IBON FEATURES |
28 June 2017
IBON Foundation | #114 Timog Ave. Quezon City | 9276986 | www.ibon.org
Rehashed
neoliberal policies
One Year of Dutertenomics
IBON FEATURES--The Philippines is in a worsening socio-economic crisis. The direction
of economic policies under the Duterte administration is alarming and in urgent
need of correction. The government's economic team still uses the
anti-development policy framework of past administrations which will mean
greater economic distress for the majority of Filipinos.
The economy's poor performance since June 2016 is due to the neoliberal
policies of previous administrations mostly being continued by the current
government.
Jobs crisis amid growth. Despite growth reported as among the fastest in the world, the economy
actually shed jobs with less employment since April last year. Massive
unemployment includes millions of discouraged workers. The quality of work
continues to decline with worsening contractualization and informal work, among
others, and falling real wages.
The Philippine Statistics Authority (PSA) reported slowing economic
growth in the first quarter of 2017 at 6.4% from 6.6% the previous year. Still,
a recent World Bank report cited the Philippines as among the 10 fastest
growing economies in the globe.
The PSA also reported lower unemployment and underemployment (5.7% and
16.1%, respectively) in April 2017 compared to the previous year. Yet, based on
these official figures, IBON estimates that the number of employed Filipinos
actually fell by 393,000 to 40.3 million in April 2017 from 40.7 million the
year before.
A drop in the labor force participation rate (LFPR) was also observed:
LFPR fell to 61.4% which is the lowest in 36 years since the country’s severe
economic crisis in 1982 under the Marcos dictatorship. This implies that the
labor force shrunk by 575,000 in April 17 from the year before despite the 1.4
million increase in the labor force population of 15 years old and over. This
is most likely due to ever-growing numbers of discouraged workers dropping out
of the labor force after failing to find jobs.
Poor-quality work persisted. IBON estimates that there are still 11.5
million Filipinos who are in without work or still looking for more work
because of the poor quality of jobs. There were 24.4 million citizens in
low-paying and insecure work with little or no benefits in 2016. The Department
of Labor and Employment’s (DOLE) Order 174 has been exposed to even fortify the
practice of contractualization rather than end it.
Workers’ wages have been eroding. The gap between the National Capital
Region (NCR) minimum wage of P491 and the family living wage, estimated by IBON
at Php1,119 for a family of six in 2016 also grew from the year before. The
two-tiered wage system which assigns a floor wage that is below minimum and a
management-determined productivity allowance further devalues the minimum wage.
Weak economic base. The basic reason for the economic slowdown is weak domestic demand from
high unemployment and low incomes, backward agriculture, and shallow foreign-dominated
manufacturing. These are all the result of neoliberal policies: a cheap-wage
economy, agricultural liberalization and minimal rural development, trade
liberalization and foreign investor-biased industry, and over-reliance on
global markets. The political controversies in the last year only aggravated
these weak growth fundamentals.
Even though official poverty statistics appeared lower as of 2016, IBON
considers government’s count of 21 million poor to be in extreme poverty using
the very low threshold of P56. IBON estimates 66 million Filipinos to be
struggling on P125 daily or less. Meanwhile, government estimates of the
average daily basic pay (ADBP) since 2001 show that the real pay received by
workers is at the very least unchanged over the last 15 years and is possible
even smaller now than before. Meanwhile, that the net worth of the 40 richest
Filipinos grew by 13.8% from 2015-2016 while workers’ real wages grew by -0.1%
in the same period indicates how workers do not benefit from reported rapid
growth.
The manufacturing sector’s contribution to the economy has been
stagnant while that of the agriculture sector has significantly shrunk to a
mere 18% by yearend 2016 from more than 40% many decades ago. This shows that
economic growth is not happening in the production sectors that could create
jobs, raise incomes and can be the basis of local industrialization. Philippine
governments have implemented neoliberal policies through the decades in the
name of increasing foreign investments to purportedly generate jobs and usher
development, but in vain.
Anti-development policies. These economic problems were clear even at the start of the Duterte
administration. Yet instead of addressing these, its neoliberal economic team
is actually deepening the implementation of failed market-based policies. The
Duterte government has continued implementing policies that have allowed corporate
interests to plunder the country’s natural resources including land and water;
privatized and raised the cost of public utilities such as water, power and
telecommunications; commercialized and made inaccessible especially to the poor
majority social services such as education, health and housing. Business
interests looking to build back war-pulverized Marawi are already being
observed. Moreover, the administration’s economic managers have actively
opposed reforms that can benefit the
people such as proposals for a moratorium on land use conversion and banning
large-scale miners. It has also given the private sector the upper hand in rice
importation and the determination of the
prices of basic goods and prime commodities contrary to the State’s mandate to ensure
the availability and affordability of the people’s most fundamental needs.
The government's so-called comprehensive tax reform package is
especially onerous. This reduces taxes paid by wealthy families, foreign
investors, and domestic big business and off-sets this with higher consumption
taxes paid by the majority of poor Filipinos. Benefits for the poor are made up
or grossly exaggerated.
It is business as usual for foreign capital and oligarchs under the
government's 0+10-point economic agenda and the Philippine Development Plan
2017-2022. These prevent real agrarian reform, agricultural development, and
national industrialization.
The government is also at the forefront of pushing the China-centric
free trade agreement (FTA) Regional Comprehensive Economic Partnership (RCEP),
especially while chairing ASEAN this year. But the government should be guided
by the country’s history in being party to six FTAs, one bilateral FTA, various
agreements under the multilateral World Trade Organization (WTO), and at least
31 bilateral investment treaties (BITs). The Philippines’ participation in
these and the continued implementation of market-oriented domestic laws and
policies have made the country more open than its neighbors in Southeast Asia
in many aspects of foreign trade and investment. Hence backward Philippine agriculture
and a declining Filipino industry compensated for by the bloating of a largely
low value-added and low productivity service sector.
The government is misguided with its 'Build build build' infrastructure
thrust. More than anything else, this merely aims to stimulate short-term
economic growth and maintain illusion of growth and development. The argument
that infrastructure is the economy's main binding constraint and that growth
and development will be spurred by a massive infrastructure drive is appealing
but simplistic. The Marcos dictatorship and, more recently, the previous Aquino
administration used the same infrastructure-intensive approach but the economy
remains backward and the majority are still poor.
It however threatens to increase public debt and other burdens on the
people. The prospect of cheap Chinese financing from loans and official
development assistance (ODA) is being dangled. Yet there is no transparency in
these and the hidden costs and dangers could mean a serious explosion of debt
in the future. There is also the problem of tied aid and relying on Chinese
contractors which may not mean the right infrastructure at the best price.
Moreover, the administration’s dealings with China and countries other
than the United States should not replicate the one-sided terms with the US,
Japan and Europe. A more definite framework of national economic development is
still needed to ensure that the Philippines is not just shifting from one
dependency to another. The nation has not seen the Duterte government more
solidly asserting independent foreign economic policy amid an evolving global
economy.
The US remains the single-biggest foreign influence on Philippine
economic policy making. US geopolitical interests in the Philippines are also
unchanged. The new US president has been vocal about increasing military
spending and enlarging every branch of the US armed forces to increase the US
Pacific military presence. For instance, US operatives are in cooperation with
the Armed Forces of the Philippines in addressing the Marawi siege.
Peace and prospects. The peace negotiations between the National Democratic Front and the
Government of the Philippines is an opportunity to tackle and concretely begin
the blueprint for social and economic reforms. Both sides agreeing on the
nature of the country’s agrarian problems and
the need for free land distribution is unprecedented, but overall
prospects in the continuation of the talks falter amid various political
dynamics. It is unfortunate to observe that the sections of Filipino
communities determined in asserting their social economic and cultural rights
are among the primary targets of human rights violations.
The economic crisis and the conditions of the people will only worsen
unless the Duterte government corrects its misguided, anti-people and
anti-development economic policies.--IBON FEATURES
IBON Foundation, Inc. is an independent development institution established in 1978 that provides research, education, publications, information work and advocacy support on socioeconomic issues.
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