Poor and jobless

The results of two surveys released last week highlight the structural imbalance in the Philippine economy and underscore the fact that the economic boom under the Aquino administration remains wanting in alleviating poverty or generating jobs.

The National Statistical Coordination Board reported that the number of poor families as a percentage of the total number of families fell to 19.7 percent in 2012 from 20.5 percent in 2009. This means that the number of poor persons as a proportion of the total population fell to 25.2 percent in 2012 from 26.3 percent in 2009. Simply put, one in four Filipinos is poor. In fact, the marginal improvement in poverty alleviation was attributed to the increase in the number of beneficiaries of the Conditional Cash Transfer program (under which monthly cash subsidies are given to the poorest of the poor in exchange for ensuring that children are kept in school and mothers avail themselves of healthcare) and the adjustment in the salaries of government employees. From about 300,000 families in 2009, the number of families covered by the CCT program rose to 3 million in 2012.

The National Economic and Development Authority acknowledged that the decline in the poverty rate was slow. Worse, the ranks of the poor are forecast to swell because Supertyphoon “Yolanda” and other natural calamities that struck the Philippines this year can heighten “transient” poverty—meaning people who were previously not poor have been suddenly pushed below the poverty line because of natural calamities and other unwanted circumstances.

There has been little change in the percentage of Filipinos living below the poverty line in the past six years. The 25.2-percent poverty incidence for 2012 was only slightly less than the 28.8 percent recorded in the first half of 2006 and the 28.6 percent in the first half of 2009 and 2011. A family of five is considered extremely poor if it is earning P5,458 a month, or just enough to put food on the table. This is about P36 a day per person, or less than $1. In contrast, the World Bank’s extreme poverty line is $1.25. The same family of five has to earn at least P7,821 if it wants to satisfy nonfood needs such as clothing. This is equivalent to about P52 a day per person, or less than $2, the average poverty line in developing countries and another common measurement of deep deprivation, according to the World Bank.

Meanwhile, the National Statistics Office reported that the unemployment rate as of October 2013 eased slightly to 6.5 percent from 6.8 percent in the same period last year. The improvement was traced to the wholesale and retail trade (for example, shopping malls) in the services sector, which more than offset the decline in the agriculture sector. The services sector employs more than half of the workers in the country at 53.4 percent, followed by the agriculture sector with 31.4 percent, and industry with 15.2 percent.

The poverty and unemployment survey results indicate that while the Philippine economy with its stellar growth rates is the envy of many of its neighbors, the expansion is not addressing the basic problems of poverty and unemployment. In short, the economic boom remains “exclusive” to the usual contributors to the growth in gross domestic product, namely real estate, retail and business process outsourcing, and not the manufacturing or industry sectors that provide lasting employment.

The Aquino administration knows the problem and is actually not lacking in plans to address it. As Economic Planning Secretary Arsenio Balisacan said: “The Philippine Development Plan Midterm Update puts emphasis on the reduction of underemployment in agriculture and the creation of conditions for the emergence of new drivers of growth that will generate high-quality jobs and strengthen the competitiveness of different regions in the country. Linking the manufacturing sector with agriculture is one of the means to create quality employment.”

The administration can blame poverty and unemployment problems on its predecessor’s failed policies, but it must remember that it is now in a position to take charge and implement structural reforms that will reverse the situation. Giving more attention to the vanishing manufacturing sector is a good starting point to address the issue of joblessness and, consequently, poverty. Hopefully, this will ultimately make economic growth “inclusive.”