By LUIS V. TEODORO
Vantage Point | BusinessWorld
NO, this isn’t about Benigno Aquino III’s latest love object this Valentine’s Day, but about the jobless. The President of the Philippines, who’s been crowing over the 7.2% growth of the economy, was described in one broadsheet account early this week as “baffled” by the rise in the country’s unemployment in the last quarter of 2013.
A Social Weather Stations (SWS) survey had found that unemployment had climbed to 12.1 million, or 27.5% of Filipinos 18 years and above, as 2.5 million went jobless between September and December last year.
Unemployment equals no income equals poverty. Philippine poverty incidence has in fact been practically unchanged since 2006, when it stood, at least officially — it could be more — at 28.8% of the population, and 27.9% in the first six months of 2012, according to a report of the National Statistical Coordination Board (NSCB) in 2013.
That means that three years since Aquino III became President on the crest of his “walang mahirap kung walang corrupt” (there are no poor if there is no corruption) campaign, poverty, including its extreme variety (monthly incomes of only a little over P5,000 for a family of five), has remained the lot of millions of Filipinos. It’s either corruption persists despite the administration hype over its “winning” its alleged campaign on ending it; or corruption’s not the only, or even the primary, cause of poverty; or both.
What was the cause of Aquino’s being bothered and bewildered? Apparently the disconnect between the high growth rates he’s been crowing about every chancehe gets, and joblessness. Obviously those growth rates aren’t generating the employment that can provide millions of Filipino poor the incomes they need to pull themselves out of poverty, validating the observation that rather than being “inclusive” (a favorite word in the Aquino administration vocabulary), it’s been exclusive — to the handful of families and their foreign partners in control of the strategic sectors of the economy.
You can’t remedy that exclusivity by throwing money at the poor through, for example, the Conditional Cash Transfer system — or, as was decided during the Cabinet meeting last Wednesday, throwing more money at the poorest provinces of the Philippines. In the first place, whether the funds allocated for those provinces will indeed generate jobs depends on whether they will be used to implement relevant programs — or will end up, as usual, being spent for other purposes, or in the pockets of the officials entrusted with their care.
The poorest provinces are also where the poorest sectors of the population are concentrated in agriculture. As was noted during the Wednesday Cabinet meeting, raising incomes in agriculture would lead to poverty reduction. Unfortunately, stating the obvious doesn’t address the problem of job-generation, the labor needs of agriculture being fairly finite in a practically infinite worker pool.
The Recovery and Reconstruction Department of the International Labor Office (ILO), while pointing out in a discussion paper on the link between economic growth, unemployment and poverty that economic growth, as the experience of other countries has demonstrated, doesn’t necessarily lead to more employment and less poverty, argues that what’s needed is a shift away from the emphasis on generating jobs in agriculture.
“High growth,” according to the ILO, “is not a sufficient condition for poverty reduction; the pattern and sources of growth as well as the manner in which its benefits are distributed are equally important from the point of view of achieving the goal of poverty reduction. And employment plays a key role in that context. Indeed, countries which attained high rates of employment growth alongside high rates of economic growth are also the ones who succeeded in reducing poverty significantly.”
The key phrases are “the pattern and sources of growth,” and “the manner in which its benefits are distributed.” ILO suggests that in agriculture, “policies in support of the growth of smallholder agriculture, product diversification, and of raising the productivity and real wages of agricultural laborers are important for achieving pro-poor growth,” to achieve which, in the Philippine context, would first of all require the dismantling of the archaic land tenancy system.
ILO’s recommendation that “a structural shift of employment away from agriculture towards higher productivity (non-farm) sectors is important for poverty reduction” can in fact be achieved only when the millions tied to agriculture are freed from tenancy so they can work in industry.
Of course this and other efforts should be accompanied by the education and skills upgrading programs the Aquino administration has correctly noted are needed. “Education and skills,” says ILO, “can have a significant influence on poverty. Investment in human capital plays a major role in boosting economic growth that could benefit the poor.”
But it’s primarily a matter of addressing the basics. The shift away from agriculture should be affected, says ILO “through rapid growth of labor intensive manufacturing and other sectors” — in the Philippine context, requiring a policy towards industrialization — which, in one of those moments so exquisitely illustrative of the mindset of the current administration, Presidential spokesperson Edwin Lacierda once described as “old hat,” despite the lessons the experiences of such countries as Japan, China, and Korea demonstrate.
In those countries industrialization was the key to poverty reduction and even prosperity. That focus requires a policy of State support and intervention — which, however, no Philippine administration has ever had the foresight or imagination to put in place, although national entrepreneurs have in the past tried, only to fail because of government indifference or outright hostility.
The ILO didn’t mention it, but in the Philippine (and in other similarly situated countries as well), whether the appropriate policies to boost employment and reduce poverty will ever be adopted and implemented is a political issue.
The administrations that have been in power in the Philippines including the current one — dominated by the handful of dynasties with firm economic interests to protect — have been for decades bewitched by the same policies based on providing all sorts of inducements to foreign investments while leaving untouched the fundamental social causes of high unemployment and poverty. While some of the current administration’s policies — upgrading the skills of the workforce, for example — can help boost employment, they’re premised on addressing the basics. And that’s where, like its predecessors, the Aquino administration has failed.
Comments, blogs and other columns: www.luisteodoro.com, and www.cmfr-phil.org
Luis V. Teodoro is on Facebook and Twitter (@luisteodoro)
Published in Business World
February 13, 2014