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Commentary

Why the poor do not feel GDP growth

12:05 AM December 07, 2015

THE PHILIPPINES’ gross domestic product achieved an average growth rate of 6.3 percent from 2010 to 2014, compared with 3.3 percent for the 1980-2010 period, to capture the 40th rank out of 194 in the 2014 ranking of the World Bank.

The GDP per capita is now $2,790.37, compared with $1,000 in the year 2000. The growth rate is good for corporate profits and provide opportunities for corporations to hire new employees. The Philippines, being a member of Asean and located strategically in the heart of Asia, is in a region where the economies are export hubs and linked to the global value chain; this helped it achieve the unmistakable indications of an economic turn. This was in fact recognized by the World Economic Forum, which put the Philippines at No. 47 in its Global Competitiveness Ranking, from No. 89 in 2010. The Philippines now enjoys the status of a lender, shifting from its perennial borrower position following its contribution to World Bank loans.

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Corporations, especially the listed ones, raked in profits as a result of this growth, as evidenced by the jump in their share prices in the stock exchange.

Everybody is happy in the board rooms, but the people on the street are grumbling, repeatedly saying that they do not feel the much-touted economic growth. Electricity is still expensive, public transport (LRT/MRT) is still unreliable, Internet connection is still very slow, food prices are still fluctuating, and real wages are still not rising. These are concerns of the middle class, which are valid and need to be addressed.

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But the people in the peripheries are having the worst of it. They are at the bottom, and they think differently. They are the ones who insist that the so-called economic growth is worthless, and they square it in two reasons: They don’t have jobs, and they cannot cope with rising food prices.

The unemployment of poor people is the big elephant in the room. In the province of Quezon where I live, unemployment is at 8 percent, resulting in poverty incidence of 22.6 percent. Many of the unemployed belong to the age bracket of 15-24, which is 50.4 percent of the population. It is still the low-productivity agricultural sector that prevails in the provinces, and even though the service sector, which comprises 70 percent of the economy, has helped bring down the unemployment rate, still it is considerably higher when compared with regional peers.

The increase in GDP cannot accelerate the employment rate in the absence of higher-value-added manufacturing sectors such as electronics and chemicals, which create supply-chain sectors that reach the people in the peripherals. The manufacturing sector, which requires investment in people to build their human capital, is what the people in the bottom need. They should be given access to learning of sufficient quality without affecting their financial ability to provide food for their family.

The high cost of food can be traced, if Quezon will be the benchmark, to the poor overall quality of transportation infrastructure and related services. The situation is becoming untenable to the poor people who produce food but who find delivering it such an expensive undertaking because of the absence of farm-to-market roads, antiquated sea and railroad transport, and overburdened jeepneys.

These are the experiences of those who are not in Manila and who do not enjoy most of the opportunities available. Two reasons, though there are many, why GDP is growing but the number of poor people in our country is still on the upward trend.

Arnel L. Cadeliña is an MBA graduate of Ateneo de Manila University and the dean of the College of Business and Accountancy of Sacred Heart College-Lucena City.

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