Impact of the Food, Fuel and Financial Crisis on the Philippine Labor Market

1. Impact of the Food, Fuel and Financial Crisis on the Philippine Labor Market Yana van der Meulen Rodgers, Rutgers University NidhiyaMenon, Brandeis University EAP Regional Gender Workshop February 1-2, 2010 NhaTrang, Vietnam

2. Context • Global financial crisis has resulted in considerably slower economic growth in the Philippines. • Real annual GDP growth decelerated after 2007 but remained positive; unlike 1997-98 Asian crisis, when Philippine economy contracted • Reduction in global demand caused industrial production to slow down in 2008 and contract in 2009, especially in export-oriented manufacturing industries. • Financial crisis partially overlapped with lingering effects of food and fuel crisis, which peaked in mid- to late-2008. • Sharp increase in international rice price ─> substantial increase in retail price of rice and domestic food inflation (Philippines one of world’s largest rice importers). • Fuel prices increased at five times the 2007 inflation rate.

3. Social Impacts and Objective • Poor households appear to be hit harder than richer ones, bearing disproportionate labor market setbacks (WB 2009, ASEAN 2009). • Objective of presentation: present set of key labor market indicators using most recent data available to assess impact of crisis by gender. • Economic status, unemployment, employment, earnings, hours worked • Battery of indicators created; presentation focuses on most pertinent effects • Methodology: descriptive statistics and regression analysis (in progress) based primarily on 2 databases: • Annual data in ILO’s LABORSTA up through 2008 • Long time series allows us to place current crisis into historical context • Quarterly Labor Force Survey data from Philippine government (Q1 2007 – Q2 2009, with Q3 and Q4 coming soon) • Timely access allows for rapid assessment of a host of quantitative labor market indicators by gender (nationally representative sample) • Challenge: data specifically cover market-based work and ignore unpaid domestic work (household chores and childcare) • Domestic work disproportionately performed by women and often increases in crises when households substitute toward relatively cheaper home-produced goods and services.

4. Preview of Main Findings Labor market impacts of current food, fuel, and financial crisis not as severe as impacts of 1997-98 Asian crisis in the Philippines. Hypotheses about increase in women’s unpaid domestic work during crisis periods indirectly supported with LFS evidence for 2007-09: job gains in paid work tend to favor men; job gains as unpaid family workers favor women. self-employed women lost jobs, consistent with reduced demand for small-scale products and services that they tend to sell. Working hours not hit as hard as other countries, but real earnings fell: especially in 2008 with peak of food and fuel price crisis. with an upswing in the unexplained earnings gap between men and women in 2008. in majority of sectors for men and women. Overall employment gains during crisis period led by job growth in agriculture (men) and sales (women); mask substantial job loss in labor- and capital-intensive manufacturing for men and women.

5. Compare the labor market impacts of current crisis with impacts of 1997-98 Asian crisis in the Philippines…

6. Standard Unemployment Rate by Gender Annual 1980-2008 Quarterly 2007-09 • Unemployment rates much higher in years after 1997-98 Asian crisis compared to current financial crisis. • Gap between men and women steadily closed over time. • Unemployment for women lower than for men after 2005. Not clear why; perhaps exit of low-skilled, low-educated women from labor force, and/or qualitative change in composition of available jobs (Acemoglu 1999). • Well-defined quarterly fluctuations. • Peaks for men have not fallen since crisis started; women’s unemployment in 2009 back on the upswing. • Note: Unemployment substantially higher in urban areas than rural areas for men and women.

7. Employment Trends Employment/Population • Gap between men and women slowly closing as e-pops rise for women, fall for men. • Substantial drop in e-pops for men, and somewhat for women, after the 1997-98 crisis, but not (so far) during the current financial crisis. • E-pops by quarter during the current financial crisis virtually flat.

8. Employment in Agriculture by Status: 1985-2008 Men Women • Although there are more men than women workers in ag, a substantially higher share of women in agriculture are unpaid family workers than men. • Drop in agricultural employment following 1997-98 crisis but not current financial crisis, so far.

9. Employment in Industry by Status: 1985-2008 Men Women • A higher share of women in industry are own-account workers than men. • Men and women in industry experienced employment declines after 1997-98 crisis • Women in industry have borne disproportionate employment declines in current financial crisis.

10. Employment in Services by Status: 1985-2008 Men Women • Women and men have very similar employment composition and employment numbers in services. • Steady growth in employment in services over time, with a noticeable slowdown but still some growth following the 1997-98 Asian crisis.

11. Percent of Employed Workers by Formal and Informal Sector, 1998-2008 Men Women • Proportionately more women work in the informal sector compared to men. • Remarkably stable distribution between formal and informal over 10-year period; economic prosperity did not bring increased formalization; neither did crisis bring increased informalization. • Quarterly data for 2009 indicate a very small (about 0.5 percentage points) upswing in the informal sector share for both men and women relative to 2008, but too small and recent to make claim about crisis leading to increased informalization.

12. What can we say about women’s unpaid work?

13. Underemployment and Multiple Jobs Percent of Workers with Multiple Jobs Underemployment • Underemployment = proportion of employed workers who want more hours of work. • Likely reason for women’s lower trend lines: they carry heavier burden of unpaid domestic work; time constraints prevent additional paid work. This conclusion consistent with previous studies based on time use surveys for the Philippines (Tiefenthaler 1999; Adair 2002; UNDP 1995; World Bank 2001). • Note considerable increase in 2008 in both indicators, suggesting difficulty of coping with the food and fuel price crisis.

14. Job Gains and Losses by Worker Status Q2 2009 – Q2 2007 Q1 2009 – Q1 2007 • Both 2-year change charts show that job gains in paid jobs (employers, wage & salaried workers, self-employed) tend to favor men, while job gains in unpaid jobs favor women. • Self-employed women lost jobs in both figures, consistent with story of reduced demand for the small-scale products and services that they tend to sell. • Story for changes in paid jobs less robust to change in quarterly reference point. • Overall employment gains during crisis period thus far, especially for men.

15. Gendered impacts of crisis on hours and earnings

16. Hours of Work in Formal and Informal Sectors Q1 2007 – Q1 2009 Q2 2007 – Q2 2009 • Measure: median hours worked in past week in primary job • Overall: Thus far weekly hours of work in the primary job have held steady for men and women, with slightly less robustness for men across reference quarters. • This conclusion holds when the measure of weekly hours includes secondary jobs (analysis not shown). • A little variation by industry: hours declines for men in finance; hours increases for women in real estate and social services; some substitution in mining away from male hours to (cheaper) female hours

17. Real Wages by Gender: 2001-2008 Real Wage Levels Female/Male Wage Ratio • Nominal wages risen steadily since 2001, but wages have fallen when measured against consumer prices for women and men, especially in manufacturing. • Women’s relative wages in manufacturing were rising steadily until 2007. • In agriculture, a rebound in women’s relative wages with the financial crisis, due to a steeper drop in absolute wage levels for men than for women. • Declining relative wages for women in non-agricultural activities explained by fall in wage levels and ratio in most narrowly-defined service industries.

18. Earnings Per Day by Gender: 2007-09, Quarterly Real Median Earnings Levels Log Residual Wage Gap • Strong decline in absolute real earnings for men and women through most of 2008, with recovery thereafter. • Nominal earnings have risen steadily, but not enough to keep pace with the price hikes associated with the food and fuel price crisis of 2008. • Log residual wage gap constructed from Oaxaca wage gap decomposition. Trend is encouraging: decrease in this common proxy for wage discrimination against women, but upswing during the food/fuel crisis of 2008.

19. Real Earnings Gains and Losses by Industry (Q1 2009 – Q1 2007) Men Women • Charts show 2-year change in real median earnings per day • Both men and women experience real earnings losses in the majority of industries, especially public administration (men) and mining (women). • Although construction sector grew from election and stimulus spending, both men and women still experienced real earnings cuts in this sector. • Similar picture emerges using Q2 as the reference point (not shown), with some shifting in sorting of industries.

20. Job creation and destruction for men and women during recent crisis

21. Job Gains and Losses by Industry (Q2 2009 – Q2 2007) Men Women • Biggest male and female job losses during the current financial crisis in capital-intensive manufacturing. • Both men and women also saw losses or stagnation in labor-intensive manufacturing. • Largest source of job growth: agriculture (for men) and sales (for men) • Construction, the target of election and stimulus spending, had job creation for men only. • Overall employment gains during crisis period thus far for men and women.

22. Job Gains and Losses by Industry (Q1 2009 – Q1 2007) Men Women • Story changes for women with first quarter reference point: overall job creation much flatter for women than men. Suggests that when economy started to pick up again in 2009, men gained first. • Another difference in this analysis: women saw big losses in service in private households (nannies, maids). • Consistent story across quarterly reference points: losses for men and women in capital-intensive and labor-intensive manufacturing.

23. Economic Status of Working-Age Individuals Working-age individuals classified as: Out of labor force Employed Unemployed Working Overseas A higher percent of women out of the labor force, as expected During crisis period, not much change in percent of men and women out of labor force and employed. Percent of Working-Age Individuals Working Overseas • Interesting change during the crisis: steady increase in percentage of men and women working overseas. • Consistent with outside evidence that remittances from abroad have not fallen during crisis

24. Jobs in Vulnerable Sectors by Gender and Poor/Non-Poor • Both women and men, poor and non-poor, work in vulnerable sectors, but in varying proportions. • Note: Employment totals in vulnerable industries reported for Q1 2009. • Poor/non-poor are differentiated on the basis of poverty head count ratios that are calculated using household earnings per day per capita. The annual overall incidence of poverty in the LFS data is roughly the same as estimates from NCSB for 2006. • Appears that the poor disproportionately work in the sectors that were vulnerable to job cuts, especially in service to private households, which is not surprising. Source: Philippines Labor Force Surveys (Q1 2007- Q2 2009)

25. Summary and Looking Forward • Brief summary: although current crisis has not hit the Philippines as hard as the 1997-98 shock: • Women have lost self-employment opportunities and seen increase as unpaid family workers • Both men and women have seen sharp declines in real earnings and job losses in manufacturing • Next steps in this research project: • Explore quarterly cyclicality and why formalization of labor market is so sticky • Regression analysis using individual-level data to explore statistical significance of the crisis impacts on employment and earnings. • Complex gender impacts require careful attention to policy reforms: • Continue with innovative policies that reduce women’s non-market workload. • Improve coverage, targeting, and efficiency of poverty-reduction programs. • Boost women’s access to markets and assets. • Increase women’s political representation to capitalize on positive links between female governance and social welfare spending. • Consider boosting tax effort to finance social spending. • Make concerted attempts to conduct program evaluations with a gender lens.