Joblessness and poverty

The increase in the SWS joblessness rate in the last quarter of last year from 21.7 percent in September 2013 to 27.5 percent in December 2013 was reported to have sparked a full Cabinet meeting that took more than five hours. Last Monday, Economic Planning Secretary Arsi Balisacan called a press conference where he admitted that “growth is not denting poverty.”

I like the honesty of Sec. Arsi who went on to explain why poverty is a tough nut to crack. High unemployment and poverty incidence, he admitted, will remain a big challenge for the government in the next 10 years or so even amid steady growth. Balisacan didn’t make a big thing of what he called a modest reduction of poverty incidence since 2009 – declining from 27 to 25 percent.

Of course years of bad economic management and even squandered growth opportunities are responsible for our stubborn poverty situation. But past administrations are quick to resort to technicalities to highlight whatever little positive result they can squeeze out from the numbers.

Indeed, it would have been easy for Sec Balisacan to say that journalists are being myopic for highlighting the single-quarter increase in joblessness. Arsi could have taken journalists like myself to task for failing to notice that the full-year data reveals a FALL in the SWS average from 2012 to 2013 as Malacanang apologists have always done.

Arsi could have even castigated newspaper headline writers for disregarding the fact that the 21.7 was the lowest quarterly percentage ever since December 2011. Averaging over four quarters, the Joblessness percentage of the full year 2013 was 25.2; this was 3.6 points below the 28.8 in the full year 2012. Hooray! 3.6 points below!

But Sec Arsi knew better. He has been in government long enough to realize that journalists look at the big picture when reporting on statistics. We look at the numbers and see a total picture, not the small differences here and there the way social scientists with PhDs would.

Take these numbers from SWS on the previous annual averages: 23.6 in 2011, 22.5 in 2010, 29.0 in 2009, 28.8 in 2008, 25.2 in 2007, 26.4 in 2006, and 22.6 in 2004.  In 1993-2003, on the other hand, the average was below 20 percent. Thus, as SWS’s Dr. Mahar Mangahas himself pointed out, “high joblessness, like self-rated poverty, has been lingering for a decade.” That’s the story we saw and reported on.

But I do agree that some readers are getting confused with the terms being used in these reports like joblessness and unemployment rate. A review is in order.

For SWS, “Jobless” means No Job Now + Looking for Work. For the government, “Unemployment” means Idle Last Week + Looking for Work + Available for Work.

Dr. Mangahas explains the difference further: “In the government’s Labor Force Survey, all respondents who worked for as little as one hour in the week before the interview are classified as employed (as well as those not actually working last week but already with a job/business or starting one within two weeks). 

“Those idle and seeking work are unemployed; those idle but not seeking work, and not available for work if an opportunity arises within two weeks, are outside the labor force, which is the sum of the employed and the unemployed. Official unemployment is the ratio of the unemployed to the labor force.

“The official unemployment rate was 6.5 percent in the October 2013 Labor Force Survey.  This should be compared to the SWS jobless/available rate of 17.1 percent, rather than to the SWS joblessness rate of 27.5 percent… 

“The key to the contrast between SWS and official figures is the latter’s stingy one-hour rule. Official unemployment is so low because so few can afford to be idle. 

“Surely, many of those who say they are jobless, when interviewed by SWS, were not idle in the past week, but did odd work to earn whatever they could.  They are jobless, but ‘employed’. The stingy rule has resulted in a statistical cover-up of the problem of lack of decent jobs.”

With all that out of the way, let us get back to Sec. Arsi and the Aquino administration’s plans to dent the poverty rate. Dent is the operative word as this is just about as much as they can hope to do in the time they have left.

Sec. Balisacan noted that “some cities or provinces have been experiencing economic growth, but the poorest families are being left behind perhaps because the growing sectors do not require the goods or services that the poor can provide.  Worse, migrants are being attracted into these cities or provinces, but they too, are unable to participate in the growth process.”

So, Balisacan said, social services are now being improved and more targeted. Government, he said, will be more aggressive in helping poor people get better job-skills match to facilitate employment.

The Secretary said he hopes to accomplish those goals through “what we call narrow targeting, meaning that the beneficiary should be known by name.  For this reason, we will make use of the data from the National Household Targeting System of the Department of Social Welfare and Development (DSWD) which identifies the poor households in these provinces by name.”

Sec Balisacan said government “will begin with the growth sectors present in these provinces, then focus on providing auxiliary and ancillary services that could be provided by the poorest families in the province.  Based on our growth experience, these sectors could be IT-Business Process Management, tourism, construction, manufacturing, and logistics.”

The Economic Planning chief also pointed out that over the last three years, the Aquino administration has allocated more resources for the Conditional Cash Transfer (CCT) program, education, health, among other services, to benefit the poor.

“The thing about investment and social services is that we actually inherited big… huge gaps in the spending, not only classrooms…but also in many other social services.” The problem they inherited, Sec Balisacan explained, could be summed up as the “Lost decade”. The Philippines had committed in 1991 to reduce poverty by half by 2015, but missed the target.

“What has happened was that by 1997 and even as early as 1994 – from 1994, in fact, to almost 2009, you hardly see any change in the poverty incidence…”

Dr. Balisacan, an economist who has done a lot of work on poverty, was optimistic “we can make the connection between economic growth and poverty reduction sharper. That is, we are going to look at specific geography, specific provinces and cities where the poor are, and we look at the circumstances of those areas and sectors, and we will tailor-fit the interventions that will matter most to the poor.”

The NEDA chief underscores the role of private sector investments in job creation needed to cut poverty incidence. “Accelerating job creation requires building up of capital. Investments must continually rise for the economy to continue to grow and this requires a stable and predictable market environment…

“At the same time, we need to raise productivity and sustain growth in the agriculture, industry, and services sectors. Investing in research and development is crucial in this respect. Emphasis will be given towards income diversification and agriculture and industry linkages.

“Reducing the cost of doing business in the country will continue to be a priority, consistent with the platform of good governance, and in order to encourage more investments. This requires addressing infrastructure bottlenecks, improving connectivity and increasing the availability of highly trainable and skilled labor.

Balisacan cited the critical constraints to investors… “We know what they are: the regulatory bottlenecks, the bureaucratic processes. And over the last three years, we have made some progress, as we have seen in the indicators of the ease of doing business and the competitiveness indicators – these are global reports.”

He called on domestic investors to take the lead in tapping opportunities the economy offers. “If you cannot get your private local investors to invest, how would you expect foreign investors to come in?”

Well, Sec Arsi Balisacan made it plainly clear that the Aquino administration knows what the problem is, realizes there are no quick fixes and is not about to quibble with statistics to convince us our problems are not as serious. Now, we all have to deliver on those modest short term goals. We are in it, all together.

Boo Chanco’s e-mail address is bchanco@gmail.com. Follow him on Twitter @boochanco