ADB reports high informal employment

By Mia A. Aznar

Wednesday, September 28, 2011

WITH studies showing the quality of employment as being correlated with the productivity and profit of a firm, the Asian Development Bank (ADB) has noted that the Philippines has a very high rate of informal employment.

Dr. Natalie Chun, an economist of the ADB leading the special chapter on key indicators for 2010 and 2011, noted that while most Asian countries showed positive signs of moving from low to high productivity in manufacturing and services sectors, there is a high informal employment.

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Chun, during the Pathways to High and Inclusive Growth forum in Manila, said it was surprising that there were still many poor families in the Philippines when a shift to the manufacturing sector is usually an ideal direction toward reducing poverty.

She said this could be due to the level of informal employment.

“Informality is common, even in non-agricultural jobs,” Chun said.

Based on studies, Chun said the quality of employment is correlated with reductions in poverty and inequality. She added that the quality of employment enhances the workers’ well-being and the firm’s productivity and profit.

Agriculture

What they found surprising in the Philippines is that while the agricultural sector has declined and has seen more workers joining the services sector, there are many families still suffering from poverty.

She also said that unemployment is rather low, and that those who have had higher education make up a high number of the unemployed.

Chun said that productivity growth is a key to promoting high quality employment but noted that the Philippines has little productivity compared with its counterparts in the Asean region.

She found restrictive labor and industrial policies, uncompetitive markets and demographic changes as challenges facing the country’s employment situation.

Compared with its neighbors in Asia, the Philippines has shown very slow growth in real wages, at a rate of below two percent from 2001 to 2008.

Dr. Emmanuel Esguerra, associate economics professor of the University of the Philippines, said the lack of skills forces majority of Filipinos to resort to low-wage jobs.

He said that even if they are not paid well, those who do have jobs will not risk losing their jobs because they will have no support if they lose their only source of income.

Esguerra said workers in low paying jobs will not bother to perform well or try to improve their skills set.

Because of employment insecurity, Esguerra said there is a high labor turnover rate and that the average job tenures are “increasingly shortened.”

He pointed out that 70 percent of company hirings are just for replacements of those who have left.

He believes the country’s labor regulations forcing companies to offer regularization to an employee within six months on the job forces companies to terminate employees five months after they are hired.

Though those behind the regulations may have thought it was protecting the rights of workers, Esguerra said the policy might have led to high job insecurity in the country.

Published in the Sun.Star Cebu newspaper on September 29, 2011.