LABOR DAY: Impact of COVID-19 on employment

ABS-CBN Investigative and Research Group

Posted at May 01 2020 12:04 AM

Relief workers distribute goods on April 28, 2020 at a community in Marikina City affected by the enhanced community quarantine (ECQ). The ECQ affected the informal sector heavily who are unable to make a living due to the restrictions. Fernando G. Sepe Jr., ABS-CBN News

HIGHLIGHTS

  • More than 2.3 million workers were displaced nationwide due to COVID-19 as of April 24, according to the Department of Labor and Employment (DOLE). 
  • This is higher than NEDA estimates in March of 116,000 to 1.8 million workers that would be displaced due to the COVID-19 pandemic.
  • Nearly 6 in 10 displaced workers are in NCR, Central Luzon, and Davao Region, based on April 24 data from DOLE.
  • 6 in 10 employees in Luzon are in small businesses, which are “having a hard time calibrating the lockdown,” according to Employers’ Confederation of the Philippines President Sergio Ortiz-Luis Jr. 
  • Nearly 6 in 10 of the employed nationwide are in the informal economy and are vulnerable, according to DOLE.
  • Business operations have become more difficult after the initial ECQ in Luzon was extended to April 30, according to preliminary results of a PHILEXPORT survey. 
  • Mass testing, establishment of quarantine facilities, and provision of public transportation are the top three issues that exporters want the government to prioritize before the lifting of the ECQ, according to the above survey. 

SUMMARY

Workers queue for temperature check at a checkpoint to enter the National Capital Region (NCR) at the Susana Heights exit of SLEX during the enhanced community quarantine (ECQ) on March 16, 2020. George Calvelo, ABS-CBN News

More than 2.3 million workers were displaced due to COVID-19, according to the Department of Labor and Employment data as of April 24, 2020. The figure is based on reports submitted by 87,301 establishments from all regions.

The figures are higher than the initial estimates provided by the National Economic and Development Authority (NEDA) in March. Back then, NEDA estimated that some 116,000 to 1.8 million workers would be displaced due to the pandemic (more details in the last section). 

Of the 2.3 million displaced workers cited by DOLE:

  • Over 1.6 million workers were affected due to the temporary closure of establishments caused by the enhanced community quarantine. 
  • 797,729 workers were affected by “reduced incomes under alternative work arrangements like less workdays, rotation, forced leave and telecommuting.”

Nearly 6 in 10 displaced workers are in NCR, Central Luzon, and Davao Region

According to DOLE data as of April 24, Metro Manila accounted for a third of all displaced workers (33%), with more than 687 thousand, according to DOLE. This was followed by Central Luzon with 281 thousand (14%) and Davao Region with 208 thousand (10%). Together, these three regions accounted for 57% of all displaced workers, with more than 1.2 million. 

Table 1. Number of Displaced Workers due to COVID-19, by Region (excluding BARMM) (as of April 24)

Source: ABS-CBN Investigative and Research Group
Source of basic data: Department of Labor and Employment

6 in 10 employees in Luzon are employed in small businesses

In a phone interview with ABS-CBN, Employers’ Confederation of the Philippines President Sergio Ortiz-Luis Jr. said that big businesses can afford the lockdown, but small businesses are the ones “having a hard time calibrating the lockdown.” 

Small businesses, however, comprise the bulk of businesses in Luzon, including Metro Manila. 

As much as 90% of the formal sector are microenterprises, according to Ortiz-Luis, and another 8% are small enterprises. Medium and large enterprises comprise only 1% each. 

Small and micro enterprises account for some 65% of employment in Luzon. The rest (30%-35%) are in medium and large enterprises, Ortiz-Luis added.

Nearly 6 in 10 of employed nationwide are in the informal economy

More than half (56%) or 21 million workers in the country are in the informal economy and are vulnerable, according to Maria Lourdes Gonzales, Chief of DOLE’s Workers in the Informal Economy Development Division. 

Of the 21 million in the informal economy:

  • 10.8 million (51%) are self-employed without paid employee
  • 6.5 million (31%) are wage and salary workers in precarious employment
  • 3.8 million (18%) are unpaid family workers

These figures are based on the 10-year average from 2008-2017. 

Business operations more difficult during extended ECQ 

Ortiz-Luis, who is also President of the Philippine Export Confederation, Inc. (PHILEXPORT), a non-profit organization of Philippine exporters with more than 2,000 members, shared the initial findings of a survey on COVID-19 conducted last April 19 among 35 PHILEXPORT member companies:

  • Of the 35 companies surveyed, 27 manufacture non-essential products (77.1%). The rest (eight or 22.9%) manufacture essential products (food sector). 
  • 18 companies (51.43% of the respondents) are still operating. The other 17 companies (48.57%) of the respondents have shut down completely during the lockdown.

Of those operating, only five companies are operating at 50% or above. Ten companies are operating at 10% or below. The rest are operating between 20% and 40% capacity.

Below are some initial findings of the survey shared by Ortiz-Luis with ABS-CBN News:

Did the industry improve during the extension as compared to when [the enhanced community quarantine] started? 

“No, respondents said that it is now more difficult to operate due to a number of reasons: (1) government-imposed restrictions, (2) lack of public transportation, (3) lack of logistics services, and (4) unavailable supply of raw materials.”

Is the industry for or against the extension? Or prefer the modified/ partial lifting? 

“A strong majority or 85.7% of the total respondents expressed willingness to operate again by May 1, 2020 as long as quarantine facilities are already in place. On the other hand, 5 respondents are not yet confident to open by May 1 regardless if quarantine facilities are already in place. Mass testing, establishment of quarantine facilities, and provision of public transportation are the top 3 issues that exporters want the government to prioritize before the lifting of the ECQ.”

Displaced workers higher than initial NEDA estimates

The 2.3 million displaced workers cited by DOLE are much higher than the estimates provided by the National Economic and Development Authority (NEDA) back in March. 

Based on its study as of March 19, 2020, the agency projected that some 116,000 to 1.8 million workers would lose their jobs due to the COVID-19 pandemic (Table 2). 

Of that total, an estimated 61,000-1 million would be unemployed due to the Luzon-wide enhanced community quarantine.

According to NEDA, without mitigating measures, “the simultaneous adverse effects on the supply and the demand side of the economy” would imply a reduction in the Philippine’s real GDP growth to -0.6 to 4.3 percent in 2020, and would result to the following job losses:

Table 2. NEDA’s Projected Impact of COVID-19, by Sector (as of March 19, 2020)

Source: Addressing the Social and Economic Impact of the COVID-19 Pandemic, National Economic and Development Authority Report, March 19, 2020