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What Build Build Build has delivered

by Rosario Guzman

The Duterte presidency is nearing the end of its term, yet we don’t seem to be anywhere near the fulfilment of the big infrastructure dream of the administration. Build Build Build is supposed to be the centerpiece of what could be a Duterte legacy, but the program’s performance is far from defining a grand exit for the administration.

The number has changed

Only 11 of the more than 100 infrastructure flagship projects or IFPs have been completed as of May 2021. The National Economic and Development Authority (NEDA) lists another 12 IFPs that may be done by the end of 2021 and another 17 by the end of 2022. If these were even feasible, there would be a total of 40 finished projects under Pres. Duterte’s watch.   

The government started with a list of 75 IFPs in 2017. In 2020, NEDA revised the list twice – increasing this to 104 and then to 112 (no longer including the 7 of the 11 finished projects). It retained only 42 of the original 75 and added new ones that are more doable, or that are not even defined as public works such as the national ID system, or projects that are merely continued from previous administrations. The list was obviously revised to increase the chances of completing a respectable number of projects.

Of the 11 projects completed so far, six were not included in the original 2017 IFP list. Two of these six – the LRT 2 East Extension and the Metro Manila Skyway Stage 3, were even started under the previous administration. Of the 12 IFPs expected to be finished by the end of this year, 11 are new additions to the list including two previously identified projects that had also been started long before Pres. Duterte’s term – the Unified Grand Central Station (a previous commitment by the Arroyo administration but was stalled due to disputes) and the Malitubog-Maridagao Irrigation Project (started in 2011). Of the 17 IFPs for completion by end of 2022, only the Chico River Pump Irrigation Project was in the 2017 list, while the rest were only added last year.

Even if we do see the completion of these 29 IFPs by the end of 2021 and 2022, all the finished projects will still just amount to Php365.24 billion which is only 7.8% of the total project cost of Php4.7 trillion for all targeted IFPs. Much remains to be done actually, with 51 projects going beyond 2023 while 28 others are still in the pipeline.

Driven by debt and private capital

Nevertheless, the Duterte administration has already crowed about its unmatched performance in infrastructure, citing as an indication of its seriousness the almost 100% increase in government spending for this, from Php590.5 billion in 2016 to Php1,019 billion in 2021. It has increased infra spending as percent of the gross domestic product (GDP) from 3.9% in 2016 to 5.1% in 2021. The annual average of 5% infra spending as percent of GDP in 2017-2021 even surpasses the annual average of 3.4% under the Marcos dictatorship. This is even despite the 21.4% decline in disbursements last year due to the pandemic.

In the Sulong Pilipinas forum of the administration in April this year, the economic managers took turns highlighting how the administration has boldly financed infrastructure for economic development in contrast to the Aquino administration’s lackluster performance.

However, more than half (56%) of the indicative amount for the IFPs is from official development assistance (ODA), mostly as loans, while only 3.9% comes purely from the General Appropriations Act (GAA) or the national budget. Conspicuously, there are now 20 unsolicited public-private partnerships (PPPs) where there was none before, comprising 32% of total cost.

There are seven other PPPs worth Php244.2 billion or another 5.2% of the total cost. Five of these PPPs, all expressways, are components of the Supplemental Toll Operation Agreement (STOA) entered into by the government’s Toll Regulatory Board (TRB), Ramon Ang’s Citra Central Expressway Corp., and the Philippine National Construction Corporation (PNCC). STOA ensures the identification, adjustments and collection of toll rates upon the completion of the projects.

The government has also mixed PPP with ODA in the case of LRT-1 Cavite Extension Project to be accomplished beyond 2023, and with GAA in the case of Metro Cebu Expressway Project which is still in the pipeline. There is also ODA mixed with GAA in the case of Davao City Coastal Road Project to be done after 2023.

PPP was the preferred funding scheme of the Aquino presidency, which was criticized not only for its slowness but more importantly for benefiting the real estate and infrastructure tycoons. The then incoming Duterte presidency declared that the state would proactively make an investment, raising hopes that infrastructure would finally be cheaper and more relevant to public needs. But in reality, the government simply shifted to ODA loans especially from Japan and China; in particular, the share of China ODA to total ODA to the Philippines increased from a negligible 0.01% in 2016 to 2.73% as of 2019. The Duterte presidency also ended up still relying on private capital, unsolicited proposals at that, to expedite projects. Overall, it appears that the promised change of having a genuinely state-led infrastructure development and presumably for maximum public benefit has not come at all.

Instead, the administration doubled its gross borrowings from Php507 billion in 2016 to Php902 billion the following year, breaching the unprecedented Php1 trillion mark in 2019 and nearly tripling this in 2020. The national government outstanding debt as of May 2021 is Php11.1 trillion – it was only Php6 trillion when Pres. Duterte took over.

Building up foreign investors and oligarchs

Unsolicited proposals for PPPs from the private sector are allowed under the 1990 Build-Operate-Transfer (BOT) Law (Republic Act 6957 as amended by Republic Act 7718), the country’s watershed legislation towards privatized infrastructure development. These projects do not require direct government guarantee, subsidy or equity, and presumably involves a new concept or technology. The BOT Law also defines and allows the Swiss Challenge as the procurement system to be followed for unsolicited proposals, where upon the project proposal of a private entity, the government invites similar or competitive proposals from third parties which the original proponent can still match afterwards.

Pres. Duterte adopted the Swiss Challenge and eliminated the normal bidding process for public works, wherein the government presents the specifications of the procurement and invites entities to make offers, which could be in an open or closed bidding. Controversially, Malacañang argued that this would quicken the pace of Build Build Build and minimize corruption. On the contrary, the Swiss Challenge can potentially concentrate infrastructure control to only a few proponents as well as government officials. It can definitely lower transparency, such that the novelty of the concept or technology does not get to be subjected to public scrutiny. In other words, the government has skipped the development planning process and relied on what the private sector wants to embark on, thereby making infrastructure inherently exclusive rather than inclusive.

All of the unsolicited PPPs are for transport and mobility. In fact, 76 of the 112 IFPs, or 91% of the total project cost, are for transport and mobility. Likewise with 71% of the total project cost of the 40 projects that the administration hopes to announce as done by 2022. Build Build Build prioritizes transport and mobility as though the country’s transport and traffic problems take precedence over the crisis and stagnation of agriculture and manufacturing.

In reality, the ‘infrastructure ambition’ is about three things for the Duterte administration. It is about providing the infrastructure foreign investors want – to improve connectivity to the economic zones and ease the cost of doing business. The country’s creditors, notably the World Bank and the Asian Development Bank (ADB), have been nagging the Philippine government to make pleasant infrastructure to increase the country’s creditworthiness and investment grade and to attract much-needed foreign investment in the import-export economy. That is visibly the first and basic reason for making Build Build Build look grand and why past administrations had merely focused on providing infrastructure as their primary task in a liberalized and privatized economy.

Secondly, Build Build Build is about providing foreign and local investors and builders the business they want. The Duterte administration wanted to take advantage of the global infrastructure investment glut that was largely untapped in 2016 by flashing a grand infrastructure menu card. In short, it has promoted infrastructure as the foreign investment destination, along with energy, water and public utilities which also have vast infra needs. This has immensely enriched foreign infra, utilities, construction and transport technology corporations despite the rise in global interest rates and prolonged global economic slide. And now, despite the pandemic and declining global investments, the Duterte administration continues to sell the dream.

Thirdly, Build Build Build is about boosting the wealth of the country’s economic oligarchs, especially those in real estate construction, ports building, transportation, energy and water, and the consequent speculation on values of land and natural assets. International and national media have observed how Pres. Duterte has empowered a new business elite, the “Dutertegarchs”, and created his own set of cronies who have benefited from full-scale liberalization of foreign investments and private capital in otherwise public goods and domain.

Legacy of deeper crisis

Much of the hyped benefits from embarking on a massive infrastructure program have failed to materialize. Build Build Build has been the Duterte administration’s only hope to arrest the economic slowdown pre-pandemic, and now to recover the economic collapse during the pandemic and beyond.

But it has been the wrong choice of policy from the start. The economy needs mending in its production sectors, especially those catering to domestic needs and that have the capability to create meaningful jobs for the mass of jobless and sustainable incomes for the poor majority. But the government has chosen to spend on boosting investor confidence and opportunities. Even spending on health pales in comparison with the Php1.1 trillion allocation for infrastructure in the 2021 budget.

Consequently, this wrong policy mindset only boosts the production of infra materials by the corporations of the contracting countries. In the case of ODA for instance, loans are always preconditioned by the host country’s use of the so-called donor country’s contractors, technology as well as businessmen. At one point, China even pushed for the use of its own workers in Philippine projects. Consequently, this has increased the country’s imports bill, resulting in the country’s worst trade deficit. But the more important consequence is that Build Build Build’s reliance on foreign contractors and materials has undermined our chance of locally producing these materials and building our own infrastructure using local resources. Even the absorptive capacity, the ability to “learn and use” external knowledge, of the Department of Public Works and Highways (DPWH) and Department of Transportation (DOTr), is limited.

Build Build Build has also failed to deliver the jobs generation that the administration has imagined as one of the benefits. Every year since 2017, the growth in construction employment has been a lot smaller than in 2016. The projected job generation from Build Build Build of 1.2 million annual average in 2017-2022 is a far cry from reality. The annual average job generation from all sectors pre-pandemic or 2017-2019 only reached 313,000,[1] the lowest among all administrations post-Martial Law. We lost 2.6 million jobs last year.

Optimists have looked forward to the public services that may be improved with the finished projects, even if these are not exactly the kinds of infrastructure that are much needed to recover lost jobs and incomes. But that is also one of the follies of debt-driven and privatized infrastructure development – we get to pay for these increasingly irrelevant projects with our taxes and high user-fees. Build Build Build has been backed by the most regressive tax reform the country ever had and the built-in automatic upward adjustments in toll fees, fares and other user-fees.

In all probability, in the future post-pandemic as the economy yields lower returns on investment, the debt owed today will be more expensive than initially computed. This will mean heavier debt burden, more anti-poor and regressive taxes, and higher user-fees for so-called public services. In all certainty by then, we can say that the grand infrastructure age has delivered a legacy of untold poverty and deeper economic crisis. #


[1] Average of 2017-2019 only because of change to 2013 Master Sample Design in 2016

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Kodao publishes IBON articles as part of a content-sharing agreement.

Jobs crisis continues, informal work worsens

by IBON Foundation

Despite economic managers’ claims, the country’s jobs situation is bleak and far from returning to pre-pandemic levels, said research group IBON. Millions of Filipinos are still struggling to find work or turning more and more to informal jobs and self-employment to survive. The group said that substantial ayuda is urgently needed and that Congress should hold a special session to ensure the immediate allocation and distribution of funds for emergency aid.

IBON said the latest labor force figures show that the 3.7 million unemployed in May 2021 remains higher by 1.3 million than in January 2020 before the pandemic. The 2.2 million increase in employment is not enough to accommodate the additional 3.5 million Filipinos in the labor force, still leaving over a million unemployed. The number of underemployed has only decreased by just 807,000.

The employment increase also hides a significant decline in the quality of work and incomes as the country remains battered by the ongoing health and economic crisis, said the group. Millions of Filipinos are increasingly resorting to informal self-employment to make a living any way they can.

IBON noted that, by class of worker, the number of wage and salary workers declined by 131,000 from January 2020 to May 2021. This is mainly due to the 711,000 drop in those that worked for private establishments, likely from closures and retrenchments in micro, small and medium enterprises (MSMEs).

The number of Filipinos entering informal self-employment and unpaid work is also worsening, the group said. Self-employed work without any paid employees climbed to 12.7 million (1.6 million increase) from 11.1 million in January 2020. Unpaid family workers also rose to 3.6 million (932,000 increase). Employers in own family-operated farms and businesses however dropped to 761,000 (241,000 decrease) from about one million – an indication that small businesses and farms have been unable to cope and are shutting down amid the pandemic crisis.

IBON stressed that the number of employed by hours worked also reveals how bad the informal employment situation has gotten. Those that worked part-time went up by 3.2 million to 16.7 million, while those that worked full-time fell by 1.3 million. Those considered as “with a job, not at work” increased by 273,000 to 606,000.  The increase in part-time workers and those with a job but not at work can also be attributed to the rising number of self-employed and businesses implementing reduced workdays and hours.

More and more Filipino workers are entering sectors that are known to be low-paying and irregular, the group noted. Employment in wholesale and retail trade increased by 1.6 million to 10.2 million and in agriculture by one million to 10.6 million. Economic growth in these two sectors however continued to contract in the first quarter of 2021 – agriculture contracted by 1.2% and trade by 3.9%. This strongly implies lower sectoral incomes made worse by overcrowding.

The rise in part-time employment in these sectors also reflects the irregularity of work, said IBON. The number of part-timers grew by 1.1 million to 3.2 million in trade and by 889,000 to 7.2 million in agriculture. 

IBON said that with an increasing number of Filipinos struggling to support themselves amid poor job prospects and falling incomes, substantial aid, subsidies and support are urgently needed. It is time for the government to take immediate steps in providing these and prioritizing the welfare and interests of millions of vulnerable Filipinos. The group said it can start by heeding people’s demand for a special session to ensure the speedy passage of legislation that will ensure the immediate release of funds and distribution of ayuda.

The ill logic of rice liberalization

by Rosario Guzman/IBON Foundation

Runaway inflation has always been our economic managers’ alibi for liberalizing importation. Food always takes a beating from this short-sighted policy, as it has the single biggest weight of 36% in the average commodity basket.

Inflation reached its highest in a decade in 2018 upon the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the most comprehensive and most regressive tax reform the country has ever had. TRAIN slapped value-added taxes and excises on consumer products, including unprecedentedly on all petroleum products. It reduced income taxes, which have benefited only the rich more than the middle class and the poor, as it has ultimately rebalanced income gains with higher prices.

But it was still the rice’s fault, according to our economic managers, and hastily they did push for the tariffication of the quantitative restrictions on the country’s staple. Rice bears a 9.6% weight on inflation and it is an extremely socially sensitive product on the same level as diesel that TRAIN had finally taxed; thus it has to be kept under control. That is their logic for subjecting local rice to undue competition with imported rice that is far better government protected and supported.

Wrong premises

Our economic managers would later point to decreased rice retail prices, although still higher than pre-tariffication levels, to support the argument that imports liberalization indeed benefits the Filipino consumer.   

It’s turning out to be a feeble argument, however, as the country would again see the highest food inflation in 27 months at the beginning of 2021, with meat and vegetables contributing the most. The apparent cause is government’s non-containment of the African swine fever epidemic in the hog subsector. But despite the obvious need for government intervention in domestic production, the official quick reaction is again liberalization, this time of pork imports.

The government has simply been pitting the welfare of local producers against that of the consumers, apparently in a principle of subordinating the interests of the few (the farmers) to the welfare of the many (the consumers). This is also wrongly premised on the Filipino consumers being concerned only with cheap commodities. Joblessness is at its worst level, while economic aid in the face of the pandemic has been meager. Majority of the Filipino consumers need to be productive first and earn decent incomes, or in the immediate be given economic relief, before they could truly benefit from lower prices. But government’s obsession with imports liberalization has only worsened the jobs crisis, loss of livelihoods, and farmers’ bankruptcy.

Denied reality

From 2018 to 2020, palay prices have gone down by an average of 19.5% for both fancy and other varieties. Palay prices are lower by a minimum of Php3.30 per kilo for other varieties, from a national average of Php20.06 to Php16.76 per kilo. Nine of the 17 regions have even lower palay prices than the national average. These are based on official statistics.

Field studies conducted on the first year of the rice tariffication law by Bantay Bigas, a nationwide network of rice advocates, showed farmgate prices going down to as low as Php10-15 per kilo. Palay prices in the range of Php10-14 per kilo were noted in the country’s rice bowls – Nueva Ecija, Tarlac, Bulacan, Pangasinan, Isabela, Ilocos Sur, Mindoro, Bicol, Negros Occidental, Capiz, and Antique. Palay prices in the range of Php11-15 per kilo were seen in Agusan del Sur, Davao de Oro, Davao del Norte, South Cotabato, North Cotabato, Lanao del Norte, and Caraga. Bantay Bigas noted that palay prices continuously declined in four consecutive cropping seasons right after the passage of the rice tariffication law.

Value of palay production went down from Php385 billion in 2018 to Php318.8 billion in 2020 despite a slight increase of 229,000 metric tons (MT) in production volume at 19.3 million MT in 2020. If the average farmgate price of Php20.06 before rice tariffication was maintained, production value would be more or less at the level of Php387 billion – thus a visible loss of Php68.3 billion in the last two years, or Php32,523 for each rice farmer.

These are based on official figures. Bantay Bigas noted that farmers in Zaragoza, Nueva Ecija lost Php20,000 to Php35,000 per hectare in 2019, as farmgate prices dropped to Php14 per kilo during the dry season and Php10-13 per kilo during the wet season. Farmers in Barangay Carmen in the same municipality have mortgaged about 40% of their rice lands or an estimated 80 hectares due to depressed farmgate prices. In Gabaldon, Nueva Ecija, some rice lands near the highways were already sold at Php1 million per hectare.

In 2019, rice farmers’ net income per hectare decreased by 32% in the dry season, by 47% in the wet season, and by 38% on the average as compared to figures in 2018, according to the Philippine Statistics Authority. This translated to substantially lower profitability ratio for the farmers. For every peso the rice farmer spent on one hectare, his profit declined in 2019 from 73 centavos to 53 centavos in the dry season, from 63 to 36 in the wet season, and on the average from 73 centavos to 47 centavos.

The average net income of Php21,324 in 2019 translated to Php236.93 per day in a 90-day cropping season, down from 2018’s Php34,111 or Php379.01 a day. The farmer lost Php142.08 income per day, which was way bigger than the Php4.65 per day that his family supposedly gained from cheaper rice. (Regular milled rice was reportedly cheaper by Php2.86 per kilo in 2019. The daily average per capita rice consumption is 325.5 grams or 0.3255 kilogram. Thus, 0.3255 kilogram x 5 family members x Php2.86 = Php4.65)

These are official figures. We are not even talking about rice farmers who incurred net losses.

Also incidentally, the Php236.93 income per day recorded in 2019 was short of the already incredibly low official poverty threshold of Php354 per day for a family of five. It was not even enough for the official family food threshold of Php248. The reality is undeniable: the country’s rice producers live in acute poverty and hunger, and rice liberalization is directly responsible for this irony.

The bigger picture

The rice tariffication law purports to offset these losses by allocating the tariff revenues to support farmers. We do not need to go into detail about how these are not enough or at worst tokenistic. We only need to see the trend of government’s agricultural support to conclude that the Duterte administration has put the sector aside in favor of other hollow and counter-productive budget items, including its infrastructure agenda.

The budget for agriculture in 2021 is only Php110.16 billion, merely 2.2% of the national budget. This has diminished further from the 2019 share of 2.7%, which is apparently already the largest under the Duterte administration. Including the budget for agrarian reform, the annual average allocation in 2017-2020 is only 3.6% of the national budget, the lowest in 21 years. This still got smaller at 3.2% in 2021.

The country’s rice self-sufficiency ratio has significantly gone down from 93.4% in 2017 to only 79.8% by 2019. Such increased import dependence is not even justified anymore by the goal of curbing inflation nor by inadequate supply. It is but a formed habit from chronically neglecting domestic production. To illustrate, despite the hyped increase in production volume in 2020 and even at harvest time, the Duterte government approved the importation of 300,000 MT. The pandemic has apparently prompted exporters such as Vietnam and Thailand to prioritize their domestic consumption, triggering already ingrained insecurity among importers such as the Philippines.

Also totally negating the inflation argument now is the fact that Vietnam and China have already started buying rice from India due to increased local prices. This could precipitate another fast rice inflation in the narrow global market, on which the Philippines has unduly relied at the expense of its own direct producers.

This brings us back to the bigger picture – that the farmers’ struggle for the reversal of rice liberalization and for more responsible state intervention is not just about themselves but the more meaningful future of food security and national development. #

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(A contribution to the virtual forum “Rice Tariffication Law: Two Years After” sponsored by the College of Economic Management, University of the Philippines Los Baños, 22 June 2021)

There’s money for bigger Bayanihan 3: Economic managers just refusing to give more — IBON

by IBON Foundation

There is more than enough money for bigger emergency aid and stimulus in Bayanihan 3 if only the economic managers prioritize ayuda, research group IBON said.

There are various sources that the government can immediately tap for a more meaningful Bayanihan 3, said the group.

These include at least Php217 billion in unobligated and unpaid obligated funds from Bayanihan 1 and 2, and realigning 2021 budget allocations from less urgent items.

The Php401 billion Bayanihan 3 stimulus bill sponsored by over 290 lawmakers has been passed on second reading at the House of Representatives.

Though a larger program than Bayanihan 2, the provisions for emergency aid remain paltry, said IBON.

The group said, for instance, that the Php1,000 emergency assistance given twice to each Filipino will mean that the average family in the badly-hit National Capital Region (NCR) will just get the equivalent of around half of the monthly minimum wage.

The NCR minimum wage is currently Php537 for an equivalent monthly rate of Php16,300.

The economic managers however have been blocking efforts to increase the aid that will be given to millions of distressed families and enterprises.

The government has not even certified Bayanihan 3 as urgent. The budget, finance and treasury departments have also yet to issue a certification on the availability of funds, a constitutional requirement for the passage of bills seeking funds appropriation.

IBON said that the problem is not where to get funding but rather the Duterte administration’s unwillingness to prioritize poor and pandemic-stricken Filipinos.

The group said that there are potentially hundreds of billions of pesos available in funding if only the government pushes the priority legislation needed.

Budget department data as of April 15 shows that there are still Php217 billion in funds from Bayanihan 1 and 2.

This includes a considerable Php158.4 billion that remains unobligated out of the Php653.4 billion in allotments.

Moreover, there is Php58.9 billion in unpaid obligated funds.

These are funds allocated for COVID response that have not yet been committed to a specific item or program (unobligated) or have been committed but not yet disbursed (unpaid obligated).

IBON also notes that there are Php5.9 trillion in revenues (Php2.9 trillion) and borrowings (Php3 trillion) estimated for 2021.

IBON stressed that the administration can realign budgetary allocations from items that are now less urgent, given critical pandemic-related needs, and even counter-productive.

The government can realign from the huge Php1.8 trillion allotted for debt service (Php1.3 trillion for principal payments and Php531.6 billion for interest payments), Php1.1 trillion for infrastructure, Php9.5 billion for confidential and intelligence funds, and Php19.1 billion for the National Task Force to End Local Communist Armed Conflict (NTF-ELCAC).

The group emphasized that the enormous health and economic crisis requires a proportionately enormous response.

This is particularly because the Duterte government’s ill-conceived protracted lockdowns are the biggest reason for the collapse in livelihoods and incomes of tens of millions of Filipinos.  

Bayanihan 3 can be a start to the  expansionary fiscal policy that IBON has proposed to jumpstart the economy.

The Duterte administration can readily find the funds for meaningful aid and stimulus if it wanted to, IBON said. After 420 days of the government’s poor and stingy response, Filipinos more than ever need a government with the political will and boldness to put the people’s needs first over the profits of a wealthy few. #

Gov’t hyping employment gains to avoid giving more ayuda, stimulus – IBON

The economic managers are overstating employment gains to cover up the harsh impact of their refusal to give more cash aid and meaningfully stimulate the economy, said research group IBON.

Latest labor force figures show that Filipinos are not regaining their jobs and incomes and, on the contrary, are desperately trying to make a living in whatever way they can.

“The seeming improvement in the jobs situation from the reported higher employment and lower unemployment is an illusion, said Sonny Africa, IBON Executive Director. “Many Filipinos have still not regained their full-time work and small businesses. They’re just trying to get by on informal and irregular work with likely low and uncertain incomes.”

Comparing March 2021 labor force data to January 2020 data before the pandemic and the start of endless lockdowns, IBON noted that while the number of employed increased by 2.8 million, the labor force also grew by 3.8 million. 

This means there was not enough work for those entering or returning to the work force, resulting in a one million increase in unemployment, said the group.

IBON also observed that these additional jobs are made up of mostly irregular and informal work.

Africa said that the clearest sign of this is the decline in full-time work (40 hours and over) by 550,000 to 28.2 million in March 2021 from 28.8 million in January 2020. The increase in the number of jobs was overwhelmingly of part-time work (less than 40 hours) which grew by a huge 3.2 million and of those ‘with a job, not at work’ which grew by 128,000.

Over half of part-time workers surveyed said they are working less than 40 hours due to variable working time or nature of work. This could be due to reduced work hours brought about by pandemic conditions and lockdowns.

The significant rise in self-employment is another indication that there is a lack of decent work. Africa said that the supposed employment gains are largely in ‘self-employed without any paid employee’ which grew by 1.7 million (to 12.8 million) and of ‘unpaid family workers’ which rose by a huge one million (to 3.6 million) in March 2021.

Meanwhile, the 28.1 million wage and salary workers in March 2021 is only 333,000 more than the 27.8 million in January 2020.

These are aside from some 206,000 employed in small family businesses which have shut down between January 2020 and March 2021, as indicated by the fall in ’employers in own family-operated farms or business’.

Africa said that this may be due to how micro, small and medium enterprises (MSMEs) are getting scant support from the government, especially informal and unregistered MSMEs.

Africa also said that household incomes have fallen so low after over a year of lockdowns that more youth and otherwise retired elderly are seeking work to supplement household incomes.

The labor force participation rate of age groups 15-24 years old and 65 years old and above increased by 2.3 percentage points and 2.7 percentage points from February 2021 to March 2021, respectively.

According to the Philippine Statistics Authority, these two age groups largely contributed to the increase in the labor force during this period.

Recovery is stifled by the economic managers refusing to give more ayuda, improve the welfare and increase the purchasing power of households, and stimulate small businesses and the national economy, said Africa.

The real value of the minimum wage measured at 2012 constant prices also continues to fall –  from Php468.06 in June 2016 at the start of Pres. Duterte’s term to just Php434.47 in April 2021 –  and is as low as almost a decade ago (Php434.38 in December 2011).  

Three out of four Filipino households do not even have any savings to fall back on, he said.

Africa said that the persisting economic crisis will become even clearer when the first quarter gross domestic product (GDP) figures come out next week.

He said, “We will likely see tepid economic growth at most despite the so-called improved employment situation. This will just underscore how poor the quality of jobs remains and how shallow the economic rebound is.”

IBON said that the government can arrest the problem by giving much more emergency cash assistance. This will not just improve household welfare but also boost aggregate demand and spur more rapid economic recovery.

The multiplier effects from this will be much greater and more immediate than the same amount going to grandiose import-intensive infrastructure projects, debt servicing, and human rights-violating counterinsurgency, said the group. #

EO 130: Much fuss about paltry gains

by Xandra Liza C. Bisenio and Rosario Guzman

President Duterte recently signed Executive Order (EO) 130 which lifts a 9-year ban on new mining agreements. The economic managers say that Philippine mineral resources have been vastly untapped and could bring significant benefits to the economy. The Department of Environment and Natural Resources (DENR) expects to generate some Php21 billion from two phases of 100 new mining projects. The mining industry can also provide raw materials for the Build, Build, Build program and employment opportunities for the Balik Probinsya, Bagong Pag-asa program, the EO justifies.

EO 130 lifts the moratorium on new mineral agreements, which was set by the Aquino administration’s EO 79, then pending a new revenue law. Save for this provision, EO 79 actually continued and enhanced the destructive features of the Philippine Mining Act of 1995 – opening more mining areas and reservations, including marginal lands, and clipping the powers of local government units (LGUs), say to impose mining bans and declare mining-free zones. EO 130 seeks to intensify these, especially by removing the moratorium – the perceived barrier to full-blast mining – leaving a thicker trail of damage on the environment and communities and with little benefit to the national economy.

Asking for coins

But the Duterte administration has exaggerated how mining investments can help the economy recover amid COVID-19. Like its predecessors, it has mainly focused on mining’s contribution to export earnings, revenues and jobs creation, instead of counting on mineral development for the country’s own industrialization. The Duterte administration uses the same shallow metrics to justify renewing and expanding foreign interests in mining.

But even in these terms, mining has delivered paltry gains. From 2001 to 2020 (available data is for January to September only), total exports of minerals and mineral products grew almost seven-fold from US$537 million to US$3.7 billion, but this contributed only 1.7% in 2001 and 8.3% in 2020 to total Philippine exports.

Ironically, while the country has practically given up its chance to build industries from its own minerals, the exports sector remains dominated by semi-processed electronics and electrical equipment.

Taxes, fees and royalties from mining, despite Duterte’s tax law (TRAIN) having doubled the rate of excise on minerals and quarry resources from 2% to 4%, have remained miniscule – only 0.5% of total excise taxes and 0.07% of total taxes in 2020.

The sector’s contribution to total employment in 2001 to 2020 was also negligible at an annual average share of 0.49 percent.

Foreign direct investment (FDI) in mining from 2002 to 2020 amounted to US$754.8 million, an annual average of US$39.7 million. This translates to an insignificant annual average contribution of 0.95% to total FDI.    

At the bottom line is mining’s little contribution to the national economy. The gross value added of the mining and quarrying sector grew from Php54.4 billion to Php136.9 billion from 2001 to 2020. But its average annual share in the gross domestic product (GDP) has only been 1.02 percent.

These figures have barely changed after more than two decades of the Mining Act, exactly because the law’s vision is for the country to remain merely the resource and host of an extractive economic activity that supports the industries of the industrialized countries. The Duterte government’s goal has also been unambitious, which is to continue orienting mining towards exports and, by offering natural resources for extraction, make the country attractive to foreign investors.

Catering to other countries

Why then, despite small change for the country, is the Duterte administration so keen on easing the approval of more mining applications – 280 pending to date?

Interestingly, unlike its predecessors, the Duterte administration is also talking about a “raw materials” contribution to its infrastructure program. This is notable, because the so-called Philippine mining industry does not have beneficiation, smelting and refining stages for iron ores. What it does have are foreign monopoly processing plants. There is one copper smelter, the Philippine Associated Smelting and Refining Corp. (Pasar), the previous company headed by Department of Finance (DOF) secretary Carlos Dominguez, which is operated by the Anglo-Swiss company, Glencore. There are two gold processing plants operated by Australian firms, CGA Limited and Medusa Mining, and two nickel processing plants operated by Sumitomo of Japan.

What the country also does have are direct purchase agreements for our nickel ores with Australia, Japan and China through Nickel Asia Corporation, also under joint venture with Sumitomo. For instance, in November 2019 before the pandemic, the Philippine Nickel Industry Association inked a memorandum of understanding with China Industrial Association of Power Sources to have the Philippine nickel mining industry supply China’s production of nickel batteries for electric vehicles.

The Philippines is one of China’s major sources of ore supply. On the other hand, about 90% of the country’s nickel ores are being shipped to China. To cater to China’s nickel demand, in 2019, the Duterte government even allowed suspended mining firms to operate, and pushed for the rehabilitation of government-owned nickel mines.

Is the EO simply referring to how these countries, China in particular, would eventually pour in capital, processed minerals as construction materials, technology, and expertise into the Duterte administration’s foreign investment-led and import-dependent Build, Build, Build? If so, that would really be ludicrous.

Interestingly too, available data show that China is the top nationality with ownership in mining tenements in the Philippines and also accounts for a huge number of mining permits and pending applications.

Big bucks for the mining firms

The amounts that the country gets from mining pale in comparison with the gross revenues of the big mining corporations. The gross revenues of all mining firms in the top 1,000 corporations ballooned from Php10.4 billion in 2001 to Php171.1 billion in 2018. Meanwhile, the gross revenues of the mining transnational corporations (TNCs) in the top 1,000 corporations increased from Php1.7 billion to Php78.9 billion in the same period.

The amounts that the country gets from mining pale in comparison with the gross revenues of the big mining corporations. The gross revenues of all mining firms in the top 1,000 corporations ballooned from Php10.4 billion in 2001 to Php171.1 billion in 2018. Meanwhile, the gross revenues of the mining transnational corporations (TNCs) in the top 1,000 corporations increased from Php1.7 billion to Php78.9 billion in the same period.

There are 50 operating metallic mines in the country, composed of 30 nickel mines, 10 gold mines, 3 copper mines, 4 chromite mines, and 3 iron mines. Large mining conglomerates and TNCs control Philippine mineral production.

Accounting for half of gold production as of 2020 are Masbate Gold Project jointly operated by Filminera Resources Corp. and Phil. Gold Processing & Refining Corp. of Australian CGA Limited, and Co-O Gold Project of Philsaga Mining Corporation in Agusan del Sur owned by Australia-based Medusa Mining.

Accounting for 43% of nickel ore production are Taganito Mining Corporation, Rio Tuba Nickel Mining Corporation, and Cagdianao Mining Corp/ East Coast Mineral Resources Co. These are all operated by Nickel Asia, a partnership between local corporates led by Manuel B. Zamora Jr. and Sumitomo Metal Mining Philippine Holdings of Japan.

Other mining TNCs include those from the US, Canada and China. Local oligarchs in mining meanwhile include Ramon Ang (Philnico Industrial Corp.), Lucio Tan (MacroAsia Mining Corporation), Manuel V. Pangilinan (Philex Mining Corp.), Consunji family (Semirara Mining Corp.), and Sy (Atlas Consolidated Mining and Development Corp.).

The legacy of the Philippine Mining Act of 1995 (Mining Act) is full foreign investment liberalization by granting four kinds of mining rights, one of which is the Financial and Technical Assistance Agreement (FTAA) that allows 100% foreign ownership. The Didipio Copper Gold Project in Nueva Vizcaya operated by Australian OceanaGold Philippines Inc. that has been contested by the indigenous people and anti-mining groups was a holder of FTAA until it expired in 2019. Despite feelers put out by the Mines and Geosciences Bureau (MGB) of the DENR to reopen it along with other closed mines, the protests prevailed. In December 2020, however, OceanaGold reportedly learned that the Office of the President of the Philippines has instructed the DENR to inform the mining firm and the Department of Finance (DOF) to finalize the renewal of the mining firm’s FTAA. The Philippine government has also apparently certified that the OceanaGold’s FTAA area is outside the ancestral domain of the indigenous people.

The Duterte administration has apparently used the pandemic crisis again to listen to the demands of big local and foreign mining corporations while remaining deaf to the urgent public clamor for health support, economic aid, social amelioration, and production support. It cites imagined benefits from unleashing hundreds of mining permits even to unexplored areas, while making certain that giant mining firms and even their financial speculators get super-profits.

The Duterte government is banking mindlessly on an otherwise overcast economic future. It has apparently not learned a thing from the bitter, disastrous past that large-scale mining has left behind for us and the future generations to bear.

We badly need people economics

Large-scale mining in the country has always been equated with environmental devastation and disasters. This is precisely because of liberalizing the mining sector to foreign exploitation for export and relegating the Philippine economy to being a mere source of raw materials. Mining investments are simply for extraction, and to maximize gains further, the mining methods employed by the mining corporations are the cheapest and dirtiest.

More than twenty years of the Mining Act are replete with mining scandals of heavy, irreparable blows on the ecosystems, displaced communities, lost livelihoods, encroachment into ancestral lands, and human rights violations. This is while the government has only been feeble in the face of the perpetrators, the mining conglomerates and TNCs who have dodged accountability for such disasters and even continued their operations. The government has even taken over mine sites abandoned by mining TNCs for government to rehabilitate.

Minerals are non-renewable resources, and oftentimes damages are irreversible. Yet, The Duterte government with its EO 130 continues to argue for the reckless exploitation of the country’s vast mineral wealth for other countries’ corporate gains and industrial benefits. This makes the projected gains from large-scale mining even paltrier than they already are. We are giving up the non-renewable resource, the Philippines’ huge potential to industrialize, for nothing.

Neoliberal apologists often ask whether the country can ever have the needed capital for it to tap and make use indeed of its mineral resources. They immediately point out that there is no alternative but to open up mining to foreign investors. Precisely the kind of thinking that has rendered government inutile in its pandemic response.

What we need foremost is the kind of people-centered economics that aspires for national industrialization, of which mining is an integral part. A well-planned utilization of mineral resources for the benefit of the communities and the national economy ensures regulation of mining activities, which is diametrically opposed to liberalization and surrender to foreign ownership. It will also ensure that the sacrifices made by a few will benefit the majority and future generations, and not vice versa.

Instead of neoliberal economics, what we need is people economics that is oriented towards national development, serves the needs of the citizenry, protects the environment, promotes sustainable consumption and production systems, promotes people’s access to land and natural resources for them to harness, and upholds people’s rights and national sovereignty.

Capital can come from progressive taxation, that is taxing the super-rich and big local and foreign corporations. It can eventually come from the values created by well-supported and prioritized agriculture and manufacturing.

But before that, mining giants should be made to pay reparation to the communities they have devastated and their ecological debt to the Filipino people. Again, foremost we need a strong, reliable and pro-people government for this endeavor, one that genuinely prioritizes people-centered pandemic and economic solutions. #

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Kodao publishes IBON articles as part of a content-sharing agreement.

Duterte’s new mining order disastrous to environment—groups

President Rodrigo Duterte lifted the nine-year moratorium on new mineral agreements, earning warnings from various groups of further corporate plunder of the environment and more natural disasters.

Bayan Muna Representative Eufemia Cullamat said she is dismayed with Duterte’s decision that would most likely result in the worsening of the environmental crisis in the country.

“Instead of putting a stop to environmental destruction that causes disasters, he is allowing further exploitation of our natural resources,” Cullamat said.

Cullamat, a Manobo Lumad persecuted for her community’s opposition to further mining activities in their ancestral domain, said mining projects have only brought untold suffering to various indigenous communities around the country.

“The country only earns two percent in royalty taxes in exchange for the tons of soil they extract, the poisoning of our waterways by mine tailings and the loss of livelihood and homes in mining sites,” she said.

In his Executive Order (EO) 130 issued Wednesday, April 14, Duterte amended former President Benigno Aquino’s EO 79, granting permission to the government to enter into new mineral agreements.

“The Government may enter into new mineral agreements, subject to compliance with the Philippine Mining Act of 1995 and other applicable laws, rules and regulations,” Duterte’s order said.

“The DENR (Department of Environment and Natural Resources) may continue to grant and issue Exploration Permits,” it added.

Duterte’s order said new mineral agreements will usher significant economic benefits to the country that can support various government projects, such as the Build Build Build and Balik Probinsiya, Bagong Pag-Asa Program by providing raw materials and new employment opportunities.

‘Unfettered corporate greed’

Environmental group Kalikasan People’s Network for the Environment (Kalikasan PNE) however agreed with Cullamat, adding Duterte’s order will only result in more environmental disasters.

“Mr. Duterte’s order to lift the mining agreement moratorium will be a disaster upon disaster because the Mining Act of 1995 is still in place. We cannot allow this deluge of destructive large-scale mining when communities are still suffering from the converging pandemic and climate crises,” Kalikasan PNE national coordinator Leon Dulce said.

The Mining Act encourages 100% ownership of mineral lands by foreign corporations that operate based on “unfettered corporate greed” and does not orient the mining industry to extract based on people’s needs, he added.

Kalikasan PNE said the law also has provisions that allow companies to renege on rehabilitation, polluter taxation and waste management obligations.

“Mining companies need only to pay P50.00 per ton of waste disposed of in unauthorized areas and only P0.05 for every ton of mine waste and P0.10 for mine tailings in terms of compensation for resulting damages,” the group explained.

“Let us recall that in the industry-wide audit made by the late Environment Secretary Regina Lopez, at least 68 percent of mining companies had been found with serious violations. This revelation already spells the potential disaster that the Executive Order will bring to the environment and communities,” Kalikasan added.

Beneficial to foreign corporations

Economic think-tank IBON said that Duterte’s new order will most likely benefit foreigners, not the local industry.

“Without domestic industries to process and use the minerals, [EO 130] will just mean that the most significant value-added from our finite mineral resources will keep going to foreign firms, industries and economies,” IBON executive director Sonny Africa said.

Africa said that at the expense of even more environmental damage and displacement of rural communities, real economic gains from Duterte’s decision are negligible.

“Even before the pandemic, mining and quarrying only employed around 190,000 in 2019. That’s not even half a percentage point of total employment and the 2-week NCR+ ECQ even displaced more jobs than that,” Africa said.

Similarly, the Php15.5 billion in taxes, mining fees and royalties paid to government in 2019 is negligible even with the additional excise tax under the TRAIN (Tax Reform for Acceleration and Inclusion, Republic Act No. 10963) law,” the economist explained.

“This EO No. 130 is just the latest sign that it really is just business as usual for the economic managers. The refusal to really reform economic policies combined with the pandemic will just mean that people will remain worse off than before the pandemic for many years to come,” Africa said. # (Raymund B. Villanueva)

Joblessness worsens in February and will get worse with ECQ — IBON

The February 2021 labor force survey confirms that unemployment and underemployment are worsening despite economic managers’ hype of rebounding employment, said research group IBON. The group also said the country’s jobs crisis will get even worse with the government still resorting to economically-destructive enhanced community quarantine (ECQ) rather than smarter containment measures as its main strategy against COVID-19 while waiting for vaccines.

In a joint statement, the economic managers said that the gradual reopening of the economy is bringing more people back to the labor force and has restored 1.9 million jobs in February 2021. The Philippine Statistics Authority (PSA) reported employment increasing to 43.2 million in February 2021 from the previous month. This is higher than the pre-pandemic employment level of 42.5 million in January 2020.  

IBON however said that merely higher employment compared to the pre-pandemic level is a low standard for claiming recovery and ignores how Filipinos rejoining the labor market still cannot find enough decent work. 

The group pointed out how joblessness and the lack of decent work continue to worsen. The combined number of unemployed (4.2 million) and underemployed (7.9 million) rose to 12 million in February, IBON stressed. This is 39% more than the 8.7 million unemployed (2.4 million) and underemployed (6.3 million) in pre-pandemic January 2020.

IBON also noted how the official estimate of 12 million combined unemployed and underemployed in February 2021 is an increase from 10.5 million in January 2021. As it is, this is the highest since April 2020 according to official figures. The group however said that the real tally is likely actually worse because the official methodology has stopped counting millions of jobless Filipinos who stopped looking for work or are not immediately available for work.

IBON stressed that a closer look at the 1.9 million jobs created shows that these are mostly of poor quality, meaning low-paying, insecure or informal work. Of the supposedly new jobs generated, some 48% (923,000) were merely part-time or less than 40 hours per week, and a large 23% (446,000) were actually categorized as “with a job, not at work”.

The group pointed out that this has resulted in the combined number of Filipinos in part-time work and those “with a job, not at work” now comprising 40% of the total employed, which is a marked increase from the 32.4% in pre-pandemic January 2020. On the other hand, mean hours worked per week is markedly down to just 38.9 hours in February 2021 from 41.3 hours in January 2020.

IBON also raised how many of the jobs supposedly generated are in sectors where employment is temporary or poor quality.  For instance, those working in wholesale and retail trade increased by 995,000 to 9.6 million, in other services (which includes household based work) by 294,000 to 2.8 million, in transportation and storage by 147,000 to 3.1 million, in public administration and defense by 142,000 to 2.6 million, and in manufacturing by 136,000 to 3.3 million.

The trade subsector, in particular, is known for its low-paying and insecure work. Wage and salary workers in this sector were paid just Php358 compared to the average daily basic pay in industry (Php404) and across all services (Php483), according to latest available data in 2018.

IBON suspects that a significant number of new jobs are in the informal sector, with many Filipinos struggling to make a living however they can rather than be completely unemployed. Using the combined share of self-employed, employers in family farms or businesses, and unpaid family workers as a proxy for informal sector work, they make up a huge 57% (1.1 million) of net employment created in February 2021. This is as the group noted the number of employers in family farms or businesses decreasing by 189,000, possibly due to small business closures during the pandemic.

IBON said the jobs situation will only get worse in March and April with the Duterte administration implementing another round of ECQ in the “Greater Manila area” which accounts for as much as 47% of the country’s gross domestic product (GDP). The group said that enterprises in the trade, transport, hotel and restaurant, recreation and other non-essential sectors will be particularly hard hit.  This is while they are still reeling from the worst economic contraction in the country’s history.

The group said that the country’s economic recovery most of all starts with the government testing more, tracing better, and ensuring that COVID patients are isolated and do not spread the coronavirus. Household distress can also be immediately relieved and economic activity spurred by meaningful amounts of emergency cash aid, wage subsidies, and other fiscal stimulus measures. #

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Kodao publishes IBON articles as part of a content-sharing agreement.

Shifting to MGCQ a short-sighted and desperate move without containing pandemic

By IBON Communications

Research group IBON said that lifting COVID-related restrictions to boost the economy is a short-sighted and desperate move amid continuing failure to contain the pandemic. The group agreed that the government’s excessive quarantine restrictions since last year are behind the economy’s unprecedented and continuing collapse. IBON however said that easing restrictions will not spur recovery without a real fiscal stimulus while risking the more rapid spread of COVID-19.

Economic planning secretary Karl Kendrick Chua recently advised Malacañang to put the entire country under modified general community quarantine (MGCQ). The ‘less restrictive’ MGCQ will supposedly allow the resumption of business activities previously limited under the pandemic lockdown.

IBON pointed out that the proposal to ease restrictions comes while the number of COVID-19 cases has been increasing since the start of the year. The 9,161 cases in the first week of the year increased to 10,741 so far in the week February 4-10. Data for this most recent week may even still be incomplete because of delays in reporting. The group asked where the optimism that the coronavirus is contained is coming from.

IBON stressed that the administration needs to greatly improve its measures to contain COVID-19 instead of relying on its favored blunt instrument of protracted community quarantines. The group enumerated the measures needed as better testing, more aggressive contact tracing, selective quarantines of possible cases, and speedy isolation of confirmed cases. With the number of cases still increasing, easing restrictions without these measures in place risks COVID-19 spreading even faster.

At the same time, IBON added, shifting to MGCQ may not even spur the economy all that much because the government still refuses to spend on any real fiscal stimulus. The group stressed that significantly higher levels of government spending are needed to make up for the lockdown-driven collapse in consumption and investment. This is more so given the now record joblessness and widespread loss of incomes and savings.

Government first of all needs to contain the pandemic better, IBON said. On top of this, it simply has to spend more to help households and small businesses cope with record jobs and income losses and to recover from the economic shock, stressed the group.

The group pointed out how the record 9.5% contraction of the economy in 2020 was substantially due to how the Philippine government refused additional spending last year. In the first 11 months of 2020, its disbursements only increased by 11.6% which is not just below the originally programmed 13.6% increase for the year but even lower than the average 12.9% increase in spending over the period 2017-2019. 

IBON also highlighted how spending even slows this year with the Php4.5 trillion 2021 national budget just a 9.9% increase from the 2020 budget. As it is, the Philippine COVID-19 response is the smallest of the major countries of Southeast Asia at just 6.3% of GDP according to the Asian Development Bank (ADB).

IBON proposes the following to address people’s urgent needs and stimulate the economy:

  1. Php10,000 monthly emergency cash subsidies to 18 million poor and low-income families (poorest 75% of families) or Php10,000/month for up to three months or Php5,000 for six months. This amount comes to Php540 billion.
  2. Php100 emergency wage relief for workers (towards eventual implementation of a Php750 national minimum wage). Micro, small and medium enterprises (MSMEs) can be supported to give this for three months with a Php101 billion fund.
  3. Php40.5 billion cash-for-work programs for the unemployed.
  4. Php78 billion financial assistance (zero/low interest rate and collateral-free loans) for informal earners.
  5. Php200 billion in financial assistance (zero/low interest rate and collateral-free loans) prioritizing Filipino-owned and domestically-oriented MSMEs.
  6. Php220 billion in agricultural support to increase the productivity of farmers and fisherfolk.
  7. Php200-billion COVID-19 health response and Php113-billion distance education to ensure quality education.

The group also stressed that the government can finance these if it really wanted to. IBON identified a universe of at least Php3.9 trillion in funds from which realignments can be made, Php1 trillion in emergency bonds and other government securities, Php391.9 billion in immediate revenues from progressive taxes especially a wealth tax, and at least Php333 billion more from a land value tax. #

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Kodao publishes IBON articles as part of a content-sharing agreement.

Wage hike necessary, overdue amid pandemic and high prices

The Duterte administration gave least number of wage hikes and lowest wage increases of any administration in past 35 years.

by IBON Media & Communications

Research group IBON said that, amid rising prices of basic commodities, minimum wage earners are suffering from how the Duterte administration has been giving the least number of wage hikes and lowest wage increases of the past six administrations in the post-Marcos era. This only made working class families even more vulnerable to the economic shocks triggered by the pandemic. Multiple strategies are needed to arrest the economic distress of poor and low-income households especially since the onset of the pandemic.

IBON noted how the real minimum wage, or the value of wages after adjusting for inflation, is worth 7.2% less today than at the start of the Duterte administration. (See Table) This does not even yet fully include the recent surge in prices of pork, fish, chicken and vegetables. IBON estimates that the real value of the National Capital Region (NCR) minimum wage has fallen to Php434.47 from Php468.06 in June 2016. This is the lowest real wage in over eight-in-a-half years or 103 months.

The Duterte administration was sparing with its wage hikes even before the pandemic. The NCR minimum wage was only increased twice, in September 2017 and November 2018, and by such small amounts that they did not even make up for inflation. When the lockdowns started in March 2020 the real value of the minimum wage was already 3.6% less than in June 2016 – this only deteriorated further to being 7.2% less today.

IBON pointed out that other administrations hiked wages six or seven times and that even the Estrada administration hiked wages twice in its short 2 ½ years in power. These resulted in the real minimum wage increasing by 2.7% (Arroyo) to as much as 54% (Cory Aquino) compared to the more or less continuous decline under the Duterte administration.

It has been more than two years or 27 months since the Duterte administration’s last wage hike to Php537 in November 2018, said IBON. This is the longest period without an increase since July 2004 under the Arroyo administration when the wage increase came after a dry spell of 29 months.

IBON noted that the current minimum wage is even further away from meeting the basic needs of workers’ families. The Php537 minimum wage in NCR is Php520 or 49% short of the Php1,057 family living wage or the amount a family of five needs for a decent living as of December 2020.

As it is, the December 2020 inflation rate of 3.5% is the highest in 21 months, mainly due to higher inflation in food and non-alcoholic beverages, health and transport. The prices of pork, ampalaya, sitao, cabbage, carrots, habitchuelas, tomato, potato and eggplant significantly went up from anywhere between Php40 to Php120 per kilo since December last year. Price increases were even worse for the poorest 30% of households nationwide with a 4.3% inflation rate.

IBON said that the Duterte administration needs to give much greater attention to alleviating widespread economic distress among poor and low-income families. The most urgent measure are new cash subsidies of Php10,000 monthly for at least 2-3 months especially while record unemployment and falling household incomes are not resolved. Price controls are also needed on the food items whose prices are soaring especially amid reports of alleged exploitative pricing by wholesale and retail traders.

The Duterte administration however also needs to go beyond short-term damage control, stressed IBON. The long-term solution to rising food prices is for meaningful government support for farmers and fisherfolk to increase agricultural productivity and output. Yet, IBON pointed out, the share of the national government budget for agriculture has been falling from 3.6% in 2019 to just some 3.2% in 2021.

IBON moreover stressed that a substantial wage hike remains just and necessary even amid the pandemic economic shock. The group said that it is incumbent on the government to come up with schemes to enable a wage hike that increases incomes of low-income households and which will also stimulate aggregate demand in the economy. Among others, this can include mandating higher wages while giving wage subsidies to micro, small and medium enterprises (MSMEs). Wage hikes are long overdue and it is unfair for the working classes to always be made to bear the burden of adjustment to economic crises. #

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Kodao publishes IBON articles as part of a content-sharing agreement.