BSP taps online job postings, AI to track unemployment

The Bangko Sentral ng Pilipinas (BSP) is utilizing online job postings and artificial intelligence (AI) techniques to estimate unemployment in the Philippines, according to a study included in their August Monetary Policy Report. By analyzing data from JobStreet and the Department of Labor and Employment’s PhilJobNet, the research aims to provide labor market insights ahead of official data releases and identify shifts in demand for workers across various industries.

The study emphasizes that timely labor market information is crucial for central banks, as labor market slack can impact inflation, wage pressures, and overall economic activity. To achieve this, the researchers trained a model using earlier data and tested its performance on subsequent periods to ensure its accuracy in current economic monitoring.

The Enhanced Labor Market Intelligence System developed by the researchers compares online job vacancies with actual labor market activity, such as job searches, to assess the equilibrium between employer demand for workers and the availability of job seekers. This ratio provides insights into the relative demand for workers and unused labor capacity.

Moreover, the system categorizes job postings by industry and occupation, enabling researchers to uncover differences that may not be apparent in national employment statistics. Some sectors might experience worker shortages even when the broader labor market appears stable, while others might be encountering weakening conditions.

To categorize the job postings, generative AI technology was employed, which can comprehend and generate text. This AI tool matched job information with the official Philippine industry and occupational classifications. Subsequently, machine learning algorithms were utilized to determine which labor market indicators are most valuable in estimating unemployment rates.

The researchers concluded that by monitoring industries and occupations separately, policymakers can pinpoint where labor market pressures are emerging and determine whether these pressures are widespread or confined to specific sectors.