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Ayuda urgent: Jobs crisis still worse than before pandemic — IBON

Government claims of the employment situation improving in February 2021 compared to pre-pandemic January 2020 are unfounded, research group IBON said.

The so-called increase in employment is just Filipinos desperate to make a living in any way they can. This makes the need for substantial cash aid even more urgent, the group said.

The economic managers repeatedly claim that “we have surpassed our pre-pandemic employment level of 42.6 million in January 2020,” such as when the February 2021 labor force survey (LFS) results were released.

IBON said the LFS figures, however, clearly show that the jobs crisis existing even before the pandemic has only gotten worse upon the longest and harshest lockdowns in Southeast Asia.

Reported employment increased by 610,000, from 42.5 million in January 2020 to 43.2 million in February 2021. But this was far from enough for the labor force which grew by 2.4 million over that same period to 47.3 million, said the group, resulting in even greater unemployment.

IBON also noted that there are 12 million combined unemployed (4.2 million) and underemployed (7.9 million) Filipinos as of February 2021, which is much more than the 8.7 million in January 2020 (i.e. 2.4 million unemployed and 6.3 million underemployed).

The 1.8 million increase in unemployment in itself already indicates collapsing household incomes for millions of Filipino families, said the group.

Photo by R. Villanueva/Kodao

The marginal increase in employment should not be seen as a sign of any improvement because it masks a serious deterioration in the quality of work in the country, IBON said. Even less than before, so-called employment is not enough to give Filipino families the regular and secure incomes they need to survive.

By class of workers, the number of wage and salary workers fell by over 1 million and of employers in family farms and businesses by 72,000 from widespread lockdown-driven business closures and retrenchments. These are down to 26.7 million and 930,000, respectively.

IBON noted that jobless Filipinos were apparently driven to “self-employment” which bloated by 1.4 million and to being “unpaid family workers” which rose by 356,000. These increased to 12.5 million and 3 million, respectively.

By hours worked, the number of full-time workers fell by 2.9 million to 25.9 million. Those working only part-time however increased by 3.2 million to 16.6 million, and those “with a job, not at work” by 325,000 to 657,000.

IBON stressed that tens of millions of Filipinos are going hungry, most of all from not having the money to buy food especially from the lack of work.

The Php10,000 emergency cash assistance being demanded is all the more urgent to immediately alleviate hunger. The inflation-adjusted official food threshold as of March 2021 for a family of five is Php2,133 per week in the National Capital Region (NCR) and Php1,905 per week on average for the Philippines.

The latest Php1,000 token cash aid is glaringly not even enough for food expenses, considering even that official food thresholds are ridiculously low to begin with, IBON said.

At the same time, a large fiscal stimulus is critical to arrest economic scarring, jump-start the economy, and genuinely improve employment on a wider scale, said the group. #

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.

Inflation highest in 21 months, NEDA warns of continuing increase

The country’s Inflation rate accelerated to 3.5% in December 2020, driven by the increase in the prices of food non-alcoholic beverages, transport, and restaurant and miscellaneous goods and services, the National Economic Development Authority (NEDA) reported Tuesday.

The inflation rate last month is higher than the 3.3% in November 2020 and the 2.5% in December 2019.

Among the sub-groups, prices of vegetables and meat significantly increased from the previous month, traced to lower production following the damage caused by previous typhoons, the NEDA said.

The increase in the prices of meat inched up for the third consecutive month owing to the decline in domestic swine production due to the African Swine Fever (ASF), the agency added.

NEDA said that country’s average inflation rate for 2020 is at 2.6%, higher than the 2.5% the previous year but within the 2% to 4% target range of the government.

Acting socioeconomic planning secretary Karl Kendrick Chua blamed the coronavirus pandemic and the string of calamities that hit the country for the increase.

“The imminent threat of natural calamities every year highlights the need for long-term solutions such as infrastructure investments that would improve flood control, water management and irrigation systems, reforestation, climate-resilient production and processing facilities, among others,” Chua said.

Chua warned that the ongoing La Niña weather phenomenon may continue to adversely affect the economy.

Inflation hardest for the poor

Research group IBON noted that the December 2020 inflation rate is the highest inflation in 21 months, and even higher for the poorest 30% of Filipino households at 4.3%.

IBON said that even Philippine Statistics Authority (PSA) data show that the December inflation rate is the highest since March 2019.

“The prices of food and non-alcoholic beverages rose the fastest at 4.8% last month from 4.3% in November 2020. Inflation in health and transport was also higher at 2.6% and 8.3%, respectively,” IBON reported.

“The higher December 2020 inflation figures underscore the urgency of giving poor and low-income families additional emergency cash subsidies. The faster increase in prices is all the more burdensome due to record joblessness and decreasing incomes amid the pandemic lockdown,” the group said.

IBON blamedthe government’s continuing failure to contain the pandemic it said resulted in more unemployed Filipinos today than at any time in the country’s history.

The group estimates unemployment in October 2020 at 5.8 million Filipinos — or two million more than the official 3.8 million count — or an unemployment rate of 12.7 percent. # (Raymund B. Villanueva)

2020 Yearender: Economic lessons from Jose Rizal

by Sonny Africa

Wrapping up a cataclysmic year, Jose Rizal’s legendary quote is something for the Duterte administration and its economic managers to reflect on: “Ang hindi marunong lumingon sa pinanggalingan ay hindi makakarating sa paroroonan.

The worst economic collapse in Philippine history and in Southeast Asia is mainly due to the government’s stumbling pandemic response and lackluster economic measures in 2020. If, again, there is more bluster than action in 2021 then real recovery will be much farther away than it should be.

Big promises

The economic managers announced a grandiose “4-Pillar Socioeconomic Strategy Against COVID-19” in April. The “Grand Total” of Php1.17 trillion was equivalent to 6.3% of gross domestic product (GDP) and sought to give the impression of grand action. This number was extremely misleading though.

There was significant double-counting. Supposedly Php338.9 billion in government spending on emergency support and health measures was counted alongside Php615 billion in borrowing – almost half of which debt was not even really going to be spent on COVID response. Another Php220.5 billion in additional liquidity and tax relief was also added.

The latest package released in October corrects some of these deceits while introducing new ones. The “Grand Total” is now an imposing Php2.57 trillion equivalent to 13.8% of GDP. The borrowing was removed while emergency support and health measures increase to Php558.8 billion. Emergency support now includes supposedly Php132 billion in credit guarantee and loan programs for small business.

The value of the package is particularly inflated by Php1.31 trillion in additional liquidity from Bangko Sentral ng Pilipinas (BSP) measures, Php459 billion in estimated incremental loans to MSMEs, and Php61.3 billion in foregone tax revenues especially because of corporate income tax cuts under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill.

These are still misleading. The additional liquidity and incremental loans cited do not mean actual investments or economic activity. Smaller businesses are not borrowing because of collapsed aggregate demand and uncertain market conditions – the “incremental loans to MSMEs” are just an illustrative extrapolation from a Php45 billion capital infusion to government financial institutions. Banks meanwhile are becoming more risk averse with non-performing loans already nearly doubling to 3.2% of total loans in October from 1.7% in the same period last year.

The big numbers seem to be designed for press releases and media briefings to convince the public that the Duterte administration is undertaking herculean efforts to boost the economy. The reality is very different.

Tiny action

Measured against the economic devastation from poor pandemic containment – including over-reliance on long and harsh lockdowns and under-investment in effective testing, tracing, quarantines and isolation – government efforts border on the trivial. The most recent official estimate of -9% real GDP growth in 2020 means that the economy will be Php1.74 trillion smaller than in 2019.

There has not really been any stimulus which, to mean anything, has to involve significant additional spending beyond pre-pandemic levels. The government originally projected Php4.21 trillion in disbursements in 2020. Upon the pandemic, planned disbursements increased only slightly by Php121.4 billion to Php4.34 trillion or just a 2.9% increase.

Measured in current prices, GDP in 2019 was Php19.52 trillion which means that additional government spending in 2020 will be equivalent to just 0.6% of GDP in 2019. The economic managers refuse to spend more because of their fixation on being creditworthy to foreign debtors. The stingy non-stimulus is due to their narrow-minded fiscal conservatism.

How to reconcile this with the Php500.7 billion figure allotted for COVID-19 response as of mid-December – consisting of Php386.1 billion under Bayanihan 1, Php6.6 billion under Post-Bayanihan 1, and Php108 billion under Bayanihan 2? Most of this spending comes from existing budget items – either discontinued programs/projects (Php306.7 billion), existing special purpose funds (Php109.3 billion), regular agency budgets (Php21.2 billion), and unutilized automatic appropriations/excess revenue collections (Php63.5 billion).

The Bayanihan 2 funds released also do not even seem to have been spent yet including for vital cash assistance. The social welfare department supposedly has Php6 billion budget for around 1.2 million beneficiaries. As of mid-December, only Php931 million has actually been disbursed to just 142,058 beneficiaries.

It is likewise with labor department emergency assistance of Php16.4 billion for around 800,000-1.4 million formal workers under CAMP, 500,000 informal workers under TUPAD, and 200,000 OFWs under AKAP. Only 350,000 workers have been reported to get assistance as of the first week of December.

The rigidity and obsession with creditworthiness unfortunately carries over into the New Year. The recently approved Php4.5 trillion national government budget for 2021 is 9.9% larger than the 2020 General Appropriations Act (GAA). This increase is smaller than the historical annual average increase of 11.1% since 1987. It is actually even smaller than previous budget increases of the Duterte administration in 2017 (23.6% increase) and 2020 (13.6%). So, again, there’s no stimulus there.

Devastating consequences

The Duterte government’s inadequate efforts are behind the extreme economic collapse and excessive suffering of tens of millions of Filipino families. The biggest blunder is the failure to contain COVID-19 – economic activity will remain repressed as long as the pandemic is raging. The administration diverts from this original sin whenever it invokes the false dichotomy between health and the economy.

The stingy fiscal response and inappropriate monetary measures come on top of that. The lockdowns and continued physical distancing have most of all caused household incomes, business investments and aggregate demand to collapse. These warrant a much larger fiscal response especially in terms of emergency assistance to households to improve their welfare and boost consumption spending in the economy.

Yet the economic managers were stingy in providing cash assistance under Bayanihan 1 – at the height of the draconian lockdowns – and only deign to give token amounts under Bayanihan 2 and in the 2021 national government budget. The trillion peso liquidity infusions gave the illusion of meaningful intervention but, with domestic and even global demand so weak, were really just pushing on a string with little or no results.

Measured as a share of GDP, the Philippines has the smallest fiscal response in Southeast Asia – which, along with the poor health response, goes far in explaining its experiencing the biggest economic contraction in the region. The economy is smaller today than it was in 2018, and will likely only return to its size last year at the earliest by 2022.

The insistence of the economic managers that the economy was going strong coming into the pandemic harkens to glory days that never were. Economic growth has been slowing in every year of the Duterte administration from 6.9% in 2016. This fell to 6.7% in 2017, 6.2% in 2018, and 5.9% in 2019. Average annual employment growth of 1.2% in 2017-2019 is the lowest in the post-Marcos era.

The number of employed Filipinos in 2020 has fallen to its lowest in four years. The 39.4 million reported employed Filipinos in 2020 (average for the whole year) is 2.6 million less than in 2019, and even less than the 41 million reported employed four years ago in 2016.

There were probably at least 5.8 million unemployed Filipinos and an unemployment rate of 12.7% as of October 2020, more than the official count of just 3.8 million if the nearly two million invisibly unemployed for dropping out of the labor force due to the pandemic shock are also counted. There were more unemployed Filipinos in 2020 at any time in the country’s history.

Domestic unemployment is bloated by displaced overseas Filipino workers (OFWs). The labor department reported over 680,000 OFWs seeking emergency assistance as of end-November. Deployments have also drastically collapsed with the 682,000 OFWs leaving in the first nine months of the year a huge 60% less than the 1.7 million deployed in the same period last year.

Household incomes are collapsing. Family incomes are only measured every three years with the last time this was done being in 2018. At the time, 17.6 million Filipinos were estimated to fall below the low official poverty threshold of about Php71 per person per day. In a worst case scenario of incomes contracting 20% without emergency cash subsidies, the Philippine Institute for Development Studies (PIDS) estimates the number to rise to as much as 29.7 million.

As it is, extrapolating from BSP Consumer Expectations Survey data, as much as 2.6-3.2 million households have had their savings wiped out by the pandemic economic shock. These are the vulnerable families whose income and livelihood losses were so large as to eat up their savings that were so low to begin with.

Lessons for 2021

The plight of tens of millions of Filipinos adversely affected by the pandemic and poor government response is not helped by the administration insisting that all is well.

The government could have pre-empted complete economic decline with a more rapid and effective health response as in Vietnam and Thailand. This remains the most urgent concern today. Unfortunately, despite relatively large numbers of COVID-19 testing, contact tracing and quarantining are lagging which means the coronavirus is still spreading. The vaccine-driven strategy is also not reassuring with emerging controversies around procurement, potential distribution bottlenecks, and self-serving preferential inoculation.

Economic distress in 2020 could also have been mitigated by a larger and better economic response of more emergency assistance, bigger support for MSMEs and domestic agriculture, and larger government spending on social infrastructure and services. These could also have been paid for with a more creative debt and finance mobilization strategy.

Instead, the Duterte administration’s poor health and economic response has resulted in the destruction of large swathes of service-oriented informal sector livelihoods, hundreds of thousands of displaced workers, reduced wages and benefits, worsened insecurity, MSME closures, and record joblessness. The wealthiest families and biggest corporations on the other hand will easily weather momentary income losses, with many even seeing their profits and market shares increase.

And yet despite a meager economic response, the budget deficit is soaring to record highs because of the collapse in revenues and continued misprioritization of infrastructure, militarism and debt service. Government debt is moreover bloating not to finance COVID-19 response but mainly to pay for unchanged government spending mispriorities.

The biggest economic lesson of 2020 is clear – the government has a vital role in economic development especially in times of crises. COVID-19 hit the entire world and the difference was in how each country dealt with it. The public has a right to decent governance which civil society groups and many other concerned Filipinos have been asserting throughout the year, many even at great risk to their lives and liberty.

Sustained administration disinformation and diversionary tactics seek to hide a plain fact: the government’s mismanagement of the pandemic and economy is behind the worst economic collapse in the region and in Philippine history. The coming year can be better only if the people keep working at changing the government and governance for the better.

As Rizal of course also asserted: “There are no tyrants where there are no slaves.” #

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

Duterte gov’t fails to meet its human rights obligations amid the pandemic

by IBON Media & Communications

The Philippine government is a signatory to the International Covenant on Economic, Social and Cultural Rights (ICESCR). The covenant obliges the government to take measures to prevent or at least mitigate the impact of the pandemic. Its gross failure to do so is leading to unprecedented but preventable suffering for millions of Filipinos.

The country’s poorest and most marginalized are being left behind by the COVID-19 response of the Duterte administration. On the other hand, wealthy creditors are protected and large corporations including foreign investors are getting their profits boosted.

COVID-19 spreading

The Duterte administration’s inability to contain COVID-19 is the clearest sign of its failure to address the pandemic. In Southeast Asia, Vietnam and Thailand show that an effective government response is possible. Yet the Philippines, adjusting for population size, has the second most number of COVID cases next to small city-state Singapore, and the most number of deaths.

The Philippines has over 4,000 cases per million population (more than double the regional average of around 2,000), and nearly 80 deaths per million population (more than triple the regional average of 26). This is despite the longest and harshest lockdowns and quarantine measures in the region.

Emergency aid falling

The government’s refusal to give meaningful aid is causing unparalleled suffering. The latest labor force survey reported 3.8 million unemployed Filipinos and an unemployment rate of 8.7% in October. IBON however estimates the real number to be at least 5.8 million, with an unemployment rate of 12.7%, if those who were forced out of the labor force by the pandemic or discouraged by the obvious lack of work are also counted. Earlier, private opinion surveys already reported 7.6 million families going hungry.

At least 12-13 million Filipino families, or the poorest half of the population, are facing economic distress because of the pandemic and the worst economic collapse in the country’s history. The administration’s Bayanihan 2 however gives emergency aid to at most around 3.3 million families, who are even getting just half as much cash subsidies as supposedly given under Bayanihan 1.

This is because the economic managers refuse to spend on emergency aid for poor and vulnerable families and only allowed a token Php22.8 billion under Bayanihan 2. This is a far cry from the Php238 billion in aid under Bayanihan 1 which has already been used up by beneficiary households. It is even worse in the proposed 2021 national government budget where pandemic-related aid falls to just Php9.9 billion.

As it is, with only nine days left in the effectivity of Bayanihan 2, the social welfare department has only given one-time emergency subsidies to a mere 64,839 beneficiaries at an average of just Php6,720 per family. The labor department meanwhile has only given CAMP support to around 350,000 workers.

The Duterte administration’s so-called emergency assistance is so small that it is just a token measure to give the illusion of responding. Tens of millions of Filipinos are not getting any help causing millions to go hungry and sink deeper into poverty.

Corporate profits rising

The government is also making inequality worse. While millions of poor families are neglected, large corporations including foreign firms are going to get hundreds of billions of pesos in additional profits over the coming years from big corporate income tax cuts.

Disregarding the critical need for revenues to respond to the pandemic, the economic managers pushed their Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act and even dishonestly presented this as a COVID-19 stimulus. This is a willful violation of the obligation to mobilize the necessary resources for responding to serious health and economic distress from COVID-19.

Rights being violated

The proposed 2021 budget also violates human rights. The state has an obligation to devote the maximum available resources to combat COVID-19 and the economic crisis in the most equitable manner.

However, the 2021 budget fails to allocate resources in a way that prioritizes the public health crisis and the economic burdens the poor are facing. The proposed 2021 budget spends less on health and on emergency aid than in 2020. On the other hand, the budgets for infrastructure, military and police, and debt servicing all increase. Next year’s budget does not protect poor and vulnerable groups nor mitigate the impact of the pandemic on them.

The Duterte administration’s contempt for human rights is complete. It violates civil and political rights with its systematic political repression and killings of activists and alleged drug offenders. With its neglectful pandemic response, it also violates the social and economic rights of tens of millions of Filipinos. The country is even further away from the full and equal enjoyment of the social and economic rights enshrined in the ICESCR and even in the 1987 Philippine Constitution. #

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

Govt stinginess worsens Filipinos’ suffering and PH economic collapse

by IBON Media & Communications

The -11.5% growth, or contraction, in gross domestic product (GDP) in the third quarter, confirms that the Philippines is on its way to becoming the worst performing economy in Southeast Asia in 2020. The economy is saddled by the Duterte administration’s refusal to spend on aid for Filipino families and support for small businesses so needed amid the pandemic.

A fiscal response commensurate to the crisis at hand is critical but the economic managers are tying the government’s hands. The government package’s demand-side effort is grossly insufficient and even undermines its supply-side measures.

The Php3 trillion in government spending in the first three quarters of 2020 is only a 15.1% increase from the same period the year before. While this is larger than the 5.5% year-on-year increase in the same period in 2019, it is still much less than the corresponding 23.6% increase in 2018.

It remains to be seen how much more spending the administration can manage in the fourth quarter of 2020. The Bayanihan 2 law is supposedly the government’s main response to COVID in the remaining months of the year.

However, as of the president’s last report to Congress at the start of November, it appears that at most just Php28.4 billion has been spent so far. With only a little over a month left in the law’s effectivity, this is just 20.3% of Bayanihan 2’s Php140 billion in appropriations and just 17.1% of its Php165.5 billion including its standby fund. The report mentioned Php76.2 billion in allotments and releases which appears relatively large.

However, the same report did not mention any actual disbursements in major items especially for aid or support to small businesses or agriculture. These items with allotments released but not reported spent include: Php6 billion for the social amelioration program (SAP); Php13.1 billion for the COVID-19 Adjustment Measures Program (CAMP), Tulong Panghanapbuhay sa Ating Disadvantaged/Displaced Workers (TUPAD) and Abot-Kamay ang Pagtulong (AKAP) programs; Php9.5 billion for public utility vehicle (PUV) programs; and Php12.1 billion for the agriculture stimulus package. While there is supposedly Php8.1 billion for small businesses, only Php893 million worth of loans were reported.

There is also little real stimulus in the proposed 2021 budget. The proposed Php4.51 trillion budget is a 9.9% increase from the 2020 budget. This is however smaller than the 13.6% increase in the programmed 2020 budget from the year before, and even smaller than the historical annual average 11.1% increase in the national budget over the 35 years of the post-Marcos era. The Development Budget Coordination Committee (DBCC) actually projects an even smaller 5.3% increase in 2022 which will be less than half the historical average.

The DBCC initially projected the economy to have -5.5% growth in 2020. To achieve this, GDP will have to grow an impossible 6.6% in the last quarter of the year which is all the more impossible with the administration refusing to give meaningful aid to millions of distressed families and small businesses including in the country’s vast informal sector.

Additional direct cash assistance to households is already pitifully small under Bayanihan 2 and virtually non-existent in the proposed 2021 budget. The record joblessness and collapse in family incomes because of the government’s poor COVID response compels much larger support to alleviate wide and deep suffering.

The economic managers also keep insisting that the CREATE law’s corporate income tax cuts will most of all benefit micro, small and medium enterprises (MSMEs). This is untrue. Large taxpayers account for an overwhelming 72% of all corporate collections as of 2019 which means that large firms will be the biggest beneficiaries of CREATE. Moreover, many MSMEs are also unregistered and in the informal sector so will not really benefit from any tax cuts under CREATE.

The International Monetary Fund (IMF) projects the economy to contract with -8.3% GDP growth in 2020. This is the worst GDP performance in the region with other countries either contracting less or even registering positive growth: Thailand (-7.1%), Malaysia (-6%), Cambodia (-2.8%), Indonesia (-1.5%), Singapore (-6%), Brunei (0.1%), Lao PDR (0.2%), Vietnam (1.6%), and Myanmar (2%).

Even the IMF’s projected 7.4% GDP growth rebound in 2021 will still not be enough to bring the economy back to its level last year in 2019. As it is, the 2020 Philippine economy is going to be as small as it was three years ago in 2017, and with GDP per capita approaching as low as it was in 2016.

The Philippines’ COVID response is the smallest among those announced by the region’s major economies, according to the Asian Development Bank’s (ADB) COVID policy tracker. This earlier reported the Philippines’ response as equivalent to just 5.8% of 2019 GDP which is smaller than in Singapore (26.2%), Malaysia (22.7%), Thailand (16%), Indonesia (10.9%), and Vietnam (10.1%).

Months into the worst economic collapse in the country’s history, the Duterte administration’s obsession with creditworthiness and the myth of a fundamentally strong Philippine economy is preventing it from taking the measures needed for real and rapid recovery. Its insensitivity is placing the burden of rebound and protracted recovery on millions of poor families and distressed small businesses. #

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

Govt stinginess worsens Filipinos’ suffering and PH economic collapse

Govt stinginess worsens Filipinos’ suffering and PH economic collapse

November 10, 2020

by IBON Media & Communications

The -11.5% growth, or contraction, in gross domestic product (GDP) in the third quarter, confirms that the Philippines is on its way to becoming the worst performing economy in Southeast Asia in 2020. The economy is saddled by the Duterte administration’s refusal to spend on aid for Filipino families and support for small businesses so needed amid the pandemic.

A fiscal response commensurate to the crisis at hand is critical but the economic managers are tying the government’s hands. The government package’s demand-side effort is grossly insufficient and even undermines its supply-side measures.

The Php3 trillion in government spending in the first three quarters of 2020 is only a 15.1% increase from the same period the year before. While this is larger than the 5.5% year-on-year increase in the same period in 2019, it is still much less than the corresponding 23.6% increase in 2018.

It remains to be seen how much more spending the administration can manage in the fourth quarter of 2020. The Bayanihan 2 law is supposedly the government’s main response to COVID in the remaining months of the year.

However, as of the president’s last report to Congress at the start of November, it appears that at most just Php28.4 billion has been spent so far. With only a little over a month left in the law’s effectivity, this is just 20.3% of Bayanihan 2’s Php140 billion in appropriations and just 17.1% of its Php165.5 billion including its standby fund. The report mentioned Php76.2 billion in allotments and releases which appears relatively large.

However, the same report did not mention any actual disbursements in major items especially for aid or support to small businesses or agriculture. These items with allotments released but not reported spent include: Php6 billion for the social amelioration program (SAP); Php13.1 billion for the COVID-19 Adjustment Measures Program (CAMP), Tulong Panghanapbuhay sa Ating Disadvantaged/Displaced Workers (TUPAD) and Abot-Kamay ang Pagtulong (AKAP) programs; Php9.5 billion for public utility vehicle (PUV) programs; and Php12.1 billion for the agriculture stimulus package. While there is supposedly Php8.1 billion for small businesses, only Php893 million worth of loans were reported.

There is also little real stimulus in the proposed 2021 budget. The proposed Php4.51 trillion budget is a 9.9% increase from the 2020 budget. This is however smaller than the 13.6% increase in the programmed 2020 budget from the year before, and even smaller than the historical annual average 11.1% increase in the national budget over the 35 years of the post-Marcos era. The Development Budget Coordination Committee (DBCC) actually projects an even smaller 5.3% increase in 2022 which will be less than half the historical average.

The DBCC initially projected the economy to have -5.5% growth in 2020. To achieve this, GDP will have to grow an impossible 6.6% in the last quarter of the year which is all the more impossible with the administration refusing to give meaningful aid to millions of distressed families and small businesses including in the country’s vast informal sector.

Additional direct cash assistance to households is already pitifully small under Bayanihan 2 and virtually non-existent in the proposed 2021 budget. The record joblessness and collapse in family incomes because of the government’s poor COVID response compels much larger support to alleviate wide and deep suffering.

The economic managers also keep insisting that the CREATE law’s corporate income tax cuts will most of all benefit micro, small and medium enterprises (MSMEs). This is untrue. Large taxpayers account for an overwhelming 72% of all corporate collections as of 2019 which means that large firms will be the biggest beneficiaries of CREATE. Moreover, many MSMEs are also unregistered and in the informal sector so will not really benefit from any tax cuts under CREATE.

The International Monetary Fund (IMF) projects the economy to contract with -8.3% GDP growth in 2020. This is the worst GDP performance in the region with other countries either contracting less or even registering positive growth: Thailand (-7.1%), Malaysia (-6%), Cambodia (-2.8%), Indonesia (-1.5%), Singapore (-6%), Brunei (0.1%), Lao PDR (0.2%), Vietnam (1.6%), and Myanmar (2%).

Even the IMF’s projected 7.4% GDP growth rebound in 2021 will still not be enough to bring the economy back to its level last year in 2019. As it is, the 2020 Philippine economy is going to be as small as it was three years ago in 2017, and with GDP per capita approaching as low as it was in 2016.

The Philippines’ COVID response is the smallest among those announced by the region’s major economies, according to the Asian Development Bank’s (ADB) COVID policy tracker. This earlier reported the Philippines’ response as equivalent to just 5.8% of 2019 GDP which is smaller than in Singapore (26.2%), Malaysia (22.7%), Thailand (16%), Indonesia (10.9%), and Vietnam (10.1%).

Months into the worst economic collapse in the country’s history, the Duterte administration’s obsession with creditworthiness and the myth of a fundamentally strong Philippine economy is preventing it from taking the measures needed for real and rapid recovery. Its insensitivity is placing the burden of rebound and protracted recovery on millions of poor families and distressed small businesses. #

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

Fighting for our rights to food, a healthy environment and development

by Xandra Liza C. Bisenio

In a forum on the role of consumers in agroecology, Commission on Human Rights (CHR) Economic Social and Cultural Rights (ESCR) Center Assistant Chief Klarise Espinosa stressed that the right to food is recognized in the International Covenant on Economic, Social and Cultural Rights (ICESCR).

Article 11 states that “everyone has a right to an adequate standard of living… including adequate food, clothing and housing, and to the continuous improvement of living conditions.” As duty bearers, governments are expected to make sure that the right to food and the factors enabling it are realized, clarified Espinosa. The ESCR Center is currently reviewing to what extent the Philippine government facilitates and provides sustainable, available, and accessible food.

The ICESCR underscores that the right to food is linked to having decent living standards and the availability of essential needs, services and utilities for an individual and families. For campaigners of People Economics, asserting the right to food is inextricably connected to the people’s struggle to realize their rights to produce food and other basic needs, to industrialization, to a nurtured environment, to the comprehensive range of working people’s rights, to progressive fiscal systems, and to economic sovereignty.

Right to food challenged

In the Philippines, the government gives only token attention to the right to food, as well to the rights to an adequate standard of living, services such as health and education, and even to utilities such as water and electricity. Neoliberal policies have also kept the economy backward and underdeveloped, thus leaving the environment in bad shape, and affecting the availability of safe and sufficient food.

The Philippine government’s food threshold is very low and set at a measly Php50 per person per day. But the Philippines should not have to be counted among the top countries with moderate to severe food insecurity and high levels of malnutrition as per the food and Agriculture Organization (FAO) had the government not abandoned and liberalized agriculture, IBON Research Head Rosario Guzman said.

The critical state of our natural food sources, namely Philippine agriculture and the environment, is due to government neglect and mispriorities. This helps to explain why Filipinos’ access to safe and sufficient food is problematic.

The agriculture sector, which produces our food, lost 1.4 million jobs from 2017 to 2019, or even before the pandemic. The sector’s annual growth was only at 2.1% on average in the same period and its share in the economy has reached its smallest in Philippine history at 7.8% of gross domestic product (GDP) in 2019. Combined agriculture and agrarian reform budgets were at their lowest in 21 years being only 3.6% on the average also from 2017-2019.

In the middle of the pandemic, government even defunded agriculture further with a meager 1.5% allocation in the 2021 budget. This pales in comparison with the agriculture budgets of rice-exporters Vietnam, Thailand, and Indonesia, which are at 6.3%, 3.6%, and 3.3% of their national budgets, respectively.

Land degradation and land use conversion have also disrupted the ecological balance and affected food systems.

The country’s forest cover is now down to only 23.3% of the country’s land area which, according to environment scientists, is ecologically unhealthy. They say that the country’s geography and terrain should sustain a 54% forest cover.

The use of inorganic chemicals and input-dependent crop varieties meanwhile has caused severe erosion in 70.5% of the country’s land area. Moreover, land conversion for corporate agriculture, cash crops, real estate and infrastructure has also added to ecological disruption. The current administration is for instance pushing for almost one million hectares of oil palm plantations in Mindanao. Its Build, Build, Build infrastructure projects, including the Kaliwa, Kanan, and Laiban Dams, threaten to destroy communities, livelihoods, farms, forests, and water sources.

IBON infographic

Hunger and government’s unsustainable ways

Philippine agriculture is in contradiction as a food system, affirms Dr. Charito Medina of the Magsasaka at Siyentipiko para sa Pag-unlad ng Agrikultura (MASIPAG). Farmers and fisherfolk producing food, he says, struggle to eat, and are the poorest sectors with 36% and 34% poverty incidence, respectively, according to official 2018 poverty statistics. Land planted to food kills instead of extending life because it is heavily infused with chemicals. Agricultural lands produce not for people but for big business in the case of feeds and biofuels production. Food wastage is high. Ultimately, corporations, not farmers, control and profit from agriculture. Government policies even prioritize importation and cash crops for export instead of strengthening local food production.

Rural, urban, and indigenous folk affirm how government policies have made food more difficult to both produce and avail. Zen Soriano of the Amihan National Federation of Peasant Women (Amihan) said that during COVID, farming communities are practically being hamletted during the lockdown. This makes it difficult for farmers to transport their produce and for farmworkers to transfer from one planting area to another. There are even cases when peasant missions to deliver food aid were terrorist-tagged. She also said that the rice liberalization law has caused palay prices to fall and millers to close down.

Mimi Doringo of the urban poor group Kalipunan ng Damayang Mahihirap (Kadamay) meanwhile said that for families whose breadwinners lost their jobs or are in precarious work amid the coronavirus crisis, more expensive food and services make it more difficult to cope. Kakay Tolentino of the BAI Indigenous Women’s Network agreed that many government policies have interfered with indigenous people’s food systems in ancestral lands, from the commercialization of palay seeds to destructive mining, export crop plantations, ecotourism projects, and militarization.

These are happening while the pandemic crisis batters especially millions of the poorest and informal workers. The widespread distress is driving calls for heightened aid, food security programs benefiting all marginalized sectors, junking rice liberalization, and a halt to corporate landgrabbing and the commercialization of land and crops. Strategically, the calls are for land reform so that tillers can make their land productive and benefit from this, and for a healthy and robust environment that is not being maimed in pursuit of so-called development that only benefits a few.

Call to consumers

As rights holders, consumers can establish solidarity with producers and themselves begin sustainable practices in producing and consuming food. They can demand the production of and access to safe and sufficient food. Consumers need to also thwart the corporate onslaught on agriculture. Consumers can assert not only the right to food but the right to produce it, and other economic, social and cultural rights.

Solidarity with producers can range from forming relationships to directly procure local farmers’ produce and help raise farmers’ incomes, to standing with farmers in their campaigns for land and life. While maintaining this connection with local producers, consumers can also engage in urban farming to grow what they eat and eat what they grow.

In demanding the production of and access to safe and sufficient food, consumers can call out government neglect of the country’s own production sectors. They can push for ample budget allocation to agriculture and industry, free land distribution and stopping land use conversion, and boosting local production by giving farmers financial and infrastructure support. They can push government to procure local produce and to ensure local stocks for adequate supply.

Consumers can demand that the price of food be reasonable. They can demand subsidies in times of crises and emergencies such as during the COVID-19 pandemic. There are so many households, displaced workers, farms and small businesses in need.

The corporate onslaught on agriculture and on Filipino producers and consumers also has to be thwarted for local production systems to break free from big business and foreign profit-driven objectives. This means saying no not only to the highly chemical and artificial farm inputs detrimental to the soil and the people’s health, but also to all policies that prevent Philippine agriculture from flourishing into the nation’s giver of food and material for development. This means saying yes to Filipinos’ indigenous, traditional ways of farming, while improving food and agricultural programs towards being ecologically sound, scientific and sustainable conduits of progress. #

* “The Role of Consumers in Agroecology” was co-organized by the Samahan at Ugnayan ng mga Konsyumer para sa Ikauunlad ng Bayan (SUKI), Magsasaka at Siyentipiko para sa Pag-unlad ng Agrikultura (MASIPAG), IBON, and the AgroecologyX Network

PH ‘stimulus’ smallest in region

Philippine spending in response to the COVID-19 pandemic is among the smallest in the region, said research group IBON.

The narrow-minded obsession with ‘creditworthiness’ stops the government from taking the urgent steps needed to restore livelihoods and save the economy. The group said that having economic managers dominated by finance people rather than development experts is the biggest obstacle to real recovery.

According to the International Monetary Fund (IMF) Policy Responses to COVID-19 tracker, the fiscal policy response of the Philippines is equivalent to just 3.1% of its gross domestic product (GDP).

IBON noted that this is the smallest among the major economies of Southeast Asia. This is less than in Singapore (19.7%), Vietnam (13.3%), Thailand (9.6%), Indonesia (4.4%) and Malaysia (4.3%). It is also less than half of the global average of around 6.2% of GDP.

The Philippines’ ranking does not change even if the Bayanihan 2 bill recently approved by the Senate is passed into law, said the group.

The proposed Php140 billion stimulus program is worth just 0.7% of the GDP and will bring the country’s fiscal response only to 3.8% of GDP.

The IMF notes that country data are not always strictly comparable but the figures are nonetheless indicative.

IBON said that upcoming national government (NG) budgets meanwhile see the smallest post-crisis ‘stimulus’ increases in decades, further undermining economic recovery.

Department of Budget and Management National Budget Memorandum No. 136 only foresees a 5.7% budget increase in 2021 falling to an even smaller 1.8% increase in 2022, despite the country facing the worst economic decline in its history in 2020 because of the pandemic.

The budget increase in 2021 would be the smallest in a decade and in 2022 the smallest in over 30 years.

These increases also compare unfavorably with budget increases after the 1997 Asian financial crisis and 2008 global financial and economic crisis.

After the Thai Baht collapsed in 1997, the NG budget rose by 9.3% in 1998 and then by 8.0% in 1999. After the Lehman Brothers firm collapsed in 2008, the NG budget rose by 9.1% in 2009 and by 2.7% in 2010.

The economic managers have been blocking larger stimulus packages proposed by Congress since at least May, the group said.

The House of Representatives and Senate took up more meaningful stimulus measures worth at least Php1.3 trillion or more but stopped when the finance department told them to because these were ‘unfundable’ and ‘unsustainable’.

These measures would have been closer to the global average.

Among others, this also affirms that the so-called power of the purse of Congress is illusory and how the president and executive branch are actually in complete control of the country’s finances. The president can implement a bigger stimulus package if he wants to, said the group.

The obsession of the economic managers with ‘creditworthiness’ is misplaced, said IBON.

Thailand, Vietnam and Indonesia have lower credit ratings than the Philippines but are spending more to respond to and recover from the pandemic. Financing can be raised by reallocating from less productive infrastructure and debt service, and by a more progressive tax system with higher taxes on large firms and the wealth of the country’s super-rich.

The magnitude of the country’s response has to be commensurate to the crisis at hand. This should span health measures, continued cash subsidies to improve household welfare and boost aggregate demand, and support especially to Filipino and domestic market-oriented micro, small and medium enterprises, said the group. #

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