Study scores government’s ‘selective view’ of state of nation

LAST month’s address by President Gloria Macapagal-Arroyo before Congress sounded triumphal: The economy is growing steadily, she enthused, and her government is equipped to bring the country to prosperity. But did the President give the public an accurate view? She failed to, says Nepomuceno Malaluan, an analyst of the non-government Action for Economic Reforms (AER).

Malaluan, in a new study of the state of income and employment in the country, calls attention to what he describes as “deep structural problems” in the economy: low productivity, unemployment, poverty and low investment. These problems, he says, tend to be overshadowed by government’s glowing reports about growth and fiscal improvement.

“Indeed upgrading infrastructure is consistent with the sense of an economy poised for take-off,” Malaluan writes, referring to the promises listed by Mrs. Arroyo in her State of the Nation Address. “In contrast, the education crisis, precarious production, and a grim state of employment and income, are not.”

The President spent a big chunk of her SONA on a litany of huge infrastructure plans that include highways, airports and bridges to be built in several areas in the country. She said the government’s coffers are ready to bear the costs of such projects.

But Malaluan says that while the economy has grown in recent years, it would be folly to look only at the bright side. “It hides the crisis from view; even more tragic, it sweeps the need for emergency measures under the rug.” (Read Malaluan’s paper, “Dire State of the Nation: The Crisis of Income and Employment in the Philippines,” and its annexes.)

Malaluan gives credence to government’s claims about the economy’s growth. After all, he notes, the economy’s gross domestic product grew by 4.4% in 2002, 4.9% in 2003, 6.2% in 2004, and 5.0% in 2005. The country’s fiscal problem has slowed down as well: In 2005, the deficit was pegged at P146.5 billion, down from the P187 billion recorded the year before.

But, Malaluan observes, self-rating surveys show that more people feel that their lives are worse than it was a year previous to being polled. Is the public simply skeptical? For Malaluan, the negative public perception is as supported by “hard data” as government’s confidence.

Low productivity

Malaluan reports about the low productivity that characterizes the country’s agriculture sector. Such stagnation, he says, results in very low incomes for farmers and fisherfolk, and, along with frequent calamities, poor infrastructure and the seasonality of employment, cause agricultural workers to be utterly vulnerable.

While industry may be regarded as an attractive alternative to agriculture, its share in overall employment rates has contracted over the past few years. With industry’s failure to expand, Malaluan writes, the services sector has been getting more entrants, employing 15.8 million last year.

Malaluan stresses, however, that a large sub-set in the services sector is not far different from those in agriculture — equally suffering from poverty wages and sub-standard conditions, and without assurance of permanence.

Unemployment and poverty wages

Malaluan studied employment figures and concludes that the economic growth being heralded by government is still unable to generate the number of new jobs that will be enough to address the country’s problem of unemployment and underemployment. In 2000, he notes, 10.14% of the labor force were unemployed; in January 2006, the proportion was a higher 10.7%.

Moreover, the study says, a large number of those who are employed are earning “poverty-level” wages.

Consider, Malaluan says, that a little less than one-third of those employed are laborers and unskilled workers who earn a daily wage of US$3 to 5. While such income is above the US$1-a-day international poverty line, it is highly insufficient for those supporting a family. And there is a good chance that these wage earners support a family, he says, as census figures indicate that over 88% of all families have at least three members.

“Indeed,” he writes, “with a daily wage rate of 3-5US$, one would easily fall under the dollar-a-day international poverty threshold if he or she is supporting 4 or more people.”

The OFW Cushion

The country’s deployment of overseas workers continue to rise, notes Malaluan, and their remittances have helped buoy the economy.

OFW remittances have provided an important source of income for a considerable number of Filipino families. Malaluan quotes government’s 2003 Family Income and Expenditure Survey, which found that for some 1.3 million families, the main source of income were cash receipts, gifts and other forms of assistance from abroad. Certainly, Malaluan says, OFW remittances have boosted personal consumption, which, in turn, has driven economic growth.

‘Emergency’ measures

Malaluan recommends specific measures which he says can provide “dramatic” results:

• Address the problems in education: high drop-out rates and low quality.
• Give relief to domestic production through tariff protection.
• Audit the institutions of OFW welfare and protection.