Why is there pessimism despite rosy economic growth figures?

Bulatlat Perspective

The Aquino administration has been boasting that the country’s Gross Domestic Product (GDP) growth, averaging 7.4 percent during the first three quarters of 2013, has been among the highest in Asia. In 2012, the country registered a 6.8 percent growth. So this should result in better living conditions for the Filipino people and greater optimism about the future, right?

However, this is not the case.

A Pulse Asia survey conducted in December last year, which was published by Inquirer.net, revealed that 55 percent of Filipinos believed that the national quality of life even deteriorated during that year; 36 percent said it remained unchanged, and a mere nine percent said it improved. Thus, a whopping 91 percent believed that the people’s quality of life either worsened or remained unchanged.

The same survey conducted March 2013 resulted in 48 percent saying that the quality of life worsened, thirty percent it remained unchanged, and 23 percent it improved.

Thus, instead of more people feeling the benefits of the so-called growth, it seems to be the opposite. More people are feeling that the quality of their life is worsening.

Why is this so? Who benefited from the economic growth?

Ibon Foundation, in its 2013 yearend Birdtalk, made an incisive analysis of the country’s GDP growth. The following are the main points raised by Ibon Foundation.

1. The GDP growth mainly translated into bigger corporate profits and increasing wealth of a few wealthy families. The total net income of the country’s Top 1000 corporations almost doubled from P599 billion ($13.6 billion) in 2006 to P1.08 trillion ($24.545 billion) in 2012. Corporate profits increased 24.5 percent in 2012 compared to 2011.

Net foreign direct investments (FDI) grew significantly with inflows rising 35.3 percent to $3.4 billion in the first ten months of 2013 from $2.5 billion posted in the same period the year before. Foreign investment approvals also grew substantially by114.8 percent to P126.5 billion ($2.875 billion) in the first nine months of 2013. This shows that foreign investors find it profitable to invest in the country, especially in the power sector and real estate, which cornered the most foreign investments at 56.8 percent and 19.5 percent respectively.

Also according to the same Ibon report: The cumulative net worth of the 40 richest Filipinos – Sy, Tan, Razon, Gokongwei, Ayala, Aboitiz, Consunji, Ty, Cojuangco, Zobel, Yuchengco, Lopez, Araneta, among a few more others – grew three-fold from $16.0 billion in 2006 to $47.4 billion in 2012. In 2013 alone, their net worth increased by $16.8 billion.

2. The benefits of this so-called growth, however, did not reach the people. A mere 317,000 jobs were generated by the Aquino administration in 2013, falling from 408,000 jobs in 2012, and 1.2 million jobs in 2011. The number of jobs generated during the last two years, 2012 and 2013, were way below the annual average of 640,000 jobs created over the long 37-year period 1976-2013, which included the economic crisis of the 70s and 80s, the 1997 financial crisis, the 2000 and 2007 world economic crisis, among others.

It is then not surprising that the number of unemployed Filipinos increased by 117,000 in 2013. The government’s unemployment rate is at 7.1 percent, with 2.9 million Filipinos unemployed. Ibon Foundation’s estimate is much higher at 10.6 percent affecting 4.5 million Filipinos. Regardless of whether one takes the Ibon or the government’s estimate, it is still the worst unemployment rate in Asia and among the worst in the world.

The number of underemployed is pegged at 7.3 million. Thus, 11.8 million Filipinos are either out of work or are in jobs that hardly earn enough.

An education is no longer a guarantee for employment. According to Ibon Foundation, seven out of ten unemployed completed at least high school, with one out of five having a college degree.

3. Poverty is worsening. The most recent official estimate of poverty, in 2012, reveals a 25.2 percent population poverty incidence with 23.7 million poor Filipinos and 19.7 percent family poverty incidence with 4.2 million poor families. According to Ibon Foundation, the number of poor families, as per government estimates, increased by 10.6 percent or 405,638 families between 2006 and 2012; the number of poor Filipinos increased by 4.9 percent or 1.1 million over the same period. Thus, neither the economic growth nor the P76.1 billion ($1.729 billion) spent on the Pantawid Pamilyang Pilipino Program (4Ps) – the Philippine version of conditional cash transfers (CCT) – between 2006 and 2012 made an impact on the worsening poverty situation.

The poverty situation could even be worse than what the government reports. For one, the government uses a very low poverty threshold of P52 ($1.18) per person per day on average nationwide, meaning a person who earns P52 a day is not considered as poor and is supposed to afford the basics of food, clothing and shelter, not to mention transportation, health and education expenses. Ibon Foundation estimates that 60 percent of Filipinos or 56 million are struggling to survive on P100 ($2.27) or less a day, with another 10 million trying to survive on P125 ($2.84) a day.

Also, according to Ibon Foundation, the government changed the method of determining the poverty incidence three times: in 1992, 2003 and 2010. This reduced the number of those being considered as poor by 9.6 million in 1992, 4 million in 2003 and 5.3 million in 2010, for a total of 19 million people removed from official poverty estimates by mere statistical manipulation.

4. Ibon Foundation describes the country’s economic growth as “narrow and shallow” and mainly coming from real estate and the construction sectors. Using NSCB data, Ibon Foundation identified the sectors that made major contributions to the country’s growth: real estate, renting and other business activities – including business process outsourcing (BPO) – which accounted for 12 percent of GDP in the first three quarters of 2013, construction 5.3 percent, and the four real estate- and construction-related manufacturing subsectors such as chemicals for paints, wood, steel, among others 4.4 percent. These sectors contributed a total of 21.7 percent of GDP.

These sectors combined, according to Ibon Foundation, hardly contributed to employment, a mere 8 percent. “Employment in real estate only increased by 2,000 (or 1.2% growth, which is probably statistically insignificant), in construction by 131,000 (5.9% growth) and in manufacturing as a whole by 38,000 (or 1.2%).”

Moreover, these sectors are mainly concentrated in the the NCR, Central Luzon and Calabarzon regions. Added to this, these sectors hardly stimulate production in other sectors of the economy.

5. Wages remain low. While there were minimal mandated increases in wages, the real value of wages has been flat during the last decade. On the other hand, prices of basic goods and services, especially rice and other food, oil, power and water rates have been constantly rising. The Aquino government declared that it would raise the fares of the MRT and LRT commuter train systems but backed out, fearing that this would result in more and bigger protests.

Ibon Foundation attributed the real estate and construction boom to the current “unprecedented low interest rates,” which was brought about by the measures being undertaken by capitalist countries to address the still unresolved world economic depression, and by increased government spending.

Nevertheless, the country remains backward and vulnerable to the shocks and shifts in the world economy because the Aquino government is pursuing the same failed neoliberal economic policies, which brought about the world economic crisis, in the first place, and have worsened the burden of majority of the population of the world, the Philippine included.

In the meantime, growth or no growth, boom or no boom, the quality of life of majority of Filipinos would continue to worsen, unless the people could push for real changes that would benefit them and not just a few. (https://www.bulatlat.com)

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