Jobless rate rises to 3-month high

The Philippine unemployment rate climbed to a three-month high in April, while the quality of jobs deteriorated, the Philippine Statistics Authority (PSA) reported on Thursday.

Preliminary data of the PSA’s latest Labor Force Survey (LFS) showed national unemployment rate — the share of the jobless Filipinos to the total labor force — inched up to 4% in April from 3.9% in March but lower than 4.5% a year ago.

April saw the highest unemployment rate in three months or since 4.5% in January.

This translated to 2.04 million unemployed Filipinos in April, up by 41,000 from March. It was 215,000 lower than the 2.26 million jobless a year ago.

For the first four months, the unemployment rate averaged 4%, lower than  4.7% in the same period a year ago.

PSA Undersecretary and National Statistician Claire Dennis S. Mapa said El Niño was the main culprit for the rise in the unemployment rate, especially in the agriculture sector.

“We saw that the crop production in the first quarter declined due to the impact of El Niño. Because the production was lower, you have that decrease in (the number of) employed,” Mr. Mapa said in a mix of English and Filipino during the briefing.

The agriculture sector is the second-largest employer in the country and contributes over a tenth to the economy.

“The slight increase in the unemployment rate, along with the sharp rise in the underemployment rate, reflects economic and seasonal fluctuations, sector-specific downturns, and possible structural changes within the economy,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.

Mr. Roces said the impact of El Niño has reduced labor demand in the agricultural sector, which will eventually affect related industries such as food processing and distribution.

At the same time, job quality deteriorated in April as the underemployment rate went up to 14.6% from 11% in March and 12.9% in April 2023.

PSA data showed the April underemployment rate was the highest in nine months or since the 15.9% recorded in July 2023.

The ranks of underemployed Filipinos — those who want longer work hours or an additional job — rose to 7.04 million in April, up by 1.65 million from March.

Year to date, the average underemployment rate was 13%.

“The rise in underemployment may be attributed to certain subsectors, namely wholesale and retail trade, agriculture and forestry and accommodation and food service activities,” PSA’s Mr. Mapa said.

The employment rate, on the other hand, dipped to 96% in April from 96.1% in March but still an improvement from 95.5% in April last year.

This was equivalent to 48.36 million employed Filipinos in April, a decrease of 798,000 from 49.15 million employed individuals in the prior month.

Year on year, 297,000 Filipinos gained employment.

The employment rate averaged 96% in the first four months compared with 95.3% a year earlier.

PSA data also showed that 50.40 million people were part of the labor force in April 2024. The labor force size fell by 757,000 month on month but grew by 82,000 from 50.31 million in April 2023.

As a result, the labor force participation rate (LFPR) — the proportion of the working-age population (15 years old and over) that is part of the total labor force — slipped to 64.1 % in April, lower than 65.3% in March and 65.1% a year ago.

Year to date, the average LFPR was 63.8%.

“The government aims to assist Filipino workers in the digital age. Initiatives include reducing job search duration, upskilling the workforce, and facilitating the transition towards higher-income jobs,” he said.

By sector, services remained the top employer in April with an employment rate of 61.4%, followed by agriculture with 20.3% and industry with 18.3%.

In April, agriculture and forestry saw jobs fall by 684,000 to 8.35 million, the biggest monthly loss among sectors. It was followed by wholesale and retail trade (down 602,000 down to 10.14 million) and public administration and defense (down 466,000 to 2.82 million).

Meanwhile, month-on-month job gains were recorded in fishing and aquaculture (up 413,000 to 1.44 million), transportation and storage (up 192,000 to 3.75 million), and accommodation and food service activities (up 192,000 to 2.75 million).

On an annual basis, agriculture and forestry shed the most workers at 818,000, followed by wholesale and retail trade (down 587,000) and human health and social work activities (down 85,000).

On the other hand, accommodation and food service activities posted the biggest yearly job gains in April, adding 638,000 workers. Construction saw an increase of 378,000 workers while transportation and storage were up by 289,000.

Wage and salary workers still had the largest share of the labor force at 63.6% in April.

The average Filipino employee worked for 40.5 hours a week in April, slipping from 40.7 hours in March but still more than the 36.9 hours in April last year.

Makoto Tsuchiya, an economist at Oxford Economics, expects the country’s unemployment rate to edge higher and peak at around 4.5% this year amid softening domestic demand and tepid global growth.

Julius H. Cainglet, vice-president for Research, Advocacy and Partnerships at the Federation of Free Workers, said the continued importation of agricultural products has hurt employment in the domestic agricultural sector.

In an e-mail, he said it is critical for key industries and small businesses to receive government support to improve labor conditions and create more decent employment opportunities.

For Mr. Roces, the labor market outlook will depend on several factors such as potential economic recovery, policy interventions, seasonal trends, and the ongoing impact of El Niño.

“While emerging sectors might provide new opportunities, stability will hinge on how these variables play out in the coming months,” Mr. Roces said.

The latest LFS was conducted from April 8 to 20, with 44,890 sample households.

Source: Business World and PSA

Think tank backs P690 hike in daily wages

IBON Foundation said it is proposing a P690 across-the-board increase in daily wages to bring worker pay more in line with the prevailing cost of living.

“The National Capital Region has the largest minimum wage of all regions at P610, but this is a bit more than half (51%) of the P1,197 living wage (for a family of five),” IBON said, citing the results of a study.

It said such an increase will address wage injustices and ensure that nominal wages keep pace with the cost of living, providing “substantial immediate relief” to workers and their families.

Federation of Free Workers President Jose Sonny G. Matula said: “Given the rising cost of living and ongoing inflation and the high rate of hunger as shown by the Social Weather Station survey, even a modest wage increase is critical.”

Renato B. Magtubo, chairman of Partidong Manggagawa concurred, but warned of possible negative effects on employers and the economy.

“The proposal will face enormous challenge(s) from employers. Economists also believe that a P690 wage increase would not be beneficial to the economy,” he said.

Mr. Matula countered that a wage increase can have “broad positive impacts” on the economy.

“By ensuring that more money remains in the hands of workers, we are not only supporting individual livelihoods but also fostering overall economic growth. Workers typically spend their earnings within their local communities, benefiting local manufacturers, producers, and the informal economy,” he added.

Between 1989 and 2023, while worker productivity  increased by 88% after adjusting for inflation, the minimum wage declined in real terms by over 22%, IBON study found.

IBON added that giving workers the equivalent of 50% of profits is “more than fair” given the years in which employers earned outsized profits while paying workers low wages.

Mr. Matula urged employers to share their profits and invest in a “stable, productive workforce.”

“This approach is not only beneficial for workers but also the economy, driving growth and prosperity across communities,” he added.

Wage increase bills are pending in the House of Representatives and the Senate, with proposals for increases ranging from P100 to P750.

“The proposal for a P690 increase in the minimum wage would greatly help workers and their families cope with the rising cost of living,” Mr. Magtubo said.

Meanwhile, another IBON study found that the real number of unemployed in February was 7.5 million, as opposed to the Philippine Statistics Authority estimate of 1.8 million in its Labor Force Survey.

“This estimate includes… the 3.8 million unpaid family workers who should not really be counted among those employed,” IBON said in its study.

It added the lack of jobs hits the younger generation the worst. IBON said in February, those aged 15-24 holding jobs fell to 6.2 million from 6.8 million a year earlier.

“This is concerning since youth employment is key in achieving the hyped demographic dividend, or when the increasing share of productive working-age population with higher incomes results in faster economic growth,” it said.

Source: Business World

Dictionary of bank loans

Understanding the jargon of home loans can be confusing, overwhelming and a wee bit frustrating at times.

But you don’t have a choice: if you’re bent to make the most out of your loans and savings, you will need to at least make an effort to fully understand these terms commonly used by your bankers and brokers.

This way, you won’t feel cheated or forced into taking that huge leap as you work on your dream home. Remember, ignorance is not and will never be an excuse—more so in this day and age when it’s much easier to do research and look up banking jargon via the internet, whether through your laptops, tablets or even mobile phones.

In the Philippines, banks have comprehensive websites that usually contain most of the information you will need to know before taking out a loan—the products and features offered, processes involved, requirements and even definitions of some terms you have to be aware of.

Here are some of the most common terms you’ll likely come across with once you start looking for the right banking partner that will suit your loan needs.

Home Loan

A home loan refers to a sum of money borrowed from a financial institution or a bank, usually for the purpose of buying a lot, a house and lot or a condominium unit. Some institutions offer home loans that can also be used for home construction, renovations, or even for the refinancing of an existing home loan.

PRINCIPAL OF A LOAN

The principal of a loan refers to the actual amount borrowed.

INTEREST RATE

The interest rate, mainly expressed as a percentage of the principal, is used to compute the amount to be paid for the money borrowed. It can also be regarded as the “cost of borrowing” money from the bank, and depends on prevailing market rates.

Borrowers usually prefer lower interest rates, but these are offered when the repayment period is shorter.

REPAYMENT

Repayment is the “act of paying back money previously borrowed from a lender. Repayment is typically executed through periodic payments that include part principal plus interest.”

TENOR OR REPAYMENT PERIOD

Tenor commonly refers to the time or period set for the repayment of a loan or until a financial contract expires.

Usually, a shorter tenor means lower interest rates. A longer repayment period fetches higher interest rates because of the belief that there is a greater risk involved, meaning there is a bigger chance that something might go wrong i.e., borrower not being able to complete all due payments.

INTEREST FIXING PERIOD

Financial institutions offer a way to keep your investments in real estate protected via an interest fixing period. This refers to the length of time you want your interest rate to remain the same despite whatever movements the interest rate may experience in the future.

This will allow you to protect your loans from market volatility and shifts in the real estate market. If there is a hike in interest rates anytime within the interest fixing period, the rate on your loan will not be affected.

The interest rate will only be reviewed and changed when the fixing period expires.

It’s still best to consult a bank home loan expert and to do your own research about the current economic conditions before deciding on your preferred fixing period.

COLLATERAL

Collateral is defined as “a property or other asset that a borrower offers as a way for a lender to secure the loan. If the borrower stops making the promised loan payments, the lender (bank) can seize the collateral to recoup its losses.”

The documentation to satisfy the collateral requirement can be: transfer certificate of title or condominium certificate of title and tax declaration (land, improvement, or condo unit. The bank may also ask for the following to evaluate the loan: contract to sell or reservation agreement if under developer tie up; and floor plan, bill of materials, or job specifications for house construction.

LOAN FEES

Remember, the cost of borrowing money from a bank does not end with paying the interest and the principal alone. There are other minimal fees that you should be aware of as well.

For home loans, these include fees for registration, notarial charges, appraisal, title investigation, handling, mortgage redemption and insurance.

Indeed, there are no shortcuts if you intend to be a well-informed home buyer and a responsible loan borrower. A little patience to go through all these minute details might prove to be more beneficial than you think in the long run.

Source: Inquirer