the informal sector and non regular employment in the philippines

A paper presented by Assistant Director Cleofe S. Pastrana during the “Employment in the Post‐Crisis Context Conference” in Tokyo, Japan, 15‐17 December, 2009[Type text]

The views expressed in this presentation are the views of the author and do not necessarily reflect the views or policies of the Asian Development Bank Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.

The Informal Sector and Non-Regular Employment in the Philippines

By: Cleofe S. Pastrana, NEDA-Social Development Staff, Philippines

I. Introduction

II. Defining the Informal Sector and Non-Regular Employment

III. Statistics on Informal Sector and Non-Regular Workers

IV. Government Policies and Issuances for the Informal Sector and Non-regular Workers

V. Government Programs Related to the Informal Sector and to the Provision of Emergency Employment in Response to the Global Economic Crisis

VI. Impact of the Global Financial Crisis on the Informal Sector in the Philippines


VII. Remaining Issues and Concerns that Need to be Addressed on the Informal Sector and the Non-regularly employed


The Informal Sector and Non-Regular Employment in the Philippines

By: Cleofe S. Pastrana, NEDA-Social Development Staff, Philippines

Introduction:

The informal sector and non-regular workers account for a major portion of

the country’s labor force and are recognized as major contributors to the economy.

Both sectors are integral players in the labor market, particularly in providing the

needed employment for the population. The NSO reported that there were about

10.5 million informal sector operators in the Philippines in 2008. Meanwhile, the

Bureau of Labor and Employment Statistics (BLES) under the Department of Labor

and Employment (DOLE) estimated that there were about 731,548 non-regular

workers employed in non-agricultural establishments in the Philippines in 2008.

Aside from the contributions of the two sectors to total employment, the

importance of the sectors in terms of absorbing the unemployed or the laid-off

regular workers from the formal sector in times of economic crisis is also

recognized. For lack of opportunities for productive employment, the jobseekers are

forced to seek short-term or temporary employment or create employment for

themselves for survival or income augmentation. Moreover, the informal sector is

seen as a seedbed of entrepreneurship that can spur economic growth. The

informal sector possesses a strong potential to make microenterprises grow into

large enterprises and thus serves as catalyst to the growth process. The informal

sector likewise captures a large part of the lower income class whose informal

enterprises are capable of operating profitably and therefore has an alleviating

effect on poverty groups.

However over the years, both sectors have constantly been confronted with

issues. In 2001, the Department of Labor and Employment through its program

entitled Support for Policy and Programme Development (SPPD) identified strategic

issues confronting the Informal Sector. These are the 1) invisibility of the IS in


government statistics and representation; 2) lack of access to social protection; 3)

lack of access to productive resources and 4) need to be organized. Meanwhile,

hiring of non-regular workers is seen as a manifestation of the emergence of

flexible employment, in response to competitions in the market for goods and

services brought about by globalization of the world economy. Employers, in their

attempts to reduce costs, have increased their use of non-regular workers to

cope with uncertainties in the markets for their products and services. However,

flexible employment arrangement has to do with the issue of employment

security. While this hiring practice promotes employment, labor groups claimed

that this has adverse effects on labor standards and may restrict workers' freedom

to organize and to bargain collectively. On the other hand, increase in flexible

employment may also be seen as a response to the economic crisis, where

establishments adopt flexible working arrangements for employees to reduce labor

cost to cope up with the crisis.

Over the years the government has tried to address these issues and

concerns. Efforts have been exerted towards creating policies, programs and

projects for both sectors, especially for the informal sector.

Defining the Informal Sector and Non-regular Employment

Informal Sector

Recognizing the significant role that the informal sector plays in the

generation of output, employment and income, as well as in the economic and

social development of the country, the National Statistical Coordination Board

(NSCB) in 2002 approved for adoption under NSCB Resolution No. 15 (Series of

2002) a standard conceptual and operational definition of the informal sector. It

was recognized that a standard conceptual and operational definition for the

informal sector is needed in measuring its contribution to the economy and to serve

as guide in the development of policies, programs and interventions for the informal

sector. A standard definition is also helpful in facilitating the collection of data about

the sector.


Except for some minor deviations in terms of exclusion of some cases in the

definition1, the country’s conceptual and operational definition of the IS as

approved by the NSCB hews with the international definition as prescribed by the

International Labor Organization (ILO).

Conceptual Definition

The informal sector consists of “units” engaged in the production of goods and

services with the primary objective of generating employment and incomes to the

persons concerned in order to earn a living.

These units typically operate at the low level of organization with little or no division

between labor and capital as factors of production. It consists of household

unincorporated enterprises that are market and non-market producers of goods as

well as market producers of services.

Labor relations, where they exist, are based on casual employment, kinship or

personal and social relations rather than formal or contractual arrangements.

Operational Definition

For statistical purposes, the informal sector shall refer to household unincorporated

enterprises which consist of both informal and own-account enterprises and

enterprises of informal employers.

Informal own-account enterprises are household unincorporated enterprises owned

and operated by own account workers, either alone or in a partnership with members

of the same or other households which may employ unpaid family workers as well as

1 The 15th international Conference on Labour Statistics (ICLS) provided considerable flexibility to countries for defining the informal sector. In the case of the Philippines, minor differences from the standard definition can be traced from the exclusions made on some cases as enumerated under NSCB Resolution No.16 series of 2003 on Adopting A Set of Criteria for Identifying the Informal Sector. The seven (7) exclusions to the definition of informal sector are the following: 1) single proprietorship, partnerships and corporations (including corporate farms, commercial livestock raising, commercial fishing and similar units); 2) quasicorporations; 3) units with ten (10) or more employees (unless they satisfy all the criteria); 4) domestic helpers hired by households; 5) units engaged in professional services (unless they satisfy all the criteria); 6) farms managed by cooperatives; and 7) farms, regardless of size, keeping sets of accounts separate from the households.


occasionally/seasonally hires workers but do not employ employees on a continuous

basis.

Enterprises of informal employers are household unincorporated enterprises owned

and operated by own-account workers, either alone or in partnership with members

of the same or other household which employ one or more employees on a

continuous basis.

Non-regular employment

Non-regular employment refers broadly to the use of specific forms of

employment arrangements that provide no security of tenure for workers and

exclude them from receiving non-wage benefits. The DOLE-BLES defines non-

regular workers as workers hired by establishments on a non-permanent status.

This group covers the following:

i. Probationary Workers - workers on trial period during which the employer

determines their fitness to qualify for regular employment, based on reasonable

standards made known to them at the time of engagement;

ii. Casual Workers - workers whose work is not usually necessary and desirable to

the usual business or trade of the employer. Their employment is not for a

specific undertaking or seasonal in nature;

iii. Contractual/Project-based Workers - workers whose employment has been

fixed for a specific project or undertaking, the completion or termination of

which has been determined at the time of engagement. Agency-hired workers

are excluded.

iv. Seasonal Workers - workers whose employment, specifically its timing and

duration, is significantly influenced by seasonal factors; and

v. Apprentices/Learners - workers who are covered by written

apprenticeship/learnership agreements with individual employers or any of the

entities with duly recognized programs. Apprentices without compensation are

excluded.


Statistics on Informal Sector and Non-Regular Workers

Informal sector

The first nationwide survey of informal sector in the Philippines - the 2008

Informal Sector Survey (ISS) - was conducted by the National Statistical Office

(NSO) in April 2008. The 2008 ISS aimed at: (a) improving the availability of

reliable and sound data on informal employment and informal sector; and (b)

providing indicators that will contribute to evidence-based policy-making.

Based on the results of the 2008 ISS, there were about 10.5 million informal

sector operators in the Philippines in 2008. The self-employed numbered about 9.1

million while the employers numbered at 1.3 million.

The Labor Force Survey (LFS) conducted in the same period (April 2008)

shows that 36.4 million were in the labor force. This shows that the informal sector

operators constitute about 30% of the total labor force.

Two-thirds of the informal sectors were male. Seventy-five percent or three-

fourth of the informal sector operators were in age group 35 years old and over,

the largest was age group 35-44 (27.5%). Age group 15-24 reported the least

share at 5.2%).

By place of work, more than 40 percent of informal sector operators worked

in the farm or individual agricultural/subsidiary plot. About 16.5 percent worked at

home with space inside/attached to the home.

Among the various occupation groups, operators working as farmers, forestry

workers and fishermen comprised 47.4 % of the total informal sector. Those

belonging to the group of managing proprietors were the second largest group

accounting for 31.2 percent.


Of the 10 million informal sector operators counted, 41.3% were engaged in

agriculture, hunting and forestry. Those in wholesale and retail trade accounted for

more than one fourth (29.6 percent) of the total operators while those in transport,

storage and communications, about 10 percent.

In an attempt to come-up with an estimate of the contribution of the informal

sector in the economy and recognize their importance in the labor market, an initial

estimation of their contribution to the GDP was done by the NSO. Their initial

estimate shows that about 12.5% of the country’s total Gross Domestic Product

(GDP) for 2008 was contributed by the informal sector.

Non-regular workers

The results of the 2007/2008 BLES Integrated Survey (BITS) indicate that as

of June 2008, the total number of persons engaged by non-agricultural

establishments with 20 or more workers was estimated at 3.011 million. Around

25 percent (731,548) of this figure were reported as non-regular workers.

Of the 731,548 non-regular workers, 359,553 are contractual/project-based

workers, 169,452 are probationary, 147,447 are casual, 33,684 are seasonal and

21,412 are apprentices/learners.

Across industry groups, two sub-sectors stood out to have the most number

of non-regular workers in their workforce, namely manufacturing (205,235) and

real estate, renting and business activities (212,379). The lowest was recorded in

Mining and Quarrying at 10,655.

By size of employment, the following table shows that the number of non-

regular workers is highest for establishments with 200 workers or more.


Government Policies and Issuances for the Informal Sector and Non-regular Workers

Informal Sector

Republic Act (RA) 8425 or the Social Reform and Poverty Alleviation Act of

1997 expressly recognizes the informal sector as one of the disadvantaged sectors

in the Philippine society. RA 8425 provides for a social reform agenda (SRA)

employing a multi-dimensional approach to poverty for the disadvantaged sectors.

The SRA provides provision on social, economic, ecological and governance

reforms.

There are existing laws and issuances that were enacted for certain

subsectors which are designed to provide opportunities for the subsectors’ access to

resources and social protection, and to improve their conditions of work and life.

Among these is the Magna Carta of Women, a women's human rights law which

seeks to eliminate discrimination against women by recognizing, protecting,

fulfilling and promoting the rights of Filipino women. It guarantees the civil, political

and economic rights of women in the marginalized sector, of which the workers in

the informal economy are included. These rights include food security and

resources for food production, housing, employment, livelihood, credit and capital

technology, social protection, among others. Other laws and issuances for the

subgroups under the informal sector are the Magna Carta for Small Farmers (RA

Table 1 - Total Employment and Number of Non-Regular Workers in Non-Agricultural Establishments With 20 or More Workers by Employment Size, Philippines: June 2008

Employment Size Total Employment Total non-regular workers All sizes 3,011,801 731,548 20-99 workers 805,130 134,595 100-199 workers 381,623 84,241 200 workers or more 1,825,047 512,713 Source: BLES, 2007/2008 BLES Integrated Survey (BITS).


7607), Magna Carta for Small Enterprises (RA 6977), Barangay Microbusiness

Enterprises Act (RA 9178), Executive Order 452 (1997) (providing for the guidelines

that will ensure the security of registered vendors in the workplace, among others.

There are also laws on social development and protection which likewise

applies to members of the informal sector. Among these are: Social Security Act

(RA 8282), National Health Insurance Act (RA 7875) and Technical Education and

Skills Development Act (RA 7796).

In an attempt to provide a comprehensive legislation which will give focus

and priority to the informal sector, there are pending bills in the Philippine Congress

which propose to provide for a Magna Carta for the Informal Sector. The proposed

bills seek to create an environment that would improve the economic state and

overall wellbeing of the members of the informal sector to improve access to social

protection benefits, representation in local governance, and their overall capacity.

Moreover, in July 2002, a Sub-Committee on Informal Sector (SCIS) was

created under the National Economic and Development Authority - Social

Development Committee (NEDA-SDC). The Sub-committee is chaired by the DOLE

with 22 other member agencies and organizations. Seventeen (17) of the member

agencies/organizations are government agencies and the remaining 5 are non-

government/peoples’ organizations, including labor groups. The functions of the

SCIS, include a) recommending to the SDC policies, programs and projects related

to the informal sector consistent with the national development objectives and

priorities; b) ensuring mainstreaming of policies and programs for informal sector

through institutionalization of support of various government agencies, local

government units, social partners and civil society; and c) coordinating and

monitoring the implementation of programs and policies related to the informal

sector, among others.

Further, in July 2003, the NEDA-SDC issued SDC Resolution No 2 (Series of

2003) approving the Philippine Country Program to institutionalize programs and


policies for the informal sector through the local governments. The country program

emphasizes the primordial role of effective and responsive governance especially at

the local level in recognition of the fact that many of the issues faced by the

informal sector are mostly localized to their situation and area.

Non-regular workers

The Philippine Labor Code is the primary legislation on the rights of workers

and governs work relationship between an employer and his/her employees. The

Code covers all workers in the formal sector, including the non-regular workers in

the formal sector. Under Book 2, Title II of the Labor Code, specific provisions on

the training and employment of special workers, which includes apprentices and

learners, are provided.

Government Programs Related to the Informal Sector and to the Provision of Emergency Employment in Response to the Global Economic Crisis

The Medium-Term Philippine Development Plan (MTPDP) 2004-2010,

consistent with the global provisions of the Millennium Declaration and the

Millennium Development Goals (MDG), recognizes social protection as a basic

human right and should be made accessible to all workers, including workers in the

informal sector.

The MTPDP laid out strategies to achieve the current Arroyo Administration’s

10-point Agenda. Specific strategies for the informal economy and social protection

are to promote job generation and enhance labor productivity; and improve social

services and protect and empower the vulnerable groups.

As stated in Chapter 12 of the MTPDP entitled Responding to Basic Needs of

the Poor, the vulnerable members of the society, including the informal sector, shall

be given preferential access to social assistance, social protection and safety nets.

The empowerment of the informal sector and expansion of its social security is one

of the government’s strategy to fight poverty.


The following are some of the regular programs and projects of the

government which caters members of the informal sector:

DOLE Integrated Livelihood Program (DILP). The DILP is a rationalized

integration of all DOLE livelihood development-related programs which

focus on providing capability-building on livelihood formation,

enhancement and restoration for the self-employed, unpaid family

workers in the informal economy and to the long-term unemployed poor.

Self-Employment Kaunlaran Program (SEA-K). SEA-K is a livelihood

program of the Department of Social Welfare and Development (DSWD)

that provides activities for the enhancement of socioeconomic skills of

poor families to establish and self-manage a sustainable community-

based credit organization for entrepreneurial development. The program

involves organizing and developing SEA Kaunlaran Associations (SKAs)

institutional capability to operate a mechanism that will provide

continuing access to credit to their members and the communities in

which they live.

Integrated Services for Livelihood Advancement of the Fisherfolks (ISLA).

ISLA is a project for the marginalized fisherfolks in coastal municipalities

which seeks to assist fisherfolks in making their existing livelihood

undertakings grow into viable and sustainable business, thus improving

their income to a level at par with that of the minimum wage earners.

Project strategies include establishment of alternative livelihood projects

that will generate employment and income for the dependents of the

fisherfolks and the provision of trainings on entrepreneurship and

business management for the members of the fisherfolks' organizations

Cash-for-Work Program (CWP). Led by the DSWD, CWP involves the

provision of cash to disaster victims, displaced or distressed persons in

exchange for their services and involvement in undertaking restoration


and rehabilitation services. The CFW program is one of the support

programs of the government for those who suffered job and income

losses as a consequence of the occurrence of disasters and serves as an

alternative and temporary source of income.

Out-of-School Youth Serving Towards Economic Recovery Program

(OYSTER). OYSTER is a community based program which serves as a

vehicle for providing livelihood and employment opportunities/ assistance

for the marginalized out-of-school youth of the country. Through the

program, out-of-school and out-of-work youth are given employment and

training opportunities to prepare them for a more productive life in the

future.

PGMA Trabaho, Trabaho Program. PGMA Trabaho, Trabaho Program

being implemented by the Metro Manila Development Authority (MMDA)

provide short term employment for residents of Metro Manila and the

nearby provinces of Laguna, Cavite and Bulacan. The program includes

provision of appropriate training to those hired as skilled workers doing

carpentry, masonry, gardening, electronics, landscaping and plumbing

works under the on-going “Metro Gwapo” physical development program

of the MMDA.

Coverage under the Social Security System (SSS). Under the Social

Security Act, employees are to be compulsory covered by the SSS,

including self-employed persons. Certain members of the informal sector

are covered by the SSS, as members who are self-employed. The SSS

identifies the self-employed as those with an income of at least P1,000 a

month, regardless of trade, business or occupation, and not over 60 years

old. Included in SSS coverage are farmers and fisherfolks and other

workers in the informal sector such as the cigarette vendors, watch-your-

car-boys, and hospitality girls, among others.


Coverage under the National Health Insurance Program (NHIP). The

informal sector is covered by the NHIP under Individually Paying Program

(IPP). Included among those serve by the IPP are the self-employed

individuals, farmers and fisherfolks, and even daily wage earners such as

vendors and transport drivers and operators. Under this program, health

insurance premiums are remitted voluntarily at any accredited payment

center on a quarterly, semi-annual or annual basis.

At the outset of the 2008 global economic crisis, the Philippine government

has formulated strategies to minimize its impact on the Philippine economy. The

prologue of the Updated MTPDP 2004-2010 was devoted to providing information

on the Philippine Economic Resiliency Plan (ERP) which was crafted to address the

challenges faced by the Philippines as a result of the global economic crisis. The

ERP is a stimulus package with the aim of minimizing the impact of the global

economic downturn through measures aimed at stimulating positive performance in

all sectors of society.

The ERP entails ensuring resources through better revenue collection;

enhancement of cash liquidity, access to credit and low interest rates; and more

effective spending. It seeks to ensure stable growth, save and create jobs, provide

assistance to the most vulnerable sectors, ensure low and stable prices, and

improve competitiveness in preparation for the global economic rebound.

One of the strategies identified is the expansion of social protection programs

being implemented by the government. The ERP, adds PhP1 billion for the

Philippine Health Insurance Corporation(PHIC) to ensure the full national

government contribution to the National Health Insurance Program (NHIP). It

likewise increases the allocation for Technical Education and Skills Development

Authority (TESDA) by PhP2 billion, to provide training for workers in need. The ERP,

through the DOLE, allocates PhP 1 billion for Overseas Workers Welfare Association

(OWWA) fund for its lending assistance program for returning Overseas Filipino

Workers (OFWs).


Another strategy is saving jobs and the creation of new employment

opportunities. It is recognized that particularly vulnerable in the crisis are workers

in the merchandize export sector and overseas Filipino workers who were laid off.

The DOLE has put in place programs to assist these sectors. The programs for

OFWs abroad and those returning cover repatriation assistance, enhanced

reintegration services and livelihood assistance.

In addition to this, President Arroyo issued in February 2008 Executive Order

(EO) 782 - Instituting Measures to Assist Workers Affected by the Global Financial

Crisis and Temporary Filling-Up of Vacant Position in the Government) which orders

for the temporary filling-up of vacant positions in the government as a measure to

assist displaced workers and their dependents affected by the global financial crisis.

The EO instructs government agencies to allocate and utilize 1.5% of their budget

for operating expenses for temporary hiring of qualified registered displaced

workers and their dependents. Following EO 782, the President also released EO

783 - Providing For Employment Interventions to Save and Create Jobs as Part of

the Economic Resiliency Plan. EO 783 instructs all members of the Cabinet to draw-

up and prepare emergency work programs and doable and fundable livelihood

projects with the following economic classes as beneficiaries: middle class, middle-

low income class and the poorest of the poor. Instructions on the provision of

training in in-demand skills for workers with income support and for the

consolidation of a all livelihood programs of the government into a one-stop shop

where all Regional Livelihood Program Offices at all regional centers will be

providing activities to support microenterprises and self-employment, including the

livelihood programs being implemented by various government agencies.

The following are some of the projects implemented by the government on

employment to protect and assist workers affected by the global financial crisis:

Comprehensive Livelihood and Emergency Employment Program (CLEEP).

CLEEP was conceptualized as a response the directive of President Arroyo


in for the members of the Cabinet to draw up and prepare emergency

work programs and doable and fundable livelihood projects in all Regions,

taking into account the challenges which the Philippines confront in the

face of the global economic crisis. CLEEP has a general objective of

protecting the most vulnerable sectors - the poor, hungry, returning

expatriates, displaced workers in the export industry, and out-of-school

youth - from threats and consequences of reduced or lost income as a

consequence of the global economic crisis. As of October 2009 there were

already 35 programs, activities and projects (PAPs) being implemented by

various government agencies under CLEEP. The National Anti-Poverty

Commission (NAPC), which serves as the Secretariat for CLEEP

implementation reported that as of October 2008, 333,267 individuals

have been hired through CLEEP.

Tulong Panghanapbuhay sa Ating Disadvantaged Workers (TUPAD).

TUPAD is a project for the displaced workers as a result of the economic

crisis and the unemployed poor which provides short-term wage

employment as immediate source of income for the beneficiaries and their

families. Short-term employment is for one (1) month in various

community work projects of various local government units. During the

employment of the beneficiaries under the project, the beneficiaries are

also provided with employability enhancement trainings to prepare them

for another employment after the completion of the project. The project

also provides social protection to beneficiaries through coverage under

SSS and Philhealth. The project is being implemented by the DOLE in

partnership with the TESDA, PHIC and various local government units.

Programs for the OFWs and export workers affected by the Global

Economic Crisis. The DOLE created a “payback package” for overseas

Filipino workers which include setting up of a PhP250 million support fund,

skills training to avail of in-demand jobs in other parts of the world, and

setting up of DOLE and Overseas Workers Welfare Administration


(OWWA) desks in the provinces to match OFWs’ skills with available jobs.

For export workers, the DOLE maintains Quick Response Teams (QRTs) in

its regional offices. The QRTs engage the companies for their Early

Warning Monitoring System. They get to know which firms are likely to

shut down or shed workers. Those who are terminated get DOLE

assistance in claiming unpaid salaries or in new job placement facilitation.

Some may take advantage of the livelihood formation projects. DOLE

continues its advocacy to enable afflicted companies to adopt contingency

measures to prevent/minimize job losses. Alternatives to laying off

workers include: shortened work shifts and work weeks, maximized

vacation leaves; and rotating forced leaves, among others.

PGMA - Training for Work Scholarships Program. This program help in

providing necessary trainings to equip more Filipinos with skills and help

them take advantage of opportunities for income generation. It provides

skills and competencies to job seekers through appropriate training

programs that are directly connected to existing jobs for immediate

employment and to empower private education and training institutions to

offer relevant training programs that meet job requirements. The

assistance being extended through this program is also seen as an

opportunity for preparing the beneficiaries for the global economic

rebound.

Impact of the Global Financial Crisis on the Informal Sector in the Philippines

Based on the July 2009 round of the LFS, the Philippine labor market

exhibited resilience amidst the global crisis. Employment grew by 2.6 percent from

July 2008 to July 2009, resulting in a total employment of 35.5 million. Net

employment generated managed to reach 916,000 during the period. While there

was an improvement in terms of overall employment, there is a need to determine

if this improvement also translated on improvement for workers in the informal

sector and determine the impact of the global financial crisis on the sector.


Determining the impact of the crisis on the informal sector in the Philippines

based on official statistics on the sector would not yet be possible since gathering of

official data on the informal sector was only conducted once through the 2008 ISS.

In view of this and for the purpose of this report, the data on the number of own

account workers2 and unpaid family workers3 generated through the LFS of the NSO

will be used to estimate the number of workers in the informal sector4 from 2005-

present. Before the first ISS conducted in 2008, this approach on estimating the

number of workers in the informal sector5 was used by the DOLE-BLES to come-up

with an estimate data on the informal sector.

From Tables 2 and 3, it can be observed that before the crisis, (January

2005-January 2008), the number and proportion of own account workers increased

(11.6 M to 12.2 M). The number of unpaid family workers also increased from 3.7M

to 4.1 M (through the proportion declined from 11.7 to 12.2).

2 An own account worker is defined in the LFS as one working for profit or fees in own business, farm or profession without any paid employee. 3 An unpaid family worker is defined in the LFS as one who works without any pay in a farm or business operated by another member living in the same household. 4 The number of workers in the informal sector is estimated by adding the number of own‐account workers with the number of unpaid family workers.

Table 2. Employed Persons by Class of Worker: January 2005 and January 2008

January 2005 January 2008

Class of Worker Number

(Millions)

Percent Number (Millions) Percent

Philippines 31.3 100 33.7 100

Wage and Salary Workers 16.0 51.1 17.4 51.7

Own Account Workers 11.6 37.2 12.2 36.1

Self-employed 10.2 32.6 10.9 32.3

Employer 1.4 4.6 1.3 3.8

Unpaid Family Workers 3.7 11.7 4.1 12.2

Source: National Statistics Office, Labor Force Survey


Table 3. Employed Persons by Class of Worker: October 2008, January 2009, April 2009 and July 2009

July 2008 October 2008 January 2009 April 2009 July 2009

Class of Worker Number

(Millions)

% Number

(Millions)

% Number

(Millions)

% Number

(Millions)

% Number

(Millions)

%

Philippines 34.6 100 34.5 100 34.3 100 35.0 100 35.5 100

Wage and

Salary Workers 18.3 52.8 17.6 51.9 17.9 52.3 18.2 51.9 19.6 55.3

Own Account

Workers 12.2 35.3 12.2 35.5 12.1 35.4 12.2 34.9 12.0 33.9

Unpaid Family

Workers 4.1 11.8 4.31 12.5 4.2 12.3 4.6 13.1 3.8 10.8

Source: National Statistics Office, Labor Force Survey

Starting the second semester of 2009, based on the July 2009 LFS (when the

crisis has gradually slowed down – as indicated by the statement that the worst

maybe over), the number of own-account workers declined to 12 M, reducing by

1% point, the share to total. However, unpaid family workers also declined from 4.1

M in January 2008 to 3.8 in July 2009, also reducing their proportion to total from

about 12 percent to merely 10.8 percent. This may indicate that the number of

entrepreneurial informal sector, were somewhat affected. An improvement,

however, is shown by the reduced number of unpaid family workers who might

have been benefitted by the government CLEEP/emergency employment programs.

As part of the efforts to monitor the impact of the global financial and

economic crisis, the Community-Based Monitoring System (CBMS) Network, a non-

government organization, launched an initiative to conduct household surveys to

determine information the impact of the crisis at the household and community

levels. The survey was administered in seven (7) barangays in the Philippines. The

barangays have been classified into Urban NCR (national capital region), Urban

outside NCR and rural areas. The combined sample consists of 2,802 households

representing a population of 11,935 persons. The survey was conducted between

March and July 2009. (Based on a study conducted by the Philippine Institute for

Development Studies (PIDS) on the Impact of the Global Financial Crisis on the

Philippines, October 2009)


The results show that out of the sample of 2,802 households, 415 or 14.6

percent had a member who is an OFW who returned during the past six (6) months

(Table 4). Moreover, 26 of these 162 households-which is 16 percent- indicated

retrenchment or lay-offs as the reason for returning home. Another way to look at

it is that 6.3 percent of households which rely on OFW remittances-or 26 out of

415-saw this source of income disappear as a result of the crisis.

Table 4. Outcome Indicators, OFW-related, 2009

Indicator Magnitude Proportion

Household (HH) with OFW 415 14.8

HH with returning OFW 162 39.0

HH with returning OFW who was retrenched or laid-off from work 26 16.0

HH with OFW who experienced wage reduction 38 9.2

HH who received remittances during the past 6 months 411 99.0

HH who experienced a decline in the amount of remittances received 36 8.8

HH who experienced a decline in the frequency of receipt of

remittances 31 7.5

Source: CBMS Survey 2009

Further, on Table 5, the survey results indicate that only two (2) percent of

surveyed households engaged in new entrepreneurial activities in the past 6

months, totalling to 53 new businesses set-up in all barangays. However, 46.4

percent of the households surveyed derived income from at least one

entrepreneurial activity. Eight of these (or 0.6 percent) closed their business as a

result of the economic downturn. Fifty nine (59) or 4.6 percent experienced a

significant downward movement in income from the business while 8 or 0.6 percent

experienced an upward movement.


Table 5. Outcome Indicators, Entrepreneurial Activities, 2009


HH with at least 1 member who engaged in new entrepreneurial activity 53 2.0

HH which derived income from at least on entrepreneurial activity 1,299 46.4

HH with at least 1 member who closed his/her business 8 0.6

HH with at least 1 member who experienced a significant change in the

monthly income from business 67 5.2

Direction

Increase 8 0.6

Decrease 59 4.6

HH with a least 1 member who experienced a significant change in the

number of employed persons from the business 4 0.3

Direction of change

Increase 2 50.0

Decrease 2 50.0

Source: CBMS Survey 2009

On Table 6, seventy seven (77) households reported job loss of at least one

of their members representing 2.8 percent of the 2,802 households surveyed. Two

point five (2.5) percent of households had a member who experienced a reduction

in wages in the past 6 months. Meanwhile, 2.2 percent of households surveyed

reported reduction in benefits during the past six (6) months.

Table 6. Outcome Indicators, Wage Earners and Salaried Workers, 2009


HH with member who lost job 77 2.8

HH with member who experienced wage reduction 71 2.5

HH with member who experienced a reduction in the number of working

hours 62 2.2

HH with member who experienced reduction in employment benefits 7 0.3

Over-all, based on the labor force surveys and the 2009 CBMS results (macro

and micro level data), we can infer that the crisis could not have significantly

affected the number of informal sector workers, particularly the own-account


workers, though there was a decline in terms of their monthly income (from CBMS

2009). This could have been due to the CLEEP program and other interventions of

the government.

Remaining Issues and Concerns that Need to be Addressed on Informal Sector and the non-regularly employed

Despite the interventions of the government through the creation and

implementation of policies and programs for the informal sector, there are still

issues and concerns that need to be addressed to better respond to the needs of

the sector. Among these are the following:

Enactment of the Magna Carta for the Informal Sector

There is a need to increase lobbying for the approval of the Magna Carta for

the Informal Sector. There are several versions of the Magna Carta for the Informal

Sector in the Congress, thus a need to harmonize these bills into one piece of

legislation that would be the instrument for creating an environment to improve the

economic state and overall wellbeing of the members of the informal sector.

Increasing social/health insurance coverage to include all the members of the informal sector

Considering the uncertainty of regular income for most of the informal sector,

it is very likely that most of them would not be able to afford the required premium

and contributions for insurances, such as for the Social Security System (SSS) and

the NHIP. As a result, members of the informal sector may perceive contributions

for social insurances as additional burden, rather than as instruments to provide

them with security, and discourage them to avail insurance programs. How to

address this concern still remains to be a challenge for the government.

Improving Access to Skills Enhancement Programs of the Government

There is a need for more investments, technology and basic infrastructure

which can help to enhance the skills and increase productivity of the informal


sector. This could be done by ensuring that manpower and technical skills training

program and entrepreneurial capacity enhancement are made available to the

members of the informal sector.

Addressing the need for organization of the informal sector

The need to organize the informal sector remains to be a challenge. Because

the workers in the informal sector are often scattered (some are ambulant and

itinerant while some are seasonal and casual workers) they have difficulties in

assembling into a defined representative organization. This results into the lack of

social identity and the lack of a collective voice to articulate their needs and

aspirations of the sector. Institutionalizing a form of registration service for the

members of the informal sector is seen as good start to address this concern.

Promoting awareness on informal sector issues

There is a need to promote awareness of the national line agencies, local

government units, civil society groups and institutions and the general public as a

whole on the issues being faced by the informal sector. Promoting awareness will

be helpful towards increasing the attention given by these institutions and in

generating public support for the informal sector.

In-depth assessment of the impact of the global financial crisis on the informal sector and the non-regularly employed

There is a need to determine more thoroughly the extent of the impact of the

global economic crisis in the informal sector and the non-regularly employed. This

would be useful in designing interventions to better respond to the needs of the

informal sector/non-regularly employed.

the informal sector and non regular employment in the philippines

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