(IBON 2019 Midyear Birdtalk Briefing Paper economic situation highlights)
The country’s
slowing economy, and worsening jobs crisis and poverty disputes the
Duterte administration’s hype of economic gains. IBON said that
this is bound to worsen if the Duterte administration continues
unopposed on its current neoliberal trajectory wherein the interests
of big foreign and local business prevail to the detriment of
millions of Filipinos, especially the poor.
Economic
growth slowing since the start of the administration.Philippine Statistics Authority (PSA) data show that gross
domestic product (GDP) growth has been slowing in the 11 quarters
since the start of the Duterte administration from 7.1% in the third
quarter of 2016 to 5.6% in the first quarter of 2019. There was a
momentary increase to 7.2% in the third quarter of 2017 but growth
fell rapidly after this. Notably, growth was slowing even before the
budget impasse and election ban on infrastructure spending.
High real
unemployment. Computing according to the original definition
of unemployment for comparability would show that the real
unemployment rate in 2018 is 10.1% and the real number of unemployed
is 4.6 million. These are much worse than the already high 9.0%
unemployment rate and 4 million unemployed in 2016, again computed
according to the original definition. In contrast, officially
released figures for 2018 were a grossly underreported 5.3% and 2.3
million, respectively.
The record real
unemployment last year is a direct result of how only an annual
average of 81,000 new jobs have been created since the start of the
Duterte administration, from 41.0 million employed in 2016 increasing
by 162,000 to 41.2 million in 2018. To put this into context and even
granting that the administration is just at its midpoint, this is so
far the worst employment generation post-Marcos.
Lowest and
least frequent wage hikes under Duterte. The Duterte
administration is so far making the worst record on wage hikes of all
post-Marcos administrations. In the NCR, for instance, it has only
given an average of one wage hike every 18 months. The frequency of
wage hikes previously ranged from one every 16 months under Arroyo to
one every 10 months under Ramos. Over the two wage hikes under
Duterte, the nominal value of the wage increased by only 9.4% –
compared to a range of 11.5% by Benigno Aquino III to 45.9% by
Corazon Aquino over their respective first two wage hikes.
Poverty
underreported. IBON estimates on Family Income and
Expenditure Survey (FIES) data in 2015 found that the poorest 50% or
11.4 million families had monthly incomes of just Php15,000 or less,
and the poorest 60% or 13.6 million families just some Php18,000 or
less.
Inequality
worsening. The net worth of the country’s richest Filipinos
and profits of the largest corporations continue to grow, in some
cases even outpacing economic growth. The net worth of the 10 richest
Filipinos grew from Php2.5 billion in 2016 to Php2.7 billion in 2018.
The net worth of the 40 richest Filipinos grew from Php3.7 billion to
Php3.8 billion in the same period. The net worth of the 40 richest as
percentage of GDP was 21.9% in 2018.
Agriculture
in crisis, manufacturing stalling.
Agriculture has been left to perform chronically poorly. The sector
grew by just 0.8% last year and in the first quarter of 2019. This is
just around half the growth pace of 1.5% in the 2010s and not even a
third of the 2.9% clip in the 2000s. Employment in agriculture has
fallen by 1.1 million between 2016 and 2018, with an initial further
376,000 losses reported in April 2019 from the same period last year.
Manufacturing
already appears to be stalling with growth of just 4.9% in 2018 –
the slowest since 2012 – and slowing further to 4.6% in the first
quarter of 2019. The share of manufacturing in total employment of
just 8.8% in 2018 is actually even much lower than its 10.1% share in
1990 and 11% in 1990. These are despite the sector growing by 22.1%
between 2016 and 2018, according to national accounts data.
Poorest land
distribution.
Lands covered by the Comprehensive Agrarian
Reform Program (CARP) should have been distributed by 1998. This
deadline was reset twice, yet until now 100% distribution has not
been met. To add to this injustice, distribution is slow and is even
going at a slower pace than before under the Duterte administration.
Department of Agrarian Reform (DAR) land distribution accomplishment
in the period 2016-June 2019 is just at an average of 2,920 hectares
monthly. This is much less than under Benigno Aquino III (8,254
hectares, July 2010-2015), Arroyo (9,047 hectares, January 2001-June
2010), Estrada (11,113 hectares, July 1998-2000), Ramos (26,389
hectares, July 1992-June 1998), and Corazon Aquino (14,142 hectares,
July 1987-June 1992).
Build
Build Build,
for whom?Over the 2016-2017 period, the biggest
concentration of gross value in public construction was in Pres.
Duterte’s home region of Davao (Region XI) accounting for 14.1% of
the total. The increase in Davao is notable in almost doubling from
7.9% over the period 2010-2015 to 14.1% in 2016-2017.
Close Duterte allies have reportedly been among
the beneficiaries of the surge in Davao construction projects.
Mounting debt.
The government is already borrowing heavily. Total outstanding debt
of the national government stood at Php7.9 trillion as of May 2019
implying a total increase of Php2 trillion since the start of the
Duterte administration. In nominal terms, this is equivalent to an
average monthly increase in debt of Php56.2 billion, which is over
two-and-a-half times that of the Arroyo administration (Php21.2
billion) and nearly three times that of the previous Aquino
administration (Php19 billion).
Truth about
TRAIN. The Duterte administration has tried to divert from
the regressive nature of its tax reforms by repeatedly claiming that
it benefits “99% of taxpayers” and giving the impression that 99%
of Filipinos gain from TRAIN Package One. The reality however is that
only 5.5 million personal income taxpayers coming largely from the
highest income groups will gain from TRAIN’s personal income tax
cuts. An additional two million taxpayers are minimum wage earners
and so previously already exempt. On the other hand, the poorest 17.2
million or eight out of 10 (76%) Filipino families will pay TRAIN’s
higher taxes on consumption goods including petroleum products and
sugar-sweetened beverages. ###
