The Asian Development Bank said over the weekend the lingering impact of the COVID-19 pandemic affected employment stability in the Philippines, with half a million jobs lost in the private sector over the past 12 months.
ADB country director in the Philippines Kelly Bird noted a reversal of trend from the formal employment sector struggling to bring in security of tenure, while the informal labor sector showed increasing reliability in terms of sustainability and reliability of opportunities.
“The formal employment is struggling to recover. And there’s been a shift. And in fact, there’s been 500,000 paid jobs in the private sector, or private establishments lost over the last 12 months. And we’ve seen a shift of the labor force towards the informal sector,” Bird said Friday in a webinar organized by the German-Philippine Chamber of Commerce and Industry, along with the Nordic Chamber of Commerce of the Philippines.
Bird said the ADB was concerned the reversal of jobs trends might persist over the medium to long term, which would mean continued loss of jobs.
The multilateral institution said the massive sectorial reallocation of jobs may improve as the economy recovers but the situation may persist for a while.
“But what it also means is that we expect to see a increase in the skills mismatch. As as for workers, it’s not so easy to transition between sectors. So we’re gonna see a more persistently high unemployment rate. And some sectors are going to have skill shortages, while other sectors will be losing jobs and there’s a number of reasons this will occur,” Bird said.
He said one reason its that businesses were digitalizing their workforce work practices. He said the sectors that could move towards automation would eventually drive the shift to digitalization.
Bird said those who lost their jobs or had disruptions in schooling or job training may suffer from skill erosion and workers who spent longer periods in unemployment would lose their skills and become less employable.
“This means that the unemployment rate will persist for some time, but it also lowers the potential capacity of the economy as well. So this is a long term or medium long term concern for the economy,” he said.
Foreign Buyers Association of the Philippines president Robert Young said in the garments and textile industry, the labor force lost 30,000 to 50,000 workers due to pandemic displacement. He said this is despite the official government announcement of unemployment rate easing to 6.5 percent in November 2021 from the April 2020 peak of 17.6 percent.
The ADB, in anticipation of a prolonged period of high unemployment rate, urged workplaces to launch skills development schemes and vet training to help young people and workers to retrain, thus averting skills mismatch.
Bird also highlighted the importance of having specific laws that support investment climate reforms to attract both domestic and foreign investment to lift the economic growth potential.
“We’ve seen the government has recently enacted the Retail Liberalization bill. And we’ve also seen good progress being made in Congress in deliberating the Public Services Act and the Foreign Investment Act. Once those two acts are passed by Congress and signed into law, I think that’s going to help improve the foundations for the investment climate. That should be a game changer for further investment, particularly foreign investment over the longer term,” Bird said.