Unemployment and Statism

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The National Statistics Office (NSO) released this week its October 2009 Labor Force Survey (LFS), http://census.gov.ph/data/pressrelease/2009/lf0904tx.html.

One ugly result is this: Out of 45.08 million Filipinos in the labor force, 2.72 million were unemployed, and 6.88 million were underemployed (have jobs but need additional work, mainly to augment current small income).

That's a total of 9.6 million Filipinos who were either jobless and poor, or have jobs but feel poor and look for additional work and additional income. They constituted 21.3 percent of those in the labor force.

Now, there are also people who can be economically productive, but are not looking for a job, mainly because they think they can not find a job anyway, so they “surrender” for the moment. Or they may find a job but not at a salary that they wish to receive. So either they become idle ("tambay"), or pursue new studies to acquire new skills. Say an engineering graduate who cannot be hired as an engineer, so he studied BS Nursing to be hired as a nurse abroad someday, where expected income is a lot higher than local jobs.

For this group of people, they are not part of the labor force at the time of the survey. And this has the tendency of not worsening the already bad unemployment situation.

Who hire workers? The entrepreneurs, the investors, the capitalists. Local or foreign, corporations or single proprietors (or partnerships). They are the main job creators.

"Wait, wait, we are also job creators!," says government. Oh Yes, thousands of government agencies and bureaucracies, national and local, also hire people. My estimate is that there are almost 4 million Filipinos who are working in government, from Barangay Councilors and health workers, to soldiers, employees of government corporations and banks, legislators, up to the President and dozens of Presidential Advisers, consultants and their staff.

But government hire people not as food producers or transporter of people, food, and other commodities. But mainly as politicians and their staff; as soldiers and policemen, as regulators and tax inspectors and collectors. The people who oftentimes give the entrepreneurs and private sector job creators a hard time.

So in a period of high unemployment and high underemployment, the best policy tool is to relax or abolish certain regulations and taxes that discourage the entrepreneurs, the capitalists and job creators. More job creation by private entrepreneurs in exchange for less bureaucracies and less taxes. But this is not happening. Rather, there is more bureaucratism, more regulation, more taxation. See table below, for instance. It shows how bureaucratic and expensive Philippine business regulations are.

Ease of Doing Business, 2010 (annual study by the World Bank and the International Finance Corporation (WB-IFC).

Source: http://doingbusiness.org/ExploreEconomies/?economyid=153

There are 2x the number of procedures for Filipino entrepreneurs to start a business than their counterparts in East Asia and the Pacific on average. And 3x than their counterparts in the richer countries which are members of the Organization for Economic Cooperation and Development (OECD).

In paying taxes, Philippine-based corporations, if they are to religiously obey all tax laws, will have to surrender one-half of their annual profit to the government, both national and local. This is clear confiscation. Countries in East Asia and Pacific, and OECD members, are not as greedy as Philippine politicians and government administrators.

Statism and heavy State intervention in business is a scourge. It drives millions of people to poverty and hopelessness.

Let us hope that politicians and candidates, both local and national, will realize the evil of heavy government intervention in the past. Then they can amend their program and vision should they win in the May 2010 elections towards a more business-friendly, more job-creating and employment-facilitating programs.

If most politicians and political parties will remain envious, confiscatory and socialist in their social and political orientation, then let us hope that more Filipino voters will realize such evil. Then they will demand for a team of less interventionist candidates who will minimize and reduce the scourge of statism and creeping socialism in the country.

Disclaimer: The views and opinions advanced in this article is the author’s own, and may not necessarily represent the views and opinions of THE LOBBYiST, its editors, or its publishers.

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