COVID-19, job loss, and underemployment: who is affected?

Case Study

I. Introduction

The Covid-19 pandemic caused a massive change in our daily lives, whether we are

prepared or not it happened rapidly and abruptly. Many sectors in every country has been

affected, and Job crisis is one of the impacts of this pandemic. The study examines the impacts

of COVID-19 on labor markets specially in ASEAN countries such as Philippines, Thailand,

Singapore, Malaysia and Indonesia. The government implemented health protocols for Covid-

19 in order to reduced the spread of the virus, it includes physical or social distancing,

quarantining and ventilation of indoor spaces. These protocols caused a significant loss in sales

for many firms, this creates a loss of liquidity which, in turn, has caused some firms to reduce

employment, working hours and wages. The ILO [2021] estimated that global working hours

declined by 8.8 percent in 2020 relative to that in the fourth quarter of 2019, which is

equivalent to a loss of 255 million full-time jobs.

The current situation among employees has made the work-from-home concept

necessary. Many businesses opted to try WFH but what happens is those who are more

educated, and are employed in jobs suitable for work-from-home (WFH) arrangements. In

contrast, immigrants, those who cannot work from home, and those who have shorter tenure

are more likely to be unemployed because of the lockdown. These studies mostly find that it is

the economically vulnerable groups who are less likely to work in jobs that are amenable to

work-from-home arrangements and are more likely to work in high-contact jobs, the individuals

with less education, with lower income even before the pandemic, working in the informal

sector, and with little access to social insurance (Delaporte and Peña [2020]; Hatayama et al.

[2020]; Mongey et al. [2020]; Saltiel [2020]). This paper ascertains the characteristics of the

individuals who are more vulnerable to job loss and underemployment associated with the

COVID-19 pandemic, lockdown policies, and disruptions in labor markets. The study finds out
using the data from the Labor Force Survey conducted in January, April, and July 2020,

estimated and compares the probability of job loss, underemployment and gaining

employment between the survey round right before the pandemic that most workers who

were most vulnerable to job loss amidst pandemic are males this is because the fact that their

job is more on operational capacity.

II. Executive Summary

The Philippines before the pandemic seen as fastest growing GDP rate since 2013

compared to that of other countries in ASEAN. The robust growth of the Philippine economy in

the past years was gravely interrupted by the pandemic with the country exhibiting the

sharpest decline in real GDP growth. Base on the Philippine Statistic Authority for the

production index and capacity utilization rate data, between 2012 and 2020, aside from

showing the lowest labor force participation rates and the highest unemployment rates in the

past decade among the largest member countries of the Association of Southeast Asian Nations

(ASEAN), the Philippines exhibited the most prominent decline in the labor force participation

rate and increase in the unemployment rate in 2020. In Labor force participation rate,

unemployment rate, and underemployment rate data shows in the dip of 2020 was too

pronounced such that it was assessed as the lowest in the history of the Philippine labor market

[PSA 2020, November 11]. The striking decline of Labor force and rise in unemployment rate in

2020 suggest that the extent and the rate of job loss during the pandemic is much more severe

than in the previous global recession. Another data in calculating the economic growth is the

data from PSA, where it shows the decline in the employment is observed in all occupations,

most severely hit occupation during lockdown appears to be the craft and related trades

workers whose employment contracted by 36.2 percent. The least hit is the occupation of

skilled agricultural, forestry, and fishery workers which recorded a fall of only 1.5 percent in

April. The study seeks to answer the following questions: who are more likely to lose their jobs
during the pandemic? Who are more likely to become underemployed? And who among the

unemployed are likely to gain employment?

III. Analysis

The study uses the Labor Force Survey (LFS) conducted by the Philippine Statistics

Authority every first month of the quarter until the end of 2020 to gather data. Given the

objectives of the study, three equations will be estimated: the probability of job loss, the

probability of underemployment, and the probability of gaining employment for the month of

January, April and July. The estimates of the equation on the probability of job loss and under

employment analyze that there’s no significant gender difference in job loss base on the data,

men, young and People living in urban areas are more likely to lose their jobs. In April, college

graduates and post-secondary graduates became less likely to experience job loss, while those

who have not finished their post-secondary studies were less likely to lose their jobs compared

to the least educated workers. The affected workers in the ECQ period were likely Medium- and

high-skilled workers were less likely to experience job loss than low-skilled workers in January.

Job loss are more likely observed in April during the ECQ period. The estimates of the equation

on the probability of underemployment shows that men, older and workers in sectors that

were not fully operational were more likely become underemployed. Better-educated workers

were less likely to become underemployed compared to workers that have lower than junior

high school education. The estimates of the equation on the probability of gaining employment

analyze that while males were more likely to experience job loss, they were also more likely to

gain employment during the reference week if they were jobless in the past quarter. Middle-

aged workers were more likely to gain employment than the youngest workers and Workers

living in urban areas were less likely to be employed in January, Better-educated workers were

less likely to gain employment in January, but the lower likelihood for those who reached

college narrowed in July. The severity of the effect of the labor market disruptions on
employment will likely be heterogenous given the varying degrees of demand to goods and

services produced by labor type, restrictions applied to different sectors, risks of physically

reporting to work, and capacity to do remote work.

IV. Conclusion

The economic fallout of the COVID-19 pandemic resulted in unprecedented job losses

and rises unemployment rate. The study determines the sectors that were more severely

affected by the COVID-19 pandemic and the containment measures implemented in the

Philippines by analyzing the probability of job loss, underemployment, and employment in

January 2020 before and during the pandemic. The workers who were more heavily affected by

job loss during the ECQ period were males and younger individuals and the better-educated

and high-skilled workers are less likely to become jobless. Males, older workers, the lesser

education and work that applies physical operation are vulnerable to underemployment during

the first months of the pandemic. Longer unemployment spells can lead to the deterioration of

skills and labor market productivity, which means that if things will get better and economy will

slowly be recovering it will hinder the improvement in labor demand and business conditions. It

also seen that the flexible work arrangement could likely remain while there’s continued

implementations of preventative measures for COVID-19.

V. Recommendation

We cannot stop the virus and that’s the fact, but what we can do is to prevent the

spread of virus and what we all can do is to adopt the new normal. We will need to radically

change almost everything we do, how we work, exercise, socialize, shop, manage our health

and etc. It is also important to consider improving the system or method that we use in this

new normal: Improving the Wi-Fi connection in Philippines and the technologies used in

different sectors as we facing now the new normal which is digital life. As we also know not

everyone can afford gadgets and not everyone is literate enough to work with this constantly

changing technologies so I think our governments should take an action by giving funds for the
gadgets specially to those who become jobless because of the pandemic. More job

opportunities can be done when enterprises can be open again, so allowing business to operate

again with the implementation of health protocols will be a great help in decreasing

unemployment rate.