Jobless growth haunts Philippine economy

By Jojo Malig, ABS-CBNNews.com; Michelle Ong, ANC

Posted at Jun 11 2013 10:46 PM | Updated as of Jun 12 2013 07:16 AM

MANILA, Philippines - The Philippine economy has been making impressive gains, beating even China.

But the latest economic reports on unemployment, foreign direct investments, and exports are raising questions if the Philippines has what economists call jobless growth.

After two investment grade ratings and an impressive 7.8% first quarter GDP growth, the country experienced a triple whammy on the economic front.

First, unemployment rose to a 3-year high of 7.5% in April.

It was the highest since April 2010, as the number of employed fell by 21,000.

The industrial sector added 200,000 jobs, while services added 400,000.

However, these gains were offset by a decline of 600,000 farm workers.

The government blamed that on hot weather and the damage caused by recent typhoons.

It said the heat and lack of water will cut farm production in the second quarter.

Meanwhile, the total number of unemployed has risen to 3.1 million, and the total number of underemployed fell slightly to 7.25 million from April 2012.

Exports also fell in April, as declines in sales of chemicals and some manufactured products offset stability in the electronics sector.
       
The National Statistics Office said exports dropped 13% to $4 billion.
   
Exporters may get more help this week, with the Bangko Sentral ng Pilipinas expected to cut interest rates on its so-called special deposit accounts again.

The unemployment and exports data followed Monday's report on foreign direct investments (FDI) that was negative in March.

It means foreigners pulled out more money more than they brought in.
   
For March, foreign investors put in $56 million and withdrew $73 million, creating a net withdrawal of $17 million.
   
While the FDI is still positive for the first 3 months of the year, at $1.3 billion, it is still lower than the $1.4 billion from 2012.
   
Foreign direct investment is money put directly into new factories and other hard assets that boost production and jobs.

Hot money

It is different from so-called "hot money" put into the stock and bond markets.

Former Budget Secretary Benjamin Diokno, a professor at the University of the Philippines School of Economics, said the peso also became weaker against the dollar because of the exit of hot money.

"Madali lang naman paliwanag iyan. Iyung paglakas ng piso, dahil iyan sa nagbago iying ihip ng hangin. Gumaganda na iyung ekonomiya ng Estados Unidos. Iyung nag-iinvest ng hot money, lumalabas na sila," he told radio dzMM on Tuesday night.

He said short-term stock market investors started selling and converting pesos to dollars, raising the demand for the US greenback.

Diokno also said the economy showed what he calls as "cracks."

"Mayroong crack doon sa claim na maganda ang ekonomiya ng Pilipinas," he said. "Nawawalan [ang mga investors] ng confidence sa atin. May nakikita silang weaknesses."

"Unang una diyan iyung unemployment," he explained.

"We lost a lot of jobs last January. Inaasahan natin na nitong April, magbabago ang hangin, pero lalong pumangit. We went from bad to worse," he added.

Diokno also said the stock market is showing weakness. "Bumagsak na iyan last week pa. Isa pang weakness, iyung exports. From January to April, bumagsak. Tapos nakita nila ulit, iyung FDI, napakababa ng pumapasok na FDI."

"Maganda naman ang ekonomiya natin pero kung hindi naman ganoon kagandahan," he said. "Mayroon tayong 2 consecutive quarters na maganda pero nakita na natin ito before. Ang issue talaga diyan ay sustainability."

Diokno said the government should focus its attention on jobs. "Malaki talaga ang problema natin sa unemployment. Mayroon kang 3 million na unemployed, mayroon kang around 7 million na underemployed."

Skills mismatch?

Labor Secretary Rosalinda Dimapilis-Baldoz, in a press statement Monday, attributed the rise in the unemployment rate to possible mismatch between those seeking work for the first time and the skill needs required by jobs.

 "The unemployed youth, aged 15-24 years old, rose to 1.487 million in April 2013 from 1.450 million in 2012. Of this number, 1.105 million are either college graduates or college undergraduates, and need to have skills or experience to qualify for first-time jobs," she said.
 
 She said the "educated unemployed" should join skills training programs or sign up for short-term work.
 
 "I also encourage them to accept the first job that comes their way to gain experience to become more employable," she said. -- with reports from ANC, dzMM