RCBC chief economist Michael Ricafort (left) and ING Bank Manila senior economist Nicholas Mapa
MANILA – Further reopening of the domestic economy and easing of movement restrictions are seen to help address the country’s unemployment rate, which stood at 8.7 percent in January 2021.
Economists expect the unemployment rate to remain around this level until next year given the impact of the pandemic on businesses and the job market.
In a report, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the latest unemployment figure “still reflects the relatively slower pace of economic recovery despite the Christmas season that just passed, as Metro Manila remained under GCQ (general community quarantine) since June 2020.”
“Thus, further reopening of the economy would provide a structural and more sustainable solution in terms of increased production, sales, incomes/livelihood that also create/entail more employment/jobs and more working hours,” he said.
Ricafort said the proposed shift to modified GCQ (MGCQ) alongside the easing of travel restrictions and those being implemented for public transportation “would help create more employment/jobs and help further lower unemployment and underemployment.”
An additional plus to this factor is the higher government spending on infrastructure and the election-related spending for next year’s national polls.
He added, “the proposed MGCQ nationwide and any other additional measures to reopen the economy would be a function of additional Covid-19 (coronavirus disease 2019) vaccine arrivals and rollouts as well as any reduction in new Covid-19 local cases.”
ING Bank Manila senior economist Nicholas Mapa said the pandemic and its resulting economic scarring is now taking root as shown by the unemployment rate.
He said despite the easing of movement restrictions, “the labor market remains just as challenged with the latest unemployment rate.”
“This translates to four million Filipinos without a job which will likely complicate the expected pickup in consumer spending should the government’s wish to move to MGCQ be granted,” he added.
Mapa said the rise of unemployment and underemployment, which rose to 16 percent last January from 14.4 percent in the last quarter of 2020, “point to subdued access to income and likely muted purchasing power, now all the more problematic given the rise in inflation.”
“The high level of unemployment will be around even if we relax quarantine measures as the scarring effects of closed businesses and jobs lost become more entrenched and the economy slowly spirals into lower levels of GDP (gross domestic product),” he added. (PNA)
