Inclusive growth course a tortuous road for poor
THE Philippines’s recent economic performance has paved the way for many economists to believe the country is no longer the “Sick man of Asia.” The strong performance of the economy under the Arroyo and Aquino administrations led to improvements in its competitiveness rankings and the recognition that the country’s credit rating was, indeed, investment grade.
However, over 10 million Filipinos are still unemployed and underemployed. Underemployed Filipinos are those who are looking for additional sources of income or better working conditions.
DATA from the Philippine Statistics Authority (PSA) in January 2016 showed there were 10.348 million Filipinos who are either jobless or looking for decent employment. This is composed of 7.879 million underemployed and around 2.469 million unemployed.
The recent data was not surprising given the growth of employment generation nationwide in the past 33 years. Ateneo Center for Economic Research and Development ( ACERD) Director Leonardo A. Lanzona Jr. said the country’s employment generation remained slow.
Lanzona said that, between 1978 and 2011, the employment rate nationwide only averaged 2.77 percent, or 640,000 jobs annually.
He noted that, without decent jobs, millions remain poor. Poverty is greater among fishermen, where poverty incidence in 2012 is at 39.2 percent and 38.3 percent among farmers.
What exacerbates the problems confronting farmers and fishermen is their apparent inability to cope with climate change. Data from the PSA showed that farm output declined by 0.96 percent in the last quarter of 2015 and by 4.53 percent in the first quarter of 2016.
In a report, the PSA said the steep decline in crop and fisheries output in January to March was due to the prolonged dry spell and damages caused by typhoons Lando and Nona.
Agricultural think tank Meganomics Specialist International Inc. President and CEO Pablito M. Villegas told the BusinessMirror the poor growth of the sector reflects “badly” on the Aquino administration’s antipoverty efforts.
“The Aquino administration allotted more than P250 billion to the agriculture sector for the past six years. But on the average, it has produced only a growth rate of about 1.5 percent. That is disappointing,” Villegas said.
“That is not contributing to inclusive growth, because the farmers are now even poorer,” he added.
Lanzona also noted that poverty is greater among the employed than the unemployed. He said the poverty rate among the employed was at 21.9 percent and among the unemployed, 18.7 percent in 2012.
“[There is a] negative relationship between unemployment rates and job generation,” Lanzona said in 2014. “The Philippines needs to generate around 14.6 million jobs over the next four years.”
UNIVERSITY of Asia and the Pacific School of Economics Dean Cid Terosa said millions of Filipinos remain unemployed due to “deficient education and health services.”
The Aquino administration, however, gave special attention to social services. The outgoing administration doubled its spending for social services. However, the government has been criticized for underspending. Terosa said better education and health services will improve the chances of the poor to increase the market value of their labor.
“Although economic growth has been sustained for several years, growth of social welfare has been slowed by the lethargic growth of income of those in the lower income classes. This can be traced to employment for the poor,” Terosa said.
University of the Philippines (UP) School of Economics Prof. Benjamin E. Diokno said job generation is also linked to population growth. On May 30 Diokno accepted the offer to lead the Department of Budget and Management (DBM) under the Duterte administration.
Diokno, who was also part of the UP School of Economics position paper on reproductive health in 2008, said poor households tend to have more children and this compounds the employment problem and, consequently, exacerbates poverty.
THE 2008 position paper of the UP School of Economics stated that more children in households tend to decrease their investment in education and other basic needs, which are key in getting decent employment and breaking intergenerational poverty.
The paper stated that using the latest available data at that time showed average annual spending on education per student decline to only P682 for a family with nine children, from P5,558 for a one- child family.
Average health spending also dropped to P150 per child for families with nine or more children, from P1,700 for a one- child family, the paper, whose lead author is incoming Economic Planning Secretary Ernesto M. Pernia, read.
As a result, the economists said poverty incidence is less than 10 percent for a family with one child and 57 percent for a family with nine or more children.
“[One] reason is the weak government commitment to family planning,” Diokno said. “A typical poor household would tend to have more children than a typically rich household.”
APART from these challenges, joblessness and poverty persist in a high- growth economy, because economic and development policies have only favored the rich, members of non- governmental organization Freedom from Debt Coalition ( FDC) said.
The FDC said among these policies is the government’s efforts to prioritize debt servicing over social spending. This is despite the government’s expansion of its Conditional Cash-Transfer (CCT) Program.
The FDC explained that automatic appropriations for debt servicing became a law under the term of President Ferdinand E. Marcos. This meant that debt payments have taken the first cut in the national budget before appropriations are made for vital social services.
This, FDC said, prevented the government from lifting millions of Filipinos from poverty. FDC President Ed Tadem said inequality in the country in 2013 was the highest in the Asean.
“Economic growth as measured by the GDP has, indeed, grown under Mr. Aquino,” Tadem said. “But this pales in comparison to continuing high poverty levels, joblessness and rising income inequality, the P6.4-trillion public debt to be inherited by the next administration and the billions of pesos wasted in payments for fraudulent, wasteful and questionable loans.”
IN this file photo, a homeless man sleeps on a pavement in Makati City. Beside him is a poster of a condominium building that will be built at his temporary shelter.