributes to this rise in unemployment rate? It's the rapid population growth. a lot of  people acting so uneducated and unaware of the consequences of their acts in making love all the time. What's bad is that they could not even send them to school making them "tambays" in their whole life. They usually rely on government subsidies. They tend to put all the blame to the government. How stupid.


Unemployment - this resulted to many families to live separately. All resorted to going abroad and find a greener pasture. They have no choice but to leave  and live away from their family.


The government should do something about it. Yes, it would not be that easy because of the global crises but at least they could help even in small ways.


I do know a lot of unemployed people. I also know how difficult being a "kapwa" is,  too. And I know that by the time I graduate, I will be one of those unemployed citizen of the country.


Everybody wants to be KAPWA para HAYAHAY!  but hey! wake up! Widen your thoughts about life and strive for your own. If there is unemployment issue, then why not CREATE employment!