PHILIPPINE STATISTICAL ASSOCIATION, INC.

PHILIPPINE STATISTICAL ASSOCIAT

ION, INC.
st

2005 1 Quarter Conference

PHILIPPINE SOCIAL SCIENCE CENTER

COMMONWEALTH AVENUE,
U.P. DILIMAN, QUEZON CITY
TELEPHONE NO. 922- 9621 LOCAL 345, 456-1928
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EMAIL: psa@info.com.ph

Statistical Measurements of Emerging Issues and Concerns

REDEFINING THE PHILIPPINE

UNEMPLOYED
Editha B. Rivera

21 April 2005
Romulo Hall, G/F NEDA sa Makati Bldg.
Amorsolo St., Makati City

REDEFINING THE PHILIPPINE UNEMPLOYED

by
Editha B. Rivera and Manuel L. Laopao1/

I.

INTRODUCTION

Statistical agencies worldwide affirm that the use if international concepts, classifications
and methods promotes the consistency and efficiency of statistical systems at all official levels
(United Nations, 2002). Such international standards provide guidance to countries in
developing their national statistical program and to extent feasible, facilitate international
comparisons.
In the case of labor statistics, the International Labor Office (ILO) provides guidelines
and international recommendations and enjoins member nations to review and, if appropriate,
revise or update the concepts, definitions and classifications used in compiling labor statistics
when the relevant international standards and guidelines are revised (ILO, 1985).
In the case of the Philippines, the measurement of unemployment substantially deviates
from the international definition set by ILO. Thus, when compared to our ASEAN neighbors, the
Philippine unemployment rate posted the highest rate as shown in the table below.
Unemployment Rates of Selected ASEAN Countries: 1998-2002
(In percent)

Country
Philippines
Indonesia
Malaysia
Singapore
Thailand

1998
10.3
5.5
3.2
3.2
3.4

1999
9.8
6.4
3.4
4.6
3.0

2000
11.2
6.1
3.1
4.4
2.4

2001
11.1
8.1
3.6
3.4
2.6

2002
11.4
9.1
3.8
5.2
2.4

Source: International Labor Office, 2003 Yearbook of Labour Statistics.

According to metadata published in the websites of ILO (laborsta.ilo.org.) and IMF

Dissemination Standards Bulletin Board (dsbb.imf.org.) study, there are a total of 88 countries
that conduct Labor Force Survey regularly or at least once a year. Of this, only ten (10)
countries including the Philippines do not include the availability criterion in their official
definition of unemployment. These countries are located in South America (Argentina, Chile, El
Salvador, Honduras, Paraguay, Puerto Rico, Panama and Uruguay) except for Morocco. There
are 20 other countries which conduct LFS but on occasional basis. Among them only one
country (Qatar) does not include the availability criterion in measuring the unemployed
persons.
The Philippine labor force statistics may have been one of the longest time series among
countries as we have been conducting labor force surveys since 1956. Changes and revisions
have been done to conform to international standards and national legislations. For instance, we
conformed to the ILO-prescribed past week reference period in 1956 but experimented with

/ Officer-in-Charge and Chief Labor and Employment Officer, respectively, Bureau of Labor and Employment
Statistics, Department of Labor and Employment.

the past quarter reference period in 1976, only to revert back to past week in 1987. We also
started out covering the economically active population at age 10 but shifted to cover the 15
years old and over when the Philippine Labor Code of 1974 set the minimum employable age at
15 years. In 1987, the National Statistics Office (NSO) used a new questionnaire design and
adopted modifications in the concepts and definitions for measuring labor force and employment
characteristics based on the past week reference period.
In its October 14, 2003 memorandum, the Office of the President has instructed the
National Statistical Coordination Board (NSCB) to review the existing concept of unemployment
vis--vis the definition prescribed by the ILO. In line with this instruction, the NSO, Bureau of
Labor and Employment Statistics (BLES) and the NSCB Technical Staff, in consultation with the
Inter-Agency Committee on Labor, Income and Productivity Statistics (IAC-LIPS), set out a
series of meetings to review and discuss the issues on existing definition, including the
questionnaire for the LFS. Findings of the group review indicate that the existing definition is
generally consistent with the international standards, except for the exclusion of the availability
criterion.
The detailed findings and recommendations of the group were presented to the NSCB
Executive Board, after which the latter approved the proposed action plan for the revision of the
unemployment definition that included the following activities: (1) revision and pre-testing of the
LFS questionnaire with additional items to test the use of availability criterion and the refinement
of the definition of discouraged workers; (2) processing and analysis of the pretest results; and
(3) consultation with labor experts. A pretest of the revised questionnaire was carried out by
NSO, with funding assistance from the ILO, in May 2004 in four barangays (three urban and one
rural) in Laguna province, covering 932 sample households with a total of 4,741 household
members.
It should be pointed out that the move to conform to the international standard definition
was initiated since the late 1980s by the Department of Labor and Employment. This was part
of a wider set of recommendations that aimed to improve the usefulness of the LFS. The
recommendation was backed up by an empirical study which covered three (3) provinces in
Region X. All sample households of LFS in Misamis Oriental, Bukidnon and Camiguin were
taken as respondents. Conducted jointly with the NSO, the survey comprised 700 households
and covered some 3,437 respondents. Moreover, two (2) consultation meetings with labor
groups, employers, government and academe were held to solicit comments and
recommendations tot eh proposed research, one, before the conduct of the data field
collections, and another after the initial results were completed. The recommendations were
presented by the Technical Working Group (TWG) on Labor Force Concepts under the then
Interagency Committee on Labor and Employment Statistics in 1992 but National Statistical
Coordination Board (NSCB) Executive Board action was deferred in lieu of the equally important
issues on poverty statistics being developed during that time. Nevertheless, the other sets of
recommendations approved by the Executive Board were the shift of reference period from
past quarter to past week, the definition of underemployment and the expansion of scope of
work.
Despite the deferment, the NSO proceeded to include an inquiry item on available for
work in the LFS questionnaire in anticipation of the change in official definition of
unemployment. As of date, the NSO has published a comparative data series (1987 - 2004) on
the current definition and the ILO international standards definition.

I.

Measuring Unemployment

Unemployment is the total lack of work at a given point in time. It is a situation of those
persons who want work and are able to take suitable jobs but cannot find them. Unemployment
complements the measurement of employment. The two concepts together make up the
countrys labor force or supply of labor.
Unemployment is part of the overall measurement of a countrys economically active
population, which is based on a framework known as the Labor Force Approach. Introduced
during the sixth International Conference of Labor Statisticians (ICLS, 1947), this approach
classifies at any given moment, the population above a specified minimum age into three
mutually exclusive and exhaustive categories, namely: (1) employed persons; (2) unemployed
persons (which together comprised the economically active population or labor force); and (3)
persons not in the labor force (economically inactive).
The unemployment rate of a country simply tells us the proportion of the labor force that
does not have a job but is available and actually looking for work, or a measure of the countrys
unutilized labor supply.
A. The International Standard Definition
The existing international standard measurement of unemployment is embodied in
Resolution No. 1 Concerning Statistics of the Economically Active Population, Employment,
Unemployment and Underemployment which was adopted during the 13th International
Conference of Labor Statisticians (ICLS) held at Geneva Switzerland in 1982.
The Resolution defines the unemployed to comprise all persons above a specified age
who satisfied simultaneously the following three criteria:
(a). without work, i.e. were not in paid employment or self-employment as specified by the
international definition of employment;
(b). currently available for work, i.e. were available for paid employment or self-employment
during the reference period; and
(c). seeking work, i.e. had taken specific steps in a specified recent period to seek paid
employment or self-employment

Without Work
Without work is regarded as a situation of total lack of work at given point in time or not
having been employed in paid employment or self-employment during the reference period.
Currently Available for Work
This criterion simply means that a person should be available for work during the
reference period, i.e., given a work opportunity; a person should be able and ready to
work. One purpose of the availability criterion is to exclude persons who are seeking

work to begin at later date such as students looking for work after graduation or who
cannot take up work due to certain impediments such as family responsibilities, illness,
etc. Here, the availability criterion serves as a test of the persons current readiness or
willingness to start or take up work.
Seeking Work
Seeking work is defined as having taken specific steps in a specified recent period to
seek paid employment or self-employment. This means that a person must have actually done
something specific to obtain work such as in the case of those looking for paid employment,
registration at a public or private employment exchange; application to employers; checking at
worksites, farms, factory gates, markets or other assembly places; placing or answering
newspaper advertisements; seeking assistance of friends or relatives. And in the case of those
seeking self-employment, this refers to such activities as looking for land, building machinery or
equipment to establish own enterprise; looking for clients or orders or arranging for financial
resources; applying for permits and licenses, etc.
Seeking work is essentially a process of search for information in the labor market. This
is particularly meaningful for developed countries where the labor market is organized, meaning
that the labor market is largely oriented to paid employment and labor market information (LMI)
exists and is widely used. This may not be the case for most developing countries. This criterion
is somewhat restrictive and may not fully capture the prevailing situations in most countries.
For this, the 1982 international standards introduced a provision that allows for the
relaxation of the seeking work criterion in certain situations. When labor market is limited or
unorganized, labor absorption is inadequate or labor force is largely self-employed. The
relaxation maybe partial or complete. The Philippines opted for the partial relations of seeking
work. This relaxation applies to certain groups of persons who are not seeking work due to
particular reasons such as discouraged workers, temporary ill or disabled, bad weather, waiting
for results of job application, awaiting job recall.
B.1. The Current Philippine Definition
As in most countries, the Philippine unemployment statistics are collected by the NSO
through the Labor Force Survey (LFS). This is a nationwide survey of 51,000 sample
households conducted every first month of the quarter, i.e., January, April, July and October.
The LFS defines the unemployed persons as all those who during the reference period
are 15 years old and over as of their last birthday who have no jobs/businesses and are actively
looking for work, as well as those persons (partial relaxation) without jobs or businesses who
are reported not looking for work because of their belief that no work was available or because
of temporary illness/disability, bad weather, pending job application or waiting for job recall. As
pointed out earlier, the definition generally follows the international standard definition except for
the exclusion of the availability criterion.
B.2. The New Official Definition
Through NSCB Resolution No. 15, series of 2004, the Board has approved for adoption
by concerned government agencies and instrumentalities, the revised concept of
unemployment, which prescribes the adoption of the availability criterion in addition to the two
criteria included in the old definition, with all three to be satisfied simultaneously, with an

extended availability period, and with partial relaxation of the seeking work criterion to be
retained for persons without work and currently available for work, but not seeking work due to
five particular reasons, and with qualification on the length of the job search period of the
discouraged workers. Specifically, the new official definition of the unemployed is as follows:
The unemployed include all persons who are 15 years old and over as of their last
birthday and are reported as:
(1) without work, i.e., had no job or business during the basic survey reference period;
and
(2) currently available for work, i.e., were available and willing to take up work in paid
employment or self-employment during the basic survey reference period, and/or
self-employment within two weeks after the interview date; and
(3) seeking work, i.e., had taken specific steps to look for a job or establish a business
during the basic survey reference period; or not seeking work due to the following
reasons: (a) tired/believe no work available, i.e., the discourage workers who had
been looking for work within the last six months prior to the interview date; (b)
awaiting results of previous job application; (c) temporary illness/disability; (d) bad
weather; and (e) waiting for rehire/job recall.
Operationally, the unemployed will be determined through a series of questions as
shown in the attached flowchart.
The adoption and full implementation of the revised unemployment concept will start
with the April 2005 round of the LFS. The Resolution also provides for the generation of a
parallel series on unemployment based on the old and the new definitions for a period of one
year and continuation of the new unemployment series thereafter. It also directed the Statistical
Research and Training Center (SRTC) to conduct information dissemination activities on the
new official definition of unemployment in coordination with NSO, NSCB and DOLE.
C. Comparisons of the Old and New Official Definition of Unemployment
As the matrix below suggest, the new official definition differs with the old on two counts.
First, the inclusion of availability for work criterion and second the exclusion of discouraged
workers who have not looked for work for more than six months.
Criterion

Old Definition

New Definition

Included

Included
Included

2. Currently available for work

Not Included

(in the basic reference period or within two

weeks after interview date)

3. Seeking work or not seeking

work due to the following
reasons:

Included

Included

1. Without work

a. tired/believe no work
available
b. awaiting results of previous
job application
c. temporary illness/disability

Included

Included

(no specification on length of job

search)

(have looked for work within the last 6 months

prior to interview date)

Included

Included

Included

Included

d. bad weather
e. waiting for rehire/job recall

Included
Included

Included
Included

Flowchart for Identifying the Unemployed

-Philippine New Official DefinitionFor 15 Years Old and Over
For Persons who had no job/business

Looking for a
job/ establish
a business?

Yes

No
Reason for
not looking
for work

Last time
looked for
work?
Six
months
or less

Tired/believe no
work available

Awaiting results of
previous job
application
Temporary
illness/disability
Bad weather
Waiting for rehire/job
recall

More than
six
months

Discouraged
worker

Available
for work?

Yes

Willing
to take
up work?

Yes

(Last wk or
w/in 2 wks)

No

Too young/old or
retired/permanent
disability
Household, family
duties
Schooling

No

Not in the Labor Force

Unemployed

II.

The Implications of the New Definition of Unemployment

Because a number of the unemployed, specifically the discouraged workers who have
not been looking for work for the past six months may now be considered as not in the labor
force, unemployment both in level and rate will be pared down. Consequently, this
reclassification in employment status (from unemployed to not in the labor force) will likewise
lead to a reduction in the size of the labor force and consequently in the labor force participation
rate (LFPR). On the other hand, data on employment and underemployment will not change.
Key Labor Market Statistics
January 2005
INDICATOR

Current
Official
Definition

ILO
Concept

53,975

53,975

35,664
31,634
4,030
18,311
66.1
11.3

34,110
31,634
2,476
19,865
63.2
7.3

Household Population 15 Years Old

and Over (000)
Labor Force (000)
Employed (000)
Unemployed (000)
Not in the Labor Force (000)
Labor Force Participation Rate (%)
Unemployment Rate (%)

Difference
-1,554
-1554
+1,554
-2.9
-4.0

Source: National Statistics Office, Labor Force Survey.

It should be pointed out however that the above figures are estimates made from runs by
the NSO using the old LFS questionnaire. The time frame for the availability question (last week
or within two weeks) and for the discouraged workers (six months or less) could not be
ascertained using the old instrument, and it could have an effect on the magnitude of difference.
A reduction in LFPR and the increase in economically inactive persons reflect a sluggish
labor market that would indicate withdrawal of persons from the labor force because people are
less optimistic of their chances of finding jobs.
The ideal situation is for the reduction in unemployment rate is accompanied by a
constant LFPR or an increase in LFPR. Both situations indicate an improved labor market
performance. First, because a rise in LFPR implies that people are more upbeat on their
outlook of the labor market and the economy in general. This positive perception invites more
people to look for jobs in the labor market. Second, this optimism is validated by more people
finding jobs that result in lower unemployment.
While the unemployment rate may be considered as the single, most informative labor
market indicator, it should not be interpreted as a measure of economic hardship or well-being.
Rather, it should be monitored along with the other economic and social policy objectives, such
as low inflation, poverty reduction and sustainable balance of payment situation. For instance,
the unemployment rates are lowest in less developed regions in the country such as in Region II
and ARMM and highest in NCR and Region IV-A. Using this figure should not lead us to include
that the former regions are better off than the latter.

Meanwhile, the study of special subgroups and the demographic characteristics of the
unemployed should lead to the development of a more focused employment programs for these
subgroups, thus optimizing resource allocation.
While unemployment is a vital concern, it is important only for young workers and it
doesnt show everything. Policy makers and data users should look beyond unemployment and
focus on other dimensions of employment problems. Foremost among these is the incidence of
underemployment which is a more serious problem in the Philippine labor market as it cuts
across age groups; affects more the less educated and heads of the family; and is more than
twice the magnitude of unemployed.
Overemployment is another dimension which refers to those who work long hours in
jobs which provide very low earnings and productivity. On top of these is the problem of Soft
employment. This refers to less decent employment or those jobs which provides no security
of tenure, no social security benefits and very limited rights for workers both in terms of
participation in decision making and the rights to organized. Apart form unemployment is its
halo such as the problems of (1) child labor (not captured in the labor force survey), (2) old
age without pension and (3) female workers with young children.

REFERENCES
Hussmanns, R. Mehran, F. and Verma, V. 1990. Surveys of Economically Active Population,
Employment, Unemployment and Underemployment: An ILO Manual on Concepts
and Methods. ILO, Geneva
International Labor Office (ILO). 1982. Resolution concerning statistics of the economically
active population, employment, unemployment and underemployment, adopted by
the Thirteenth international Conference of Labor Statisticians (October 1982) in
Current International Recommendations on Labour Statistics 1988 edition
(Geneva), pp. 47-58.
___________1985. Recommendation concerning labour statistics, 1985 (No. 170), adopted by
the International Labour Conference in Current International Recommendations
on Labour Statistics 1988 edition (Geneva), pp.7-10.
___________ 2002. Key Indicators of the Labor Market 2001-2002, (Geneva).
___________2005. Laborsta: Sources and Methods of Labour Statistics. http://laborsta.ilo.org
02/16/2005 02/07/2005.
International

Monetary Fund (IMF). 2005. Dissemination Standards

http://dsbb.imf.org/Applications/web/basepagesmreport/?
strcode=ARG&strcat=UMOO

Bulletin

Board.

National Statistical Coordination Board (NSCB). 2005. Resolution No. 15, series of 2004,
Adoption of a New Official Definition of Unemployment. Makati City, Philippines.
National Statistics Office (NSO). 2003. Philippine Yearbook, Manila, Philippines.
____________. 2005. Philippine Labor Force Survey January 2005 (Preliminary Results),
Manila, Philippines.
United Nations (UN). 2002. United Nations Statistics Division Fundamental Principles of Official
Statistics. Extract from the report of the Statistical Commission on its Special
Session, held in New York 11-14 April 1994. Official Records of the Economic and
Social Council, 1994, Supplement No. 9.

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