STATEMENT OF NEDA ACTING SECRETARY ON THE
JULY 2020 LABOR FORCE SURVEY AND IMPLICATION
3 September 2020, 9:30 AM
Colleagues in government, friends from the media, fellow countrymen, good morning.
Back in March 2020, we made the very difficult decision of placing a large part of the economy under the enhanced community quarantine (ECQ) because the priority was to save lives from COVID-19.
This decision is worth the lives saved. It prevented an estimated 1.3 to 3.5 million cases, of which an estimated 68,000 severe and critical cases at the peak day would have overwhelmed our healthcare system. More importantly, some 59,000 to 171,000 lives were saved, including possibly the lives of our family and friends.
However, this has come at a great cost to the economy and jobs as the ECQ shut down some three-fourths of the economy. Second quarter GDP and labor markets saw their worst performance in decades with GDP falling by 16.5 percent and the unemployment rate increasing to 17.7 percent.
The ECQ period enabled us to strengthen our testing and treatment capacity. Daily testing peaked at 41,030 on August 27 and daily testing capacity reached 84,595 on August 25. This means we can test up to 2.2 million per month. Improvements in our health system capacity are seen in the falling death rate and deaths as a share of the population. The share of patients needing critical care has also been smaller than other countries.
Recent labor market developments
The government’s decisive policies to contain COVID-19 have led to the gradual opening up of the economy. Starting May, key economic variables such as manufacturing production, exports, and imports have begun a U-turn.
Earlier today, the Philippine Statistics Authority (PSA) reported that the labor market has also begun to improve.
The unemployment rate went down to 10 percent in July 2020 from 17.7 percent in April 2020. The decrease in the unemployment rate means that some 2.7 million jobs returned as the quarantine level eased. In addition, some 4.9 million workers rejoined the labor force. All in all, some 7.5 million jobs were restored.
The five sectors that saw the most number of returning jobs are trade, agriculture, construction, manufacturing, and transport. These sectors directly benefited from the relaxation of quarantine measures and are important contributors to jobs and GDP growth.
On the other hand, the underemployment rate, which measures those with jobs but lack income, decreased to 17.3 percent in July 2020 from 18.9 percent in April 2020.
Government programs to provide income support to workers through the Small Business Wage Subsidy Program and to low income families through the Social Amelioration Program have tempered the increase in underemployment amid the crisis.
The link between jobs and quarantine
The July survey figures show a direct link between the level of quarantine restriction and labor market outcomes. In the first half of May 2020, 78.8 percent of the economy was placed under ECQ. As a result, GDP and unemployment worsened to record levels. In contrast, In the first half of July 2020, only 2.1 percent of the economy was placed under ECQ. The result is a significant reduction in the unemployment rate and the return of some 7.5 million jobs. These data shows that the government has responded to the needs of the people and will continue to do so.
In the coming months, better GDP and job numbers will hinge on how open the economy is. This entails a better strategy to “Prevent, Detect, Isolate, Treat, and Recover (PDITR).” It also requires a safe and sufficient number of public transportation that, if needed, is supported by service contract subsidies. Without the public transport system back sufficiently, many people cannot go back to work. To illustrate, under GCQ, the share of the NCR economy that is allowed to open is 58.2 percent, but without sufficient public transport, it falls to 35.5 percent.
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.
To improve growth and job prospects, the government’s recovery package includes i) the recently passed Bayanihan 2 and upcoming complementary measures, ii) the infrastructure program, and iii) the 2021 budget. All three are needed to preserve current jobs, create new jobs, and prevent families from falling into poverty.
Bayanihan II principally aims to
1. Support the healthcare system,
2. Enhance testing, tracing, isolation, and treatment, which are crucial to boost confidence, get people back to work, and restore consumer demand,
3. Support public transport,
4. Support critically affected sectors, and
5. Provide capital infusion to government financial institutions (GFIs) to allow them to lend to more small businesses and help smaller banks help more microenterprises.
To support income and jobs, Bayanihan 2 provides relief and assistance to households and businesses through programs, such as:
1. Cash subsidies for low-income households, and unemployment or involuntary separation assistance for displaced workers, including public utility vehicle (PUV) drivers;
2. Funds for hiring of 50,000 contact tracers;
3. A one-time, 60-day grace period for the payment of all existing, current, and outstanding loans falling due on or before December 31, 2020;
4. A minimum 30-day grace period on residential and commercial rents of lessees not permitted to operate during the pandemic;
5. A minimum 30-day grace period for the payment of utility bills (electricity, water, etc.) due within the period of ECQ or MECQ;
6. Condonation of pending payments of interest, penalties, and surcharges for agrarian reform loans, with the restructuring of the remaining original principal without interest.
To complement these programs, the passage of the GUIDE, FIST, and CREATE bills are also needed. For next year, the 2021 budget will take the leading role in our recovery and resiliency program.
Alongside Bayanihan 2 is the infrastructure program. The Duterte Administration is committed to accelerate countryside development, regional connectivity, and job generation through the Build, Build, Build infrastructure program. From 4.2 percent of GDP in 2020, infrastructure spending will grow to 5.4 percent of GDP in 2021, creating in the process some 1.1 million full time equivalent jobs, and with a multiplier of around 2, will help us achieve the 6.5 to 7.5 percent GDP growth target next year.
Call for whole-of-society to unite against COVID19
To conclude, the progress we have seen in the health sector and in the economy is encouraging. This motivates us to do more and better, and is a testament of all the hard work that all of us, especially frontliners, have given.
Through our collective efforts, I believe that we will be able to recover as one, come out stronger, more resilient, and become better as a country and as individuals.
Thank you and take care always.