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Jobs Start to Return as Quarantine Eases

The latest unemployment data released by the Philippine Statistics Authority last week is revealing to policy-makers. The unemployment rate significantly dropped to 10 percent in July from a record-high of 17.7 percent in April.

 

More significant are the comparative months of April and July—the reckoning dates of the PSA report. The strict quarantine rules from March to April severely restricted the movement of goods and workers, while the laxer restrictions from May to July allowed the economy to partially reopen.

 

The correlation between regional and community lockdowns with jobs, to me, is very clear. Only about 4.6 million Filipinos aged 15 years and over, according to government data, were unemployed in July this year, down by 2.7 million from three months ago. The reduced unemployment rate in July meant some 2.7 million jobs were created as the quarantine eased.

 

The reopening of the economy, in addition, allowed some 4.9 million workers to rejoin the labor force, bringing the total jobs restored to 7.6 million. Millions of Filipino workers went back to their workplace as Metro Manila’s rail system resumed operations, and more buses, jeepneys, taxicabs and tricycles plied their routes.

 

Acting Economic Planning Secretary and National Economic and Development Authority Director-General Karl Kendrick Chua, in a labor force survey paper last week, presented a direct link between the level of quarantine restrictions and the labor market. His paper showed that when 78.8 percent of the economy was placed under enhanced community quarantine in the first half of May, the gross domestic product declined and the unemployment worsened.

 

The restrictive quarantine ultimately led to a 16.5-percent GDP contraction in the second quarter of the year and a higher unemployment rate. By the first half of July, only 2.1 percent of the economy was placed under ECQ, resulting in a significant reduction in the unemployment rate and the return of over 7 million jobs.

 

The level of economic reopening in the succeeding months will clearly determine the country’s GDP output and job numbers. It also hinges on how the government contains the spread of Covid-19.

 

I am confident to say that we are starting to win the war against Covid-19. The daily confirmed cases appeared to have stabilized between 3,000 and 4,000, with total Covid-19 cases at 232,072 as of Friday last week. Total recoveries stood at 160,549 against 3,737 deaths.

 

President Duterte from the outset laid out a clear plan of containing the virus spread. Saving lives was the government’s top priority. He placed a large part of the economy under ECQ and virtually shut down 75 percent of the economy as a result.

 

At the cost of the economy, the Philippines averted some 59,000 to 171,00 deaths, per Neda’s estimate. Mr. Duterte’s strategy reduced the country’s death rate from a high of 17 percent to just 1.6 percent (2,687) as of August 18.

 

The government is also succeeding in limiting the virus spread by enforcing selective community lockdowns, instead of wider containment. The strategy seems to be working while we allow the economy to gradually reopen.

 

Meanwhile, we should allow more workers to return by increasing the access to public transportation. Mr. Chua correctly noted that the GCQ reopened nearly 60 percent of Metro Manila’s economy. Only 35.5 percent of the economic activities, however, were effectively restored due to the insufficient public transport system.

 

“To bounce back from this crisis, we will need to open the economy even more. This will depend on everyone working together to adhere to health standards, as the government accelerates the implementation of the recovery program,” said Chua.

 

We can expect the economy to recover faster based on the number of jobs being restored. The employment data has noted that five sectors saw the most number of returning jobs in July—trade, agriculture, construction, manufacturing and transport. These sectors directly benefited from the relaxation of quarantine measures and would be important contributors to jobs and GDP growth.

 

The improving employment data tells us that we should reopen the economy further.