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Philippine growth fails to ease poverty, joblessness

Published on Monday, 22 Jul 2013
Philippine President Benigno Aquino III
Protesters burn an effigy of Philippine President Benigno Aquino during a rally near the House of Representatives building in Manila on July 22. Thousands of protesters tried to march to the site for a protest ahead of Aquino’s annual State of the Nation Address (SONA), but were blocked by hundreds of anti-riot policemen. (AFP)
Office towers of the Makati business district loom over shanty houses on the banks of the Pasig River in Manila. Optimism is soaring that the Philippines is finally becoming an Asian tiger economy, but critics caution a tiny elite that has long dominated is amassing most of the new wealth while the poor miss out. (AFP)

MANILA: Philippine President Benigno Aquino III’s fourth State of the Nation Address (SONA) may have harped on the country’s recent economic gains, but it failed to address the country’s biggest problem – poverty.

In a speech delivered at the opening of the 16th Congress on July 18, Aquino stressed on how the Philippines has been tagged as “a rising tiger” by the World Bank and “the brightest spark” by the Institute of Chartered Accountants in England and Wales.

He talked about the country’s stunning growth, the stable inflation rate and its attainment of investment-grade status from two respected credit ratings agencies. But analysts said Aquino, who’s now in the third year of his six-year term, is yet to fulfil his campaign promise of reducing poverty by fighting corruption.

The Philippines posted a 7.8 per cent GDP growth in the first quarter that outpaced its East Asian neighbours, and yet a third of the country’s population continues to subsist on less than US$2 a day.

“The SONA has an inspiring message,but it contains too many details that you can’t see the bigger picture. There are so many leaves that you can’t see the forest anymore,” said Leonor Magtolis Briones, former National Treasurer and professor emeritus at the National College of Public Administration and Governance of the University of the Philippines.

Briones said Aquino’s SONA failed to address big issues such as joblessness, the inability of the conditional cash transfer programme (CCT) to reduce poverty incidence and the legislators’ misuse of the so-called pork barrel, a form of development fund handed out to each lawmaker.

“It is unfortunate that no mention was made of poverty and labour data because these two are indicators of the progress we made towards inclusive growth,” said Cid Terosa, vice-dean of the School of Economics at the University of Asia and the Pacific.

Aquino also presented a video showing interviews with poor Filipinos who benefited from the CCT. The programme, which was first implemented in 2008 during the term of former president Gloria Macapagal Arroyo, is one of Aquino’s key anti-poverty schemes.

His government allocated 44 billion pesos (US$1.02 billion) to the CCT this year and it will jump to 63 billion pesos by 2014.

Terosa said the CCT won’t get everyone out of the poverty trap, but he believes it will at least cut the number of people living below the poverty line. But he maintains that it’s still important to promote inclusive growth and that means “getting people out of the low productivity trap by generating quality jobs.”

But as data from the National Statistics Office showed, unemployment and underemployment levels remain high. The unemployment rate in the Philippines rose to 7.5 per cent, while underemployment rate was at 19.2 per cent in April.

The number of underemployed people was estimated at 7.25 million, with more than 80 per cent of them working in the agriculture and services sectors. This is something that Aquino didn’t mention in his speech, analysts said.

The only part related to solving unemployment and underemployment problems was when he mentioned that a “stronger tourism sector will generate more job opportunities.”

Aquino, who has strongly supported the promotion of the Philippines to global travellers, said the tourism sector created 3.8 million jobs in 2011.

Analysts are also critical of the much vaunted CCT programme. A recent impact study made by Social Watch Philippines, and the Alternative Budget Initiative revealed that poverty rates of CCT beneficiaries were not significantly lower than non-beneficiaries.

The study showed that the social welfare department, which implements the CCT, has administrative difficulties and this is why its beneficiaries are receiving smaller amounts than what they should be getting.

Compliance reports from schools and health centres are not regularly submitted and the programme database is not regularly updated to monitor attendance in schools and health centres.

Marivic Raquiza, co-convenor of Social Watch Philippines, can’t understand why the government is raising the budget of a supposed anti-poverty programme that has failed to address poverty.

“Majority of CCT household-beneficiaries included in the study expressed the belief that access to regular employment is the most important way for them to get out of poverty,” she said, adding that the government needs to improve rural incomes and create jobs in the manufacturing sector.

In the end, more than anything, analysts agreed that the most effective way to significantly reduce poverty is to create more jobs.

“The problem of the economy is job creation and I think incentives for reviving the manufacturing sector is a better use of money and creates jobs,” said Victor Abola, associate professor at the University of Asia and the Pacific.


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