Where Have the Workers Gone since the COVID-19 Pandemic?

This study seeks to investigate how labor markets in the Philippines responded to the COVID-19 pandemic by decomposing the change in average annual hours of work per person and analyzing the extent of reallocation across occupations, sectors, classes of work, and nature of work. It finds that the declining average work hours before the pandemic was primarily due to the extensive margin. However, the huge fall in work hours in the first year of the pandemic is attributed to the intensive margin to a larger extent and the extensive margin to a lesser degree. Although work hours moderately increased later into the pandemic, the larger contribution of the change occurring at the intensive margin persisted. The same implication can be observed even when the difference in average hours of work is examined by gender and age group, except for the old age bracket among women, where the change at the extensive margin consistently dominated the difference in average hours of work. Furthermore, lower reallocations across occupations and sectors were seen during the pandemic, contrasting the spike in reallocations in developed countries. That is, labor markets in the Philippines appear to be less dynamic in the face of huge economic shocks such as the COVID-19 pandemic. Although higher reallocation across work classes was observed for women during the pandemic, this was due to the rising employment shares of paid and unpaid family workers. Higher reallocation across the nature of work is also associated with the increasing share of short-term employment. With limited social safety nets that protect worker income amid economic shocks, there appears to be little leeway for workers to adjust in the labor market. Workers and households should be adequately supported to protect their income and welfare, especially during economic downturns. Comments to this paper are welcome within 60 days from the date of posting. Email publications@pids.gov.ph.