Steady growth fails to wipe out poverty

Steady economic growth may have been President Gloria Arroyo’s biggest achievement in her nine years in office, but this did not solve the most pressing problems of this developing Southeast Asian country—joblessness, poverty and hunger.

“The state of our nation is a strong economy,” President Arroyo declared Monday in what was supposed to be her last State of the Nation Address (SONA). Mrs. Arroyo, who has a doctorate in economics from the University of the Philippines, told the joint session of Congress that the average annual GDP growth under her term is the highest in 43 years. And thanks to reforms and fiscal discipline, the Philippine economy remains resilient amid a global recession.

But some economics professors from President Arroyo’s alma mater questioned the figures she cited in her valedictory speech, and some others criticized her failure to reduce the country’s poverty incidence—which is among the highest in the region.

“It’s not accurate and that’s hard to believe,” said professor Ernesto Pernia, commenting on President Arroyo’s pronouncement about the strong Philippine economy. For Pernia, the economy is not only underperforming, but it has not grown enough to provide more jobs and reduce poverty.

GDP growth

Solita Collas-Monsod, professor of economics in the University of the Philippines and former socioeconomic planning secretary, said the annual GDP growth is highest under President Arroyo’s term and “that is an empirical fact.” GDP is gross domestic product, which is the total cost of all goods and services produced in the country in a year.

“She’s done good for this country and you can’t take that away from her,” Monsod said. But like her colleague Pernia, Monsod was disappointed that the rising GDP rate—which even hit a record high of 7.2 percent in 2007—did not translate to a lower poverty incidence.

Thirty percent of the country’s 90 million population continue to subsist at less than $2 a day. This figure is likely to increase now that the global recession will slow businesses, retrench thousands of workers and increase hunger incidence, according to Benjamin Diokno, economics professor of the university and former Philippine Budget Secretary.

Diokno said that poverty, unemployment and hunger were inter- related. The professor noted that early in her term, President Arroyo vowed to put food in every table. But latest figures showed that hunger incidence remained high.

“Her failure to feed the people is one of the biggest failures of Arroyo’s government,” Diokno said. Manila-based social research institution Social Weather Stations (SWS) reported that in the second quarter of the year, the number of Filipino families experiencing involuntary hunger at least once in the past three months rose to 20.3 percent, or about 3.7 million families, from 15.5 percent, or 2.9 million families in the previous quarter.

This figure is just 3 points lower than the record-high 23.7 percent (or 4.3 million families) recorded in December 2008. This is also eight points above the 10-year average of 12.8 percent. The SWS also noted in its quarterly report issued Monday that hunger incidence has consistently been in double-digits for the last five years, since June 2004.

Job creation

Perhaps, more than the fact that the economy remains afloat albeit a global economic crisis, President Arroyo takes pride in bringing down unemployment rate under her watch. In her speech, President Arroyo said that an average of one million new jobs each year was created under her term.

But economists questioned President Arroyo’s figures and her basis in defining “employment.”

Pernia said that Philippine government agencies have a questionable definition of “employment.” The government considers anyone who works at least one hour a week or just an unpaid employee of a family-owned business is considered “employed.” That, for Pernia, is not what being employed is all about.

Diokno said that the economy is not strong enough to absorb the more than one million people who join the labor force each year. Worse, the shrinking manufacturing sector—which provides full time jobs with the adequate wages and benefits—is reducing the option for most job seekers.

Underemployment

Manila-based think-thank IBON Foundation said most of the jobs created since last year are “non-earning, poorly earning or otherwise insecure jobs including part-time work.” Some jobs created were either unpaid family work or domestic household help. “These are jobs that notoriously earn far below minimum wage, if at all,” IBON said.

“Job creation figures actually show that 1.3 million Filipinos are crowding into sectors that are stagnating or even shrinking,” IBON said in its report issued last week.

IBON said the largest number of jobs created was in the agriculture sector. The farm sector employed 408,000 people. But year-on-year growth in farm production slipped 0.7 percentage point in the first quarter of 2009.  –Prime Sarmiento, Xinhua