PiTiK: Good news and bad

With the release of fourth-quarter data on gross domestic product (GDP) last week, it’s worth doing another “PiTiK test” on the Philippine economy. Like the way people often test fruit for ripeness or materials for durability with a flick of a finger, it’s my quick but reliable test on the state of the economy based on P-T-K: presyo, trabaho, kita (prices, jobs, incomes)—the three basic economic indicators we can all relate to. For jobs, the latest available data are for November, but we have the price and income data for the full year. What’s the score? Overall, it’s two good against one bad news—bad on prices, but largely good on jobs and incomes.

First, the bad news (which we all know and feel by now anyway). Prices, in general, rose even faster again in December, by 8.1 percent year-on-year (meaning, compared to the same month last year), higher than November’s 8.0 percent. This means that for every P100 we spent last year on products and services we typically buy, we’re now paying P108.10. The last time we saw inflation that high was 14 years ago, at the height of the world financial crisis. The year just past started with a 3-percent inflation rate, which kept speeding up through the months with food prices surging, especially for meat, fish, sugar, onions, and lately, eggs. Food inflation, at 10.6 percent in December (up from 10.2 in November), dominates and drives the overall price increases. The sad implication of this is that the poor, for whom food is the biggest expenditure item, are being hit harder. Also, price increases are faster in the countryside (8.2 percent) than in Metro Manila (7.6 percent), penalizing rural folk more than city dwellers. As I wrote last week, our much faster inflation rate compared to our neighbors shows that much of our price problems are self-inflicted (we can’t keep blaming the Russia-Ukraine war)—and it traces to utter mismanagement of our farm and fisheries sector.

Fortunately, the news on jobs is more positive, with both unemployment (4.2 percent) and underemployment (14.4 percent) down from a year ago (from 6.5 and 16.8 percent, respectively). What makes this even better news is that labor force participation rate was actually higher at 67.5 percent (vs. last year’s 64.2 percent). That is, joblessness declined even as a greater portion of working-age Filipinos sought jobs. The unemployed numbered 2.18 million compared to 3.16 million a year ago, while the underemployed also dropped to 7.16 million from 7.62 million. But a cause for concern is the lower percentage of wage and salary workers, especially compared to pre-pandemic October 2019, from 64.2 percent of workers then, to 61.8 percent now. Disturbingly, unpaid family workers rose from 5.9 to 8.8 percent in the same period, or an increase of 1.85 million in this category of workers I call “all work and no pay.”

GDP growth was also positive news, having exceeded expectations with a 7.6 percent full-year growth. However, the large number is somewhat misleading, as it has also resulted from the so-called base effect, where the year-ago level was still low coming out of the pandemic recession, hence easier to post a higher percentage growth on. And as must be pointed out time and again, while rapid overall growth is good, we must examine how broadly beneficial that growth has been. We may pride ourselves on having the fastest-growing economy in the region this year, but it is a growth that has left too many Filipinos behind. This is evidenced by the measly 0.5 percent growth in the agriculture, fishery, and forestry sector, which directly employs nearly a quarter of our workers (and even more indirectly). Industry also grew more slowly (6.7 percent) than the overall economy did, especially its dominant subsector of manufacturing (5 percent), which provides the best quality jobs to common workers.

Moving on, every informed analyst expects slower growth for our economy this year. The bigger challenge is to make that growth a better-quality growth that uplifts a broader mass of Filipinos. And that would require having good news across the board on presyo, trabaho, and kita.

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