Jobs crisis getting worse under Duterte gov’t – IBON

Research group IBON said that the jobs crisis in the country is getting more severe under the Duterte administration.

The group said that the government should be more forthright and admit growing economic insecurity from inflation and joblessness rather than keep trying to downplay this.

Millions of Filipinos are jobless, including those excluded from official unemployment figures, or have jobs but endure poor quality work.

IBON said there are less jobs available now compared to the start of the Duterte administration.

The number of employed Filipinos has fallen by 295,000 from 40.95 million in July 2016 to just 40.67 million in July 2018.

This is largely due to a huge 1.8 million drop in agricultural employment over that period.

Job losses and expensive food characterize the crisis in the agricultural sector.

IBON pointed out that job creation in the rest of the economy was not enough to compensate for the huge job losses especially in agriculture.

There were gross job losses of 2.2 million between July 2016 and July 2018 but only 1.9 million in gross job creation, hence the 295,000 drop in the number of employed.

Moreover, the group said, the biggest job generation is in sectors that do not necessarily indicate a strong economy.

The largest part of additional employment since July 2016 was in the public sector where 500,000 jobs were created, followed by construction with 393,000 in likely mostly short-term work.

These were followed by 269,000 jobs in manufacturing which is potentially important but barely 14 percent of gross job creation in the last two years.

IBON stressed that net job creation in the economy is feeble. Only 488,000 additional jobs were generated in July 2018 from the year before.

This is less than the 701,000 jobs created on average annually in the decade 2006-2015 prior to the Duterte administration.

It was also not enough to make up for the huge 783,000 jobs lost in July 2017 from the last year, hence net job losses since the start of the administration.

This crisis is obscured in the official statistics because millions of discouraged workers are no longer counted as unemployed even if they are jobless and are just statistically dropped from the labor force, said the group.

Combined with the effect of K-12 implementation in senior high school (SHS) since 2016, the labor force participation rate has dropped to 60.1 percent in July 2018 which is the lowest in 36 years or since 1982.

There are also signs that the quality of work is drastically worsening, said IBON.

The number of under-employed, or those with jobs but seeking additional work, increased by 464,000 in July 2018 from the year before to reach 7 million.

The underemployment rate has correspondingly risen to 17.2 percent from 16.3 percent last year.

The current jobs crisis consists of the millions of jobless Filipinos including those who are no longer officially counted as unemployed and the millions of Filipinos who have jobs but suffer poor quality work that is not enough to live securely and decently.

As it is, IBON conservatively estimates at least 11.3 million unemployed (4.3 million) and underemployed (7.0 million) Filipinos as of July 2018 which is one in four (25 percent) of the labor force.

IBON said that amid skyrocketing prices and inflation, it is more urgent than ever to ensure sustainable and decent employment for millions of Filipinos.

The only long-term solution is for the government to invest in genuinely developing domestic agriculture and Filipino industries. #

Government losing control of economy –IBON

The Duterte administration is losing control over the Philippine economy and the poorest Filipinos are suffering for this, research group IBON said upon the release of the August inflation rate.

The greatly accelerating inflation is only the latest in a series of bad economic news about the economy’s so-called fundamentals.

The Philippine Statistics Authority (PSA) reported that the headline inflation rate in August 2018 accelerated to 6.4 percent or its highest in almost a decade from 5.7 percent in July.

This is more than double the 2.6 percent inflation in August 2017.

Inflation was highest in alcoholic beverages, tobacco and narcotics at 21.6 percent year-on-year but inflation also worsened among food and non-alcoholic beverages, especially vegetables (19.2 percent), corn (12.6 percent), and fish (12.4 percent).

Meanwhile, from July to August 2018, steepest inflation occurred in vegetables (4.9 percent) and rice (2.1 percent).

IBON said that the rapid rise in food prices hits poor families the worst because food takes up a greater portion of their expenditure compared to higher income families.

The bottom 30 percent income group spends 59.7 percent of their expenditures on food, compared to just 30 percent for the upper 70 percent income group based on the 2015 Family Income and Expenditure Survey.

IBON estimates that the poorest six deciles of Filipino families with monthly incomes ranging from Php7,724 to Php21,119 have suffered income losses of around Php1,455 to Php3,781 due to inflation from January to August this year.

Other indicators of macroeconomic fundamentals are no better, IBON said.

The high August inflation comes on the heels of second quarter gross domestic product (GDP) growth which was the slowest in 12 quarters, the peso falling to its lowest in 13 years, first semester remittance growth the slowest in 17 years, trade and balance of payments deficits the worst in the country’s history, and gross international reserves (GIR) that are the lowest in nine years.

IBON added that the more rapid inflation means that prices are higher than ever and will remain high even if inflation tapers off in the coming months as government projects.

The government needs to become more decisive in addressing increasingly unaffordable goods and services, IBON said, adding immediate and longer term measures can be taken.

The most immediate is to stop implementation of the TRAIN law and particularly its inflationary consumption taxes, IBON stressed.

This will not arrest inflation completely but it will take away the most recent inflationary pressure that is also the one most directly within the government’s control. The government can also consider price controls, said the group.

The president has the authority to impose price controls not just in the case of calamities but also when there is illegal price manipulation and if prices of basic commodities are already deemed at unreasonable levels, it said.

The long-term solution however, IBON underscored, is to strengthen domestic agriculture and Filipino industry. These are essential to provide cheaper food, goods and services in the domestic market. This will also lessen imports and lower pressure on the peso to depreciate.

The group also said that another solution is to reverse the privatization or commercialization of water, power, education and health to take away the profit premium making these services more expensive.

These are steps that the Duterte administration’s economic managers hinder due to their stubborn adherence to failed neoliberal policies, said IBON.#

PH Economy Duterteriorating

IBON FEATURES – Stay the course, the country’s economic managers always insist. They will be the last to admit bad economic news because eternal sunshine is part of their job. Their recent spontaneous reactions against federalism are however more revealing. They are losing control of the economy as it is and they know the ill-conceived self-serving federalism project will just make things worse.

After just a little over two years of the Duterte administration, the economy is stumbling with adverse movements in key economic indicators. It is not yet a severe economic crisis nor necessarily about to be one soon. Still, it is clear that the fundamentals are unsound and the economy is increasingly vulnerable to a political upheaval or to a renewed global downturn.

The majority of Filipinos are poor and gained little when times were supposedly good – but they will be hit the worst when the illusion of progress is finally broken.

Unsound fundamentals

Government economists like to invoke macroeconomic ‘fundamentals’ particularly when supposed economic good news are not being felt by the people. The argument is that these are vital to eventually bettering Filipino lives so the concern for them is a concern for the masses.

This would be believable if there were not habitual inattention to things of more direct everyday relevance to people like higher wages or better social services or insistence on anti-people measures like regressive taxes. In practice, the concern about certain economic indicators is really more because they matter to the investment and production decisions of big business and foreign investors.

The administration’s problem today, even if they will not admit it, is that many of the so-called fundamentals are taking a turn for the worse.

The most headline-grabbing is inflation which is already up to 5.7% in July 2018. This is more than double the 2.5% in the same period a year ago and four times the 1.3% inflation rate in June 2016 at the start of the Duterte administration. It is the highest inflation since March 2009 or a nearly 10-year high. While businesses worry about how to plan ahead, tens of millions of the poorest Filipino households worry about how their lives are just becoming even more difficult.

Unemployment is also high. The reported low unemployment rate of 5.5% or just 2.4 million unemployed Filipinos in April 2018 is misleading. It is based on a revised definition of unemployment that among others does not count millions of discouraged workers. IBON’s preliminary estimate according to the original definition is an unemployment rate of around 9.1% or some 4.1 million unemployed. Adding the 6.9 million underemployed then means 11.1 million unemployed and underemployed Filipinos which is a sizeable one in four of the labor force.

Employment generation is in any case tepid. Job generation in April 2018 from the same period in the year before was an unremarkable 625,000 new jobs. This is just around the historical average since the 1980s and actually even less than average annual employment generation of over 800,000 since the 2000s. The quality of work is moreover undermined by low pay, poor benefits and apparently unabated contractualization.

Worse, neoliberal logic during times of high inflation means that working class Filipinos will not get meaningful wage hikes just when they need these more than ever. Economic managers will likely use rising cost-push inflation to justify keeping wages low. The government will choose to manage inflation by making Filipino working people make do with less, while ensuring that firms maintain their profits.

Worst in years

Economic growth is slowing. The 6.0% growth in gross domestic product (GDP) in the second quarter of 2018 is down from 6.6% in the same period last year. It is also the slowest in the past 12 quarters since the second quarter of 2015. This is despite the debt-driven surge in construction and government spending since the start of the year.

Among the reasons for this are sluggish exports amid the unresolved global crisis. Exports are overwhelmingly by foreign firms in export enclaves and actually contribute little to national development. In any case, the export slowdown to 13% in the second quarter from 21.4% in the same period last year has dragged first semester export growth to its slowest since 2015.

Imports on the other hand continue to grow because domestic production is still backward. The country remains overly dependent on imports of capital, intermediate and consumer goods for local and export zone use. The trade deficit soared to US$19.1 billion in the first half of 2018 which is a huge 62.6% more than in the same period last year and the worst semestral deficit in the country’s history.

More expensive imported oil contributes to the swelling import bill and trade deficit aside from also pushing domestic inflation. The country would be less vulnerable to rising global oil prices if the oil industry were not deregulated and if there was not just lip service to transitioning to more sustainable renewable energy.

Portfolio investment inflows from abroad in May, June and July fell from the same respective periods last year. The US$959 million inflow in July 2018 is a marked  33.1% decline from US$1.4 billion in the same month last year. Portfolio investments are volatile especially on a month-to-month basis. At any rate the US$9.8 billion in inflows to date in 2018 is a slight 1.8% dip from the same period last year.

The bulk of this so-called hot money goes to Philippine Stock Exchange (PSE)-listed securities and the PSE index (PSEi) has been generally falling. The PSEi breached 9000 in January but has fallen to around the 7000-7800 range since May. The foreign buyer-heavy PSEi is showing foreign investors voting with their feet.

Foreign direct investment (FDI) is among the government’s most favored indicators of investor confidence. This is probably even more so now than usual because reported FDI inflows seem to be the only bright spot left – the US$4.9 billion in FDI in the first five months of 2018 is a notable 48.9% increase from the same period last year. Whether this trend will continue though is uncertain. Approved investments in the first half of 2018 declined by 5.3% to Php292 billion from Php308 billion in the same period last year.

Even remittances from overseas Filipinos are becoming less reliable than before. Cash remittances fell to US$2.36 billion in June 2018 which is 4.5% less than US$2.47 billion in the same month last year. This dragged down remittance growth in the first semester of 2018 to 2.6% from the same period in 2017, which is also the slowest first semester growth since 2001 or in the past 17 years.

Measured on a year-on-year basis, monthly remittances were consistently growing in the 11 1/2 years between May 2003 and October 2014. Monthly declines are however becoming much more frequent and there have already been 10 months of year-on-year declines in just the last 36 months since July 2015.

Dollars come in and dollars go out. All told, the country’s balance of payments (BOP) deficit for the first seven months of 2018 has almost tripled to US$3.7 billion from US$1.4 billion in the same period last year. The government dismisses the huge deficit as due to imports of raw materials and capital goods to support domestic economic expansion. It should however also realize that the country’s growth pattern is not really building domestic capacity that ends chronic import-dependence or creates a sustainable growth momentum.

These are exerting considerable pressure on the  peso which is depreciating rapidly. The average monthly rate of Php53.43 to the US dollar in July 2018 is its lowest value in over 12 1/2 years or since the Php53.61 exchange rate in December 2005. Year-to-date, the Philippine peso is the worst performing among the major currencies in East Asia – losing more value than the yuan, won, Taiwanese dollar, rupee, ringgit, Singaporean dollar, rupiah and yen.

The worsening deficit is also driving gross international reserves (GIR) ever lower. The end-July 2018 GIR level of US$76.9 billion is 5.1% less than the same period last year. The country’s external liquidity buffer is down to 7.4 months’ equivalent of imports of goods and payments of services and primary income from 8.4 months’ worth in the same time last year. This is already much less than the peak 11.8 month import cover reached in 2013 and as low as nine years ago in April 2009 when it was 7.3 months’ worth.

Wavering economic drivers

The factors that have been driving the economy recently are subsiding. The post-2008/09 low global interest rate environment is fading fast. Overseas remittances are slowing and business process outsourcing (BPO) is losing momentum. These depress household consumption and curb the real estate boom.

On the other hand, factors restraining economic growth are on the rise. Tax-, depreciation- and oil price-driven inflation is squeezing household purchasing power and rising interest rates are tempering business expansion and investment. The Bangko Sentral ng Pilipinas (BSP) has hiked interest rates thrice in May, June and August to try and stem inflation as well as to keep the country attractive to foreign speculative capital. The monetary board’s policy interest rate has risen from a steady 3% since June 2016 to 4% already by August this year.

Bank lending was actually already slowing since the middle of 2017 or even before these rate hikes. Consumer confidence and business expectations indices have also been steadily falling since the last quarter of 2016. All of these will dampen demand and eventually also output.

The economy is then in a precarious situation of high inflation, high unemployment, slowing growth, rising interest rates, swelling trade deficits, a failing peso, and stagnation of agriculture and Filipino industry. This combines with growing political uncertainty from resurgent and wider protests driven by economic discontent, assertions of human rights, and opposition to corrupt and authoritarian governance.

Short-term trends should certainly be interpreted cautiously. The recent deterioration in so many indicators is however consistent with deep structural problems in the economy. The most important long-term issue is the chronic underdevelopment of domestic production sectors.

Agriculture and fisheries are still backward and not even keeping up with population growth. Some 723,000 agricultural jobs were even reported lost in April 2018. Food prices will stay high if the sector is not given more attention and developed. Industrialization meanwhile is superficial. Reported manufacturing growth is mainly by foreign firms and their domestic subcontractors with shallow links to the domestic economy rather than driven by burgeoning Filipino industry.

Modern domestic agriculture and Filipino industry are the most reliable foundations of endogenous domestic growth. The government’s reaction is however grossly short-sighted. In particular, the debt-driven infrastructure offensive will be a limited and momentary stimulus at best. But even this will only be to the extent that limits on the absorptive capacity of government and of the private sector to implement the projects are overcome. The adverse effect of rising interest rates on the national debt also cannot be underestimated.

Ending poverty

The government is doing something wrong. It is way past time to discard neoliberal Dutertenomics for an economic program that really does end poverty. The government does not have to look far for ideas on how to start doing things right.

The mass movement came out with the wide-ranging People’s Agenda that Pres. Rodrigo Duterte personally received on his first day in office in end-June 2016. The government’s own National Anti-Poverty Commission (NAPC) proposed a fresh anti-poverty framework in January 2018 which has been taken up in inter-agency consultations and a national anti-poverty conference last month in July.

Even the National Democratic Front of the Philippines (NDFP) weighed in long ago with its bold proposed Comprehensive Agreement on Social and Economic Reforms (CASER) in 1998. This was updated in 2017 and the government and the NDFP were negotiating and actually making progress on a mutually acceptable CASER until the peace talks were unceremoniously scuttled in June this year.

Decades of neoliberalism have generated profits and wealth for a few at the expense of tens of millions of Filipino farmers, workers, informal sector odd-jobbers, and low-paid employees. The call to be patient as the government perseveres with fundamentally unsound policies is unacceptable. If anything, the danger of intensified crisis makes it all the more urgent to immediately change course. #

Poor Filipino families worst hit by rising July 2018 inflation

Research group IBON said that faster inflation largely due to rising food prices hits poor households the worst.

The group also said that the Duterte administration’s proposal to increase food imports is short-sighted, and that the best defense against rising food prices and high inflation is to increase domestic food supply through long-term solutions that correct long-standing government neglect of agriculture.

The Philippine Statistics Authority (PSA) reported that July 2018 inflation rose to 5.7 percent from 5.2 percent the previous month.

This was mostly driven by worsening inflation in food and non-alcoholic beverages with higher rates among nine out of 11 commodity items in the index.

Prices rose fastest for vegetables (16 percent), corn (13 percent), and fish (11.4 percent).

IBON said that this increasingly expensive food is particularly problematic for poor families because food takes up a greater portion of their expenditure compared to higher income families.

According to the latest available data from the 2015 Family Income and Expenditures Survey, 59.7 percent of the expenditures of families in the bottom 30 percent income group was spent on food compared to just 38.8 percent for families in the upper 70 percent income group.

Rising prices will push more families into hunger and poverty, the group said.

The Duterte administration is proposing to arrest escalating food prices and inflation by lowering tariffs on food to increase their importation.

IBON however said that while this could give some immediate relief it is only a short-sighted measure and the government is still failing to come up with long-term solutions to rising domestic food prices.

The much-needed long-term solution is to increase domestic agricultural, fisheries and livestock productivity, said the group.

Yet the Duterte administration is proposing to increase food imports while cutting the Department of Agriculture (DA)’s proposed budget for 2019 by Php862 million, making it 1.7 percent lower than in 2018.

Domestic producers lacking government support are at risk of being undermined or displaced by cheap food imports.

IBON said that additional food imports should only be for a short time until prices stabilize.

 

Suspending the Tax Reform for Acceleration and Inclusion (TRAIN) Law will also greatly reduce inflationary pressures.

 

The group stressed that measures to increase farm productivity should immediately be implemented including providing irrigation, production and storage facilities, extension services, subsidized credit and marketing support, among others. #

Crisis of PH agriculture drives high inflation and economic slowdown

Research group IBON said that the recently released second quarter 2018 growth figures confirm the fundamental reason for rising food prices: underdeveloped agriculture from government neglect.

IBON said that while the Tax Reform for Acceleration and Inclusion (TRAIN) law is the most proximate driver of inflation within the Duterte administration’s control, the agricultural sector’s underdevelopment is the long-term reason for rising food prices.

The sector is in deep crisis with slowing growth, massive job losses, and domestic food supply insufficient for the growing population, the group added.

The Philippine Statistics Authority (PSA) reported drastically slowing growth in agriculture to 0.2 percent in the second quarter of 2018 from 6.3 percent in the same period last year.

First semester growth has correspondingly been dragged down to just 0.7 percent in 2018 from 5.6 percent in the first semester last year.

IBON noted that agricultural growth today falls far behind estimated population growth of 1.6 percent in 2018 and is well below the seven-decade historical average of 3.0 percent since 1948.

The agricultural slowdown is also reflected in massive job losses in the sector.

Agricultural employment collapsed by a huge 723,000 to just 9.8 million in April 2018 from 10.5 million in the same period in 2017, the group observed.

“The Duterte administration only gives lip service to improving agricultural productivity amid this severe crisis of agriculture in the countryside,” IBON executive director Sonny Africa said.

He said that the 2019 budget for Department of Agriculture (DA), for instance, is even proposed to be cut by Php862.3 million or a 1.7 percent decline to Php49.8 billion from Php50.7 billion in 2018.

These are comparable figures using the cash-based equivalent for 2018 with the cash-based budget for 2019.

“The administration also continues long-standing government neglect of the sector,” Africa added.

“The combined agriculture and agrarian reform budget is only 3.7 percent of the total proposed cash-based budget for 2019. This is less than the 3.8 percent share under the obligation-based budget for 2018 and even lower than the historical range of about 4 to 6 percent since the mid-1980s,” he explained.

According to Africa, proposals to increase food imports may be necessary but should only be a short-term emergency measure used with restraint if it has been established that there is a shortage.

It is possible for more food imports to lower prices but only if traders do not exploit tariff cuts just to increase their profits, he said.

“With importation, uncompetitive domestic producers not given enough support by the government will be displaced if trade protection for them is removed. Importation could also tend to worsen the trade deficit and add to pressures for the peso to depreciate,” Africa warned. # (IBON.org)

 

Rice tariffication to impoverish Filipino farmers more, Congress warned

Research group IBON raised concern over the current move by the House of Representatives (HOR) to lift the quantitative restrictions (QR) on rice imports and instead apply a 35 percent tariff on unlimited rice importation.

This will practically decrease farm gate prices, said IBON, but not necessarily lower retail rice prices as government claims.

Rice prices have increased for six straight months in 2018 – by Php2.53 from Php37.83 to Php40.36 for regular milled rice and by Php1.61 from Php42.58 to Php44.19 for well milled rice.

Consequently, government called for additional importation ahead of the schedule for the minimum access volume (MAV), a commitment under the World Trade Organization (WTO), and for Congress to rush the rice tariffication bill to lower the price of rice and ensure support for farmers.

IBON however said that as it is, the prevailing farm gate price of Php21 does not provide sufficient income from the farmers’ average production cost of Php12 per kilo.

Computing the average yield of 80 cavans of palay from one hectare, which is equivalent to 4,000 kilos, the rice farmer earns only Php36,000 until the next cropping.

Each cropping commonly lasts for six months, which means that the farmer’s average monthly income of Php6,000 is 76 percent short of the estimated monthly family living wage (FLW) of Php25,454 for a family of five.

If higher importation will decrease farm gate prices, the already insufficient income of farmers will fall further, IBON said.

Retail prices, on the other hand, will not likely automatically go down with increased rice imports that supposedly stabilize supply.

The years of highest importation are also the years of highest price increases, IBON observed.

For instance, when rice retail prices increased by Php7.99 per kilo during the rice crisis in 2008, the country was already importing an average of 1.8 million metric tons (MMT) for three years, an unprecedented volume since 2000s.

When the country imported even more at a yearly average of 2.2 MMT from 2008-2010, retail prices continued to increase by an annual average of Php1.20 until 2016.

The farmers are themselves rice consumers, IBON said, and will be affected badly by lower income yet continuously increasing rice retail prices.

The group added that Congress may be misguided for placing hopes on unlimited rice importation for stabilizing supply and prices while the rice industry remains dominated by an alleged trading cartel that dictates rice prices. #

TRAIN-driven rising cost of living makes wage hike urgent

Research group IBON said that tax-driven inflation is making the meager wages of poor Filipinos fall even further behind the rising cost of living.

The group said this makes it even more urgent for the government to immediately raise wages even as it revisits the Tax Reform for Acceleration and Inclusion (TRAIN) law behind the increase in consumption taxes.

The Duterte administration would be insensitive if it continues to resist the clamor for a decent national minimum wage, the group added.

IBON said that accelerating inflation has increased the family living wage (FLW) in the National Capital Region (NCR) and elsewhere.

IBON computations show that as of June 2018, a family of six needs Php1,175 to meet their basic needs, while a family of five needs Php979.

The FLW has increased by Php65 for a family of six and by Php54 for a family of five in June 2018 from the same period last year.

As it is, said the group, the NCR nominal minimum wage of Php512 is falling even further behind the rising cost of living.

The NCR nominal wage is only 44 percent of the FLW for a family of six, and 52% of the FLW for a family of five with a wage gap of Php663 (56 percent) and Php467 (48 percent), respectively.

The wage gap will continue to widen as inflation erodes the minimum wage.

Reacting to economic planning secretary Ernesto Pernia who said that a wage hike is not necessary, the group said that an immediate wage hike will help poor Filipinos cope with price spikes.

The Duterte administration can respond to the demand of labor groups for a Php750 national minimum wage.

IBON stressed that there are enough profits in the economy and among corporations to support the substantial increase in the minimum wage needed by workers and their families.

IBON also belied claims by the country’s economic managers in their joint statement on the June 2018 inflation that TRAIN’s reduction of personal income taxes, cash transfers, and allocation for free social and economic services “should help in coping with the rising prices of goods.”

The group said that their assertion that TRAIN “increased the take-home pay of 99 percent of income tax payers” is grossly deceitful because they know that only around 7.5 million or one-third (33 percent) of Filipino families are income tax payers.

Of these, some two million were already exempt from paying income tax even before TRAIN because they were only minimum wage earners.

This means that 17.2 million or over three-fourths (76 percent) of Filipino families suffer inflation but without any increased take-home pay.

IBON also said that the government should stop hyping TRAIN’s cash transfers because when they are ended by 2020 the higher prices of goods and services due to TRAIN will remain.

The group said that the Duterte administration’s unrepentant defense of TRAIN is daily affirmation of its callousness to the plight of tens of millions of poor Filipinos and its refusal to replace TRAIN with a more genuinely progressive tax package that is unafraid to tax the rich. #

 

Duterte’s TRAIN to blame for highest inflation in nearly 10 years — IBON

Research group IBON said that the government’s insistence on higher taxes especially on the poor is among the factors driving inflation rates to their highest in nearly a decade.

The group said that runaway inflation is due to the peso depreciation and rising global oil prices combined with the Tax Reform for Acceleration and Inclusion (TRAIN) law.

Among these, TRAIN’s higher consumption taxes are directly within the government’s control and it can immediately arrest the tax-driven portion of inflation if it chooses to do so.

The Philippine Statistics Authority (PSA) has reported a 5.2 percent inflation rate for the month of June.

The biggest price increases were in food, especially in corn, vegetables, meat and rice; alcohol and cigarettes; transport; housing, water, electricity, gas, and other fuels; and education.

This 5.2 percent inflation rate is more than double the 2.5 percent in the same period a year ago and four times the 1.3 percent inflation rate in June 2016 at the start of the Duterte administration.

The June inflation rate appears as the fastest in only five years because available estimates using the current base year [2012=100] are only until 2013.

But IBON noted that inflation today would already be the fastest in nearly a decade, or since March 2009, using inflation data according to the previous base year [2006=100] as an approximation.

Sonny Africa, IBON executive director, explained that the TRAIN-triggered increase in consumption taxes, especially on fuel products, is an inflation factor immediately within the government’s control.

“The Duterte administration’s insistence on TRAIN makes it directly accountable for the highest inflation in almost ten years,” said Africa, “and its pushing the higher taxes last year amid already rising global oil prices and a depreciating peso only underscores its insensitivity to the poor.”

Africa stressed that the runaway inflation hits poor Filipinos the hardest because their incomes are so low already that any price increase means they will be consuming less.

Moreover, food spending accounts for over half the expenses especially of the poorest households so that food prices are rising even faster than other commodities is particularly alarming.

The poorest are hit worst, Africa said, adding, “The cumulative impact of high inflation is that the poor will eat less, walk more, forego spending on medicines and treatment, scrimp on their utilities, and have nothing for emergencies.”

In the short-term, government can suspend TRAIN to moderate inflation and provide relief to millions of poor Filipinos. Even better, it can work towards eventually reforming the tax reform package to become genuinely progressive rather than regressive and anti-poor, said Africa.

Africa added that the government can also take measures to moderate inflation over the longer term. It can manage the impact of rising global oil prices through responsible regulation of the oil industry.

Arresting the peso’s steady decline will, he said, require a more comprehensive approach.

 

This includes identifying and overcoming: the long-standing agricultural and industrial backwardness at the root of the country’s chronic trade deficit; the over-reliance on overseas remittances for foreign exchange; and the over-reliance on foreign debt and investment. #

Group to MWSS: Show us the numbers

The Water for the People Network (WPN) expressed dismay that the Metropolitan Waterworks and Sewerage System – Regulatory Office (MWSS-RO) would not readily reveal the numbers involving water companies’ petitions for tariff increases in public consultations that the MWSS-RO itself convened this week.

The group said that by doing so, the government agency effectively hindered the consumers’ right to know.

Instead of genuinely consulting the people, it seemed to be conditioning the public to blindly accept the impending water rate hikes based on the petitions of the Manila Water Company (Manila Water) and Maynilad Water Services Inc. (Maynilad), said the group.

The WPN is composed of groups and individuals promoting people’s control over water services and resources.

A concession agreement (CA) between government and water concessionaires warrants the rate rebasing process every five years.

The process pertains to the determination of new tariffs based on the Manila Water and Maynilad’s past and future expenses, as well as a rate of return that will allow the firms to recover their investments.

The MWSS-RO has conducted public consultations before and during the past rate rebasing periods purportedly to grasp the public pulse with regard to the implementation of new tariffs.

The private companies’ petitions have historically been approved, resulting in water rates increasing manyfold through the years, except during the 2013 rate rebasing period.

In September 2013, the MWSS prohibited Maynilad and Manila Water to collect their corporate income taxes and company incentives such as recreation and travel expenses through pass-on charges.

The rate rebasing results reflected amounts lower than both companies’ petitioned rates.

Teddy Casiño, WPN spokesperson, said, “Show us the numbers. If water regulators truly prioritize public interest and want consumers involved in the rate rebasing process, they should make information in Maynilad and Manila Water’s petitions readily available to the public. Otherwise, these public consultations are a PR gimmick.”

During this period’s rate rebasing public consultations, water regulators and the consultants they hired to review water concessionaries’ proposals were reluctant to share pertinent details such as the rate increases requested and basis for the rates such as company earnings, expenditures, and future expenses.

They were also hesitant to answer if questionable charges prohibited in the 2013 rate rebasing process were also included.

WPN said that without vital rate rebasing information from the MWSS-RO, water consumers will be left in the dark and made vulnerable to the water companies’ onerous fees.

The group urged water regulators to uphold their mandate to protect public interest and ensure that Maynilad and Manila Water will not pass on unwarranted expenses to already burdened water consumers. #

Stop water rates hikes until onerous fees resolved – WPN

Advocacy group Water for the People Network (WPN) is appealing to the Metropolitan Waterworks and Sewerage System – Regulatory Office (MWSS-RO) to halt the ongoing rate rebasing process that is expected to raise water rates in Metro Manila and its environs, saying the basis for determining future water rates remains unresolved.

Concessionaires Maynilad and Manila Water continue to contest the MWSS-RO’s 2013 decision to prohibit water companies from passing on their corporate income tax and other questionable expenses to consumers.

Both companies took to international arbitration to protest government’s denial of their petitioned rate hikes, with Maynilad demanding government to pay Php72 billion in lost revenues and Manila Water demanding Php10 billion. Both cases are still pending in the courts.

WPN said that pending resolution of both controversies, any rate rebasing scheme would be conjectural and would burden the public with unjust and unnecessary increases in the midst of soaring prices.

“With continued lack of transparency in the rate rebasing process and petitions, water companies could make another attempt to pass on questionable charges to consumers through their water bills,” said former party list representative Teddy Casiño, a convenor of the WPN.

For the 2018-2022 rate rebasing period, Maynilad is seeking an estimated Php12 per cubic meter increase, while Manila Water is seeking and Php8 per cubic meter increase.

Rate rebasing pertains to the periodic computation of water rates based on government’s review of the concessionaires’ petitioned new tariffs.

The latter supposedly covers the companies’ past and projected expenses and a guaranteed rate of return.

However, due to water consumers and advocates’ clamor during the rate rebasing process in 2013, previous water regulators disallowed corporate income tax and other expenses unrelated to the delivery of water from being computed into the water bill.

Casiño said that since 1997 when water utilities were privatized, basic or average water tariffs have soared by as much as 596 percent under Maynilad and 970 percent under Manila Water, contrary to the promise of affordability.

Studies also showed urban poor families end up shelling out thousands of pesos beyond their means for either fetched water from the community pump or sub-meter water access in the absence of direct water connections.

“WPN hopes that the government will look upon the rate rebasing petitions with public interest foremost in mind,” Casiño said. He added that the network will guard against the inclusion in the bill of the Php82-billion uncollected funds which both private companies have pleaded international arbitration courts to demand from the government.

According to Casiño, government’s accession to the companies’ demands would certainly entail higher user fees. “This will double the burden on poor Filipinos who are already struggling with price hikes due to the new taxes,” he said.

Casiño challenged the government to not allow companies to impose onerous fees for profit. # (ibon.org)