Carl Rookie O. Daquio, Paulina Kim C. Pacete, and Ivan Cassidy F. Villena

1. Macroeconomics and Modelling for Labor Market Analysis: Philippine Employment Projection Model and Key Indicators of the Labor Market Carl Rookie O. Daquio, Paulina Kim C. Pacete, and Ivan Cassidy F. Villena Presented by Ivan Cassidy F. Villena Institute for Labor Studies

2. Outline • Key Indicators of the Labor Market (KILM) • Philippine Employment Projection Model (PEPM) • Unemployment projection using Global Employment Trends (GET) Model • Other emerging concerns • Conclusion

3. What is the KILM? A collection of 18 “key indicators of the labor market”, which include core employment indicators such employment and unemployment rates and as well other variables relating to employment (status, sector, hours, flows etc.), the lack of work and the characteristics of jobseekers, education, wages and compensation costs, labor productivity and working poverty. For more information, you can visit the KILM page at http://www.ilo.org/global/statistics-and-databases/research-and-databases/kilm/lang--en/index.htm

4. Labor Market Analysis using KILM Increases almost close to 3M per year KILM 1. Labor Force Participation • Increasing population leads to more persons entering the labor force • By 2020, the number of youth in the labor force will hit the 10 million mark 0.2M per year

5. Labor Market Analysis using KILM KILM 2. Employment-to Population ratio • Regardless of the population boom, the consistency of the economy to create job opportunities for each member of the labor force is evident Average EPR is 0.61%

6. Labor Market Analysis using KILM KILM 3. Status in Employment • The increasing number of wage and salaried workers (employees) indicates economic development • Overall, the proportion of wage and salaried workers are greater than total self-employed workers 15 to 16M during the past 6 years

7. Labor Market Analysis using KILM KILM 4. Employment by Sector • The demand for labor is driven by the services sector • Employment in the agricultural sector remains stagnant 0.615M annually

8. Labor Market Analysis using KILM Employed Persons by Sector and Sex • There is a high concentration of males in the agricultural and industry sectors

9. Labor Market Analysis using KILM KILM 5. Employment by Occupation • The increasing number of workers employed in elementary occupation is a signal that the skills requirement for these occupations is relaxed • The low share of professionals and technicians and associates professional denotes the need for higher educational attainment

10. Labor Market Analysis using KILM KILM 6. Part-time employment • The rapid growth in part-time employment has been seen as an instrument to increase labor supply.

11. Labor Market Analysis using KILM KILM 7. Total Unemployment • The reduction in the total unemployment levels and rate in the past six years is an indication of an efficiently utilized labor supply

12. Labor Market Analysis using KILM KILM 8. Youth Unemployment • The downward trend in youth unemployment reveals that the youth (15-24 years old) contributed effectively to the national development and the labor market have provided more opportunities to the youth to showcase their skills and talents

13. Labor Market Analysis using KILM KILM 9. Long-term unemployment • Long-term unemployment is declining

14. Labor Market Analysis using KILM KILM 10. Persons outside the labor force (Inactivity) • Those who do not want to work are mostly youth

15. Labor Market Analysis using KILM KILM 11. Educational Attainment and Illiteracy • Large proportion in the labor force has completed secondary education Average rate of persons in the labor force who completed secondary education is 38.6%

16. Labor Market Analysis using KILM KILM 12. Wage and Compensation costs • Employees’ purchasing power is diminishing, as demonstrated by the descending path of the employees’ monthly real average wages • Overall, the diminishing purchasing power of workers have caused nominal average wages to be adjusted multiple times

17. Labor Market Analysis using KILM KILM 13. Labor Productivity • The efficiency of workers, as shown by their increasing output, contributed significantly to the country’s economic performance measured by the Gross Domestic Product (GDP)

18. Philippine Employment Projection Model (PEPM) National labor market aggregates and indicators (2010-2022)

19. Projecting Unemployment rates using the GET Model The GET Model • Developed by ILO Trends Units • Provide estimates of unemployment, employment, status in employment, and employment by sector • Estimates can be disaggregated (if possible) • Based on Okun’s Law Unemployment , Gross Domestic Product 

20. Projecting Unemployment rates using the GET Model Unemployment rates: 1993-2014 • Unemployment rate and in GDP growth illustrate a negative relationship whenever there were changes observed in the said variables

21. Projecting Unemployment rates using the GET Model

22. Projecting Unemployment rates using the GET Model Regression Coefficients • Using the data on unemployment and GDP from 1993 to 2014, the results shows that increasing the rate of unemployment by one percent in current year is associated with a reduction in its unemployment rate by 1.6 percent one year later, ceteris paribus. Further, increasing the change of GDP growth by one percent in current year is associated with a reduction in the unemployment rate by 0.1 percent one year later, ceteris paribus.

23. Projecting Unemployment rates using the GET Model Forecasted data alternative projection • The estimates derived using the GET Model show that in the next five (5) years the rate of unemployment increases

24. Projecting Unemployment rates using the GET Model Forecasted data alternative projection • The estimates derived using the GET Model show that in the next five (5) years the rate of unemployment increases

25. Other emerging concerns Future of work in the Philippines • Changing Demographic Patterns • Increasing Inefficiency • The rise of the “millennials”

26. Conclusions • The utilization of KILM to examine the dynamics of the Philippine Labor Market has shown significant improvement in generating decent and equal employment opportunities for Filipinos particularly the youth • The results of the projection performed using the GET Model and PEPM give explanation to the important roles played by private and government sector in generating employment opportunities. • The agricultural sector needs to be bestowed with legislative reforms and measures for it to become a productive sector of the economy.

27. References Key Indicators of the Labour Market (KILM) 2015. International Labour Organization (ILO) (http://www.ilo.org/global/statistics-and-databases/research-and-databases/kilm/lang--en/index.htm) Philippine Employment Projections Model 2015 (tables). Souleima El Achkar Hilal. July 2015. PEPM 2015 Results and Analysis [forthcoming]. International Labour Organization (ILO).

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