More households opted to borrow to cope with global financial crisis

MORE Philippine households opted to rack up debt to cope with the global financial crisis, according to state-run Philippine Institute of Development Studies (PIDS). In a presentation, Celia Reyes, PIDS senior research fellow, said the most common coping strategy adopted by households was to borrow money at 39.4 percent of survey respondents.

This was followed by using savings at 13.4 percent, selling assets at 2 percent and pawning assets at 4.8 percent.

Reyes said Filipino households coped by also reducing consumption. Families also transferred school-going children from private institutions to public schools to cope with the difficult times, she said.

“About 0.9 percent of students studying in a private school in the past school year [was] moved to a public school in the coming school year,” she said.

Worse, about 1.7 percent resorted to withdrawing children from school altogether.

The state-run think tank used Community-Based Monitoring System Survey early this year for its study, having 3,274 respondents in nine provinces including the National Capital Region.

The survey also showed that about 2.8 percent of the polled families reported that at least one member of their household lost their job during the period.

It said that most of the individuals who lost jobs used to work as services workers and shop market sales at 24.3 percent, followed by professionals, 19.6 percent; laborers and skilled workers, 17.8 percent; plant and machine operators and assemblers, 14 percent; and technicians and associate professionals, 7.5 percent.

The PIDS said that 39.3 percent of those who lost their jobs were females and 60.8 percent, male.

Thirty-three percent of respondents reported that the major reason for job loss was that the firm where they worked was incurring losses, followed by downsizing and reducing costs, 10.4 percent; bankruptcy and closure, 6.6 percent; legal violations, 2.8 percent; and corporate restructuring, 0.9 percent.

Earlier, the Asian Development Bank (ADB) reported that the Philippines lost an estimated 950,000 jobs from the fourth quarter of 2008 to the first quarter of this year because of the global crisis.

The ADB said that in the Philippines, the crisis had relatively “little impact” on economic growth and employment, as against the South Korea and Thailand.

In South Korea, an estimated 1.63 million jobs were lost from the second half of 2008 to the first half of 2009. In Thailand, about 1.04 million jobs vanished during the same period.

“The Philippines’ minimal exposure to global financial markets, weak export growth and heavy dependence on remittances [from overseas Filipino workers] all contributed to shielding the economy from the immediate impact of the crisis,” the ADB said.

Because of the crisis, employment in the Philippines fell by 2.83 percent in the second quarter of 2008 compared with the trend from 2001 to 2007, the lender said.

Before the crisis or during 2001 to 2007, the annual rate of employment growth in the Philippines stood at 2.35 percent, the ADB said.

The number of wage earners in the country increased by 3.28 percent, the number of own-account workers by 1.60 percent, and the number of unpaid family workers by 0.87 percent. –Darwin G. Amojelar, Senior Reporter, Manila Times