After the highs of last week in Manila due to the 45th Annual meeting of the ADB comes this commentary from Dr Ben Diokno. A very good reality check to make us not lose focus of the objectives.
From BusinessWorld Philippines
May 08, 2012
It’s back to reality. The euphoria coming after the successful hosting of the Asian Development Bank’s 45th annual meeting in Manila has barely died down, and then here comes some compelling bad news: poverty has reached new peak during President Aquino III’s watch and involuntary hunger has reached a new peak ever.
The latest Social Weather Stations (SWS) poverty and hunger survey results are grim reminders that all’s not well in the Philippines. Almost two years after a new government had been installed, things that should truly matter are getting worse, not better.
Families who have suffered involuntary hunger have risen significantly during the last four years, contemporaneously with the second worst economic crisis in a century. But the hunger rate of 23.8% this March was the highest since the survey was started, surpassing the previous 23.7% peak recorded in December 2008. As a result, 4.8 million families have experienced involuntary hunger at least once in the past three months, up from 4.5 million families recorded last December.
During the same period, the incidence of self-rated poverty has soared to a new height to date for the Aquino III administration: 55% of respondents, equivalent to some 1.1 million families, claimed to be poor, 10 points higher than December’s 45% or 9.1 million families.
Some 2 million families were added to the army of poor families within 3 months. The historic high for self-rated poverty, of course, was 74%, which was registered in July 1985 (after two consecutive years of 7.3% decline in gross domestic product, or GDP, during the waning years of the Marcos regime). After 27 years, there has been little progress in the fight against poverty!
One wonders: What has the conditional cash transfer (CCT) program (P29.2 billion in 2011 and P39.4 billion in 2012) done to reduce hunger and alleviate poverty? Officials of the Department of Social Welfare and Development (DSWD) claim that a total of more than 3 million households, mostly in Mindanao, were enrolled in the program as of March 21. Has DSWD really reached the program’s intended beneficiaries (the poorest of the poor)? Why aren’t we feeling the results of the program yet? Or is the poverty and hunger situation so intractable that the P39 billion annual appropriation for the program remains woefully inadequate? Or is the CCT program simply poorly implemented?
The official statistics show that there has been little change in the country’s state of poverty during the last 10 years. In 2009, poverty incidence was 26.5%, slightly higher than the 26.4% in 2006 and 24.9% in 2003.
This level of poverty is unacceptable since the Philippine government is expected to reduce poverty incidence by 2 percentage points every year in order to meet its Millennium Development Goal (MDG) of reducing poverty by half in 2015. But instead of moving forward, it moved back.
The next nationwide survey on poverty — which is done every three years — will be done this year. And if the SWS March survey results were any indication of things to come, poverty incidence would at best remain unchanged, or worse, slightly up.
A comparison with our ASEAN-5 neighbors show how miserably the Philippines has performed during the last 10 years. Will 2012 be any different? Thailand has long licked poverty, from 27% in 1990 to 9.8% in 2002 (10 years ago). Vietnam has shown the most impressive progress in the war against poverty, from 58.1% in 1990, it was cut to 14.5% in 2008, a 75% reduction. Poverty incidence in Malaysia is now 3.8%.
Is the Philippines caught in some kind of a poverty trap? With population growing at close to 2% annually, poor households expanding faster than rich households, and with the economy growing, but inequitably, at an average rate of slightly above 4%, the Philippine economy seems to be stuck at the same state of affairs as the year before, year after year after year. This reminds us of Sisyphus, the King condemned by the gods to ceaselessly roll a rock to the top of a mountain, where the stone would roll back on its own weight.
I would put the blame on the Philippines lack of progress in its war on poverty on the stubbornly high unemployment rate. The latest Labor Force survey (January 2012) results show an unemployment rate of 7.2% and underemployment rate of 18.8%. That’s much higher than our ASEAN-5 neighbors. The ASEAN country with the second highest unemployment rate is Indonesia at 6.7% (Q32011). This is followed by Vietnam at 4.4% (2010), then Malaysia at 3.0% (Q42011). Thailand has near full employment at 0.6% (Q32011).
But it is not only the lack of jobs that haunts the Philippine economy. Equally horrible is the quality of employment which prevented poor Filipinos from escaping poverty, according to the International Labor Organization. Many of those employed may be characterized as “vulnerable workers,” those who work in lowly paid jobs that do not provide social security, health insurance and other employee benefits. Vulnerable workers include the pedicab drivers, street hawkers, and unpaid family workers.
The second most important determinant of poverty is the high population growth rate. Poor families tend to have more children than rich families. Unwanted pregnancies is quite high among poor mothers because of lack of access to modern methods of population control. Because of the large size of families among the poor, many of the poor children do not perform well in school; many drop out before grade xix. This situation would then result in low productivity and poor employment opportunities and, hence, the full cycle of poverty.
There are simply too many babies being born in the Philippines, making it “very hard” for poverty-reduction efforts to make even a dent, according Professor Jeffrey Sachs, one of the world’s most influential economists. At this point, it is fitting to ask: What happened to the Reproduction Health Bill? Doesn’t it deserve top priority attention?
A good way out of poverty is college education, but even this avenue is closing. The number of college graduates is dwindling. Worse, the educational system is not producing the right type of college graduates. The annual number of graduates of education science and teacher training dropped sharply from 71,349 in 2000-2001 to 56,209 in 2009-2010. The National Statistics Coordination Board asks: “Who will teach our children?” “Who will build our future?” What has the increasing number, and budgets, of state universities and colleges done to increase access to, and to improve the quality of, college education in this country?
A caring President should do what’s the greatest good for the greatest number. He should avoid pointing to the soaring Philippine Stock Exchange indices (mainly due to “hot” money) and peso appreciation (due to “hot” money, steady supply of overseas Filipino workers — or OFW — remittances partly because of the strengthening of the peso, and low imports owing to a weak economy) as barometers of progress. This thinking, which mimics the economic reasoning of his predecessor, only increases the level of frustration of the ordinary man on the street. The true barometers of economic wellbeing are availability of decent jobs, food on the table, moderate prices, quality basic education and health care, and decent housing.
For the nth time, the appreciation of the peso favors the few (the importers, the elite who love to travel and shop abroad, and the Hermes-Prada-Gucci-Ferragamo crowd), and hurts the many (families of OFWs, exporters, and workers in the export sector and import-substituting industries).
Here’s what the government of the day should do. Focus on creating more decent jobs; attract foreign direct investments by reducing the costs of doing business in the country and by making public policies credible and predictable; invest in better airports, seaports, mass transit systems, roads and bridges, power plants; and increase social protection for the poor.
Benjamin E. Diokno is an Economics professor at the University of the Philippines (Diliman), former budget secretary in the Estrada Cabinet and budget operations undersecretary in the Aquino 1 government.