Philippines slightly improves in Human Development Index

The Philippines jumped five spots in the latest Human Development Index, but remained one of the laggards in Southeast Asia, the United Nations Development Program (UNDP) said.

The Philippines ranked 113th out of 193 countries in the UNDP’s index, which measures a country’s health, education and standard of living.

The Philippines’ score improved to 0.71 in 2022 from 0.692 in 2021. This also marked the country’s highest score since 0.714 in 2019.

The Philippines’ score was below East Asia and the Pacific’s average of 0.766 and the global average of 0.739.

In Southeast Asia, human development levels were “very high” in Hong Kong (fourth), Singapore (ninth), Brunei Darussalam (55th), Malaysia (63rd), and Thailand (66th).

The Philippines had a “high” human development level, along with Vietnam (107th) and Indonesia (112th).

On the other hand, human development was considered “medium” in Laos (139th), Myanmar (144th), Cambodia (148th) and Timor-Leste (155th).

“The world has achieved a new record in human development. After steep losses in 2020 and 2021, the Human Development Index… has climbed to its highest level ever recorded at the global level,” the UNDP said in a report.

While the index value is greater than in 2019, the UNDP said it does not mean the world has fully recovered from the impact of the coronavirus pandemic and other crises.

“Essentially, we have not reached the level of human development that could have been expected had the pandemic not happened,” it said.

Life expectancy at birth is at 72.2 years in the Philippines,” according to the Human Development Index. The expected years of schooling for Filipinos is 12.8, while the mean years of school is nine.

Life expectancy in Singapore is 84.1, with 16.9 expected years of schooling and 11.9 mean years of school.

The Philippines’ gross national income per capita is about $9,059, a far cry from Singapore’s $88,761.

The Philippines also ranked 92nd in the gender inequality index with a score of 0.388, while its gender development score stood at 0.966.

Jose Enrique A. Africa, executive director of think tank IBON Foundation, said the Philippines’ human development ranking does not reflect an improvement in the poverty situation.

“The appearance of improvement is unwarranted though, because the country’s economic growth has long been grossly inequitable and manifests disproportionately as income, profit and wealth gains for the richest rather than a generalized improvement in the conditions of the majority,” he said in a Viber message.

Almost half of Filipino families, equivalent to 13 million households, consider themselves poor, according to a survey by the Social Weather Stations in late 2023.

Mr. Africa said the index’s measure of education does not even capture the poor quality of education in the country.

“Amid low family incomes, the government has so much more to do to improve the reach and quality of the public school system,” he said.

The Philippines had one of the longest and strictest lockdowns in the world, with schools closed between April 2020 and March 2022.

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Source: Business World

Philippines still largely ‘unfree’ in economic aspects

The Philippines remained largely “unfree” in economic aspects, even as it inched up a spot to 88th out of 176 countries in a global ranking on economic freedom by The Heritage Foundation.

In the 2024 Index of Economic Freedom, the American conservative think tank said the Philippines’ score dipped by 0.3 point to 59 from 59.3 in 2023. It got a score of 61.1 in 2022 and 64.1 in 2021.

Manila ranked 89th out of 176 countries in last year’s index, 80th in 2022 and 73rd in 2021. It ranked 70th in 2020 and 2019.

Singapore (83.5) topped the index as the freest economy, followed by Switzerland (83.0), Ireland (82.6), Taiwan (80.0), and Luxembourg (79.2).

The bottom five countries include North Korea (176th), Cuba (175th), Venezuela (174th), Sudan (173rd), and Zimbabwe (172nd).

Among 39 Asia-Pacific countries, the Philippines still ranked 18th, lagging behind neighbors Thailand (87th), Vietnam (59th), Indonesia (53rd), Malaysia (45th), and Brunei (43rd).

However, the Philippines was ahead of Uzbekistan (103rd), Cambodia (106th), and Kyrgyz Republic (112th).

The index analyzes economies considering the rule of law, government size, regulatory efficiency, and market openness.

According to the think tank, the Philippines’ overall rule of law is weak, noting that the country got a score of 46.1 for property rights, lower by 0.3 point compared with last year.

Its score for judicial effectiveness increased by 16.4 points to 42.2.

For government integrity, the country’s score slipped by 0.6 point to 33.8, which is below the world average.

The Philippine government has pursued legislative reforms to enhance the entrepreneurial environment and increase job growth but “there still are institutional challenges,” the conservative think tank said.

“Despite some progress, corruption continues to undermine long-term economic development,” it said.

In the Philippine context, corruption is both a “regulatory capture problem and a systemic issue,” said Emy Ruth Gianan, who teaches economics at Polytechnic University of the Philippines.

One of the best recourse in addressing corruption would be to give the anti-graft court Sandiganbayan “sharper teeth to investigate,” she said in a Facebook Messenger chat.

“We also have to invest in community-based watchdogs as well as improve our whistleblower protection schemes,” she added.

For government size, the country scored 78.2 in tax burden, lower by 0.1 point from last year. Its score for government spending decreased by 2.1 points to 79.2. An 18.9-point decrease was seen in its fiscal health score, which was at 40.5 in the 2024 index.

The top individual income tax rate was at 35% in the Philippines, while its top corporate tax rate was at 25%, the think tank said.

“The tax burden equals 18.1% of gross domestic product (GDP). Three-year government spending and budget balance averages are, respectively, 26.3% and -5.8% of GDP,”

For regulatory efficiency, the country scored 69.7 in business freedom, up by 3.6 points compared with last year and above the global average. Its score for labor freedom increased by 0.3 point to 57.8, while its score for monetary freedom declined by 2.5 points to 65.8.

The business regulatory environment in the Philippines “has generally been streamlined,” the think tank said, adding that the “time and cost involved in dealing with licensing requirements have been reduced.”

The Heritage Foundation noted the regulatory environment is relatively well institutionalized but lacks efficiency.

While the labor market remains structurally rigid, “regulations are not particularly burdensome,” it added.

For market openness, the Philippines scored 74.4 in trade freedom. It received a score of 60.0 each for investment freedom and financial freedom. These scores remained unchanged.

“Foreign investment is generally welcome, and the Investment Code treats foreign investors the same as domestic investors,” the think tank said.

While the financial sector is dominated by banking and is relatively stable, it noted capital markets are underdeveloped.

The index considered aspects that also prevent foreign investors from setting up a business in a country — a thing that Philippine policy makers should consider as they push for amendments to the economic provisions of the 1987 Constitution, said Enrico P. Villanueva, who teaches money and banking at the University of the Philippines – Los Baños.

“The index notes that overall rule of law is weak, property rights score is below average, judicial effectiveness and government integrity are also average,” he said via Messenger chat.

“It is better that the government focuses on improving index scores rather than tinkering with the Constitution.”

The failure of institutions in the country is the main cause of low foreign investments, an economist said.

“The index recognizes that reforms have been made but the institutional challenges continue as the balance of power remains skewed,” Leonardo A. Lanzona, an economics professor at the Ateneo de Manila University, said via Messenger chat.

Weak Philippine institutions, as reflected in the country’s low score in government integrity, breed corruption and lead to specious reforms, he noted.

“The increasing numbers of Filipino households migrating to other countries is a testament to these institutional failures.”

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Source: Business World

Unemployment rate drops to 18-year low in October

The Philippines’ unemployment rate fell to the lowest in 18 years in October, underscoring the strength of the country’s labor market.

The jobless rate was 4.2%, the slowest since April 2005 and matching the level in November last year, the Philippine Statistics Authority (PSA) said on Thursday.

The employment rate also rose to 95.8%, the highest in 18 years and consistent with sustained labor demand that’s at the root of renewed economic momentum.

The statistics agency revamped the definition of “unemployed” in April 2005 to refer to people aged 15 years and older without a job, are available for work and actively seeking one or not because of a valid reason.

Preliminary results of the PSA’s Labor Force Survey (LFS) showed the 4.2% unemployment rate translated to 2.09 million jobless Filipinos in October, 150,000 lower than 2.24 million in the same month last year.

The unemployment rate was an improvement from 4.5% in both October 2022 and in September.

However, the National Capital Region had the highest jobless rate of 5.4% in October, while Davao Region had the lowest with 2.9%

National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan said the labor market is expected to further improve amid the government’s efforts to boost trade and investment in the country.

“We can make the labor market more inclusive with the entry of more investments, especially those that bring in new and better technology,” Mr. Balisacan said in a statement. “We need to expand and enhance learning opportunities to ensure that we equip Filipinos for future jobs.”

Year to date, the unemployment rate stood at 4.6%, which is below the 5.3%-6.4% target for 2023 under the Philippine Development Plan.

“We are now closer than ever to achieving the President’s vision of bringing down the Philippines’ unemployment rate to 4-5% in 2028,” Finance Secretary Benjamin E. Diokno said in a statement.

UNDEREMPLOYMENT

Meanwhile, job quality improved as the underemployment rate fell to 11.7% in October, from 14.2% in the same month last year. This translated to 5.6 million underemployed Filipinos or persons already working but still looking for more work or longer working hours.

Month on month, job quality slightly deteriorated from 10.7% in September.

Year to date, the average underemployment rate stood at 12.5%, lower than 14.2% during the comparable period.

PSA data also showed that the size of the labor force increased by 589,000 to 49.89 million in October from 49.3 million in the same month last year.

This brought the labor force participation rate (LFPR) — the share of the Filipino workforce to the total working age population of 15 years old and older — to 63.9% in October. This was lower than 64.1% in the same month last year.

For the January-to-October period, the average LFPR stood at 64.6% which is higher than the records for the previous years, PSA Undersecretary and National Statistician Claire Dennis S. Mapa said at a news briefing.

The employment rate climbed to 95.8% in October, which the PSA said was the highest rate since April 2005 and the same rate in November 2022. This meant 47.8 million Filipinos aged 15 and older had jobs, higher than 47.06 million in October 2022.

On average, an employed Filipino worked 41.2 hours a week in October, higher than the 40.2 hours logged in the same month in 2022.

Antonio A. Ligon, a business and law professor at De La Salle University in Manila, said the jobless rate dropped in October amid higher demand for workers from labor-intensive industries and the government’s infrastructure projects.

“There is high demand for skilled and construction workers nowadays,” he said via Facebook Messenger.

Sonny A. Africa, executive director of think tank Ibon Foundation, said the unemployment figures may be underestimated since only those actively seeking employment in the past six months and ready to immediately take up work are considered part of the labor force.

“Over the last year-and-a-half from March 2022 to October 2023, the labor force stayed stagnant at a little less than 50 million despite the working age population growing by 1.8 million or a 2.3% increase to 78 million. This is likely from so many jobless being dropped from the labor force and no longer counted as unemployed by official statistics,” he said in a Facebook Messenger chat.

PSA data showed the number of Filipinos classified as “not in the labor force” increased to 28.1 million in October, higher than 27.6 million in the same month a year ago.

“Job creation is weak. Moreover, jobs available are evidently of poor quality. One indicator of this is that poverty is increasing. Another indicator is the irregularity of work as shown by extreme volatility in net employment creation on a month-to-month basis,” Mr. Africa said.

PSA data showed the services sector employed 47.8 million, accounting for 60.1% of the total. Agriculture and industry sectors made up 22.2% and 17.8% of employed persons, respectively.

Year on year, employment rose significantly in accommodation and food service activities (up by 291,000), administrative and support (up by 224,000), and transportation and storage (up by 149,000).

However, employment declined in wholesale and retail trade and repair of motor vehicles and motorcycles (down by 193,000), mining and quarrying (down by 75,000), and manufacturing (down by 73,000).

PSA data showed agriculture and forestry industry saw a 1.09 million increase in employment at the start of the fourth quarter in October from the start of the third quarter in July.

PSA’s Mr. Mapa said the agricultural sector helped boost employment in

the Davao Region which holds the highest regional employment rate of 97.1%, and in Bangsamoro Region which holds the highest regional LFPR of 74%.

However, Roehlano M. Briones, a senior research fellow at the Philippine Institute for Development Studies, said agricultural jobs typically increase in October as harvest season begins in some regions.

“October marks the start of the harvest season for key crops such as rice, the planting season for maize, and rice in some areas,” he said.

Source: Business World