Economists Say That Underemployment Projected to Worsen From Inflation

The underemployment rate in the country can continue to deteriorate in the next months as workers ask for an increase in salaries in light of rising commodity prices according to economists.

Asian Institute of Management economist John Paolo R. Rivera has said that the inflation increasing to 6.9% this September may trigger more workers to ask for higher salaries.

“If firms cannot cope with this, they might reduce manpower resulting in higher unemployment but workers will look for other means of livelihood even if it’s below their scope. This will slow down growth trajectory as the workforce is not fully maximized,” said Rivera.

In August, the underemployment rate went up to 14.7% from a previous 13.8% in July.

This was the highest underemployment rate since March with 15.8%. The number of underemployed Filipinos has increased to 7.031 million. This is an increase of 488,000 from July’s 6.543 million.

“With the numbers, we think that many are already feeling the pinch of higher inflation and may weigh down on the country’s economic growth prospects in the medium term,” said Mr. Ruben Carlo O. Asuncion, Chief Economist of UnionBank of the Philippines.

“Despite the availability of jobs, we suspect the high job dissatisfaction among workers (as seen in the rising underemployment rate) can be traced to higher wage demands as inflation went in a surge,” he says.

The increasing inflation has cut the purchasing power and “raised the urgency for people to look for work and augment family incomes.”

Source: Business World