Govt methodology underestimates number of poor Filipinos—IBON

Research group IBON said that the government methodology to count the poor grossly underestimates Philippine poverty. The recently released 2018 poverty statistics can be taken to mean those in extreme poverty but IBON says that many other poor Filipinos are left out.

The Philippine Statistics Authority (PSA) explained that Republic Act 8425 of 1997, or the Social Reform and Poverty Alleviation Act, defines “poor” as “individuals and families whose income fall below the poverty threshold as defined by the National Economic and Development Authority (NEDA) and/or cannot afford in a sustained manner to provide their minimum basic needs of food, health, education, housing, and other essential amenities of life.”

The number of poor are counted as the number of Filipinos whose incomes fall below the poverty threshold or the minimum amount needed to meet basic food and non-food needs. Using official data on provincial food bundles and prices, the methodology first computes the subsistence threshold or the minimum amount a family needs to meet basic food needs. The subsistence threshold is then assumed to be 70% of the poverty threshold where the balance of 30% is assumed enough to meet basic non-food needs.

The number of poor are estimated using family income data from 180,000 sample households from the provinces and highly urbanized cities. Filipinos whose incomes are below the poverty threshold are those officially counted as poor.

However, poverty estimates according to this methodology are unbelievably low and unrealistic. The monthly poverty threshold is just Php10,727 for a family of five. This is just around Php71 per person per day at Php50 for food needs and Php21 for non-food needs.

These low standards explain the reported fall in the number of poor Filipinos. Poverty incidence, or the percentage of poor families to total families reportedly fell from 23.3% in 2015 to only 16.6% in 2018, and the number of subsistence or food poor Filipino families from 6.4 million in 2015 to only 3.4 million in 2018. NEDA hailed government’s poverty reduction measures for successfully getting poverty alleviation on track.

IBON however said that the methodology uses unrealistically low standards and is detached from daily poverty realities.

The food or subsistence threshold, for instance, the group said, conservatively assumes a “least cost” food bundle. It is unrealistic to expect that all families have ready access to this lowest-priced or cheapest food, the group argued. Moreover, the food bundle is based on so-called “revealed preference” which is presumably based on actual spending. Yet IBON said that this is not necessarily a desirable food bundle and may just reflect the food that Filipino families are forced to buy or make do with given their poverty or limited budget, such as the notorious pagpag or recycled garbage food.

These mean that the subsistence threshold estimated is over-optimistically low and not necessarily of the needed quality for decent eating.

Estimating non-food expenses, meanwhile, does not take into account the actual cost of basic non-food items, IBON said. The cost of non-food needs is merely assumed to be a certain ratio to food needs. However, the cost of many non-food needs has been rising rapidly for instance due to the privatization of utilities and social services. Non-food needs include clothing and footwear; fuel, light, and water; housing maintenance and other minor repairs; rental of occupied dwelling units; medical care; education; transportation and communication; non-durable furnishing; household operations; and personal care and effects. Thus, this also too conservatively assumes that non-food needs are available at illusory low prices.

IBON stressed that poverty has many dimensions and while income is a convenient indicator this is only one of them. The current low Php71 poverty threshold should be adjusted to be more realistic and reflective of the true potentials of the economy, said the group. As it is, PSA data indicate that around 12.4 million families or about half of the population is trying to survive on Php132 per person per day. On the other hand, chief executive officers of the country’s biggest corporations can earn the equivalent of as much as Php60,000 or more per day.

IBON said that a more realistic and higher poverty threshold will send a strong signal of the government having ambitious anti-poverty targets and genuinely seeking to eradicate this. On the other hand, persistently low poverty thresholds and illusory reductions in poverty will only result in persistent neglect of the needs of the many.#

Renegotiation of CA not enough without renouncing privatization –WPN

by Water for the People Network

The Water for the People Network (WPN) said that government should renounce water privatization and assert water as a human right whose provision should be under effective public control. This is the most important basis for terminating the concession agreements (CA) between the State and private water firms. The vital public utility should be returned to the public sector, WPN said, and not remain in the hands of profit-seeking water oligarchs.

President Duterte recently ordered the CAs between government and water firms Maynilad Water Systems Inc. and Manila Water Company to be renegotiated. Department of Justice (DOJ) Secretary Menardo Guevarra said that certain provisions of the water CAs are onerous and disadvantageous to both government and consumers. The DOJ began reviewing the CAs upon the instruction of President Duterte at the height of the water crisis during the first quarter of this year.

The onerous stipulations recorded by the DOJ include prohibition against State interference in rate-setting, indemnification for revenue losses due to this interference, and irregular extension of contracts by 15 years. These are issues that have been raised by water rights advocates, WPN said, in the more than two decades since water in Metro Manila was privatized.

“The WPN has long and repeatedly called for the scrapping of the CAs. The CAs are the very epitome of water privatization, which has failed to deliver promised cheaper, cleaner, and more secure water services,” WPN spokesperson Prof. Reggie Vallejos said. Water utilities have to deliver water as a human right, he stressed, and mere renegotiation of the CAs will not truly ensure public interest objectives over private profits.

“The government has not yet revealed its points for renegotiation but we doubt that these will be enough to uphold the public welfare if they are still within the failed water privatization framework and biased towards profitability for water oligarchs,” Vallejos said.

WPN recalled that water privatization has only resulted in more expensive water, with rates increasing seven-fold for Maynilad and ten-fold for Manila Water from the start of the concession in 1997 to the third quarter of 2019. The CA-directed rate rebasing every five years since privatization allowed firms to make profits by charging consumers increasing tariffs including, among others, for projects that fail to push through. WPN added that the CA gives government a key role in rate-setting (judging whether enumerated expenses were prudent and just in the interest of consumers), but nonetheless allows the companies to sue the State should its regulation affect their profit-making.

The water firms also face Supreme Court-imposed penalties for violating the Clean Water Act, with poor sewerage services performance versus targets as of 2018. Meanwhile, water service interruptions have been hounding Manila Water and Maynilad consumers since March 2019.

These problems bring us back to 1997, WPN said, when the Ramos administration invoked a national water crisis and handed over water sourcing, processing and distribution to the private sector. The huge socially-sensitive water utility was handed over to the Ayalas and Lopezes. The biggest water privatization until then was perfectly in tune with the Ramos government’s grand promotion of globalization policies including deregulating the oil industry and liberalizing Philippine agriculture, said the group.

Public sector water operations should be re-established in Metro Manila and the rest of the country as soon as possible, said Vallejos. “These should be returned to the public sector to ensure that profit-seeking does not get in the way of delivering cheap, clean, and secure water services to the public,” he said.

WPN cited the growing global trend of water remunicipalization reversing water privatization. This has already happened in over 231 cities in some 37 countries around the world for instance in Spain, Germany, Argentina, and even in France, home to water multinationals. The poor experience with water privatization is making governments choose public water sourcing and distribution over private control, the group said.

Government’s continued implementation of water privatization is seeing additional oligarchs taking over public control of water, said WPN. Specifically, these are big business interests close to Duterte, for instance, Manny Villar and Dennis Uy who are also in the water business through Prime Water Infrastructure Corp. and Udenna Water and Integrated Services, respectively. Prime Water has been striking joint venture agreements with local water districts in areas nationwide but undermining water services according to a Commission on Audit report, WPN observed.

Simply renegotiating the CAs to let more oligarchs keep profiting from the water business will not remove the ill effects of privatization on the public and may even make it worse, WPN said. Government must bravely decide to take control of the vital public utility and run it as a service rather than for profit, the group said. #

Counterproductive counterinsurgency

By Sonny Africa

Development policymaking is hard enough as it is – the Philippines after so many decades of so many development plans is a case in point. Now the military wants to take that over as well? The government’s whole-of-nation approach where the military hijacks governance will just make the country’s maldevelopment worse.

Authoritarian creep

Pres. Rodrigo Duterte’s authoritarianism of course started with a big bloody bang – the thousands of urban poor the government killed in a show of intimidating force. The militarist takeover of government took a little bit longer but is well underway. The transformation has a thin veil of legality but the nation is as far away from real democracy as it has ever been.

The Duterte administration’s brand of militarism started with the National Security Policy (NSP) 2017-2022 it released in April 2017. Conspicuously, national security was defined broadly to “[encompass] virtually every aspect of national life and nation-building” where “economic development and security are inextricably linked”.

While conceptually valid, in retrospect these were less a sign of vision than gross and insidious ambition. It is difficult to credit a military establishment notorious for human rights violations, unwarranted violence, lying and deceit with having positive long-term aspirations. On the other hand, the appetite for dictatorship is easier to see.

The National Security Council (NSC) prepared the NSP. This collegial body includes many Cabinet members and legislators but is really dominated by the security sector – especially by the Armed Forces of the Philippines (AFP) and the Philippine National Police (PNP).

The broad definition of national security was immediately used to give the military and police an entry point into everywhere else in government. Executive Order (EO) No. 16 was released simultaneously with the NSP. This directed that “all government departments and agencies, including government owned and controlled corporations (GOCCs) and local government units (LGUs), shall adopt the NSP 2017-2022 in the formulation and implementation of all their plans and programs which have national security implications”. This is a far-reaching mandate because, according to the NSP, virtually everything has national security implications.

This was followed by the National Security Strategy (NSS) in 2018. The NSS was prepared by National Security Adviser Hermogenes Esperon and presented as a “blueprint [to] foster better coordination, synchronization and cohesion of government functions”. Its sweeping strategy included “the combined, balanced and effective use of the instruments of national power, namely: political and legal, diplomatic, informational, intelligence, economic, and military and law enforcement”.

Ominously, Pres. Duterte called for Filipinos to “stand behind our national security apparatus” and “strengthen the foundations of a secure, peaceful, modern and prosperous Philippines”. Towards this, the president gradually appointed 73 military and police officials to civilian positions in at least 46 agencies. There are now more military and police officials in government than at any time since the Marcos dictatorship nearly 50 years ago.

They were made heads in 38 of these as Cabinet secretaries, director generals, chairpersons, executive directors, administrators or presidents. As it is, former military and police officials account for 11 of 50 cabinet and cabinet-level officials or one-fifth of the Cabinet.

President Rodrigo Roa Duterte presides over a meeting with the National Task Force to End Local Communist Armed Conflict (NTF-ELCAC) at the Malacañan Palace on April 15, 2019. SIMEON CELI JR./PRESIDENTIAL PHOTO

Authoritarianism now

All this fell into place when Pres. Duterte issued EO No. 70 in December 2018 creating the so-called National Task Force to End Local Communist Armed Conflict (NTF-ELCAC). The EO invoked the armed conflict to justify creating the task force and institutionalizing a “whole-of-nation approach” that will “integrate and harmonize the various efforts of the whole of government and of all sectors of society”.

Pres. Duterte is National Task Force Commander and chairperson with Esperon as vice chairperson. This places Esperon second only to the president at the top of an expansive organizational structure encroaching on virtually every government agency that matters, reaching from the regional to the barangay level nationwide. They preside over 18 Cabinet officials and two private sector representatives.

The high-level task force includes the secretaries of national defense, interior and local government, and justice as well as the AFP chief of staff, PNP director general, National Intelligence Coordinating Agency (NICA) director general, and Presidential Adviser on the Peace Process. Propaganda is handled by the Presidential Communications Operations Office (PCOO) Secretary.

To cover socioeconomic development concerns, the group also includes the secretaries of economic planning, finance, budget and management, public works and highways, agrarian reform, education, and social welfare and development, as well as the Presidential Adviser for Indigenous People’s Concerns, National Commission on Indigenous Peoples (NCIP) chairperson, and Technical Education and Skills Development Authority director general.

The 17 regional task forces (RTFs) under the NTF-ELCAC are each chaired by a Cabinet Officer for Regional Development and Security (CORDS) designated by the president. The military and police officials in the Cabinet are handy for this — eight (8) of the 17 Cabinet members appointed as CORDS are former military officers: Esperon (NSA), Carlito Galvez (Presidential Peace Adviser), Eduardo Año (DILG), Gregorio Honasan II (DICT), Roy Cimatu (DENR), Eduardo del Rosario (HUDCC), and Delfin Lorenzana (DND).

The RTFs supplant regional structures in place and merge the existing Regional Development Councils (RDCs) and Regional Peace and Order Councils (RPOC). RDCs are the highest policy-making and direction-setting bodies for overall socioeconomic development in the regions. The RDC is composed of all governors, mayors, and development-related line agency regional directors. Upon EO No. 70, RDCs are also adding active military and police officials as special non-voting members.

RPOCs take up major issues and problems affecting peace and order. RPOCs are also composed of all governors, mayors, peace and order-related line agency regional directors, plus AFP commanders. Similar task forces are organized at the provincial, city/municipal, and barangay level. In effect, all these far-reaching multi-stakeholder bodies are put in a direct chain of command under the NTF-ELCAC and the national security adviser. This cumulatively amounts to hundreds of task forces nationwide and potentially even thousands if barangay efforts are counted.

The NTF-ELCAC’s seemingly disproportionate budget of just Php522 million belies its influence. All the memorandum circulars implementing EO No. 70 are clear that “the budgetary requirements for the implementation of EO No. 70 may be authorized chargeable against the respective LGUs and agencies in accordance with EO 70”. Regular agency budgets are put at the service of the NTF-ELCAC.

The NTF-ELCAC is fully up and running. The first RTF-ELCAC was organized in CALABARZON in February 2019 and the first provincial PTF-ELCAC in Cavite in March soon after. The national task force approved its National Plan in its first meeting in April 2019, held in Malacañang.

Other regions and provinces followed suit to organize their respective task forces. One-day island group summits of regional task forces were held in Luzon, Visayas and Mindanao in October to all culminate in a national summit with Pres. Duterte.

This year has already seen a frenzied surge of EO No. 70 implementation-related activity at every level of government across the country. This has gone far beyond armed conflict areas and the government’s militarism has intruded into schools, urban poor communities, offices, media, embassies, international agencies, and elsewhere. A National Capital Region (NCR) task force was even created in September 2019 even if there are no signs of armed conflict or insurgents in Metro Manila. The NCRTF-ELCAC is a hammer and activists, critics and political opposition are the nails it will be used on.

President Rodrigo Roa Duterte presides over a meeting with the National Task Force to End Local Communist Armed Conflict (NTF-ELCAC) at the Malacañan Palace on April 15, 2019. SIMEON CELI JR./PRESIDENTIAL PHOTO

Hijacking development

EO No. 70 implementation includes weaponizing the law and criminalizing dissent. But it also in effect enables the military to hijack socioeconomic development policy for its militarist ends. Having construed national security and addressing the roots of armed conflict expansively, the national task force is broadly “authorized to evaluate, modify or integrate policies and programs” of government according to its plans.

The recent midterm update of the Philippine Development Plan (PDP) 2017-2022 is a case in point. This is regularly done for PDPs but there was something new this time around. Supplementary guidelines were issued to RDCs to “integrate” the NTF-ELCAC’s Cluster Implementation Plans in the updated regional development plans (RDPs) and regional development investment programs (RDIPs).

Accustomed processes were overridden and the NTF-ELCAC gave the RDCs plans to “mainstream” in the update. Regional planning committees were assigned to clusters as defined by the NTF-ELCAC, all of which had military officials from the defense department and AFP as members.

The national task force members include 18 government agencies. The various program clusters of the NTF-ELCAC implementation plan include most of these and 38 others, for 51 agencies in total. At least some of these agencies have created NTF-ELCAC “steering committees” to implement EO No. 70 and operationalize the national task force within their respective departments.

The problem with the national task force and the extensive machinery it creates is that it is, underneath a lot of development-speak and bureaucratese, still just another military scheme driven by a narrow-minded enemy-focused military mindset. It is essentially the Duterte administration identifying ‘enemies’ and using the full force of government against them.

EO No. 70 is not the military suddenly genuinely getting insights about the roots of underdevelopment and, much less, suddenly having the skills set to address this. The military is using the task forces to command resources for community programs, welfare services, and the like for its narrow counterinsurgency and anti-activism purposes. This muddles decision-making and prioritization according to actual development needs.

EO No. 70 is also being used to justify State security forces cracking down on development NGOs, people’s organizations, and all civil society groups whose advocacies the administration deems overly critical and putting it in a bad light. More to the point — the government is using all its political, legal, diplomatic, informational, intelligence, economic, military and police resources against any perceived domestic political opposition. In short, using all “the instruments of national power”.

The Duterte government is systematically going after organizations of workers, farmers, urban poor, youth, teachers, indigenous peoples, environment advocates, alternative media, cultural workers, disaster responders, and even researchers. Freedom of expression, freedom of assembly and even freedom of thought are under siege with the government deciding and enforcing what is and is not acceptable.

This gravely sets back prospects for real and democratic development. Curbing civil society suppresses a crucial check on government, stifles fresh development ideas upholding the rights of the majority, and constricts people’s participation in governance.

President Rodrigo Roa Duterte presides over a meeting with the National Task Force to End Local Communist Armed Conflict (NTF-ELCAC) at the Malacañan Palace on April 15, 2019. KING RODRIGUEZ/PRESIDENTIAL PHOTO

What is it all for?

At one level it is the Duterte administration coming down hard on the strongest voices against its authoritarianism, corruption, and policies enriching elites at the expense of the people. It is the Duterte clique putting down organized opposition to its self-serving agenda to stay in power and enrich itself.

But it is also much more than that. The Duterte government has come but, as with others before, it will also go. Unfortunately, what is happening is also the State pushing obsolete neoliberalism forward by eliminating obstacles to the market and to capital dominating every aspect of Philippine society. The groups being attacked have their own stresses and versions but nonetheless share a vision for a more just, humane and democratic Philippines.

This is consequential for the country’s political and economic prospects. We are in the middle of the Left and social movements violently being put down, under a thin veneer of rule of law, to increase the power of capitalists, landlords, and political elites. Activists are targeted because their clear politics, concrete organizations, and advocacies threaten the ruling class’s grip on power.

The ruling class embraces the Duterte government because it increases their wealth and profits: tax cuts on the rich and big corporations; infrastructure to keep the comprador economy humming and to preserve real estate wealth; privatization of transport, water, health and education; wage repression; land monopolies; and market- and capital-friendly policies all around.

The Philippines is in dire need of reforms and the sheer scale of the problem demands system-wide thinking and massive mass movement solutions. Yet the heavy-handed authoritarianism and military meddling in governance will just stoke even more unrest. This includes polarizing the nation and actually fueling the radicalism, and revolutionary armed struggles that the Duterte administration is so fearful of. #

(Kodao publishes IBON.org’s reports and analyses as part of a content-sharing agreement.)

PH economy headed towards 3rd year of slow growth — IBON

by IBON Media

Research group IBON said that the Philippine economy is on its way to a third straight year of slowing economic growth under the Duterte administration.

The group said that while the economy registered higher growth in the third quarter of 2019, the factors behind this are too weak and unsustainable.

The government recently reported 6.2% gross domestic product (GDP) growth in the third quarter of 2019.

National Economic and Development Authority (NEDA) secretary Ernesto Pernia said that this means the Philippine economy is “surging” and was confident that the government could meet its 6% full-year growth target for 2019.

IBON said however that annual economic growth has been slowing since the start of the Duterte administration, falling from 6.9% in 2016, to 6.7% in 2017 and to 6.2% in 2018.

The group said that GDP growth in the fourth quarter of 2019 would need to be at least 7.4% just to match growth in 2018.

In the last four decades, the economy was only able to achieve 7.4% growth in the fourth quarter just once (in 1989), said the group.

IBON also noted that the 6.2% third quarter growth spurt is higher than the 5.5% of the previous quarter and 6% in third quarter 2018.

However, it is much lower than its peak 7.2% first quarter 2017 growth.

The third quarter growth was mainly due to increases in household spending, construction and government spending.

Household consumption rose by 5.9%, construction by 17.3%, and government spending by 9.6 percent.

IBON said that while household spending was faster than the 5.3% in the third quarter of 2018, this was still lower than the 5.7% average of the past decade.

The group also said that higher household consumption was most likely just driven by higher overseas Filipino worker (OFW) remittances this year.

But remittances have been slowing for years and the uptick is likely only momentary.

Construction accelerated from the 13.3% growth in the third quarter of last year.

IBON said however that this short-term stimulus is only while construction is ongoing.

Another question is how big and sustained infrastructure spending can be with government’s Build Build Build program faltering.

The group noted that infrastructure spending contracted to -4.3% in January-September 2019 from 45.9% in the same period last year.

 Accumulating debt could also be a problem if this reaches unpayable levels.

IBON noted that the most important sources of domestic demand and growth are showing signs of weakening.

Agriculture momentarily recovered with an increase of 3.1%, but it remains in long-term decline.

The manufacturing sector’s 2.4% growth is the slowest in 32 quarters or since the 2% clip in the third quarter of 2011.

Manufacturing has been stalling since the start of the year, said the group.

This is because it has become overly foreign-dominated and export-dependent and is adversely affected by the slowing global economy and the US-China trade war.

To reverse the economic slowdown, IBON said that the government can boost growth in a way that is both beneficial to the people and more sustainable.

There are redistributive measures that can be done right away and will be felt by the people.

These include immediate and meaningful wage hikes to spur greater consumption especially among lower income communities.

The wider informal economy will be stimulated.

Lowering consumption taxes will also increase their spending power. Growth can be boosted by higher taxes on the wealthy and large corporations if the revenues are spent on expanding social and economic services for the poor.

But the most sustainable source of growth in the long-run is developing domestic agriculture and building Filipino industry to create more jobs and raise incomes in the country, said the group. #

(Kodao publishes IBON.org’s reports and analyses as part of a content-sharing agreement.)

Inflation slowing due to a sluggish economy — IBON

by IBON Media

Research group IBON said that despite reported slower inflation, daily expenses are still rising and too expensive for the majority of Filipinos who suffer low and stagnant incomes.

The group also said that slowing inflation mainly reflects a slackening economy.

The Philippine Statistics Authority (PSA) reported lower nationwide inflation at 0.8% in October 2019 from 0.9% the previous month and 6.7% in October last year.

Meanwhile, National Capital Region (NCR) inflation increased to 1.3% in October 2019 from 0.9% in September 2019 but was lower than the 6.1% inflation in October 2018.

The uptick in NCR inflation was due to higher annual inflation in alcoholic beverages and tobacco, food and non-alcoholic beverages, and clothing and footwear.

IBON executive director Sonny Africa said that lower inflation is generally better for poor and low-income consumers as slower price increases will weigh less on low wages and incomes.

He noted however that lower reported inflation is from a high base last year when prices dramatically rose. Yet some food items are still more expensive now than last year.

In Metro Manila, for example, the cost of pork, chicken, fish, eggs and many vegetables in the last week of October 2019 was much higher than in the same period last year.

The price of pork increased by Php50; chicken by Php30; tilapia by Php20; string beans by Php20; and potato and native pechay by Php15. Rice is a notable exception in being slightly cheaper.

Africa said however that the majority of Filipinos’ incomes are still far below what is needed to live decently and still eroding further despite reportedly lower inflation.

In NCR for instance, the real value of the minimum wage or taking inflation into account is actually lower today compared to November last year.

Measured at 2012 prices, the real value of the Php537 NCR minimum wage has fallen to Php453 today from Php459 in November 2018.

It is also likely that inflation is slowing because the economy is slowing from faltering investments, stalling infrastructure spending, and the global economic slowdown, said Africa.

So far under the Duterte administration, gross domestic product (GDP) growth has declined from 6.9% in 2016 to 6.7% in 2017 and 6.2% in 2018. The 5.5% growth in the second quarter of 2019 is the lowest in 17 quarters.

Foreign direct investments shrank by 39.8% from US$6.8 billion in January-July 2018 to US$4.1 billion in the same period in 2019.

Meanwhile, infrastructure spending growth contracted from 45.9% in January-September 2018 to -4.3% in the same period this year.

Africa said that lower inflation alone is meaningless if Filipinos especially the poor continue to be burdened with high prices and little to no incomes. The government should not ignore this nor the signs of a slowing economy.

Immediate steps for government should include supporting and developing domestic agriculture, as well as substantially increasing wages and salaries to give relief to Filipino households, Africa said. #

(Kodao publishes IBON.org’s reports and analyses as part of a content-sharing agreement.)

Agri sector slumps due to continuous government neglect

by IBON Media

Even prior to rice liberalization, the country has become increasingly dependent on food imports.”

Long-time government neglect and low prioritization has put the agriculture sector in a chronic crisis, said research group IBON.

The group said that this is in line with government’s advancement of neoliberal policies favoring local and foreign big business. The Duterte government continues this by giving minimal support to the agriculture sector.

IBON said that declining share in gross domestic product and agricultural productivity per capita, increasing import dependence, rising trade deficit, and widespread rural poverty are signs that this crisis is worsening. 

The agriculture sector’s share in the economy has shrunk from over 40% in the 1960s to less than 10% in 2018.

Agricultural productivity per capita peaked at Php7,862 in 1981, declined, and then was in a period of recovery from 1999-2008.

But agricultural productivity per capita again fell to Php7,052 in 2018, noted the group.

IBON also said that the country has become increasingly dependent on food imports even before rice liberalization this year.

For instance, garlic imports made up only 1.1% of the country’s consumption in 1990, but this spiked to 90% in 2017. Import dependency ratio also increased significantly with coffee (-7.7% to 56%); beef (8.5% to 36%); tuna (3.7% to 17%); onion (-14.3% to 15%); potato (0% to 15%); and pork (0% to 13%) in the same period.

Meanwhile, rice import dependency ratio declined from 9% in 1990 to 5% in 2016. But this rose to 6.6% in 2017 and is expected to be higher due to the influx of rice imports under the Rice Liberalization Law.

The agriculture trade deficit has also increased by 30 times from US$287 million in 1994 to US$8 billion in 2018.

In the first quarter of this year, the agriculture trade deficit was a staggering US$2.1 billion, said the group.

IBON said widespread rural poverty is another indicator of agriculture in crisis.

Official figures show that the poverty incidence among farmers (34.3%) and fisherfolk (34%) is higher than the national average (21.6%).

IBON estimates that, if based on more reasonable standards of poverty measurement, at least 90%, if not all farmers and fisherfolk, are impoverished.

This chronic agriculture crisis is due to government’s chronically low prioritization of the agriculture sector, said IBON.

The group noted that from 1981 until 2020, the annual average share of agriculture and agrarian reform was only 4.1% of the national budget.

This low priority of agriculture is being continued under the Duterte administration.

The group said that the 3.5% share of agriculture in the proposed 2020 budget is the lowest since 2004 (3.3%).

Also, from 2017 to 2020, the annual average share of agriculture in the national budget was only 3.6% – the lowest since the Ramos administration (3.5%).

The average share of agriculture was higher under Estrada (4.4%), Arroyo (4.7%), and Aquino (4.2%).

IBON said that immediate steps government should take to arrest the agriculture crisis is to wipe off if not significantly reduce all forms of loans including amortization for awarded lands, and to substantially increase support and subsidies for the agriculture and agrarian reform sectors.

It should also suspend, and eventually repeal, policies like the Rice Liberalization Law, that are harming domestic production and farmers’ livelihoods.

But to truly strengthen domestic agriculture, government needs to implement long-term policies that prioritize rural development over big business interests. #

IBON launches alternative to failed govt econ agenda

by IBON Media

Research group IBON launched its campaign on People Economics to promote much-needed policy reforms that would really benefit the majority of Filipinos and engender genuine national development.

IBON held the forum “People Economics: May Magagawa!” at the College of Science Admin Auditorium, UP Diliman last October 10 to discuss why there is a need for and what the principles and policy outlines are of People Economics.

After four decades of neoliberal globalization and its market-driven policies, the group said that the country remains underdeveloped.

Many Filipinos are struggling with worsening poverty and jobs crisis, while only a wealthy few are benefiting. The global economic slowdown is not letting up, and in response several countries, especially the big capitalist powers, are becoming increasingly protectionist, the group said.

IBON said that People Economics is an alternative to government’s failed neoliberalism.

This draws from the policies and demands of the people’s movement, as well as IBON’s more than 41 years of experience in advocating for social and economic reforms.

The group said that it envisions a Philippines that can be transformed into a modern industrialized nation that is more equal, humane, and ecologically sustainable. It lays the foundation for a future where the Filipino people continuously change society for the better.

People economics is comprised of six pillars: Develop the countryside; Build Filipino industries; Protect the environment; Uphold people’s rights and welfare; Finance development; and Strive for sovereignty and independence.

IBON said that People Economics can be further articulated and enriched as an alternative to neoliberalism. The contributions of the progressive movement and other advocates for genuine change is needed to come up with the most concrete and comprehensive solutions to the country’s social and economic problems, the group said. #

(Kodao publishes IBON.org’s reports and analyses as part of a content-sharing agreement.)

IBON questions CITIRA job creation claims

by IBON Media

Research group IBON said the Department of Finance’s (DOF) claim of over a million jobs to be created by corporate income tax cuts under the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA) is imaginary.

The group said that the DOF is hyping job creation to justify implementation of regressive tax measures. CITIRA will increase corporate profits and executive pay without increasing jobs or even wages, IBON said.

The group recalled that the DOF repeatedly claimed that the Tax Reform for Acceleration and Inclusion (TRAIN) law would benefit “99%” of Filipinos or households when they were lobbying for this.

The DOF did so despite knowing, on the contrary, that the poorest 17.2 million Filipino families would eventually be burdened by additional consumption taxes especially after the smokescreen of temporary cash transfers, said IBON.

“The DOF is now claiming that CITIRA ‘will benefit more than 99% of companies’ and that the proposed corporate income tax (CIT) cuts will create 1.5 million jobs. There is no legitimate basis for such a claim,” said IBON executive director Sonny Africa.

“The DOF seeks to justify even more tax cuts for the rich following TRAIN’s reduction of personal income taxes (PIT),” Africa added.

“The DOF’s suddenly claiming that CITIRA will create jobs is suspicious,” Africa said.

He noted that there were no job generation estimates when the bill was first submitted to Congress in early 2018 as TRAIN Package 2, when it was passed by the House of Representatives (HOR) in September 2018 as the renamed Tax Reform for Attracting Better and High-Quality Opportunities (TRABAHO) bill, nor even at the first Senate hearing on it right after.

Africa recalled that DOF undersecretary Karl Chua said outright at the Senate hearing: “We do not see a job impact.”

Department of Labor and Employment (DOLE) director Dominique Tutay on the other hand answered pointedly: “Mayroon po [mawawalan ng trabaho].”

Africa said that it was only on October 17, 2018, that the DOF suddenly declared in a press release that the proposed law would create 1.4 million jobs.

He added: “The DOF’s job generation claim is unfounded speculation that has no theoretical or empirical basis.”

“The new jobs will supposedly come from businesses ‘reasonably’ spending half of their increased profits from the lower corporate income tax ‘in growing their businesses’ but companies already have enough profits as it is,” Africa said.

He cited DOF reports that large firms account for some three-fourths (75%) of corporate income tax collections.

Africa pointed out that the profits of the country’s Top 1000 biggest corporations have been growing some 12% annually in the past decade, and have more than tripled from Php415 billion in 2008 to Php1.33 trillion in 2017.

“Simplistically claiming that corporate tax cuts will magically create 1.5 million jobs is deceitful as the argument opportunistically ignores key economic realities,” said Africa.

He pointed out that global growth is slowing, trade is weakening, foreign investment flows are falling, and protectionism is growing, while Philippine economic growth has already slowed to its lowest in 17 quarters.

“It is more likely that CITIRA’s tax cuts will just go to increasing corporate profits and justify increasing already exorbitantly high executive pay. They will certainly not go to increasing wages because corporations have kept real wages flat for over a decade-and-a-half despite rising labor productivity,” concluded Africa. #

(Kodao publishes IBON.org’s reports and analyses as part of a content-sharing agreement.)

Duterte admin banning aid to hide human rights violations

by IBON Media

Research group IBON, a member of the multisectoral network AidWatch, said that the Duterte administration is stopping talks on new official development assistance (ODA) from 18 countries as part of its efforts to hide the worsening domestic human rights situation.

This includes Spain which is supporting the Commission on Human Rights (CHR).

The group said that the show of standing up against foreign intervention in the country is hollow because the administration continues to receive much more ‘aid’ from China and the United States (US) despite their much larger and more damaging intervention in the Philippines.

The administration issued a memorandum on August 27, 2019 directing the suspension of all negotiations and signing of loan and grant agreements with the 18 countries of the United Nations (UN) Human Rights Council that recently supported a resolution to investigate human rights violations in the country.

These include: Argentina, Australia, Austria, Bahamas, Bulgaria, Croatia, Czech Republic, Denmark, Fiji, Iceland, Italy, Mexico, Peru, Slovakia, Spain, Ukraine, United Kingdom, and Uruguay.

AidWatch, a network actively working with different government agencies and stakeholders on ODA issues, noted that as of the first quarter of 2019, the 18 countries combined account for only US$525 million or less than 3% of the Philippines’ active loans and grants.

This is because only three of the 18 countries have active ODA here — Australia (US$476 million), Italy (US$41 million) and Spain (US$8.1 million).

There is also just an additional US$414 million in the pipeline from Australia (US$82 million), Austria (US$177 million), and the UK (US$155 million).

Active grants and loans mostly go to education, disaster management, agrarian reform and peace-building projects.

Spain however also provides almost US$6 million in grants as institutional support for the CHR under the Project Go-Just Human Rights-CHR project.

This started in February 2016 and is due to end in December 2019.

Aid in the pipeline is meanwhile overwhelmingly for transport infrastructure especially bridges, the group noted.

The president’s memo says that the government is in the process of ‘assessing’ relations with these countries.

AidWatch said that this is clearly a signal not just to the 18 countries but to the international community that it will not take any criticism about its human rights record and indeed that the only narrative about the human rights situation it allows will be its own sanitized version.

The administration has already said that it will not cooperate with the UN on any such investigation and that it will block the entry of any UN special rapporteurs.

The group said that this is however clearly not a principled stand against foreign intervention but a self-serving stand to cover up massive and rising human rights violations stemming from its violent ‘war on drugs’ and repression of activists and political opposition.

The Duterte administration continues to accept US$365 million in active ODA from China and looking to as much as US$10.6 billion more despite its gross intrusiveness in the West Philippine Sea, said the group.

It is also accepting US$887 million in active ODA and US$276 million in military aid over 2016-2020 from the US despite Philippine territory being used as a US military outpost hosting troops, warplanes, war materiel, equipment and bases.

IBON said that notwithstanding the president’s swagger and rhetoric, the country is clearly still under the thrall of big foreign powers and still wanting genuinely independent foreign policy. #

Job creation volatile, mostly of poor quality work

by IBON Media

Research group IBON said that the recently reported job generation is mostly in poor quality work and confirms volatile labor market conditions rather than a strengthening economy.

The group made the statement after the recent release of seemingly favorable employment figures and warned against complacency.

The Philippine Statistics Authority (PSA) reported an increase in the number of employed by 2.3 million and an increase in the number of unemployed by 103,000 in July 2019 from the previous year.

The employment and unemployment rates stayed the same as last year at 94.6% and 5.4%, respectively.

IBON however said that the extreme volatility in the labor market since 2016, for instance, should temper overenthusiasm that the economy and the labor force situation is improving.

Millions of Filipinos are making do with poor quality work and hundreds of thousands more are in and out of work.

The group recalled that the reported 2.3 million additional employment in 2016 reversed to 664,000 net job losses in 2017.

In 2018, 2.4 million new jobs were reported generated in the January labor force survey round, measured year on year, but this reversed to 218,000 net job losses in the October round.

The situation remains as volatile so far this year, ranging from 387,000 net job losses in January 2019 to the recently reported 2.3 million job creation in July 2019.

This volatility indicates Filipinos struggling to find work where they can on a day-to-day basis rather than a strengthening economy creating steady jobs paying decent incomes, IBON stressed.

Looking at employed persons in terms of hours worked, 2.2 million or an overwhelming part of the net 2.3 million additional employed in July 2019 was actually just in part-time work of less than 40 hours.

This caused the share of part-time work in employment to markedly rise from 28.2% to 31.8 percent.

Looking at employed persons by class of worker, IBON pointed out that the biggest employment increases were actually in low-earning, insecure, and informal work, as well as in unpaid family work.

The number of self-employed without paid employees grew by 1.1 million and the number of unpaid family workers grew by 854,000.

Finally, IBON said that looking at the three biggest job-creating sectors also does not give confidence.

The sectors creating the most jobs included wholesale and retail trade which grew by 820,000, and accommodation and food service by 292,000.

These subsectors are notorious for high informality and uncertainty, the group said.

IBON noted the 716,000 increase in agricultural employment but pointed out that this is likely only momentary because agricultural employment is in long-term decline especially from lack of government support for the sector.

IBON also commented on the underemployment rate falling significantly from 17.2% in July 2018 to 13.9% in July 2019.

This is equivalent to the 7 million underemployed last year falling to just 6 million this year.

The group said that while falling underemployment is commonly used as a proxy for improving quality of work, the latter is not necessarily what is happening.

Underemployment refers to employed persons wanting additional hours of work in their present job, an additional job, or a new job with longer working hours.

IBON explained that the large drop in the underemployed is possibly only because workers are already working such long hours that they do not want additional hours in their present job, cannot take on an additional job, or cannot imagine a new job with even longer hours.

The breakdown of reported underemployed persons is not inconsistent with this, the group said.

The number of those working 40 hours and over in a week, or the invisibly underemployed, fell by a huge 1.5 million from 3.7 million in July 2018 to 2.2 million in July 2019.

Those who worked less than 40 hours, or the, visibly underemployed, meanwhile, increased by 352,000, hence the net decrease of some 1.1 million total underemployed.

IBON said that while more employment is always desirable, government should ensure that jobs are decent and sustainable.

But as long as government neglects the development of domestic agriculture and industries to generate stable and quality work, the jobs crisis will continue to worsen, and Filipinos will keep grappling with poor job prospects. #