Quantifying the Short-Run Macroeconomic Impacts of the COVID-19 Pandemic: A Macroeconometric Approach

While the COVID-19 pandemic's effects on the Philippine economy have been widely chronicled, there has not been an effort at an ex-post quantification of the pandemic's impacts using counterfactual analysis. This paper aims to fill this gap. Using a modified version of the PIDS small macroeconometric model, forecasts for 2020 and 2021 are generated to serve as counterfactual paths of key economic indicators in the pandemic's absence. The gap between the actual and counterfactual trajectories is interpreted as comprising the pandemic's impact. The impact estimates lend further evidence to the pandemic's severe and lasting effects on the real economy, with real output, private domestic spending (particularly investment), and the employment rate suffering significant negative deviations from their counterfactual levels. Model simulations also clarify the extent of the deterioration of public finances triggered by the pandemic, particularly on tax revenues, the fiscal balance, and government debt. On the other hand, the pandemic's estimated impacts on inflation and key domestic interest rates are less evident

Profile of training and skilling programs in the Philippines

This study is undertaken as part of the Youthworks PH initiative by the Philippine Business for Education. It aims to address five research questions: (a) What are the existing training programs for the priority sectors of YouthWorks PH (construction, manufacturing, and tourism)? (b) How responsive are the current training programs to the needs of industries? (c) Is there industry demand for new National Certificates in specific sectors and for what level and occupation? (d) How did the Covid-19 pandemic change the landscape of training programs in the country? (e) What are the emerging industry sectors brought about by the Covid-19 pandemic? Secondary data and interviews with relevant stakeholders, particularly with training providers in YouthWorks PH priority sectors, were used in this study. TVET providers are overwhelmingly private, but public providers account for a larger share of graduates. Most TVET graduates are products of either community-based or institution-based TVET programs. TVET programs and graduates are concentrated in a few occupational sectors, the dominant sector being Tourism (Hotel and Restaurant). Likewise, demand for assessment leading to a National Certificate is concentrated in relatively few qualifications. The government offers several scholarships promoting TVET access. The issues on the responsiveness of current programs, according to the respondents, revolves around: (a) the lack of demand, particularly for construction; (b) weaknesses in the design of financing programs; (c) perception about the quality of training schools, trainers and assessors; and (d) training content. Industry respondents noted demand for skills standardization in prefabricated construction, supervisory-level construction jobs, and nursing assistance. Restrictions due to Covid-19 resulted in the suspension or scaling down of training programs. Some providers have provided online modules, but lack of access to appropriate digital devices or the internet hinders remote learning. Covid-19 has caused the emergence of online food selling and made digital skills valuable. The study recommends pursuing an information campaign to promote construction jobs; reviewing and rationalizing TVET financing programs; reviewing the TVET content; tapping industry practitioners as trainers and assessors; investing in flexible learning modalities; and promoting regular dialogue between the government, employers, and TVET providers

Let's Get Fiscal: Extending the Small Macroeconometric Model of the Philippine Economy

This study presents a small macroeconometric model with a fiscal sector, extending the model presented in Debuque and Corpus (2022). The model retains the original core blocks of domestic demand, international trade, employment, prices, and monetary sectors, and adds a fiscal sector consisting of equations for government revenues, expenditures, and debt. Behavioral equations are estimated in error-correction form (using ARDL methodology) on quarterly data from 2002 to 2019. In-sample simulations demonstrate acceptable levels of predictive accuracy for most macroeconomic variables, even when producing dynamic forecasts. The model also shows plausible outcomes on the fiscal side in response to shocks in world oil prices, the exchange rate, and primary expenditure, showing the expanded model's policy simulation capabilities. The next steps for developing the model include adding a detailed financial block, modeling the aggregate supply side, and incorporating expectations

Starting Small: Building a Macroeconometric Model of the Philippine Economy

This study presents a small macroeconometric model of the Philippines. The model covers the basic parts of the economy-namely, private consumption and investment, international trade, employment, prices, and basic monetary sectors. Behavioral equations are estimated in errorcorrection form (using ARDL methodology) on quarterly data from 2002 to 2017. The model's validity is evaluated through various simulation exercises. It generates satisfactory in-sample and out-of-sample predictions for GDP growth, CPI inflation, and employment rate, but is less successful in tracking the movement of domestic interest rates. The model also shows plausible responses to exogenous shocks emanating from government consumption, world oil prices, and global GDP. Briefly, a government spending shock elicits increases in investment and imports, a shock to world oil prices generates faster inflation, while a global recession is transmitted to the domestic economy mainly through lower exports and investment. The next steps needed to extend the model beyond improving the existing blocks include developing the supply side, incorporating expectations, and adding fiscal and financial blocks

Socioeconomic profile of sustainable livelihood program participants: Evidence from a household survey

The Sustainable Livelihood Program (SLP) is a livelihood assistance program of the Department of Social Welfare and Development targeting working-age members of poor households. We draw insights on the socio-economic profile of target beneficiaries of SLP using survey data covering 2,160 households with a member that participated in SLP during the survey period of August 2018 to March 2019. The survey was conducted as part of an experimental impact evaluation of enhancements in the SLP process. We present a descriptive analysis of the data after giving an overview of SLP and the design of the evaluation. We find that sample households are largely poor or near-poor, and on average derive most of their income from salaries and wages. Sample households also have limited formal borrowing and savings. Furthermore, female spouses who are not in the labor force or are employed but underemployed comprise the majority of potential beneficiaries. These findings suggest that SLP attracts economically inactive or underemployed female members of poor households seeking self-employment to augment household income while maintaining time to perform housework

Macroeconomic Prospects of the Philippines in 2022–2023: Steering through Global Headwinds

This paper, which will be released as the lead chapter of the 2021-2022 PIDS Economic Policy Monitor, reviews the Philippines' macroeconomic performance in 2021 and the first half of 2022, analyzes recent developments and challenges shaping the economy's near-term outlook, and presents macroeconomic projections for 2022 and 2023. With the country's sustained economic reopening, the analysis suggests that GDP growth may grow by about 7.1 percent, but economic activity may weaken in 2023 as the global economic environment deteriorates. Inflation will likely continue to be elevated in 2022 but may still fall within the central bank's target range in 2023. The economic outlook features significant challenges and downside risks, including persistently high inflation, an uncertain business environment, and a possible downturn in the world's major economies. The paper ends by outlining what the authors believe should count among government's key priorities in steering the economy through these headwinds

Who are the youth NEET in the Philippines today?

Being not in employment, education, or training (NEET) can undermine young people's future employment and earnings prospects, leading to lasting economic disadvantage. Being NEET can also have adverse social consequences, such as depression, weaker social engagement, and possibly deviant behavior. These outcomes come at a great cost to the economy and society. This study aims to address four research questions: (1) what are the dropout points of learners across the education continuum; (2) how are NEET computed and monitored across government agencies; (3) how many NEET are potential TVET learners; (4) what barriers do NEET face in pursuing further training. The study used a range of research strategies, such as document review, primary and secondary data analysis, and in-depth interviews with national government offices with programs for youth. The study finds that NEET is still an emerging concept in the Philippines. However, given the large number of youth NEET in the Philippines, and the social and economic implications of this, more attention needs to be directed toward youth NEET and the issues faced by this cohort. First, there is a need to adopt a standard definition of NEET and promote the concept as an important cohort that needs attention from government and nongovernment programs. Second, there should be more comprehensive coverage of people in technical and vocational education and training (TVET) in official statistics to understand the demand for TVET better. Resolving issues in the definition of training participation in official statistics would provide a more comprehensive picture of TVET participation and lead to a more accurate measurement of NEET in the country. Third, more in-depth studies should be conducted to identify other important determinants of being NEET. This will help find effective levers of drawing out the NEET into either learning a trade and/or being productively employed. Fourth, given the high proportion of inactivity among female youth observed, further inquiry into the reasons behind this is recommended. Fifth, the study estimated that only one in four NEETs would demand TVET training. Given this low potential take-up rate, there is scope for promoting TVET among the NEET. Lastly, government and other key stakeholders should address the barriers and challenges of those desiring and who are currently in TVET training. This includes addressing participants' financial constraints through re-examining existing allowance benefits, the conduct of better information dissemination on training opportunities, provision of labor market information and employment facilitation, and consideration of solutions to connectivity and digital device issues experienced by trainees

Effects of the COVID-19 Pandemic on Employment and Wages in the Philippines

This study examines the impact of the COVID-19 pandemic on the Philippine labor market, focusing on employment and real wages and their respective outcomes across sectors and various worker characteristics. To analyze the pandemic's impacts on employment outcomes at various stages of the crisis, we estimate changes in the probability of employment through a set of logit and multinomial logit regressions, and measure changes in daily working hours using ordinary least squares (OLS) regressions. We also estimate the effects on real daily wages through OLS regressions on subsamples of wage and salary workers. The empirical analyses reveal several important observations. First, the immediate impact of the pandemic crisis was much larger on employment than on real wages, in contrast to findings for previous crises which found the reverse to be true. Second, workers in contact-intensive sectors experienced the worst effects in terms of wage declines and employment losses. As many of these sectors were male-dominated, male workers-especially older men with less education and in middleskill jobs-suffered the most initially. Third, the recovery a year into the pandemic was uneven in terms of employment. Real wage trends during this period were generally less favorable for women, particularly young females and those in middle-skill and high-skill jobs. In contrast, male workers saw a recovery in real daily pay a year after the lockdowns, with the increase largely driven by outcomes in the rural sector-reflecting an uptick in real wages in agriculture. Our findings provide support for active labor market policies such as worker reskilling and training programs for the unemployed, as well as for social protection for vulnerable workers. The heterogeneous labor market effects of a crisis such as the pandemic also highlights the need for a focused fiscal response, targeting sectors and worker subgroups who are most likely to face the harshest impacts

Assessment of implementation issues and livelihood success on the Sustainable Livelihood Program (SLP) of the DSWD

The study aims to assess the Sustainable Livelihood Program (SLP) implementation processes based on recent policy enhancements and to determine additional dimensions or indicators of program success. The analysis is based on focus group discussions and key informant interviews, and a survey of a small sample of beneficiaries. Majority of those served by the program have expressed positive results from the SLP intervention particularly when it comes to the skills training. There is a felt improvement in the standard of living experienced from additional household income, business expansion, and a stable source of employment. Other dimensions of success include increased motivation to be productive; better links to employment or that the program provided a form of social protection. However, beneficiary targeting is poor with parent leaders, their friends and relatives capturing most of the benefits. Delays in project review and approval caused potential beneficiaries to drop out, back out, or find other opportunities. Moreover, the establishment of SLP associations is viewed as a deterrent instead of a mechanism for success. Overall, additional reforms in the delivery of program services is still needed. The reforms should focus on beneficiary targeting and development of characteristic-based assessment tool on beneficiary readiness and capacities. The Department of Social Welfare and Development also needs to examine project review and approval, caseload of project development officers, and issues with regard to social preparation and development of associations. Lastly, an impact evaluation has to be undertaken to provide better evidence of program success