The Philippine Economy in 2009: Bruised and Battered by Myths and Hype

Limits of Migration

The Philippines gives great policy importance to migration so it is worthwhile to stress three points on the matter. The first is that migrant remittances have been markedly slowing. While monthly remittance growth has remained positive ever since the global crisis in the last quarter of 2008, this has been at much slower rates. The 4.5 percent growth in remittances reported by the Bangko Sentral ng Pilipinas in the first 10 months of 2009, reaching US$14.3 billion so far, is actually less than a third of the 15.5 percent growth rate in the same period last year and the slowest 10-month growth in eight years.

The second is how the growth rate in the deployment of overseas workers has been slowing overall, albeit with wide year-to-year variation, since the early 1980s. According to data from the Philippine Overseas Employment Administration, there was an 11.7 percent growth in OFW deployments in the first 11 months of 2009 from the same period last year (i.e., 1.28 million land- and sea-based workers). Peak growth rates were around 19-38 percent in the period 1981-1990, down to some 13-38 percent in 1991-2000, and down further to just around 12-15 percent in 2001-2008.

Third is how the size of remittances relative to GDP have been somewhat flat in the last five years possibly even marking the start of a period of decline. The period 1980-1990 saw remittances as a share of GDP slowly rising from 1.3 percent (1980) to 2.7 percent (1990) with the next period 1990-2004 seeing the share rising rapidly to reach 9.8 percent (2004). However, this appears to have reached some sort of plateau in the period 2004-2008 to vary between 9.8-10.9 percent, falling back to 9.8 percent of GDP in 2008. This could be the result of the tightening global jobs market and implying that if the country wants to keep relying on remittances then it will have to send even more Filipinos abroad and likely working for even less pay and under worse working conditions.

People’s Welfare

The Philippine is facing the worst crisis of joblessness in its history. This is compounded poor quality of jobs available. This goes far in explaining the country’s wide and deep poverty — with Ibon Foundation’s last October 2009 quarterly nationwide survey having 71 percent of Filipinos rating themselves as poor — at the same time it starkly reflects the sheer backwardness of economic activity. The economy is not creating enough jobs for the population and, moreover, the jobs created are in small-scale low productivity economic activity that gives little formal legal protection.

In 2009, there were some 4.32 million unemployed with a true unemployment rate of around 11.0 percent (these estimates try to correct for the government’s change in definition of “unemployed” in April 2005). The average unemployment rate for the period 2001-2009 is 11.2 percent, which is the country’s worst nine-year period of sustained high joblessness in the over half a century since 1956 as far back as records go to.

The estimated figure of 4.32 million unemployed, however, still grossly understates the seriousness of the country’s jobs crisis. The poor quality of jobs is alarming and millions more are in insecure, unprotected, and poorly earning or non-earning work. In 2009, among those considered employed were 4.22 million “unpaid family workers” and 12.16 million “own-account workers” covering those in informal sector work.

To this can also be added “wage and salary” workers whose employment status belie the supposed security and stability that the category implies. One estimate of additional poor quality work is another 4.67 million non-regular wage and salary workers or those with casual, contractual, probationary, apprentice or seasonal status. This is estimated by extrapolating the finding to 2009 of the 2007/2008 BLES Integrated Survey (BITS) of the Bureau of Labor and Employment Statistics (BLES) that some one in four workers in nonagricultural establishments with 20 or more workers had nonregular status.

Another estimate of another 11.71 million wage and salary workers employed but with only verbal contracts or none at all. This, in turn, is estimated by extrapolating the finding, again to 2009, of the April 2008 Informal Sector Survey (ISS) of the National Statistics Office (NSO) that less than four out of 10 (37.3 percent) wage and salary workers were covered by written contracts. Employers increasingly prefer nonregular or noncontract employees to cut costs where they want to legally avoid paying minimum wages, deny workers their benefits, and be able to dismiss workers at will.

This poor quality of much work is already partly reflected in the underemployment figure of 6.69 million in 2009, which covers those employed but nonetheless still looking for more work and income. The underemployment figures, however, show only those most determined in looking for additional work and would not reflect, for instance, those discouraged or otherwise practically unable to find the time for any additional work given their current job. Also, over one in three jobs (36.4 percent) in 2009 were merely parttime work, numbering12.75 million.

All told, this means a huge 25.37 million to as much as 32.41 million Filipinos either jobless or in poor quality work — the combined unemployed, unpaid family workers, own-account workers and nonregular (for the lower figure) or noncontract (for the larger figure) wage and salary workers. This is equivalent to 64.4 percent to as much as 82.2 percent of the country’s labor force of 39.39 million in 2009. (This labor force figure also seeks to adjust for the April 2005 change in definition.)

This grim jobs situation was aggravated last year by natural disturbances degenerating into manmade disasters because of government neglect. Ibon Foundation estimates that tropical storm Ondoy might have caused lasting poverty and severe difficulties for at least 276,000 families in the National Capital Region (NCR), Central Luzon and Calabarzon regions.

In addition, military operations in the countryside resulting in massive physical and economic displacement also cause severe socioeconomic difficulties. The Internal Displacement Monitoring Centre (IDMC) in June 2009 reported that nearly three million people have been internally displaced by conflict and human-rights violations in the Philippines since 2000. The Philippines had the most number of displacements due to militarization worldwide in 2008 surpassing those in Sudan, Kenya, Democratic Republic of Congo and even Iraq. The IDMC also noted “tens of thousands” of Filipinos displaced each year as a consequence of projects linked to urban development, energy production or natural resources extractions.

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5 Comments - Write a Comment

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  4. sonny, i suppose you are also an economist. your interpretation on philippine economic situation reflects your bias and personal hatred towards this administration.

  5. Hi Sir Sonny, Glad to read this analysis from u. U r one of the economist of/for the people whom I highly honored and appreciated.

    Thanks for sharing this packet. It is very timely for I badly need this to one of my assignment-article in the newsletter of our youth organization. Im connected to one of our arms in this journey – PCPR.

    I personally see u in one of the workgropus during the first GA of PAGBABAGO.

    Hope to see u around! And hoping to work with u in any way in the service of the people.

    Thanks again! Padayon!

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