Covid-19 Pandemic Unemployment Rate Analysis in the Philippines

In Partial fulfillment for the subject,

Advanced Managerial Economics

Submitted by:

Kent Ian Hay Conde

Dennis Barawidan

May 2022

Electronic copy available at: https://ssrn.com/abstract=4121471

Abstract

This study aims to analyze the situation of unemployment rate in the

Philippines during pandemic as of March 2022. Also, factors which can analyze
the labor force survey on the first quarter of 2022. The data used were acquired
from the Philippine Statistics Authority. Labor force survey from first quarter of
2020 up to first quarter 2022 shows the data of percentage rate of Labor force
participation, employment, under employment and unemployment which will help
the country to monitor. Several formulas were used to get its rate.

Introduction

In a country with almost a 100 million people living in it like the Philippines,
having a 9.1 million unemployed citizens is a huge problem. According to the
latest Social Weather Stations (SWS) survey,

21.4% of the population declares themselves as unemployed. The unemployed

Filipinos are considered unemployed based on two criteria, either they don’t have
a job, or they are currently looking for a job, except for housewives, students,
retired workers and disabled person who are considered to be not part of the
labor force
Despite of the fact that employment in the Philippines has been growing fast for the
past decade, still, many Filipinos are jobless. Employment growth rate was recorded
to be almost 50 percent at the beginning of the twentieth century mainly on industrial,
agricultural and services sectors. However, as 2000 enters, the country’s population
was quickly rising as it reached 76 million. It proves that employment growth is not
enough to decrease the number of unemployed due to the rapid growth in population,
a rise in the labor force participation, and the slow formation of jobs The country's
uneven employment market has traditionally led millions of Filipinos to seek better-
paying jobs overseas. As year 2000 enters, overseas Filipino workers almost
reached 2.9 million, about nine percent of the labor force.One out of every ten
Filipinos works abroad, sending billions of dollars in remittances home, helping to
drive the country's consumption-driven domestic economy but doing little to

Electronic copy available at: https://ssrn.com/abstract=4121471

 promote employment. The Philippines has long been a l abor exporting market.
About 2,500 Filipinos leave the country on a daily basis to seek for greater
opportunities abroad and to provide better for the needs of the family.

The COVID-19 pandemic has triggered one of the worst jobs crises since the Great
Depression. There is a real danger that the crisis will increase poverty and widen
inequalities, with the impact felt for years to come. Countries now need to do everything
they can to stop this jobs crisis from turning into a social crisis. Reconstructing a better
and more resilient labor market is an essential investment in the future and in future
generations. (OECD)
Global growth is estimated to have contracted by almost 5 percent in 2020,
representing the largest economic crisis in a generation. At the beginning of the year, at
the onset of the pandemic, consumer spending began to decline dramatically, most
notably in retail and recreation. By April, visits to restaurants, cafes, shopping centers,
theme parks, museums, libraries, and movie theatres had declined globally by almost
60 percent and by more than 80 percent in many countries. (Cotofan et al.)

Research Paradigm
A research paradigm was charted by the researchers with the intention of
attaining the purpose of the study by following a set of procedures. The research
paradigm includes the inputs used in conducting the study, the process or method
applied, and the expected outputs.

Input: Process: Output:

Data gathered Labor Force Significant
from PSA Survey factors for
unemployment
rate

Electronic copy available at: https://ssrn.com/abstract=4121471

Statement of the Problem
So as to meet the objective of the study, the researchers intend to answer the
following question which specifically leads to the analyzing of the model in
unemployment rate in the Philippines.

1. What is the variable starting from the first quarter of 2020 up to the first quarter of
2022?
a. Labor force participant rate
b. Employment rate
c. Underemployment rate
d. Unemployed rate
2. What is the mathematical model in projecting the unemployment rate of the
Philippines generated through Box-Jenkins method?

Methodology
This chapter presents the statistical treatments used by the researchers to be
able to come up with the expected outputs. Moreover,
a. Quantitative Methodology
emphasize objective measurements and the statistical, mathematical, or
numerical analysis of data collected through polls, questionnaires, and
surveys, or by manipulating pre-existing statistical data using computational
techniques

b. Box-Jenkins Methodology
Box - Jenkins Analysis refers to a systematic method of identifying, fitting,
checking, and using autoregressive integrated, moving average (ARIMA) time
series models. Box-Jenkins method follows a set of procedures in formulating
the model:
i. Model Identification – involves determining the order of the model
required (p, d, q) in order to capture the salient dynamic features of the
data. This mainly leads to use graphical procedures such as plotting

Electronic copy available at: https://ssrn.com/abstract=4121471

 the series, the autocorrelation function, and the partial ACF.
ii. Model Estimation and Selection – involves estimation of the
parameters of the different models identified and proceeds to a first
selection of models using information criteria.
iii. Model Checking – involves determining whether the model specified
and estimated is adequate. Notably, residuals undergo diagnostic
tests.
c. Labor Force Participation Rate (LFPR)
Percentage of the total number of persons in the labor force to the total
population 15 years old and over

d. Underemployed
Percentage of the total number of underemployed persons to the total number
of employed persons

e. Unemployed
Percentage of the total number of unemployed persons to the total number of
persons in the labor force

Electronic copy available at: https://ssrn.com/abstract=4121471

 Results and Discussion
This section provides the interpretation of data and analysis of the results

Table 1: Labor Force Participation Rate (%)

2020 2021 2022
January 55.7 60.5 60.5
February 61.9 63.5 63
March 58.7 65 65.4
Table 1 shows the Labor Force Participation rate gathered from PSA increased
in March 2022 with a rate of (65.4%)

Table 2: Employment Rate (%)

2020 2021 2022
January 94.7 91.3 93.6
February 82.3 92.9 93.6
March 90 91.9 94.2
Table 2 shows the Employment rate gathered from PSA. It can be inferred
that (94.7%) of the population are employed during January 2020 before
pandemic

Table 3: Underemployment Rate (%)

2020 2021 2022
January 18.9 16 14.9
February 17.3 18.2 14
March 14.4 16.2 15.8
Table 3 shows the Underemployment rate gathered from PSA. It can be
inferred that underemployment rate dropped by (14%) during February 2022

Electronic copy available at: https://ssrn.com/abstract=4121471

 Table 4: Unemployment Rate (%)
2020 2021 2022
January 5.3 8.7 6.4
February 17.6 8.8 6.4
March 10 7.1 5.8
Table 4 shows the Unemployed rate gathered from PSA. It can be inferred
that unemployment rate is highest with (17.6%) on February 2020 during
pandemic.

Conclusion
This paper aims to analyze the unemployment rate in the Philippines using a
quantitative method. The Labor Survey from Philippine Statistic Authority during first
quarter of 2020 up to first quarter of 2022 shows that Covid-19 Pandemic affects
employment of people here in the Philippines. Significant factors of unemployment rate
are found to be Labor Force Rate and Population. Any increase on those variables can
cause the unemployment rate to ascend or descend. While everything is back to
normal, employment rate gradually rises.

Recommendation
The government must find a way to maintain or reduce the unemployment rate in
the Philippines. With over a hundred million people living in it, the government must
prevent the rapid growth in the population since it is found that population affects the
unemployment rate in the country, or better yet create millions of jobs enough to provide
those unemployed a suitable occupation. The researchers suggest investigating on
other factors that can affect unemployment rate, as well as adding more observations to
the time series data for further studies.

Electronic copy available at: https://ssrn.com/abstract=4121471

References

Cotofan, Maria, et al. “Work and Well-Being during COVID-19: Impact, Inequalities,

Resilience, and the Future of Work.” Worldhappiness.report, 20 Mar. 2021,

worldhappiness.report/ed/2021/work-and-well-being-during-covid-19-impact-

inequalities-resilience-and-the-future-of-work/.

OECD. “The Impact of COVID-19 on Employment and Jobs - OECD.” Www.oecd.org, 2021,

www.oecd.org/employment/covid-19.htm.

PSA. “Employment Rate in March 2022 Is Estimated at 94.2 Percent | Philippine Statistics

Authority.” Psa.gov.ph, 6 May 2022, psa.gov.ph/content/employment-rate-march-2022-

estimated-942-percent.

---. “Labor Force Participation Rate (LFPR) | Philippine Statistics Authority.” Psa.gov.ph, 27

May 2022, psa.gov.ph/content/labor-force-participation-rate-lfpr-1.

---. “Underemployment Rate | Philippine Statistics Authority.” Psa.gov.ph, 27 May 2022,

psa.gov.ph/content/underemployment-rate-2. Accessed 27 May 2022.

---. “Unemployment Rate | Philippine Statistics Authority.” Psa.gov.ph, 27 May 2022,

psa.gov.ph/content/unemployment-rate-3. Accessed 27 May 2022.

Electronic copy available at: https://ssrn.com/abstract=4121471