Regional Economy and Employment Situation

Regional Economy

 

   Bicol’s Gross Regional Domestic Product (GRDP) increased from P19.365 billion in 1985 to P27.629 billion in 2001 (at constant 1985 prices).  During the sixteen-year period, however, GRDP growth rates fluctuated, posting an average of only 2.3 percent and marred by two (2) periods of contraction --- the first in 1987 when GRDP growth plummeted to negative 3.2 percent, and the second in 1998 when GRDP growth dropped to negative 1.6 percent.

 

   The unsustained performance of the regional economy may be traced to certain events that affected the country in general and/or the region in particular.  These events, whether natural (calamities and weather disturbances), political, or external (Asian currency crisis) affected the three (3) major production sectors in the economy, namely, Agriculture, Fishery, and Forestry (AFF), Industry, and Services.

 

   In 1987, the nation was beset by political instability as the newly installed Aquino administration was rocked by successive coup attempts. In the region, it was also the year that Typhoon Sisang devastated agricultural crops and properties, and destroyed power and communications utilities. As a result, the region experienced a power outage that lasted for about one-and-a-half months. The damages brought about by the typhoon caused the agriculture and industry sectors to plunge, pulling down GRDP growth to negative 3.2 percent, despite the relatively strong performance of the services sector (Figure 3.25 and Table 3.45).

 

Table 3.45. GRDP Growth Rates, by Sector, Bicol Region, 1985-2001   (At Constant 1985 Prices)

Sector	Year
	1986	1987	1988	1989	1990	1991	1992	1993	1994	1995	1996	1997	1998	1999	2000	2001	Ave.
GRDP	0.9	(3.2)	6.3	4.7	3.1	0.2	0.8	2.4	3.0	1.9	4.7	5.7	(1.6)	1.6	1.5	4.5	2.3
AFF	(2.9)	(2.8)	5.5	2.2	(0.9)	2.7	(2.7)	1.0	2.4	(0.7)	2.8	6.0	(10.1)	3.9	(4.1)	7.4	0.6
Industry	6.8	(14.8)	7.8	9.3	10.3	(4.2)	7.8	2.2	1.0	5.7	6.4	6.8	0.8	(3.0)	6.1	3.5	3.3
Services	2.3	2.8	6.5	5.1	3.7	0.0	0.9	3.8	4.5	2.4	5.5	5.0	4.7	2.1	3.8	3.0	3.5

   From a negative 3.2 percent in 1987, GRDP growth peaked to 6.3 percent in 1988 when the political turmoil settled down and prospects for the economy were optimistic, resulting to the robust performances of all the three sectors simultaneously.  National policies on agrarian reform, countryside development, and economic zones development perked up the economy, both at the national and regional levels.

 

   Beginning in 1989, however, growth rates decelerated, sliding down to 0.2 percent in 1991. This was the period when the country faced a power crisis that proved detrimental to nationwide economic growth and pulled down the growth of the region’s industry and services sectors despite the relatively strong performance of the agriculture sector.

 

   From 1992 to 1997, GRDP growth again accelerated, dipping only once in 1995 and peaking at 5.7 percent in 1997.  The liberalization policies of the Ramos Administration resulted to the fast growth of the services sector during this period, particularly the transport/communication/storage, finance, government and private services, and trade subsectors. The decelerated growth of the GRDP in 1995 was due to the negative growth of the agriculture sector brought about by Typhoon Rosing that hit the region.

 

   The year 1997 was the year of the Asian currency crisis, which drastically affected regional, as well as national economic growth.  Aside from this, the El Niño phenomenon and two typhoons (Monang and Naning) also hit the region towards the latter part of the year.  All these resulted to a year of negative GRDP growth in 1998, with agriculture as the most affected sector, hitting negative 10.1 percent. The industry sector grew by only 0.6 percent while the services sector decelerated slightly to 4.7 percent.   

 

   The period from 1999 to 2001 was a period of recovery for the region as the GRDP posted positive, though fluctuating, growth rates.  The negative growth in the agriculture sector in 2000 due to strong and prolonged monsoon rains, caused the slight deceleration of the GRDP growth in 2000 despite the strong performances of the industry and services sectors.

 

   The preceding discussion shows the vulnerability of the regional economy, particularly the agriculture and industry sectors, to natural, political, and external disturbances.  The services sector, on the other hand showed resiliency and managed to prop up the economy during critical periods.

 

   In terms of sectoral contribution to GRDP, the Agriculture, Fishery, and Forestry (AFF) sector’s contribution shows a downward trend, from 43.87 percent in 1985 to 33.32 percent in 2001.  The decrease in the contribution of the AFF sector was absorbed in a large part by the services sector, the contribution of which increased from 36.81 percent in 1985 to 44.67 percent in 2001.  Only a small part from the AFF sector’s contribution went to the industry sector, which increased slightly from 19.32 percent in 1985 to 22.01 percent in 2001, indicating that the regional economy is still far from being industry-driven.

 

   Table 3.46 shows the average growth and the average contribution of each  subsector to GRDP for the period 1985-2001.  Contributing an average of more than two thirds or 37.6 percent to GRDP is agriculture and fishery, indicating that this subsector remains to be the predominant economic activity in the region.  On the other hand, its average growth rate for the same period is the lowest among the subsectors at 1.1 percent, on account of the fact that this subsector is most susceptible to climatic and weather disturbances.

 

   Among the industry subsectors, the electricity/gas/water and mining/quarrying show great potential in leading overall industry growth, as shown in their relatively high average growth rates and average percent contribution to GRDP.

 

   In the services sector, the wholesale/retail trade, transport/communication/storage, private and government services all manifest positive prospects in terms of growth and contribution to GRDP.  The ownership of dwellings/real estate subsector, while contributing the second highest average at 10.9 percent, posted the second lowest average growth rate of only 1.3 percent.

Table 3.46 Average Growth and Average Percent Contribution to GRDP
by Subsector, Bicol Region, 1985-2001 (At Constant 1985 Prices)

Subsector	Ave. Growth (%)	Ave. Contribution (%)
Agriculture, Fishery and Forestry	0.6	38.3
Agriculture and Fishery	1.1	37.6
Forestry	7.3	0.1
Industry	3.3	20.6
Mining and Quarrying	8.2	3.8
Manufacturing	2.4	1.4
Construction	3.1	7.1
Electricity, Gas, Water	3.8	8.2
Services	3.6	41.1
Transport, Storage, Communication	4.8	4.7
Wholesale/Retail Trade	4.7	10.4
Finance	2.6	1.2
Dwellings/Real Estate	1.3	10.9
Private Services	4.6	7.8
Government Services	4.7	6.6

      Source: NSCB

   Employment and Mix-and-Share Analysis

Employment

   The succeeding discussion endeavors to give an analysis of the employment situation in the region for the past sixteen years, that is, from 1985 to 2000.  The tables and figures present a data series on labor force and employment that shows the distinct behavior of the different employment indicators as well as the employment trends in major industry groups in the region.

 

Labor Force Participation Rate (LFPR)

 

   In the data series presented below, the Labor Force Participation Rate (LFPR) was highest in 1989 at 70.0 percent and lowest in 1990 at 67.0 percent.  On all the rest of the years LFPR ranged from 67.2 to 69.9 percent. (Table 3.47).

Table 3.47 Labor Force and Employment, Region V: 1985 - 2000

Year	Working Age  Population	Labor Force Participation Rate (%)	Labor Force ('000)	Employment			Unemployment Rate (%)
				Employed ('000)	Rate (%)	Unemployed ('000)
1985	2248	69.9	1571	1469	93.5	102	6.5
1986	2294	67.3	1543	1427	92.5	116	7.5
1987	2347	69.4	1629	1538	94.4	91	5.6
1988	2417	69.4	1677	1583	94.4	95	5.7
1989	2489	70.0	1703	1636	93.9	67	6.2
1990	2562	67.0	1716	1657	96.6	59	3.6
1991	2635	68.3	1800	1694	94.1	105	5.8
1992	2719	69.1	1877	1773	94.5	104	5.5
1993	2803	68.5	1921	1819	94.7	101	5.3
1994	2882	69.5	2001	1916	95.8	85	4.2
1995	2961	68.9	2039	1905	93.4	134	6.6
1996	3038	69.3	2104	1967	93.5	137	6.5
1997	3116	67.2	2095	1977	94.4	118	5.6
1998	3196	68.5	2191	1986	90.7	205	9.6
1999	2745	66.8	1837	1676	91.2	161	8.8
2000	2820	67.2	1896	1737	91.6	159	8.4

    Sources: Compendium of Philippine Social Statistics, NSCB 1990 and
    Philippine Statistical Yearbook 1986-2001, NSO

Employment and Unemployment Rates

   Employment rate in the region has always been high compared to other regions and higher even than the national average.  Employment rate was highest in 1990 at 96.6 percent.  It is noteworthy that employment rate was higher during the period 1992 to 1994, which corresponds to one of those periods when the region’s economic  growth was accelerating (Figure 3.26). 

 

   The number of unemployed and the Unemployment Rate was at its lowest in 1990.  Contrary to that in 1998, when the number of unemployed as well as the unemployment rate hit the highest mark at 205 persons and 9.6 percent, respectively.  Relatedly,  economic growth dipped to a negative 1.6 percent.  This was a repercussion of the Asian Financial Crisis experienced in 1997.

               

   The employment situation seem to set a three to four-year period pattern from 1991 to 2000.  The employment rate was on an upward movement from 1991 to 1994, that is, from 94.1 to 95.8 percent, but made a dip in 1995 to 93.4 only to increase again in the next three years. 

 

   The employment situation was erratic from 1985 to 1990.  This behavior could be attributed to the combined effects of crisis due to changes in the national leadership and the typhoons that hit the country during this period. Figure 3.26  illustrates this pattern.

Sectoral Employment

 

   Employment distribution in Region V remains to be heavily concentrated in the Agriculture sector as it absorbs the most number of jobs in the region.  Although the Agriculture sector maintains the status of being the number one job provider, its percent share to employment is decreasing.  This movement is more pronounced in the years 1995 to 1997 and abruptly again in 1999 to 2000. (Table 3.48 and Figure 3.27).

 

   The performance of the services sector, on the other hand, has been slowly picking up, steadily increasing in number and its percent share to total employment is getting bigger. 

 

   The industry sector has more or less remained unvarying in number and its percent share has always been the least among the sectors.

 

   The biggest shift noticeable in employment is in 1999 where the share in employment of the services sector was at its highest at 46.78 percent.

 

   In 1993 and 1994, the Agriculture, Fishery and Forestry (AFF) sector was at its peak in terms of number of employed with 1014 and 1069 thousand workers, respectively. There are two notable declines in employment in this sector and these are in 1994 to 1995 and 1999 to 2000.

Table 3.48 Employment and Percent Distribution By Sector
Region V: 1991-2000

Year	Total Employed Persons('000 workers)	Agriculture		Industry		Services
		Number	Percent	Number	Percent	Number	Percent
1985	1469	943	60.00	204	13.00	124	27.00
1986	1427	867	56.93	391	25.67	266	17.47
1987	1538	859	55.85	373	24.25	307	19.96
1988	1583	885	55.91	404	25.52	294	18.57
1989	1636	878	53.77	406	24.86	349	21.37
1990	1657	916	55.45	271	16.40	340	20.58
1991	1694	921	54.36	243	14.34	530	31.29
1992	1773	968	54.46	276	15.57	527	29.72
1993	1819	1014	55.74	219	12.04	573	31.50
1994	1916	1069	55.79	215	11.22	632	32.99
1995	1905	985	51.71	251	13.18	668	35.07
1996	1967	989	50.28	271	13.78	708	36.00
1997	1977	963	48.71	272	13.76	642	32.47
1998	1986	980	49.34	254	12.79	651	32.79
1999	1676	953	56.86	255	15.21	794	46.78
2000	1737	815	46.92	234	13.47	687	39.55
2001	1875	875	46.67	250	13.33	749	39.95
2002	1831	858	46.86	224	12.23	749	40.91

    Source:  1985-1990 Philippine Statistical Yearbook, NSO                         

              1991-200 Regional Statistics and Employment Trends, NSCB

    Note :  Details may not add up to totals due to rounding.

  

   During these same years (1993 & 1994), the Industry sector had the least number of employed persons with 219 and 215.  The employment in this sector is pretty much the same in number all throughout the 16-year period except in 1988 and 1989.

 

   At any point in time, the services sector, has been increasing in number except in 1988 and from 1996 to 1997, then again in 1999 to 2000 where it experienced a decline in employment.

 

   The trend lines shown below in Figure 3.27 clearly illustrate the upward and the downward movement of each major industry group.  Despite the downward trend from 1985 to 1987, the AFF sector gave a very encouraging performance from 1989 through1994.  But this has not been sustained as thereafter it continued to decline.

 

   Countering the performance of the AFF sector, the industry sector started low in 1985 to increase substantially in 1986 until 1989. But it dropped considerably in 1990 and continued on a downward trend until 1994.  Since then the sector has been exhibiting an almost passive behavior, though from 1986 to 1989 it had employed more than it ever had in any given year in the series.

 

   The services sector steadily increases, although at some points it retracts.  It can be noted that the decrease in employment in agriculture, although not proportionally, has a counter effect in employment in the services sector.

 

Philippines	Employment (In '000 Workers)		Employment Change
	1985 (1)	2000 (2)	Number (2) - (1) (3)	Percent (3) / (1) (4)
Agriculture, Fishery and Forestry	9698	10401	703	7.20
Mining and Quarrying	128	106	-22	-17.2
Manufacturing	1922	2792	870	45.3
Electricity, Gas and Water	73	116	43	58.9
Construction	689	1430	741	107.5
Wholesale/Retail Trade	2611	4587	1976	75.7
Transportation/Storage/Communication	931	2028	1097	117.8
Financing,Insurance,Real Estate & Bus.Services	342	678	336	98.2
Community/Social and Personal Services	3408	5636	2228	65.4
Others	-	4	4	-
Total	19801	27778	7977	40.3
Agriculture, Fishery and Forestry	924	815	-109	-11.8
Mining and Quarrying	3	9	6	200.0
Manufacturing	165	146	-19	-3.6
Electricity, Gas and Water	3	8	5	166.7
Construction	28	71	43	153.6
Wholesale/Retail Trade	171	288	117	68.4
Transportation/Storage/Communication	49	82	33	67.3
Financing,Insurance,Real Estate & Bus.Services	11	15	4	36.4
Community/Social and Personal Services	179	302	123	68.7
Others	-	-	-1	-
Total	1534	1736	202	13.2

   Mix-and-Share Analysis at the Regional Level

Employment Change

   Table 3.50 presents an analysis of the employment structure of the region between 1991 and 2000.    It compares changes in employment distribution by sector for Region V and the Philippines.  

 

   While national employment grew by 40.3 percent, employment in the region also grew, albeit modestly, by 13.2 percent. All sectors, except AFF and Manufacturing, exhibited positive growth compared to the national where all sectors recorded increases in employment, except in Mining and Quarrying.

 

   Agriculture, Fishery and Forestry (AFF) employment in the region declined by 11.8 percent while the national figure grew by 7.20 percent.  Manufacturing also declined by 3.6 percent while the country grew by 45.3 percent. Interestingly, employment in several sectors like Mining and Quarrying, Electricity, Gas and Water, Construction and Community/Social and Personal Services had growth increases more than the Philippines.

Table 3.50 National Growth Effect on Employment in Bicol Region: 1985-2000

Sector	Total Employment in Bicol 1985 (1)	National Growth Effect 1991-2000 N = (1) x NGR (.403) (2)	Actual Regional Employment Growth ( R ) (3)	Net Regional Change to be Accounted for(3) - (2) (4)
Agriculture, Fishery and Forestry	924	372.37	-109	482.37
Mining/Quarrying	3	1.21	6	4.79
Manufacturing	165	66.50	-19	-85.50
Electricity/Gas and Water	3	1.21	5	3.79
Construction	28	11.28	43	31.72
Wholesale/Retail Trade	171	68.91	117	48.09
Transportation/Storage/Communication	49	19.75	33	13.25
Finance and Housing	11	4.43	4	-0.43
Community/Social and Personal Services	179	72.14	123	50.86
Others	-	-	-1	-1.00
Total	1534	618.20	202	-416.20

   The preceding table (Table 3.49) attempts to answer the question on how much would employment in the region grown if it each sector had expanded as much as the national growth.

 

   As observed in the data, had employment in each sector in the region grown at the same rate as the national, the total employment of the region would have increased by 618,200 jobs while in reality it increased only by 202,000.  Employment in the agriculture sector would have grown by 372,370 jobs and manufacturing would have 66,500 jobs more instead of the negative 109,000 jobs in the AFF and the negative 19,000 for manufacturing. 

 

   Wholesale/Retail Trade, on the other hand, gained 117,000 jobs and Community/Social and Personal Services with 123,000 additional jobs which were greater than the national which was able to grow only an additional 68,910 and 72,140 jobs for Wholesale/Retail Trade and Community/Social and Personal Services, respectively.  

 

    Mining and Quarrying, Electricity Gas and Water, Construction and Transportation/Storage/ Communication, too, were able to generate more jobs than the national.

 

   The shortfall of 416,200 jobs in the region may be brought about mainly by the immense discrepancy in the AFF and by poor economy due to slow economic activity and various other reasons like calamities and national crisis brought about by the change in the administration that somehow affected the region’s performance.

 

Table 3.51 Industry Effect on Employment in the Bicol Region: 1985-2000

Sector	Percent Distribution of Employment 1985 in		Deviation: Industry Growth Rate Minus National Growth Rate(3)	Regional Employment 1991 (4)	Industry Mix M = (3) x (4) (5)
	Philippines (1)	Bicol (2)
Agriculture, Fishery and Forestry	49	60.2	7.2 - 40.3 = -33.1	924	-30584.4
Mining/Quarrying	0.6	0.20	-17.2 - 40.3 = -57.5	3	-172.5
Manufacturing	0.7	10.8	45.3 - 40.3 = 5.0	165	825.0
Electricity,Gas and Water	0.4	0.2	58.9 - 40.3 = 18.6	3	55.8
Construction	3.5	1.8	107.5 - 40.3 = 67.2	28	1881.6
Wholesale and Retail Trade	13.2	11.1	75.7 - 40.3 = 35.4	171	6053.4
Transporation/Storage/Communication	4.7	3.2	117.8 - 40.3 = 77.5	49	3797.5
Finance and Housing	1.7	1.7	98.2 - 40.3 = 57.9	11	636.9
Community/Social & Personal Services	17.2	11.7	65.4 - 40.3 = 25.1	179	4492.9
Others	-	0.1	-	-	-
Total	100.0	100.0	-	-	-13013.8

Industry Mix in the Region

   Calculation of the industry mix effect (Table 3.51) is done to determine to what extent the deviation of the growth of employment in the region is compared to the national.  In this case, it can be attributed to very big margin between the Agriculture, Fishery and Forestry (AFF) sector with the rest of the sectors.

 

   By way of analysis, it can be noted that the negative industry mix in the region offset the national growth effect by 13,013,800 jobs.  Employment was distributed very heavily on the AFF which pulled down the growth of the region.  The high proportion of workers in the agriculture sector coupled with that of the mining/quarrying sector cannot offset the low proportion of workers in the other sectors.  Neither can the positive growth rate in other sectors like wholesale and retail trade, transportation/storage/communication, community/social and personal services, and the rest of the sectors that performed positively, counteract the effect of the comparatively slow growth of the agriculture sector.

 

   The percentage of experienced or gainful workers in Agriculture in the region at 60.2 is higher than the national that is 49, but employment in the national grew by 7.20 percent, the decline in the region is -11.8 percent.

Regional Share Effect of the Components of Employment Change in the Region

Table 3.52 Employment and Components of Employment Change in Bicol Region,
1985-2000 (Thousands of Persons Employed)

Sector	Employment by  Industry in Bicol		Regional Employment Change ( R )1985-2000 (3)	National Growth Effect N (4)	Industry Mix Effect M (5)	Regional Shares Effect S=R-N-M (6)
	1985 (1)	2000 (2)
Agriculture, Fishery and Forestry	924	815	-109	372.37	-30584.4	30103.0
Mining/Quarrying	3	9	6	1.21	-172.5	177.3
Manufacturing	165	146	-19	66.5	825.0	-910.5
Electricity, Gas and Water	3	8	5	1.21	55.8	-52.0
Construction	28	71	43	11.28	1881.6	-1849.9
Wholesale/Retail Trade	171	288	-143	68.91	6053.4	-6265.3
Transportation/Storage/Communication	49	82	33	19.75	3797.5	-3784.3
Finance and Housing	11	15	4	4.43	636.9	-637.3
Community/Social/Personal Services	179	302	123	72.14	4492.9	-4442.0
Others	-	-	-	-	-	-
Total	1534	1736	202	618.2	-13013.8	12597.6

 

   Table 3.52 provides an indication of the effects of national employment growth, industry mix and regional shares on various industries in Bicol and on regional employment.

 

   If the Agriculture sector grew the same rate as the national an additional 481,370 jobs would have been realized.  As it is, the region has to account for 372,370 million jobs deficit.

 

   For the regional economy, the negative 13,013,800 net impact of the regional industry mix is extremely greater than the positive national growth effect of 618,200 jobs.

 

The Location Quotient

 

   The location quotient computed by occupation, by major industry and by sector groupings leaves no doubt that Bicol is, by and large, a predominantly agricultural region.

 

   Based on Table 3.53, a huge concentration of employment is in the Farmers, Fishermen, Miners and Related Workers Occupation Group.  In the location quotient analysis, it can be said that the region may be exporting goods and services to other regions as far as this occupation group is concerned.  While in the rest of the group categories, the region may be wanting and could need help from other regions to satisfy local needs.

 

   Table 3.54 affirms that among the three major industry groups, the region specializes in agriculture, fishery and forestry with the industries more concentrated on agriculture and fishery.  

 

   There are categories, however, in other industry groups where the region also specializes in.  For instance in the Industry sector, there are the mining and quarrying and the electricity, gas and water sector groupings.  And in the Services sector, there is the wholesale and retail trade. Since the region exhibits potential in these sectors, it has to be given more opportunity to develop. (Table 3.55).

Table 3.53   Location Quotient, By Occupation Group, Region V, CY 2000

 

Experienced Workers by Occupation Group	Location Quotient
Professional, Technical, Managerial and Administrative	0.90
Farmers, Fishermen, Miners and Related Workers	15.67
Craftsmen, Production Process Workers and Laborers	0.83
Services, Commercial and Related Workers	0.81
Industries Not Adequately Defined	5.03

Table 3.54   Location Quotient, By Major Industry Group, Region V, CY 2000

Major Industry Group	Location Quotient
Agriculture, Fishery and Forestry	1.27
Industry	0.94
Services	0.77

Table 3.55   Sectoral Location Quotient, Region V,  CY 2000

Sector Groupings	Location Quotient
Agriculture, Fishery and Forestry	1.27
Mining and Quarrying	1.25
Manufacturing	0.80
Electricity, Gas and Water	1.25
Construction	0.80
Wholesale and Retail Trade	1.00
Transportation and Communication	0.71
Finance/Insurance	0.45
Community/ Social/Personal Services	0.90
Industries Not Adequately Defined	-