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Jobs crisis continues, informal work worsens

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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.

Higher inflation for poorest Filipinos underscores urgent need for continued cash subsidies

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by IBON Media & Communications

Research group IBON said that the higher inflation is problematic but particularly burdens the poorest Filipinos. Inflation rates for the 30% poorest households are higher than the national average.

Especially amid historic joblessness, this affirms how the government should continue giving cash subsidies as income support, the group said.

According to the Philippine Statistics Authority (PSA), headline inflation rose to 2.5% in June 2020 from 2.1% in May 2020.

Behind this uptick are price increases in: transportation, particularly tricycle fares; alcoholic beverages and tobacco; housing, water, electricity, gas, and other fuels; and communication.

However, the 3.0% inflation rate in June for the poorest 30% of households was higher than the headline inflation rate of 2.5 percent.

This means that the cost of living is rising fastest for the country’s poorest households.

IBON said that this is troublesome for millions of poor families suffering interrupted incomes and stingy emergency relief. 

IBON said that the rise in inflation despite repressed consumption during the lockdown is worrying and points to problems in supply and production.

The government is primarily responsible for ensuring these especially during a public emergency.

For instance, the group said, the notable increase in the transport index shows the government’s weakness in ensuring this vital public service.

Rising prices especially for the poorest affirms the urgency of continued income support, IBON said.

The number of beneficiaries getting the second tranche of emergency subsidies should not be limited. The 18 million poorest Filipinos, including the 5 million wait-listed beneficiaries of the Social Amelioration Program, should receive both the first and second tranches of the Php5,000-Php8,000 per-month emergency aid, said the group.

The government said that only those residing in enhanced community quarantine (ECQ) and modified ECQ areas will be getting a second tranche.

This is only 8.6 million families of the original 18 million target beneficiaries, and 3.5 million households of the five million wait-listed.

This also means that 10.6 million beneficiaries now in general community quarantine (GCQ) and modified (MGCQ) areas will have to make do with just their first tranche.

With the cost of living fast rising amid an even worsening pandemic, limiting the number of beneficiaries getting the second tranche of emergency aid is unconscionable, IBON said.

The government should even consider additional tranches for vulnerable households that continue to reel from lost livelihoods and income, said the group. #

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

The anomaly of transport modernization (Part II)

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by Rosario Guzman

Read the first part here:

Government’s misplaced scheme

In many instances, the solution to the complex transport problems of Metro Manila lies in the physics of the problem, in the same way that dealing with COVID-19 requires medical science. But the Duterte administration has simply picked up its pre-COVID proposal of “jeepney modernization” and used the pandemic to justify finally pushing for it, amid protestations by jeepney drivers and the adverse impact on millions of commuters.

The government is a signatory to the Bangkok Declaration on Sustainable Transport Goals (Bangkok 2020) on “environmentally-sustainable” transport policy. This is also in relation to the ADB’s Sustainable Transport Initiative that is ultimately premised on the continuation of “free market” and “inclusive” economic growth. The Duterte government’s accomplishment in fulfilling Bangkok 2020 rests on the jeepney modernization program. Ultimately, this is important for the Duterte administration to attract transport infrastructure investments as well as to push for the sale of brand new, imported, so-called environment-friendly, and modern jeepneys.

Through the Omnibus Franchising Guidelines (OFG) that the DOTr issued on 19 June 2017, the government is requiring the make of the body and engine of the traditional jeepney to be compliant with the requirements set by the Land Transportation Franchising and Regulatory Board (LTFRB). These requirements definitely prioritize electric jeepneys (e-jeep), while pushing away the traditional jeepneys which need to go through numerous hurdles to get licensed to operate. These hurdles include: upgrading combustion engines to comply with Euro IV and similar emissions standards; complying with the LTFRB-set age-limit of oldest vehicle part; refurbishing and rebuilding that should pass the type approval system test; and still finally going through the Land Transportation Office (LTO) for a roadworthiness test to get registration renewal.

Concerned automotive engineers, scientists and mechanics contest the need to phase out traditional jeepneys and argue that the government should support locally manufactured environmental solutions. They also question the availability of the parts of the imported modern jeepneys in case of repairs, unlike with the traditional jeepneys that can be replaced easily. They also claim that the body engineering of the modern jeepneys is not suited to Metro Manila’s narrow roads and more prone to accidents. Environmentalists have also criticized the government’s going electric or Euro IV as hypocritical when its own energy program is reliant on coal and other fossil fuels.

But the OFG just keeps on narrowing the chances for traditional jeepneys to survive. The OFG also requires a fleet size of 15 units for any type of PUV for six months for new routes, which prevents small operators from applying for new franchises. Actually, even medium-scale operators – if they exist – are constrained and marginalized under the modernization program. The modern jeepney costs about Php1.6 million to as high as Php2.5 million, which means that an operator needs at least Php24 million to get a franchise.

The DOTr has stated that the government is not phasing out jeepneys but simply modernizing. However, the government plays with words. The jeepney modernization program will ultimately kill the livelihoods of thousands of jeepney drivers and complete the corporate capture of the ‘last-mile’ resort of millions of Filipino commuters.

Still pushing for Build, Build, Build and foreign ownership

The Duterte administration is also not compromising its Build, Build, Build (BBB) infrastructure projects, despite their questionable viability even before COVID-19 struck and their diminishing relevance now. Of the 100 infrastructure flagship projects (IFPs) worth Php4.3 trillion, 73 are for transport and mobility. The government does not have plans to strengthen economic production so the projects will just end up reinforcing a service economy dependent on import-export trade, foreign investments and tourism. Much of the construction materials used are even imported rather than produced locally.

The transport sector is reflective of how the government has lost its capacity to govern and manage public services because of privatization. This raises questions therefore on government’s absorptive capacity for such a grand infrastructure program. Four years into the ambitious BBB, there are only two (2) completed and nine (9) ongoing projects to date. The Duterte administration has even increased the IFPs from 75 to 100 to make BBB “more feasible”. But it appears that only 38 projects will be finished by the end of its term.

The future of BBB in the time of COVID-19 is precarious. But like a beaten beast, the Duterte administration refuses to yield. The pandemic is posing serious challenges to the continuation of BBB, apart from the program’s innate weakness of simply being aimed at attracting foreign investments and momentarily stimulating a slowing economy.

The most obvious challenge for the construction industry is physical distancing because  masses of workers need to gather to finish a project. The IATF suspended construction at the start of the lockdown but later allowed it, while passing on to the construction companies the responsibility of ensuring that workers comply with health protocols.

The next challenge is how travel restrictions and physical distancing will certainly dampen transport, travel and tourism businesses, and foreign trade and investment for a long time. These are the sectors that BBB wishes to be relevant for – but they are less and less important for the economy’s survival in the time of COVID-19.

Another challenge is the commercial viability of the projects on which they are all premised. Instead of catering to genuine public service, the completed projects are designed to be run by private transport corporations who will collect user-fees for their profitability and sustainability. The most expensive BBB projects are mass commuter railways whose viability depends on expensive fares that will be beyond the reach of the majority of the poor and working people.

But the greatest challenge is how BBB’s socially inappropriate orientation can be shifted to support the proper health response to COVID-19. The pandemic has revealed how weak our health system is – lacking facilities and equipment, lacking health personnel, and even lacking the means to transport health personnel. Not a few health frontliners have had fatal road accidents biking to work due to lack of transport support from the government. There is not even a single health infrastructure facility in the IFP lineup. The administration has made pronouncements that it would reorient BBB to respond to the health crisis but has yet to release a new IFP list.

Meanwhile, one priority legislation of the administration is the amendment of the Public Services Act (PSA). On March 10, just before the lockdown, the House of Representatives passed on final reading House Bill (HB) 78 to amend the PSA. It is now at the Senate for deliberation and approval. These amendments include narrowly defining public utilities to bypass Constitutional restrictions on foreign ownership. Sectors considered public services, transportation included, can be opened up to complete foreign ownership. This further undermines public interest and national development. The PSA amendments will pave the way for the full foreign ownership of the mass transport system and government’s eventual surrender to private transport and transport infrastructure corporations.

The right direction

The Duterte government can address the transport crisis in the time of COVID-19 and in fact can look at the pandemic as an opportunity to overhaul the system. The health protocols may be followed indeed if only the government recognizes and addresses the transport crisis in a scientific manner.

There should be a first-step long-term modal shift from road to rail. The government can start by upgrading and adding rolling stock and rails to the train system. The corporations and officials of government agencies who forged lopsided privatization contracts should be held liable for poor service including breakdowns and accidents. The Philippines is among the first countries in Asia to have an urban rail system and has a long history of government running rail transport systems. These assets can be nationalized again and returned to public control. Rail transport can then be central to urban planning as well as to the dispersal of economic activities to the rural areas.

An efficient rail transport system, not to mention fully linked and accessible, will be the basis of an equally efficient route rationalization plan for PUBs and PUVs. The government should seriously conduct its own study to identify where the mass of commuters can have the most optimal travel time, including number of stops, from their workplaces to their homes. This should also include designation of walkways and bike lanes. It should not rely on self-interested privatization stakeholders to make such studies.

For a route rationalization plan to be truly systematic, PUBs and PUVs along with rail should be publicly run. Government can start by organizing PUBs and PUVs into cooperatives rather than allowing only single or corporate proprietorship of large fleets. It can also incentivize cooperatives to improve their service and compliance. Then, government can move on to careful consolidation of fleets through joint ventures and eventual nationalization. Such crucial steps will finally make PUB and PUV modes more economical and fares more affordable.

The DOTr is proposing to introduce service contract arrangements with private transport operators for the “new normal”. It also aims to shift from the “boundary system” to daily fixed wage for drivers and conductors so they can have steady incomes regardless of reduced ridership. This sounds acceptable, especially if we consider that transport groups have long been clamoring for government to abolish the “boundary system” to avoid competition-driven stresses, road hazards, and transport unpredictability.

However, the DOTr proposal remains outside the vision of living wages for transport workers, promoting their welfare and strengthening their unions, subsidizing commuters and controlling fares, and diminishing competition among the private contractors with stronger public control. In short, the current proposal should be within the framework of nationalization, lest it end up being another privatization contract.

The proposal is welcome if it is not being done in the context of the government’s jeepney modernization program. The Duterte administration cannot even give sufficient social amelioration to displaced drivers and conductors during a pandemic.

Moreover, government should once and for all restrain the explosive private car sales that defies all public mass transport logic. These just give the automotive corporations maximum returns on their businesses.

Finally, the pandemic gives us the vast opportunity to rethink sustainable development perspectives. The need for agrarian development and national industrialization cannot be overemphasized. But the government can start with arresting the anarchic building of offices especially for business process outsourcing and online gambling, shopping malls, hotels and leisure structures, residential and private subdivisions, and condominiums. Metro Manila’s urban development Is geared to increasing real estate profits and the wealth of the country’s economic oligarchs at the expense of public mobility and welfare.

Government can start by planning an economy that genuinely addresses severe inequalities existing pre-COVID-19 that, without corrective steps, will persist even far beyond. #

Ang sinapit ng mga drayber

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“Dati, kami ang kinakawayan. Ngayon, kami ang kumakaway [para mamalimos].”–Joel Caligayan, tsuper ng jeep biyaheng Rosario-Cubao

Govt jeepney ban has already cost drivers Php78,000

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by IBON Media & Communications

Thousands of small public utility jeepney (PUJ) drivers have lost as much as Php78,000 each from three months of mass transport suspensions since the lockdown.

The government has been insensitive and stingy assistance has pushed jeepney drivers and their families into poverty, said IBON.

Their troubles risk becoming permanent with the government exploiting the COVID-19 pandemic to keep small drivers and operators off the road to fast-track its jeepney phaseout program, it added.

The Duterte administration suspended mass transport, including jeepneys, when it declared enhanced community quarantines (ECQ) in Luzon then in other parts of the country in mid-March.

Quarantine measures have since eased to general community quarantine (GCQ) in many areas and public transport has resumed in phases.

The first phase started in June 1 and the second is due to begin on June 22.

Jeepneys, however, will still remain prohibited.

PUJ drivers have suffered lost incomes for over three months already, IBON said. Among them are the estimated 55,000-70,000 jeepney drivers in Metro Manila.

For instance, before the ECQ, drivers plying the MCU-Rotonda via Taft route earned an average of Php1,000 per day after a 12-hour shift, net of boundary and fuel expenses.

Jeepney drivers on this route usually worked six days a week.

This means that, to date, they have lost some 78 working days over the past 3 months or 13 weeks of suspended mass transport.

This translates to a total net income loss of Php78,000 or Php26,000 per month of lockdown, said IBON.

Out of work jeepney drivers lose Income with each passing day of transport suspension.

The group stressed that government assistance has been far from enough to make up for these lost incomes.

The social welfare department reports only 36,200 jeepney drivers getting cash aid in the past three months.

Even then, some jeepney drivers only received one tranche of the Php5,000-8,000 of social amelioration and it remains unclear if they will even get the second tranche.

Many small jeepney drivers and operators could become permanently out of work, particularly in Metro Manila, IBON said. 

Transport officials are using the mass transport suspension to force the phaseout of traditional jeepneys by only allowing modernized jeepneys to run.

Under the Land Transportation Franchising and Regulatory Board (LTFRB)’s Memo Circular 2020-017 on public transport guidelines in GCQ areas, only modernized jeepneys and traditional jeepneys under a corporation or cooperative are allowed to operate.

This leaves out small jeepney operators and drivers who, unlike big or corporate fleet operators, can ill-afford the costly Php1.6–2.2 million modernized units, or steep fees and requirements to form a cooperative.

They are even less able after three months of lost incomes and depleted savings, if any.

IBON said that the livelihoods of thousands of small jeepney drivers and operators are at stake. Instead of putting corporate interests first and pushing its phaseout program, the government should give immediate cash assistance to drivers and their families who have suffered three months of lost incomes.

It should also support drivers and operators in upgrading or replacing their units to meet safety, health and environmental standards. #

Government employees oppose ‘mass layoff circular’ amid pandemic

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By Joseph Cuevas

Government employees raised alarms over a new budget circular instructing agencies to realign their budget for Covid-19 programs, saying the new measure is anti-labor and anti-poor.  

In an online press conference Tuesday, June 9, the Confederation for Unity, Recognition and Advancement of Government Employees (COURAGE) said Department of Budget and Management (DBM) National Budget Circular (NBC) No. 580 would only result in mass layoffs and budget cuts to programs and services for the people.

The new DBM measure, dubbed the Adoption of Economy Measures in Government Due to the Emergency Health Situation, was issued last April 12.

It derives legal basis from Republic Act No. 11469 or the Bayanihan Act of 2020 that gave emergency powers to President Duterte to raise and realign  funds for government’s efforts against Covid-19.

Section 4.3 of the circular orders the discontinuance of hiring of job orders except those considered as frontliners during the ongoing state of public health emergency, COURAGE said.

The National Housing Authority (NHA) initially released a memorandum effecting the circular but, after a dialogue with union members, issued an addendum assuring that no workers would be affected.

COURAGE also said government agencies are realigning or have already realigned their work and financial plans to comply with the circular, sacrificing many social service programs and poverty alleviation plans.

Among such programs may include the Kapit-Bisig Laban sa Kahirapan (KALAHI) and Sustainable Livelihood Program (SLP) program of the Department of Social Welfare and Development (DSWD), COURAGE revealed.

COURAGE national president Santiago Dasmariñas Jr. said as many as 600,000 government employees all over the country, especially job-order and contractual employees, are worried.

Dasmariñas said COURAGE wrote DBM Secretary Wendel Angel Avisado last April 29 to express opposition to the circular, particularly DBM’s plans to reduce or remove funds for government employees’ wages.

“The COS, JO workers, and the like, need their wages now, more than ever, in this time of pandemic caused by the COVID-19. And it will be an injustice if the budget intended for their wages shall be SLASHED and cut which will result to their eventual termination from work,” COURAGE’s letter states. #

Official unemployment figures understate historic jobs crisis

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by IBON Media & Communications

IBON said that the unemployment crisis is actually even worse than official figures show.

The group estimates that the real unemployment rate is likely around 22% and the real number of unemployed around 14 million.

The 20.4 million real unemployed and underemployed today is the worst crisis of mass unemployment in the country’s history.

The Philippine Statistics Authority (PSA) reported 7.3 million unemployed and 6.4 million underemployed in April 2020.

As it is, this is the worst government-recorded unemployment (7.3 million) and combined unemployment and underemployment (13.7 million) in the country’s history.

IBON pointed out, however, that the technical definition of unemployment does not count as much as 4.1 million Filipinos who did not formally enter the labor force because of the ECQ and another 2.6 million that the revised unemployment definition since April 2005 stopped counting.

The drastic drop in the labor force participation rate (LFPR) to 55.6% is most of all due to the ECQ, said the group.

The jobless Filipinos who did not enter the labor force will not be counted as unemployed because the technical definition of unemployed requires them to be in the labor force to begin with.

If the LFPR had stayed the same at 61.3% in April 2019, there would be an additional 4.1 million in the labor force.

The methodology for counting the unemployed was revised in April 2005. Since then, jobless Filipinos who did not look for work in the last six months or are unable to immediately take up work are no longer considered unemployed and removed from the labor force.

This lowered officially reported unemployed Filipinos and stopped comparability with data from previous years.

The revised unemployment definition tends to underestimate the magnitude of unemployment by 35% and the unemployment rate by 3.3 percentage points.

An initial correction for this would mean an additional 2.6 million jobless Filipinos who should be counted as unemployed according to the previous definition, said the group.

IBON said that it is important to see historical trends in the country’s unemployment situation to get an accurate picture of the long-term implications of economic policies. Having data that is comparable over time will give a much clearer indication of the structural economic changes the economy is undergoing which will enable better policymaking. #

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

PH economy was already slowing – COVID-19 just made it worse

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by IBON Media & Communications

The Philippine economy was already weak coming into the COVID-19 crisis, research group IBON said. Growth will remain slow if the government does not acknowledge pre-existing weaknesses that the pandemic merely intensified.

The group said that recognizing the problem is the first step to the bold measures needed for long-term growth and development.

The Philippine Statistics Authority (PSA) reported -0.2% growth in gross domestic product (GDP) in the first quarter of 2020, marking a significant drop from the 5.7% growth in the same period last year.

The National Economics and Development Authority (NEDA) attributed this to the Taal volcano eruption in January, decrease in trade and tourism due to COVID-19 in February, and the eventual lockdown in March.

IBON said however that the economy was already slowing for three consecutive years and headed for its fourth such year even before COVID-19 came into the picture.

Official figures show annual GDP growth falling from 7.1% in 2016 to 6.9% in 2017, 6.3% in 2018 and 6.0% in 2019.

Year-on-year first quarter growth also reflects this trend, falling from 6.9% in the first quarter of 2016 to 6.4% in 2017.

This slightly increased to 6.5% in 2018 but fell to 5.7% in 2019. In 2020, first quarter growth dove to -0.2%, which is the first GDP contraction since the fourth quarter of 1998 (-3.4%).

Important accustomed drivers of growth were falling even before the eruption of Taal Volcano in January and the COVID-19 crisis since February and especially since the lockdown starting mid-March.

Growth in overseas remittances slowed from 5.3% in 2017 to 3.9% in 2019, and foreign investment flows from US$10.3 billion to US$7.6 billion over the same period.

The manufacturing sector slowed from 8% in 2017 to 3.2% in 2019, and agriculture from 4.2% to 1.2% over the same time.

Tourism had also been lackluster, said the group. Growth in gross value added of tourism industries remained virtually stagnant from 10.1% from in 2016 to 10.3% in 2017 and 10.6% in 2018.

In terms of expenditure, gross capital formation considerably slowed from 10.9% growth in 2017 to 2.5% in 2019 and exports from 17.4% to just 2.4 percent.

Household consumption spending remained steady at 6% in 2017 and 5.9% in 2019.

Hence, overall economic growth has just been artificially driven by government consumption spending, which increased from 6.5% in 2017 to 9.6% in 2019 and by public infrastructure projects rather than an underlying dynamism from vibrant domestic agriculture and industry.

These basic economic weaknesses result in record joblessness and the proliferation of informal and irregular work.

Correcting the official methodology which underreports joblessness, IBON estimated that the number of unemployed reached a record 4.7 million in 2019.

The group also estimated that 27.2 million or 64% of employment in the same year was really poor quality work comprised of non-regular and agency-hired, government contractuals, and informal earners.

Widespread poverty is another indicator of a sluggish economy, said the group.

According to PSA data, some 12.4 million or over half of 22 million families nationwide were trying to survive on less than P132 per person per day.

IBON pointed out that the last three years of slowing growth has been despite the Duterte administration’s expanding Build, Build, Build infrastructure program.

Despite annual appropriations for infrastructure increasing to 4.7% of GDP in 2019, economic growth still fell for a third consecutive year.

The group explained that infrastructure spending is a short-term stimulus at best and that domestic agriculture and Filipino industry have to be strengthened for growth to be higher and more sustained.

The agriculture sector has been weakening due to long-time government neglect. It grew from -0.1% in 2016 to 4.2% in 2017, but steadily declined thereafter to 1.1% in 2018 and 1.2% in 2019.

First quarter growth in agriculture slid to -0.4% in 2020 from 0.5% the previous year. Continued agricultural liberalization, such as of the rice subsector, will only weaken agriculture further.

Growth in manufacturing, which has long been foreign-dominated and export-oriented, has also been dwindling. The sector registered 6.8% growth in 2016, which increased to 8.0% in 2017. But this dropped to 5.1% in 2018 and 3.2% in 2019. First quarter growth in manufacturing went down to -3.6% in 2020 from 5.2% in 2019.

IBON said that the government will be making this same mistake in overly relying on infrastructure spending as its response to the unprecedented COVID-19 crisis.

The group stressed that the government needs to implement bolder measures that prioritize the needs of Filipinos, especially the most vulnerable, and that genuinely develop the national economy.

These include: immediate emergency relief, and especially with unemployment soaring, extended income support to poorest households; expanding the public health system and providing universal social protection; and repurposing the economy for domestic demand-driven employment and growth by strengthening agriculture and building Filipino industry.

The resources needed for these can be raised by imposing a wealth tax, higher personal income taxes for the richest families, and higher corporate income tax for the largest corporations.

IBON said that if the government insists on its old neoliberal policies and does not change course, the economy will be even weaker after the COVID-19 crisis. #

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

IBON questions CITIRA job creation claims

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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.)

Job creation volatile, mostly of poor quality work

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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. #