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Reds urge people to brace for worse COVID crisis; rallies forces to lead fight vs. ‘tyrant Duterte’

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The Communist Party of the Philippines (CPP) urged the people to brace for an even worse crisis because of the government’s ineffectual response to the coronavirus (COVID) pandemic.

In a statement, the CPP said that due to President Rodrigo Duterte’s “unbridled neglect and failure of governance,” there appears to be an imminent break out of an even worse crisis in the coming months.”

The underground Party said there is a possibility that the COVID pandemic would lead to the downfall of the economy and people’s lives due to Duterte’s reliance on lockdowns and other onerous and burdensome policies.

If it happens, the Duterte regime would falter with the wearing down of the people’s patience, the group said.

Last August 6, the day the government imposed its strictest quarantine for the third time since the pandemic began last year, the Philippines has overtaken Indonesia with the most number of active COVID cases at close to 120,000 cases as compared to its neighbor’s more than 118,000 cases.

Since Saturday, August 14, the country registered upwards of 14,000 new cases daily, nearly matching the all-time high of more than 15,000 registered last April.

“[T]he continuing worsening of the pandemic is a result of Duterte’s pigheaded refusal to prioritize health measures,” the CPP said, noting that the government has no new solution to the emergent Delta variant of the virus but repeated lockdowns.

The group warned there is a strong possibility that COVID will spread more rapidly beyond the capacity of hospitals and facilities in the coming months due to the government’s lack of testing and contact-tracing capacity, in addition to its “turtle-paced vaccination” activities.

No recovery in the horizon

The CPP also said government’s assurances of an economic recovery appear empty due to the lack of investments to kick-start production and consumption.

“Based on experiences in 2020, there is the threat of unemployment shooting up within a few months and rapid rise of businesses losses and bankruptcies,” it said.

The Department of Labor and Employment (DOLE) announced last August 6 that 5,322 workers have lost their jobs on the first day of the current lockdown as at least 178 establishments said they were closing down or cutting their workforce.

Last March 30, DOLE said 4.2 million remained unemployed while 7.9 million workers took pay cuts from shorter working hours.

The CPP said the situation will cause the intensification of workers exploitation and further deterioration of the lives of millions in both cities and the countryside.

“People are forced to desperate straits by the rotten, failed and oppressive Duterte government. Millions of Filipinos daily suffer in long queues for food, aid and vaccines,” the group said.

All the while, government officials abuse power, politicize aid and vaccine distribution, pocket public funds, squander on counterproductive wars, or repay the ever rising government debt which did not benefit the people, the group alleged.

Human rights activists accuse Duterte of instigating mass killings of civilians. (Kodao file photo)

Resistance vs. tyranny

The CPP urged the people to act and express outrage against the Duterte government’s failed policies and response to the crisis.

 “They cannot remain silent and dispersed. They cannot forever wait for aid or rely on the good-heartedness of others to avoid extreme hunger,” it said.

“The people must resist being silenced by Duterte’s shock and terror. Their silence will all the more embolden Duterte and his vassals and minions to trample on the their rights and welfare, plunder public funds, impose heavier taxes, betray and conspire with foreign powers, monopolize political power, sow terror and perpetuate themselves in Malacañang,” it added.

It also challenged its forces as well as progressive, patriotic and democratic activists to bear “the responsibility of guiding and leading the Filipino people in their fight against Duterte’s ruling tyranny.”

“The Filipino masses have been deprived of everything. They have nothing else to lose,” the CPP said. # (Raymund B. Villanueva)

What Build Build Build has delivered

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by Rosario Guzman

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

The number has changed

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

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

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

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

Driven by debt and private capital

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

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

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

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

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

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

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

Building up foreign investors and oligarchs

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

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

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

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

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

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

Legacy of deeper crisis

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

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

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

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

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

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

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

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

Jobs crisis continues, informal work worsens

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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.

Ang araw, ang gabi ni JV

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Ni Nadja de Vera

Alas-sais ng umaga nag-umpisa ang araw ni Jerry Boy “JV” Boller noong Hunyo 30. Kumuha siya ng saging sa kapitbahay para ilako sa mga dumadaang sasakyan sa Rd-10. Ito ang “hustlin” ng maraming kabataan sa Rd-10, maglako ng saging o ng kung ano mang maaring matinda para makatulong sa kanilang pamilya.

Si JV ay 17 anyos lamang. Miyembro siya ng Kabataang Anakpawis sa R-10 Tondo. Masipag na anak at mabait na kapatid at kaibigan. Isa siya sa ang mga nanguna sa pagset-up ng mga community pantry at production work namin. Nasagasaan siya ng isa sa mga naglipanang truck sa malapit sa pier ng Maynila alas otso ng umaga noong Miyerkules at binawian ng buhay ng gabi ring iyon.

Si JV. (Larawan ni Nadja de Vera)

“May pinulot siyang barya, tapos, ayon, nahagip na siya ng truck,” ang sabi ng nagbalita sa akin. Dahil sa barya, dahil sa hirap ng buhay.

Napakarami kong gustong ikwento tungkol kay JV at sa nangyari sa kanya, pero ito pa lamang ang nakayanan ko.

Maralita ang pamilya ni JV. Si Nanay Vingie ay buntis at si Tatay naman ay tricycle driver. Kahit ang pang araw-araw ay kinakapos sila. Silang pamilya ang pangunahing volunteer ng ating community pantry sa Tondo.

Noong nag-orientation kami sa Kabataang Anakpawis, tinanong ko sila kung sila ba ang papipiliin, magtatrabaho ba sila o mag-aaral. Ang sagot ni JV, gusto niyang mag-aral pero gusto din niyang magtrabaho. Sabi niya, sobrang sipag ng Nanay at Tatay nila, pero kahit anong sipag nila hindi pa rin kasya ang kinikita para sa pamilya.

Tuwing darating kami sa Rd-10, isa si JV sa mga unang sumasalubong sa amin. Sa liit ng katawan ay kaya niyang magbuhat ng mga kaban ng bigas o mga gulay para sa community pantry. Laging nakasilip tuwing mag-uumpisa na ang pila. Nakangiti sa mga kapitbahay na tila proud din siya na nakatulong sa kapwa. Masipag din siya sa mga aktibidad ng Kabataang Anakpawis. Kahit hindi raw siya ang tagaluto ay siya naman ang tagabili.

May isang beses na kinausap ko siya ng masinsinan. Muntik kasi siyang madamay sa gulo. Nangako siya na hindi na uulit para sa Mama niya. Kinagabihan, naabutan ko siyang nasa labas pa ng bahay. Agad na lumapit at malambing na nag-sorry. Sabi ko, hindi naman ako galit, basta iakyat niya na ang itlog na ulam namin kinabukasan para sa pagkilos.

Alas otso ng umaga noong Hunyo 30, habang naghahanda ang mga Nanay sa Rd-10 para sumama sa pagkilos, ibinalita na nasagasaan daw si JV ng truck. Habang nagbebenta ng saging sa Rd-10 may nalalaglag daw siyang limang piso, kasabay sa pagpulot ng barya ay ang pag-andar ng truck.

Ang burol ni JV na may tumpok ng saging na kanyang paninda. (Larawan ni Nadja de Vera)

Buhay pa si JV noong dinala sa ospital. Ipinaalala niya pa kay Nanay Vingie na may Php300 siyang naipon at ipang-gastos muna. Tuwing umiiyak daw si Nanay ay nasasaktan daw siya. Hindi siya umiyak kahit sobrang sakit ng maliit na katawang nagulungan ng gulong. Pabirong sabi niya kay Nanay na kung magbabayad daw ng danyos ang nakabangga sa kanya ay ipangpagawa na lang ng tricycle ni Tatay. Okay lang daw na di siya makalakad basta may panghanap-buhay sila.

Alas-siete ng gabi, natapos ang araw ni JV. Hindi naubos ang saging na paninda, hindi rin maubos ang luha ng mga nagmamahal sa kanya. #

*Nadamitan na namin ang bangkay ni JV. Sinalubong siya ng ulan at iyakan mga kapwa Kabataang Anakpawis. Nakaburol siya ngayon sa maliit na chapel dito sa Tondo. Sa mga nais magpaabot ng tulong sa pamilya maaring ipadala ang in-kind donation sa Brgy Hall ng Brgy 123, Tondo. Sa abuloy ay maari sa Gcash 09162436843 o sa (0999) 667 0648.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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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

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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

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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

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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

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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.