The economy in 2003:
Broken Promises, Misplaced Priorities, Outright Lies

The year 2003 started with promises of growth and predictably ended with claims of such. An alternative interpretation of official statistics and independent quantification of the economic landscape, however, paint a not-so-rosy picture.

By DANILO ARAŃA ARAO
Bulatlat.com

In the context of the economic situation by December, 2003 will be remembered as a year of broken promises, misplaced priorities and outright lies.

Broken promises

President Gloria Macapagal-Arroyo promised on Dec. 30, 2002 that she will not seek a second term. She took back her word last Oct. 4 when she proclaimed her supreme sacrifice by running for President in the 2004 elections to help the country, so she said, get back on its feet.

At that time, Macapagal-Arroyo stressed that creation of jobs is one of the three priorities in the last months of her administration. (The other two priorities are generically described as “national unity” and “clean and honest elections” in 2004.)

The number of unemployed, however, rose from 3.8 million Filipinos in July 2002 to 4.3 million in July 2003.

The 12.7 percent unemployment rate for July 2003 is even higher than April 2003‘s 11.2 percent. In the past, the unemployment rate in April is usually the highest because graduation happens in March and April, hence the surge in labor force entrants.

The quantity of jobs leaves much to be desired, but the quality of employment also needs closer scrutiny.

For the year 2003, there was no increase in the legislated minimum daily wage rates nationwide. For non-agricultural workers in Metro Manila, the minimum wage remained at P280 daily. Their counterparts in areas outside Metro Manila had daily minimum wages ranging from P140 (Autonomous Region in Muslim Mindanao) to P237 (Southern Tagalog).

Bulatlat.com computations of cost of living in Metro Manila from January to November 2003, however, show that cost of living increased by P424.50 monthly but the minimum wage rate remained the same. This is the reason why a Metro Manila-based minimum wage earner who happens to be the sole breadwinner of a family of six is short by about P10,580 monthly as of November 2003.(See Table 1)

Those who earn minimum wage in areas outside Metro Manila are also in the same rut. For instance, data as of October 2003 from the Department of Labor and Employment (DOLE) acknowledge the ironic situation in ARMM that has the lowest minimum daily wage rate (i.e., P140) and the highest family living wage (i.e., P727). The latter refers to the total wage needed by a family of six to fulfill food and nonfood requirements. 

The Macapagal-Arroyo administration’s failure to keep inflation in check also had deleterious effects on the already low wages. From January to November 2003, the purchasing power of the peso got eroded to the current level of P0.56 in Metro Manila and P0.51-P0.61 in areas outside Metro Manila. This resulted in wage erosion ranging from 38 percent (Western Visayas and Central Mindanao) to 49 percent (ARMM). (See Table 2)

Purchasing power refers to the buying capacity of a currency compared to a given base year, in this case 1994. The purchasing power pegged at P0.56 in Metro Manila simply means that only this amount was necessary in 1994 to buy goods and services that are now being bought at one peso. Wage erosion, on the other hand, shows the extent in which the real value of one’s money has been gone due to lower purchasing power.

Misplaced priorities

A series of oil price hikes that started on Jan. 3 served as a reality check for Filipinos who just celebrated the coming of the New Year. It was ominous of things to come in the light of government’s insistence that sound macroeconomic fundamentals are in place and that these will result in economic growth in due time.

True enough, oil prices continuously increased in 2003 due to the deregulation of the downstream oil industry that freely allowed industry players to set the prices of petroleum products.

The Macapagal-Arroyo administration’s macroeconomic fundamentals are also the reasons why the economy remains outward-looking not only in terms of labor productivity but also revenue generation.

The deployment of workers abroad, however, experienced a snag in 2003. According to the government, only 577,952 registered Filipino workers were deployed from Jan. 1 to Aug. 20 this year, compared to 608,525 in the same period in 2002.

Despite the decrease in number, remittances of overseas Filipino workers (OFWs) from January to August increased by 4.8 percent from $4.8 million in 2002 to $5.1 million in 2003.

The adage “what goes around comes around” applies to OFW remittances since these are used to help pay for the country’s foreign debt. As of June 2003, the country’s foreign debt stands at $56.1 billion. It is interesting to note that when Macapagal-Arroyo assumed the presidency in 2001, the foreign debt was pegged at $52.1 billion.

This foreign debt is expected to further increase as the government continues to incur deficits in its cash operations. From January to September 2003, the deficit reached P142 billion. This is projected to reach P178 billion to P185 billion by the end of 2003.

Outright lies

Is growth already apparent due to the 5.9 percent increase in national income during the third quarter of 2003? The administration claims that this is so, but this was mainly due to increased OFW remittances and the increased activities in services sector, particularly communications.

The latter posted an 11.6 percent growth, and even the National Statistical Coordination Board (NSCB) acknowledged that the growth was due to “strong consumer demand for wireless communication.”

A cellphone-driven growth is clearly not sustainable, and is short-term and speculative to say the least. The availment of various wireless communication services like SMS is mainly due to the relatively low price compared to making voice calls, not to mention the craze with the introduction of the relatively new technology. (For more details, please read “Growth as an Indicator of Crisis” at URL https://www.bulatlat.com/news/3-43/3-43-growth.html)

Especially at a time when the elections are just around the corner, growth is being peddled to justify current economic policies that are chiefly responsible for the poor people’s continued hardship. Interestingly, official statistics are also used as bases for claiming a reality that is the exact opposite of what the people go through. Bulatlat.com

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