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‘Sobra ang dagok’

“Dati, itong pechay-baguio, ang kuha namin ay nasa P90 lang. Ngayon, nasa P150 na. ‘Yung repolyo, dati P80. Ngayon, P180 na. Sobrang laki ang itinaas, kaya sobra rin ang nararamdaman namin na dagok.”–Mang Ricky, tindero ng gulay, Sitio San Roque, Quezon City

Jobs crisis getting worse under Duterte gov’t – IBON

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Government losing control of economy –IBON

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

‘Itaas sa P20 ang kilo ng palay’

“Isang dekada nang binibili ng NFA ng P17 kada kilo ang palay. Panahon na para taasan ang support price ng NFA at gawing P20 kada kilo.”–Zenaida Soriano, chairperson, Amihan

‘Hindi maiwasang mangutang’

“Ngayon pa nga lang, hirap na e. Paano pa ‘pag tumaas ‘yung presyo ng bigas? Lalo na high school na ‘yung mga anak ko, may mga panahon talagang hindi maiiwasang mangutang.” – Florenda Biagatindera ng kanin

PH Economy Duterteriorating

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

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

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

Unsound fundamentals

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

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

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

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

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

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

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

Worst in years

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

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

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

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

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

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

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

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

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

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

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

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

Wavering economic drivers

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

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

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

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

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

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

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

Ending poverty

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

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

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

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

‘Ang ibinigay sa atin ay TRAIN’

“Ang mga manggagawa na nananawagan ng pagwawakas ng kontraktwalisasyon para sa nakabubuhay na sahod ay naibigay ba ni Duterte? Ang ibinigay sa atin ay TRAIN. Taas-presyo ng mga bilihin na lalong nagpapahirap at nagpapagutom sa taong bayan.”—Einstein Recedes, Anakbayan secretary general

Poor Filipino families worst hit by rising July 2018 inflation

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

 

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

Maza resigns; last NDFP-nominated member leaves Duterte Cabinet

The last of the National Democratic Front of the Philippines (NDFP)-nominated members to the Rodrigo Duterte Cabinet has tendered her irrevocable resignation today, August 20

National Anti-Poverty Commission (NAPC) Lead Convenor Liza Maza announced she is leaving the Duterte government after deeper reflection on the events of the past weeks, including the double murder charges she faced with three other former Makabayan bloc representatives like herself.

“I am announcing that I have tendered this morning my irrevocable resignation as Secretary and Lead Convenor of the National Anti-Poverty Commission,” Maza said in a pres conference.

She said that while the fabricated and baseless murder charges were eventually dismissed, the revival of these cases and the issuance of warrants of arrest under a seeming crackdown on activists like her took its toll on her work at the NAPC.

“I realized that similar attacks by the anti-reform, rightist, and militarist forces in our society will continue to undermine my leadership of this agency. As such, I simply can no longer work under these circumstances,” she said.

Along with Maza, former social work and development secretary Judy Taguiwalo and agrarian reform secretary Rafael Mariano were nominated to the Duterte Cabinet by the NDFP.

Taguiwalo and Mariano were no longer re-appointed by President Duterte after they were rejected by the Commission on Appointments.

Maza explained that Duterte’s total cancellation of its peace talks with the NDFP last August 14 was her biggest reason for resigning.

“The decision killed my remaining hopes that the peace talks would result to substantive social and economic reforms that would end widespred poverty in the country as well as the ongoing civil war,” she said.

She added that the cancellation of the talks signals that policies that are counter to reforms for the poor as well as militaristic mindset and attitude are primary to the government.

Maza said that her resignation is not a surrender of the pursuit of meaningful reforms that she has embarked on in her two years of leading the NAPC, which she said has always been her life’s work as an activist and legislator.

“[N]or am I succumbing to the reactionary forces who have long wanted me out of this post. Rather, it has become clear to me that this pursuit will be better served with me working outside of government,” she said.

Among Maza’s biggest achievements as NAPC lead convenor was the publication of the 100-page “Reforming Philippine Anti-Poverty Policy – Going Beyond, Moving Forward” roadmap that sought “meaningful debates on poverty eradication instead of mere poverty alleviation.”

Maza said during its launch in January that among the book’s proposals are the development of Philippine industries, review of international economic deals, regulation of foreign investments for development, state-directed financing for development, and more progressive taxation.

She said then she hoped that President Duterte would support their proposals.

Maza, in her statement today, said that poverty eradication may no longer be possible under the Duterte administration.

“I joined the Cabinet more than two years ago with high hopes of helping to facilitate meaningful socioeconomic and political reforms from within the government, when the President was initially engaged in the peace negotiations that can potentially bring these about,” she explained.

“His latest pronouncement, however, on finally terminating the talks brings me to the conclusion that these reforms may no longer be possible under the current administration,” she said, adding she believes “genuine change cannot happen when the old forces of fascism and corruption, and the defenders of elite and foreign interests, are consolidating their position in government.”

“I have found it best to resume fighting from among the masses for this genuine change, which, as ever, has been the only real way to make sure that it will happen,” Maza concluded. # (Raymund B. Villanueva)

Continuous war against the poor

LETTER TO THE EDITOR

August 14, 2018

As the Congress approves House Bill 7735 or the Rice Tariffication Bill on third and final hearing, the Philippine Network of Food Security Programmes, Inc. (PNFSP) expresses its strong indignation as it will definitely not address the root cause of continuous food insecurity, rice shortage and worsening poverty in the country. The bill is systematically, mechanically and logically favorable to domestic and international rice cartel operators. It will further exploit the already exploited Filipino farmers and fishermen by forcing them to produce big bulk of rice, meat and fish just to meet global dictum and for importation which are all within the mechanism of HB 7735.

The House Bill 7735 has an intention to put safety nets for Filipino rice producers by imposing tariffs in lieu of quantitative restrictions on rice imports including fish and meat. It was pursued in line with President Duterte’s order to the Congress last July 23 to immediately pass the measure which targets to arrest inflation for at least 1% thus, minimally affecting the reduction of commodity prices. Though the bill mandates the National Food Authority as the sole authority to undertake the direct importation of rice for the purpose of ensuring food security and maintaining sufficient national buffer stocks, there’s no big assurance for common Filipinos to have food security due to neo-liberal agreements signed by the past administration.

The Rice Tariffication Bill will remove tough government control in all agricultural commodities and will oblige our domestic market to join and spend unnecessary resources to global rice market and competition. It will be a burden to all Filipinos especially the 60 million poorest of the poor families because of the high possibility of price increase on all basic commodities like rice, fish, meat, canned goods, vegetables, bread, etc. due to bloating rice import and unstable status of the global market which was further intensified and legalized by the TRAIN Law. In a country where landlessness, joblessness and homelessness are proliferating, the bill will not be of help to the majority of Filipinos. It will lead to farmer’s bankruptcy, drowning in debt and displacement from their lands. It will put farmers at a disadvantage situation especially that the government have minimal support to our rice producers.

In order to address poverty, food shortage and inflation, it is very timely to pass the Genuine Agrarian Reform Bill for it has the capacity to uplift the lives of the poor majority Filipinos. Rural aid like free water irrigation, free calamity subsidy, post-harvest facility, agrarian mechanization and boosting of local market. Land conversion must stop because it contributes to the unceasing decrease of tillable land which affects the annual productivity rate of agriculture including aquaculture that shakes our food security.

Lastly, we want to reiterate that the right to safe, healthy and sustainable food system is a basic and universal human right which the Philippine government must abide with. There is no need to pass the Rice Tariffication Bill including the TRABAHO Bill for it is not favorable to all common Filipinos both in public and private sector. We must act and pray that the Senate will hear and consider our intention.

 

RENMIN VIZCONDE

Executive Director, Philippine Network of Food Security Programmes, Inc.