POSITION ON THE ISSUES RAISED
ON THE REVISED DEFINITION OF
(posted 30 June 2005)
on Labor, Income and Productivity Statistics (IACLIPS)
POSITION ON THE ISSUES RAISED
ON THE REVISED DEFINITION OF UNEMPLOYMENT1
This position paper was prepared after a consultation meeting with the members of the IACLIPS on 11 May 2005 on the issues raised during the briefings conducted on the revised definition of unemployment starting November 2004 up to May 2005, during the forum of the Philippine Economic Society (PES) held in March 2005, and during the 1 st Quarter Conference of the Philippine Statistical Association (PSA) held in April 2005. Thus, this is the consensus of the IACLIPS as a group. Following are the issues:
1) There is no such thing as an International Labor Office (ILO) definition of the unemployed.
It should be pointed out that the Resolution adopted by the 13 th International Conference of Labor Statisticians (ICLS)2 is explicit in stating the existence of international standards for labor force measurement acceptable to all ILO member-countries. The first two paragraphs in the Preamble of the Resolution state the following:
“Recalling the existing international standards concerning statistics of the labour force, employment, and unemployment contained in Resolution I adopted by the Eighth Conference (1954) and concerning measurement and analysis of underemployment and underutilisation of manpower contained in Resolution III adopted by the Eleventh Conference (1966),
Recognising the need to revise and broaden the existing standards in order to enhance their usefulness in the provision of technical guidelines to all countries and particularly those with less developed statistics and recognising the usefulness of such standards in enhancing the international comparability of the statistics…”
Sections 5 to 24 under the Concepts and Definitions portion of the Resolution again indicate the existence of international standards for labor force measurement. It should also be noted that Section 10, subsection (1) of the Resolution states that:
The “unemployed” comprise all persons above a specified age who during the reference period were:
All these three criteria must be met before one could be classified as unemployed. The second was found lacking in the existing Philippine definition.
It should be noted that of the 88 countries regularly conducting labor force surveys, only 10 do not adopt the availability criterion, including the Philippines, one African country and eight South American countries.
The IACLIPS is also fully aware of the provision on taking account of the specific national needs and circumstances. This is precisely the reason why it recommended for adoption the partial relaxation of the seeking work criterion, which the Resolution allows under Section 10, subsection (2), stated as:
“ In situations where the conventional means of seeking work are of limited relevance, where the labour market is largely unorganized or of limited scope, where labour absorption is, at the time, inadequate or where the labour force is largely self-employed, the standard definition of unemployment given in subparagraph (1) above may be applied by relaxing the criterion of seeking work.”
Discouraged workers (who are considered “not economically active” in developed countries) have long been included in the Philippine definition of the unemployed.
2) Proponents of the new definition were not transparent with the process involved in changing the definition.
Throughout the review process, the public was made aware of the review efforts then being done by the IACLIPS. In the early stages of the review, a preliminary report (Attachment 1), which was a product of the IACLIPS consultation meetings, was also presented to the NSCB Executive Board. The Board was always updated on the progress of work on the unemployment definition. The NSCB also issued a press release on the review being done then in the Philippine Statistical System in February 2004 (Attachment 2) and the NSO, for its part, in September 2004 (Attachment 3). The issue even landed on newspapers, proof that the public knew that the existing definition of unemployment was being reviewed. Indeed, the IACLIPS has been transparent with revising the unemployment definition to make it conceptually correct.
3) Issues were raised on the aspect of operationalizing the questions related to the availability and seeking work criteria.
The question on the operationalization of asking the questions on the availability and the seeking work criteria was already addressed by the two pretests of the LFS questionnaire conducted by the NSO in Laguna in May 2004 and in Metro Manila in January 2005. The pretests aimed to identify possible problems in using the questionnaire, particularly the new questions as they relate to the other items in the questionnaire. If there would be future problems on this concern, these could again be tackled by the IACLIPS.
4) No study was made to find out the implications of the revised definition to public policy.
The effect of the revision in the definition is a reduction in the number of unemployed individuals. Based on the preliminary results of the January 2005 LFS round (using the old LFS questionnaire), around 1.5 million would be counted out from the unemployed if the availability criterion was adopted, with a corresponding drop in the labor force participation rate. It should be pointed out that the actual drop in unemployment under the revised definition may not reach this magnitude and may be lesser as a result of the expansion of the reference period for the availability criterion to cover the period from the past week before the interview date to two weeks after.
NSCB Resolution No. 15, Series of 2004, also provided that a parallel series on unemployment based on the old and the revised definitions be generated by the NSO for a period of one year, starting with the April 2005 LFS round, in accordance with best practices in statistical information dissemination. This will allow the smooth transition from the old to the new series of unemployment statistics.
On the policy side, the Department of Labor and Employment (DOLE) is aware of the fact that changing the unemployment definition will not solve the persistent unemployment problem. Rather, it welcomes the idea that due to scarce resources, it will be able to focus its employment interventions to the group that matters most – the jobless who are at the same time available and willing to take up work.
On the other hand, the group of unemployed who will now be classified as “not in the labor force” would be an interesting subject for policy analysis. Their socioeconomic profile would provide insights on appropriate policy interventions both by the executive and legislative actions.
5) Briefings should be done also for the LGUs.
The efforts of the IACLIPS to disseminate the revised definition of unemployment, with the SRTC taking the lead role as Chair of the Task Force on Information Campaign for the New Official Unemployment Definition , initially covered LGUs like Davao, Cebu, and Cagayan de Oro. Due to limited budget, only these three LGUs were identified as target audience for the briefing. The National Capital Region was also covered, owing to the smaller budget requirement. Nevertheless, as resources would permit, there is still a plan to intensify and widen the scope of advocacy work on the revised definition.
6) Why only now?
The change is admittedly overdue. It should be noted that the BLES, as a member of the IACLIPS, has been advocating for the change in the definition of unemployment since 1987, as well as further improvement of the usefulness of the LFS. The initial efforts to review the unemployment definition with a view of recommending the adoption of the availability criterion were undertaken in 1992 by the then Technical Working Group on Labor Force Concepts (TWGLFC), for which a report on the review of standard definitions and concepts, assessment of the LFS operational definitions, and review of the LFS questionnaire vis-à-vis new demands for data was presented to the Board in December 1992. The Board's decision then was to defer action on the matter in view of the next ICLS scheduled in January 1993, as this could also have implications on the recommendations. Thereafter, the matter was also pursued by the IACLIPS in its past work programs. However, priority issues like poverty and the definition of the informal sector were tackled first by the Committee.
It was in 2003 that the matter was again addressed. The review took about one and a half years and this period was highlighted by a series of IACLIPS consultation meetings, repeated review and revision of the LFS questionnaire, and finally, the pretest of the instrument. The Committee also went over the TWGLFC report in its review process. It is worth noting that in most of the fora conducted, there was a general acceptance of the revised definition. There were participants who expressed support to the change, especially at this time, considering the advent of globalization. Hence, at the most, only clarificatory questions and some recommendations were raised/provided. Mrs. Nelia R. Marquez, former NSO Deputy Administrator and former President of the PSA, congratulated the IACLIPS during the PSA 1 st Quarter Conference held in April 2005 for having the courage to pursue the adoption of the availability criterion. Dr. Michael Alba, Dean of the College of Business and Economics at the De La Salle University, also expressed during the PES forum his support on the efforts to revise the unemployment definition with a note to expand the set of indicators being monitored by the government.
With these clarifications, the IACLIPS would like to assure all concerned that its decisions and recommendations are not in any way affected by political interference and that it will continue to resolve statistical issues on labor and employment statistics especially if these concern the welfare of the people in general. The IACLIPS would like to assure the public that this would be done through proper channels and with wider consultation. It will continue to adhere to the UN Fundamental Principles of Official Statistics and will preserve the integrity and reliability of statistical data and information.
Considering the efforts and the rigorous review that the IACLIPS has done on the existing unemployment definition and the generally positive feedback on the revised definition, the group is still recommending the implementation of the activity timetable as approved under NSCB Resolution No. 15, Series of 2004.
1 As presented by Ms. Editha B. Rivera, the Committee Co-Chair during the NSCB Executive Board Meeting held on 18 May 2005
2 The ICLS, first held in 1923, meets roughly every five years to establish international guidelines for labor statistics and promote the international comparability of labor statistics. Participants include experts from governments, mostly from ministries responsible for labor and national statistical offices as well as employers and workers organizations. Observers come from regional and international organizations and other interest groups.