In 2012, the dominant theme peddled by the Aquino administration was “good governance is good economics”. The main propaganda line of Malacañang is that the “daang matuwid” (straight path) has created a favorable environment for economic growth that is inclusive. From being the sick man of Asia, the country now brims with vitality, declared President Benigno Aquino III in his State of the Nation Address (Sona).
To the uncritical, such assertions would seem hard to doubt. For one, the national accounts do show rosy numbers. The Philippines is beating expectations and has been one of the supposed few bright spots amid a gloomy world economy. International banks, local and foreign investors, credit rating agencies and multilateral financial institutions are one in saying that the prospects are indeed upbeat for the country. There are even claims that we are the new tiger in the region, joining the likes of Singapore and South Korea.
Good news for big business
After growing by 7.1% in the third quarter, way above the market’s media forecast of 5.4%, the gross domestic product (GDP) has now expanded by 6.5% for the year. The strong third quarter performance prompted economic managers to revise upwards their 2012 full year GDP growth projection with the National Economic and Development Authority (Neda) claiming that the GDP will likely grow by 7% this year, well beyond the earlier official forecast of 5-6 percent. Many share the same optimism like the World Bank which also raised its projection to 6% from the previous 4.2 percent.
Meanwhile, Standard and Poor’s (S&P) upgraded the credit rating of the Philippines from “stable” to “positive” following the GDP report which put the country on track to make investment grade by next year. Officials say this means lower borrowing cost for government and lower cost for doing business in the Philippines. Prior to the S&P upgrade, the country has already posted eight credit rating upgrades since 2010. These developments continued to feed optimism in the market with trading at the Philippine Stock Exchange posting 38 record highs this year, making it one of the most vibrant equities market worldwide.
Other economic data, as culled by the Christmas Day Inquirer editorial, also seem encouraging. In the first nine months of the year and amid the global crisis, exports grew by 7.2% and foreign direct investments (FDI) by 40% compared to the same period in 2011. Consequently, as of November, the country has an all-time high of $84.1 billion in gross international reserves (GIR) and a balance of payments (BOP) surplus of $2 billion, five times its value during the same month last year.
The country’s big business groups share government’s high optimism, citing the so-called good economic fundamentals in 2012 that can lead to a “super-year” in 2013. They see more opportunities to further boost profits with the anticipated investment grade rating, the implementation of public-private partnership (PPP) projects and the upcoming midterm elections.
Big business, of course, has every reason to be upbeat. High GDP growth, robust stock market and favorable credit rating all reflect not the state of the ordinary people but of how lucrative the economy is for the moneyed few. Further, past and present policies of privatization and deregulation have allowed them to monopolize and greatly profit (through generous perks, incessant hikes in rates and user fees, and exploitation of workers) from key economic activities including public utilities and infrastructure development. This small group of the super-rich has seen their wealth balloon in recent years. In 2009, the Forbes magazine reported that the 40 richest Filipinos had a combined wealth of $22.4 billion and in 2011, the amount more than doubled to $47.43 billion. The economy is growing but that’s good news only for big business.
Because amid the purportedly stellar growth of the economy, series of credit rating upgrades, streak of stock market highs and favorable reviews by banks, fund managers and investors are the hard realities of rising joblessness, worsening hunger and deteriorating poverty. Social indicators which are most vital to the people have been deteriorating in the past three years amid the record-high profits and wealth of elite families, high investor confidence and positive market sentiment.
Official unemployment rate as measured by the National Statistics Office (NSO) averaged 7% in 2011 and 2012 from 7.3% in 2010. We are supposed to be the second fastest growing economy in the region just behind China but the official jobless rates of our neighbors are much lower. Thailand’s is 0.7%; Singapore, 2.1%; Malaysia, 3%; South Korea, 3.8%; China, 4%; and Taiwan, 4.2 percent. To be sure, like in the Philippines, these official unemployment figures understate the true extent of domestic joblessness in the respective countries. But we cite them for the simple comparison of official data on the labor markets in the region. (Data on Asian countries are as of first quarter 2012 as compiled by the Bangko Sentral ng Pilipinas or BSP. During the same period, our official unemployment rate was 7.2 percent.)
And we have not even looked at the quality of available jobs. A quick peek at the NSO’s preliminary October 2012 Labor Force Survey shows that underemployed workers – those who are employed but are still looking for additional work – numbered 7.2 million; self-employed without any paid employee, 10.7 million; and unpaid family workers, 4.1 million. That’s easily 22 million out of the reported 37.7 million employed workers (more than 58%) with disputable quality of jobs.
Then for wage and salary workers, there’s the issue of extremely low pay amid a very high cost of living (made even worse by Aquino’s enforcement of the two-tier wage system which imposes a floor wage that is even lower than the minimum wage) as well as job insecurity amid widespread labor contractualization. The last time the National Wages and Productivity Commission (NWPC) issued its estimate of family living wage (which could approximate the amount needed by a regular family to live decently) it pegged it at ₱917 per day as of September 2008 in Metro Manila. More than four years later, Metro Manila’s daily minimum wage is still a measly ₱419-456.
To have an idea of how massive job scarcity in the Philippines could be, we may refer to the regular surveys of the Social Weather Stations (SWS). In 2010, 22.5% of Filipino workers said they were jobless which increased to 23.6% in 2011. This year, it ballooned to 30.1 percent. In absolute terms, there were about 9.5 million unemployed workers in 2010 and 2011; this year, it climbed to 12.1 million workers. In Aquino’s first three years in power, the number of workers who said that they were jobless increased by 2.6 million based on SWS surveys. (Results of SWS surveys cited in this article all refer to annual averages.)
With the economy not producing enough jobs and livelihood opportunities even as wages become even more depressed, poverty and consequently hunger have been at their worst. Again using the SWS surveys, 47.5% of Filipino families considered themselves poor in 2010. Since then, the percentage has steadily climbed to 49.3% in 2011 and 51% this year. There are now around 10.3 million families who consider themselves poor, up from 9.9 million in 2011 and 8.9 million two years ago. Thus, in the first half of Aquino’s term, the number of poor families ballooned by 1.4 million. This means that some 7 million Filipinos have been added to the number of poor in the past three years. Note that between 2009 and 2012, the budget for the controversial conditional cash transfer (CCT) program swelled from just ₱5 billion to ₱39.4 billion (a whopping 688% increase) but apparently failing to make a dent on poverty.
Hunger incidence, still as surveyed by the SWS, follows the same path. In 2010, the percentage of families who reported to have experienced hunger was at 19.1 percent. It climbed to 19.9% the next year and to 21.1% this year. In absolute figures, there were 3.6 million hungry families in 2010; 4 million in 2011; and 4.3 million in 2012. Under Aquino, the number of Filipino families who experience hunger has so far grown by 700,000 or about 3.5 million people as measured by the SWS.
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