World Bank July Survey: Half of Companies Reduced Manpower
Photo Credit: World Bank Headquarters in Washington, D.C.
The COVID-19 pandemic significantly impacted the employment situation in the country with close to half (48 percent) of firms reported reducing the number of their employees. This is according to the results of a World Bank survey conducted in July 2020 in collaboration with the Department of Finance and National Economic and Development Authority released on Tuesday.
"Job loss is most significant in the education, food services, and construction sectors, with greater than 60% of firms in these sectors having laid off their employees," the survey reported.
Job loss is less significant in the financial services and health sectors, but 2 out of 5 firms in these sectors reported laying off employees. Only 1% of the firms reported new employment.
Firms likewise reported a deep reduction in sales revenue despite the government's move to ease community quarantines to allow more people to work amid the spread of coronavirus disease.
The enhanced community quarantines came into effect in mid-March and had forced 77 percent of firms to close in April 2020. With easing community quarantine measures in the following months, some firms re-opened while others remained closed.
Reported sales revenue has gone down by 64% on average between April and July 2020, with 89% of firms reporting a continued reduction in sales. This was in addition to already significant loss by 65% experienced in March 2020 compared to February 2020, with 75% of firms reporting reduction in sales.
Firms across asset sizes were affected similarly. Firms outside of the National Capital Region and those in automotive repair, tourism and accommodation, food services, and real estate sectors reported a greater reduction in sales.
"Reduced sales are linked to a higher than average rate of temporary and permanent closure of firms in the tourism and accommodation, and food services sectors," it said.
Also, three quarters of firms experienced a decrease in demand, with 1 in 3 firms reporting a decline by more than 50%. The biggest demand shock was the temporary mobility restriction that has caused customers not being able to travel to purchase products or services (67%).
On the supply side, the survey found out that 70% of firms reported having their operations affected by a decrease in the availability of inputs and raw materials. Similar to the demand shocks, those outside NCR and firms in automotive repair and wholesale and retail trade sectors were more severely affected.
The most notable causes of supply shocks were local distributors (50%) and domestic suppliers (44%) having ceased or reduced operations.
"This is likely to be due to a large proportion of businesses being closed and disruption in logistics as a result of mobility restriction measures," it said.
Forty-five percent of the currently closed firms did not know when their businesses could resume. Among the firms that were open as of July 2020, 39% did not know how long they could remain open under the current circumstances, whereas 36% reported they could remain open only for the next 3 months.
The level of uncertainty was greater among firms in the transportation and BPO sectors in terms of sales, and in wholesale and retail trade and rental and leasing services sectors in terms of employees.
The survey aimed to assess the various channels of impact of the pandemic on firms, their adjustment strategies, and public policy responses. The self-administered online survey was conducted between July 7 and 14 and collected responses from 74,031 firms across regions, firm size and sectors.
The surveyed sample was reweighed to follow the distribution of firms by region and firm size based on employment as reported by the Philippine Statistics Authority’s 2018 Listing of Establishments.
"Job loss is most significant in the education, food services, and construction sectors, with greater than 60% of firms in these sectors having laid off their employees," the survey reported.
Job loss is less significant in the financial services and health sectors, but 2 out of 5 firms in these sectors reported laying off employees. Only 1% of the firms reported new employment.
Firms likewise reported a deep reduction in sales revenue despite the government's move to ease community quarantines to allow more people to work amid the spread of coronavirus disease.
The enhanced community quarantines came into effect in mid-March and had forced 77 percent of firms to close in April 2020. With easing community quarantine measures in the following months, some firms re-opened while others remained closed.
Reported sales revenue has gone down by 64% on average between April and July 2020, with 89% of firms reporting a continued reduction in sales. This was in addition to already significant loss by 65% experienced in March 2020 compared to February 2020, with 75% of firms reporting reduction in sales.
Firms across asset sizes were affected similarly. Firms outside of the National Capital Region and those in automotive repair, tourism and accommodation, food services, and real estate sectors reported a greater reduction in sales.
"Reduced sales are linked to a higher than average rate of temporary and permanent closure of firms in the tourism and accommodation, and food services sectors," it said.
Also, three quarters of firms experienced a decrease in demand, with 1 in 3 firms reporting a decline by more than 50%. The biggest demand shock was the temporary mobility restriction that has caused customers not being able to travel to purchase products or services (67%).
On the supply side, the survey found out that 70% of firms reported having their operations affected by a decrease in the availability of inputs and raw materials. Similar to the demand shocks, those outside NCR and firms in automotive repair and wholesale and retail trade sectors were more severely affected.
The most notable causes of supply shocks were local distributors (50%) and domestic suppliers (44%) having ceased or reduced operations.
"This is likely to be due to a large proportion of businesses being closed and disruption in logistics as a result of mobility restriction measures," it said.
Forty-five percent of the currently closed firms did not know when their businesses could resume. Among the firms that were open as of July 2020, 39% did not know how long they could remain open under the current circumstances, whereas 36% reported they could remain open only for the next 3 months.
The level of uncertainty was greater among firms in the transportation and BPO sectors in terms of sales, and in wholesale and retail trade and rental and leasing services sectors in terms of employees.
The survey aimed to assess the various channels of impact of the pandemic on firms, their adjustment strategies, and public policy responses. The self-administered online survey was conducted between July 7 and 14 and collected responses from 74,031 firms across regions, firm size and sectors.
The surveyed sample was reweighed to follow the distribution of firms by region and firm size based on employment as reported by the Philippine Statistics Authority’s 2018 Listing of Establishments.
