Q&A with ILO Economist: ‘Issue in Philippines Is Quality of Jobs, Not Job Creation’

Interview with Steven Kapsos, ILO Labour Economist on the Global Employment Trends Report

What are the trends and projections for South-East Asia in particular the Philippines based on the Global Employment Trends Report?

STEVEN KAPSOS: The ILO has developed three scenarios based on labour market data available to date which illustrate that the regional unemployment rate for South-East Asia and the Pacific (which includes the Philippines) could increase from 5.5 per cent in 2007 to between 6.0 and 6.4 per cent in 2009. This would represent an increase of 2 to 3 million unemployed people in the region.

The number of working poor and workers in vulnerable employment (lacking benefits and without a safety net to guard against loss of incomes during economic hardship) also appears to be on the rise in this region. In addition to the 45 million workers in the region living with their families in extreme poverty (US$1.25 per person per day), an additional 23 million are living only marginally above the poverty line and are in danger of becoming poor if the right action is not taken.

What is the impact of the global economic crisis on employment trends in the Philippines and other Asian countries?

STEVEN KAPSOS: Economic growth in the Philippines has shown a sharp decline from 7.2 per cent in 2007 to 4.2-4.5 per cent in 2008 and is expected to fall further to 2.3-3.4 per cent in 2009. We haven’t yet seen large increase in unemployment in the Philippines, but the crisis is also likely to affect workers in other ways that are somewhat more difficult to measure, such as declining hours of work (an increase in part-time work), pressure for lower wages and less job security.

Based on the report, the three Asian regions which included the Philippines accounted for 57 per cent of global employment creation in 2008 as compared to low global creation in developed economies, what are the reasons for such trends?

STEVEN KAPSOS: Much of this is due to demographic trends – Asia is a very young region with relatively rapid population and labour force growth.

The employment rate in the Philippines based on the Labour Force Survey showed an increasing pattern amidst the global financial crisis, what can you say about the trend when other countries have decreasing employment?

Date Employment rate (%)

January 2008 92.6

April 2008 92.0

July 2008 92.6

October 2008 93.2

STEVEN KAPSOS: The issue in the region is not so much employment creation, but rather whether good quality jobs are being created – for instance jobs that pay a decent wage that opens the way to a better future and allows workers and their families to escape poverty and jobs that allow economies to move to higher value production. It is important to remember that Asia still has a large share of workers in vulnerable employment – an estimated 60 per cent of the workforce and more than 400 million workers living with their families in extreme poverty.

In the Philippines, there were about 10.5 million informal sector operators identified in the 2008 while the Global Employment Trends projected an increase in vulnerable employment, what do you think are the factors for such increase? What are possible actions to be taken to protect those in vulnerable situations?

STEVEN KAPSOS: Direct transfer payments and spending on health care can be effective ways of ensuring that people are able to continue spending and consuming, which will support growth. Loans to small and medium-sized enterprises, which employ most workers in the region and which are being hard hit by problems accessing credit, are another good tool for policymakers to consider. Longer term, increased investment in education and training can help to ensure that workers have up-to-date skills that will be in demand when the recovery begins to take shape.

What is the ILO doing amidst the global financial crisis which has now become a global job crisis?

STEVEN KAPSOS: The ILO, in collaboration with the Asian Development Bank is organizing a High-Level regional Forum in Manila, 18-20 February 2009 on “Responding to the Economic Crisis- Coherent policies for Growth, Employment and Decent work in Asia and the Pacific”. The aim is to promote policy dialogue between regional and international experts and policy makers from governments, business and labour on concrete steps to counter the economic and social consequences’ of the crisis.

Do you think the Philippine economy is safe from the global crunch with large foreign exchange reserves and fiscal surplus?

STEVEN KAPSOS: Growth in the Philippines is slowing, which is likely to have adverse impacts on the labour market and, more directly, on people’s lives and livelihoods. Large reserves and a fiscal surplus provide space for addressing the problems of the crisis, but policymakers should not be complacent. Appropriate policies must be designed and implemented. It is important to identify ways to create jobs amidst the crisis and to ensure that the poor and most vulnerable do not slip further behind. This will help to ensure that a recovery occurs sooner rather than later.

What is the worst scenario especially for a country like the Philippines with large level of remittances?

STEVEN KAPSOS: A prolonged crisis could result in a negative cycle of declining demand, falling output and rising joblessness and poverty. But we feel that if appropriate action is taken and there is international coordination, this outcome can be avoided. It is important to ask what the impact will be on migrant workers, as they are important in both receiving countries, where they often perform vital jobs in the economy and in their home countries such as the Philippines, which benefit from remittances. Migrant workers may be at risk if rising unemployment puts pressure on policymakers to try to free up jobs for nationals. Migrant workers should not be used as a political football. This would not only be harmful to them – it would also be harmful to the firms where they work as they may have difficulties finding appropriately qualified workers to replace migrants that have acquired skills over time.

What are the necessary steps or measures for Asian countries like the Philippines now that the whole world is confronting this economic crisis?

1) Ensure that the patient survives – that credit markets are unfrozen so that business and lending can resume. A lot of progress has been made on this front.

2) Give the patient the appropriate medicine – monetary and fiscal stimulus, with an explicit goal in fiscal stimulus packages of creating employment, improving labour market outcomes and protecting the poor and vulnerable.

3) Begin to rehabilitate the patient for the long-run – focus on building skills and education of the workforce so that they are able to run once the race starts again.

What are your projections for 2009 based on the Global Employment Trends globally and locally for the Philippines? Do you think we could ever survive this economic crisis?

STEVEN KAPSOS: Most certainly yes, if we act quickly and bring in the right policies. We may not be able to prevent the onset of the crisis but to a large extent how quickly we get out of it, and in what sort of shape, is in our hands.

Do you think it is possible to achieve decent work amidst the crisis when people are unemployed or have no other choice but to settle for whatever jobs are available?

STEVEN KAPSOS: It may certainly be difficult, but the onset of the crisis – and the way it was created – is producing a fundamental re-evaluation in all countries of the aims and objectives of growth and development. People know that for growth to be sustainable and stable it must be more inclusive. The benefits of progress must trickle down. Jobs that trap people in poverty, rather than releasing them from it, do not allow people or societies to grow economically and socially, or to be competitive in the long term. So the lesson of this crisis is that Decent Work is not an optional luxury, it is essential for stable, equitable growth.(PinoyPress)

One Response to “Q&A with ILO Economist: ‘Issue in Philippines Is Quality of Jobs, Not Job Creation’”

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