The labor situation may improve in the coming months but it will depend on the pace of the COVID-19 vaccination program by the government, a bank said in a report over the weekend.
“The labor situation in the country might improve in the coming months given the easing of restrictions, particularly in NCR. However, it might take the country some time to return to pre-pandemic unemployment levels,” Bank of the Philippine Islands, the third-largest lender in terms of assets, said.
“This would depend on the speed of vaccinating the working population. The recent launch of the vaccination drive for economic frontliners is definitely an important milestone that could fast-track the recovery of the labor market,” it said.
The Philippine Statistics Authority reported last week that unemployment rate in April declined to 8.7 percent from a record high of 17.6 percent a year ago. This was, however, higher compared to the 7.1 percent jobless rate reported in March 2021.
Data showed the unemployment rate in April was about the same as the rate reported in October 2020 (8.7 percent), January 2021 (8.7 percent) and February 2021 (8.8 percent).
The total number of unemployed individuals 15 years old and over in April 2021 was registered at 4.14 million, lower by 3.09 million from 7.23 million unemployed persons in April 2020.
The labor force participation rate in April 2021 was placed at 63.2 percent, translating into 47.41 million who were either employed or unemployed. This was higher than the LFPR in the same quarter last year at 55.7 percent but lower than the LFPR in March at 65.0 percent.
It said that in terms of magnitude, there was a year-on-year increment of 6.35 million persons in the labor force from the 41.06 million in April 2020.
Employment rate posted a month-on-month decline in April when the Enhanced Community Quarantine/Modified ECQ was re-imposed in the National Capital Region and nearby areas. From a 92.9-percent employment rate in March, it dropped to 91.3 percent in April 2021.
The unemployment rate in NCR rose to 14.4 percent in April, or nearly at the level during the ECQ period in 2020. Meanwhile, unemployment in CALABARZON remained high at 13.4 percent, not far from its peak last year.
BPI said with NCR and CALABARZON which accounts for almost 50 percent of the economy, there’s a significant chance that the second-quarter GDP might disappoint the markets even with the low base from last year.
“Consumer spending probably suffered in the second quarter given the jobs lost due to ECQ/MECQ,” the bank said.
Gross domestic product in the first quarter contracted by 4.2 percent, deeper than the 0.7-percent decline a year ago amid the lingering impact of the pandemic.
The first-quarter print was an improvement from the 8.3-percent contraction in the fourth-quarter of 2020. GDP last year contracted by a record 9.6 percent, the worst since the end of World War 2, due to the pandemic.
Economic managers expect GDP to grow this year by 6 percent to 7 percent, driven by the rollout of vaccination program, gradual easing of restrictions and reopening of the economy.