Economy, Governance

How People Economics can solve the transport crisis

✅ Develop the countryside, to ease the heavy congestion in urban centers like Metro Manila with the creation of longterm economic opportunities in the regions

✅ Build Filipino industries, to supply the needs of building and maintaining the country’s transport infrastructure as well as the needs of transport rehabilitation and modernization programs

✅ Protect the environment, by utilizing domestic renewable energy resources to power mass transport especially rail systems and funding the rehabilitation and modernization of current modes of public transport like jeepneys

✅ Uphold people’s rights and welfare, by ensuring the reliability, accessibility, efficiency, safety and affordability of public and mass transport at all times, which entails, among others, reversing the privatization of the county’s rail systems, toll roads, etc. and discarding the neoliberal user pays principle in mass transport

✅ Finance development, and ensure the mobilization of sufficient public resources to fund national, regional and local transport infrastructure development, including subsidizing their operation and maintenance

✅ Strive for sovereignty and independence, because those mentioned above will not be possible if Philippine policy making and determination of national development agenda will continue to be shaped by foreign interests with ties to local oligarchs and bureaucrats who run the transport system and build transport infrastructure for private profit

#MayMagagawa

(People Economics is a campaign led by research group IBON Foundation to articulate and enrich the people’s alternatives to the failed policies and programs of neoliberalism in the national economy.)

Standard
Consumer issues, Governance, infrastructure

LRT-2’s decline amid funds misuse and dubious deals

LRTA misused LRT-2 rehab funds

Presidential mouthpiece Salvador Panelo called the challenge to commute. The dare arose from his callous remark about the state of the metro’s transport system. There’s no crisis he said, since people are still able to go wherever they need to. Enduring the daily torment of long queues and endless waits, overcrowding and hellish traffic, the commuting public are of course outraged.

But Panelo’s four-hour, four-jeepney commute circus should not distract us from the fundamental issues. The ordinary working class and students who bear the torture of commuting do not need him to validate what they suffer every day.

Recurrent mishaps

The crisis in the mass transport system is not only real. It is chronic and structural. It did not start when the LRT-2 suspended its operations as the usual glitches hampered the LRT-1 and MRT-3. For as long as we can remember, one or two of Metro Manila’s rail lines break down on an almost weekly basis.

To be sure, the Duterte administration is not solely to blame for the recurrent glitches, passenger offloading and shutdowns of Metro Manila’s rail system. Such decrepit state of the rail system was spawned by decades of accumulated wrong government policies, neglect and corruption. Technical glitches number to thousands per year, according to transport officials.

These train malfunctions started to occur with increasing frequency under the previous administrations of Arroyo and Aquino, and the crisis continues its cumulative deterioration under Duterte. Prior to these recent incidents, LRT-2 is not as notorious as LRT-1 and more especially MRT-3 in terms of service interruptions.

LRT-2 had several mishaps prior to the October 4 fire that brought its entire line to a halt for several days. Last May 18, two of its trains collided and injured 34 people. It was perhaps the second worst accident involving metro rails, just behind the wayward MRT-3 train that rammed through a station and hurt 38 people back in 2014.

The LRT-2 collision happened two days after a lightning hit the train line’s overhead power connection. Unable to operate, the incident stranded thousands of LRT-2 commuters in the middle of a thunderstorm. On June 7, LRT-2 also suspended its operations due to a technical malfunction.

Declining performance

It seemed that the recent major breakdown of the LRT-2, which will take a possible six to nine months to be fully restored, was bound to happen. This noticeable increased frequency in its system’s malfunctions is affirmed by the rail line’s declining performance indicators. From an average of 11 trainsets running during peak hours in 2014 and 2015, the number fell to 10 in 2016 and 2017, and further to just 8 in 2018 and 7 trainsets in 2019.

Passenger traffic has also substantially decreased – from 72.85 million in 2014, the number fell to 62.21 million in 2015. After recovering to 67 million in 2016, passenger traffic in LRT-2 progressively declined to 65.96 million in 2017 and 64.70 million in 2018. Its passenger traffic in the first five months of 2019 is also the lowest in the last six years.

LRT-2’s farebox ratio – or the proportion of fare revenues to total operation and maintenance (O&M) costs – is falling as well. A farebox ratio of 1.00 means that fare revenues cover 100% of O&M cost.  From an upward trend of 1.00, 1.44 and 1.53 in 2014, 2015 and 2016, respectively, the farebox ratio of LRT-2 has gone down continuously to 1.06, 0.93 and 0.81 in 2017, 2018 and 2019 (first five months), respectively.

Actual gross revenues collected from LRT-2, after increasing from Php973.36 million in 2014 to Php1.25 billion in 2015 (the year when fares were substantially hiked) and further to Php1.31 billion in 2016, declined to Php1.27 billion in 2017 and Php1.24 billion in 2018. Comparing similar periods, collected gross revenues in the first five months of 2019 (Php485.59 million) are also the lowest since 2014.

Falling farebox ratio is the result of declining passenger traffic which results to lower fare revenues, and higher O&M costs due to, among others, poor service maintenance of the system. Poor maintenance leads to less trainsets running and less revenues earned. It is a cycle that could be ended through efficiency in management and maintenance of the system.

Misusing rehab funds

Alas, the train line operated by the Light Rail Transport Authority (LRTA) has been obviously poorly managed and maintained.

One reason is that already limited public resources allocated for the system’s improvement are not properly being used. In its 2018 audit report on the LRTA, the Commission on Audit (COA) said that a portion of state subsidy for the rehabilitation of LRT-2 as well as for general administration and support “was not utilized in accordance with its intended purpose”.

Through a Special Allotment Release Order (SARO) on June 17, 2016, the LRTA received Php743.56 million from the national government. However, state auditors found out almost half of that amount – Php360 million – was transferred to LRTA accounts not related to the purpose of the SARO (i.e., LRT-2 rehabilitation and administration and support).

“Questionable and doubtful”, according to COA, was the transfer of Php210 million in rehabilitation and restoration funds of LRT-2 to fill the liabilities of the LRTA in a bank account held in trust for bid documents, bonds and retention.

Likewise, state auditors noted the transfer of Php150 million in LRT-2 rehabilitation and restoration funds to a savings account that holds LRTA’s revenues from magnetic ticket sales. It was used as partial payment, interest charges and taxes for an outstanding loan arising from the services rendered by a private contractor with LRT-1.

In its report, released just last June 2019, COA asked the LRTA management to “discontinue using the subsidy funds earmarked for specific purposes and strictly comply with EO (Executive Order) 292 on the use of subsidy fund”. EO 292 refers to the Administrative Code of 1987.

COA also told the government rail agency to “replace the amount taken from the subsidy fund of Rehabilitation of LRT Line 2 System and General Administration and Support”. Further, state auditors asked the LRTA management to submit an explanation on the questionable transfer of Php210 million to bank accounts not meant for LRT-2 rehabilitation.

Dubious deals

Not only is the LRTA mismanaging the funds intended to improve the condition of and services provided by the LRT-2 system. It also continues to make deals with long-time LRTA private contractors that have a questionable track record.

The current maintenance provider for LRT-2 is the AMSCO joint venture composed of APT Global Inc., MultiScan Corporation, and Opus Land, Inc., with the LRTA awarding a Php1.81-billion contract last December 2018.

APT Global has figured in several cases of problematic contracts involving Metro Manila’s rail systems. As the MRT-3 maintenance provider, APT Global was ordered by the COA in 2015 to pay Php211 million for failing to deliver its contractual obligations. Among others, they included failure to deliver trains, defective escalators and elevators and half line operations.

APT Global was also part of the TSPA joint venture (along with Telefonika, STIV and Pacific) that maintained LRT-2 from June 2007 to June 2012. In its 2016 Special Audit Report on the LRTA, COA said that TSPA committed a minimum of 16 trainsets running on LRT-2 but only delivered 13 trainsets. Despite this, LRTA still paid its contract with TSPA in full, worth almost Php1.06 billion, instead of making the necessary cost reduction.

With such an undesirable track record, it is perplexing how APT Global was still able to be part of a joint venture that currently maintains the LRT-2. Apparently, it is one of the favored contractors by those in the LRTA.

The bidding conducted by the LRTA for the procurement for maintenance of the LRT-2 system won by APT Global’s joint venture AMSCO was allegedly fraught with irregularities. Commuter groups RILES Network and United Filipino Consumers and Commuters filed a case before the Ombdusman against LRTA officials last April 2019.

They alleged, among others, that the LRTA designed the bidding process in a way that ensures only AMSCO will bag the contract. It included requiring the use of spare parts that AMSCO’s MultiScan is the exclusive distributor of in the Philippines. Like APT Global, MultiScan is a longtime contractor of LRTA as a supplier of spare parts and consumables of the LRT-2 system in the past two decades.

The real challenge

In other words, the hundreds of thousands of LRT-2 commuters affected by the shutdown are at the mercy of, to the say the least, an inefficient government agency and its inept private contractors that profit millions of pesos in taxpayers’ and commuters’ money.

With the kind of track record that those handling the LRT-2 have, no wonder that the rail system broke down the way it did. It is also not surprising that the damages caused by the fire could supposedly take months to repair, aggravating the already unbearable state of public commute in Metro Manila.

The public sector should continue to operate the LRT-2 as a provider of a vital public service. The transportation department’s plan to privatize its operation and maintenance will only worsen the woes of commuters and further drain public resources as evidenced by our experience in LRT-1 and MRT-3.

But obviously, the current LRTA has been mismanaging the LRT-2 system. Reforms must be put in place to address this, including structural changes that would allow greater public scrutiny of and participation in the rail agency’s operations. Private contractors that have repeatedly failed to deliver should be banned and held to account. Using the crisis to justify the failed and flawed privatization must be opposed.

These are actually small reforms compared to the massive extent of Metro Manila’s transport crisis, but necessary reforms nonetheless to ensure that the LRT-2 becomes a truly publicly run rail system meant to serve the commuters’ interests and welfare.

Is the Duterte administration capable of instituting these reforms to start addressing the crisis? That’s the real challenge to Panelo and his boss. ###

Standard
Governance, Human rights, Military & war

Rising national insecurity amid Duterte’s soaring security budget

 

Duterte with gun

Photo from Interaksyon

With Martial Law in Mindanao, a brutal drug war and an even more vicious counterinsurgency campaign, the Duterte regime vowed to make the country peaceful and safe. However, as once again highlighted by the recent twin bombings in Mindanao, it appears that instead of peace and quiet, the Duterte administration’s heavy-handed approach to national security is not only failing. Duterte’s policies are actually creating more conflict and insecurity for the people.

This even as Malacañang siphons off an ever-growing portion of public resources to its national security efforts, including for the controversial intelligence and confidential funds of the President and his security forces. In its 2020 budget proposal, the Duterte administration is seeking an all-time high of Php8.28 billion in total intel and confidential funds, on top of the hundreds of billions of pesos for the police and military establishments to acquire more arms and hire additional personnel.

Questionable, unjustifiable budget

Such big allocation for intel and confidential funds is questionable and unjustifiable for various reasons. One is that the funds are apparently not achieving their objectives. Aside from the bombings in Mindanao, the illegal drug trade has worsened even, as admitted by no less than Duterte himself. By abandoning the peace talks with the communist rebels and relying more on often bloody military and police operations in the countryside, Duterte is making the same mistakes of his predecessors of further feeding the 50-year old insurgency.

Another is that by their nature, intel and confidential funds are difficult to audit and are thus prone to corruption as has already happened many times in the past. Perhaps even more wicked than corruption is how these funds can be used to bankroll illegal and murderous operations against groups and people it considers as enemies of or threats to the regime.

It is indeed ironic that under a regime that has made anti-criminality and peace and order as its centerpiece program, the safety and security of the public are increasingly at risk. And this insecurity is coming not just from the unabated terrorist attacks and criminal activities that Duterte promised but failed to address, but from the very same policies of the regime that are supposedly meant to protect the people. Martial Law in Mindanao, rights advocates and even parliamentarians from the country’s ASEAN neighbors point out, has been a factor behind the terrible state of human rights under Duterte. Extrajudicial killings that mar Duterte’s drug war and counterinsurgency campaign are so prevalent that 8 out of 10 Filipinos fear that they or someone they know can be a victim anytime.

Mindanao bombings

The incidence of terrorist bombings in Mindanao has increased and has become more frequent under Duterte’s Martial Law. Just recently, two more incidents of bombing happened in the restive region. Last September 8, reportedly another suicide bomber staged an attack in a military camp in Indanan town in Sulu. A day before, at least seven people were hurt in an explosion in a public market in Isulan town in Sultan Kudarat.

This was the second time in four months that Indanan suffered an alleged suicide bombing. Just last June 28, an attack killed eight people (including the two suicide bombers) and wounded 12 more. The attack in Isulan was the second time in five months since a blast rocked a restaurant in the town on April 3, hurting 18 people. There are now five bombing incidents this year, with the deadliest occurring at a cathedral in Jolo, another town in Sulu, when a twin explosion killed 22 people and wounded at least 100 last January 27.

Counting the incidents since last year, there are now nine cases of reported terrorist bombings and explosions in Mindanao, killing 47 people and wounding more than 200. All these have happened under Martial Law, first imposed in May 2017, raising the question of whether or not military rule is really effective in curbing terrorism. (See Table)

Tab 1 Mindanao bombings

Still, Duterte officials continue to defend Martial Law in Mindanao despite the increased incidence of terrorist attacks. While crime incidents and proliferation of firearms in Mindanao have supposedly gone down because of Martial Law, authorities argue that “terrorism is really a different kind of thing”, leaving one to wonder what option more extreme is the regime contemplating to address terrorism. One answer could be the amendment to the Human Security Act (HSA), a priority legislation of Duterte that will make Martial Law nationwide and permanent.

Drugs and homicides

With increased incidence of terrorist bombings in Mindanao, claims by the regime of an improving peace and order environment become ever more doubtful. Widespread and systematic killings under the Duterte administration’s drug war and counterinsurgency campaign paint a picture of a deteriorating rule of law and of deepening impunity even as the Philippine National Police (PNP) maintains that the crime situation is getting better.

According to the PNP, for the entire 2018, there was a 9% decline in crime volume compared to 2017. From July 2016 to June 2018, the crime rate fell by 21.5% compared to July 2014 to June 2016, based on the police’s data. For the PNP leadership, there is an unmistakable correlation between crime and drug abuse. The reported trend of plunging crime volume continues in 2019, with Duterte officials congratulating the PNP for “making our streets safer and making our people feel secure.”

Sadly, many ordinary folk – in particular the victims of alleged extrajudicial killings (EJKs) and their families – do not feel the supposedly improved safety and security under the current regime. Official PNP figures show that the anti-drug operations have killed about 6,600 alleged drug pushers (mostly small-time street peddlers) and drug users from July 2016 to May 2019 (although even official figures are confusing – the latest PNP data being cited is 5,793 drug war killings between July 2016 and July 2019). Moreover, out of these thousands of deaths, a mere 253 police officers involved in the drug war killings have been criminally charged or faced an inquest proceedings. Majority of PNP operatives involved in these killings – 341 police officers – are facing only administrative charges.

Official data on the drug war are not just confusing; they are also not credible as they tend to understate the true extent of the killings. Counting the so-called homicides under investigation or suspected drug personalities killed by unidentified gunmen, there are now reportedly almost 23,000 deaths related to Duterte’s drug war, based on some estimates.

Activist killings

Meanwhile, bodies also continue to pile up under the equally notorious and ruthless counterinsurgency campaign of the Duterte administration. Based on the monitoring of human rights advocacy group Karapatan, there were 250 killed activists, leaders and members of cause-oriented groups from July 2016 to March 2019. Of the total, more than half – 134 killings – happened in Mindanao. (See Chart)

Tab 2 EJK victims by region

Most were from the peasant sector, indigenous people, and Moro as well as from the trade union and youth and student movements. Some were human rights lawyers, supportive local government officials, journalists, teachers and even priests. Perpetrators were usually unidentified gunmen, including those from declared anti-communist paramilitary groups. The aggressive and well-orchestrated propaganda campaign by the Armed Forces of the Philippines (AFP) and the PNP that the groups the victims belonged to are communist fronts is seen as justifying these violent attacks against unarmed civilians and critics of the regime.

Of particular concern recently is Negros Island, which is fast becoming a killing field for anti-communist hit squads and police operatives. Disguising as anti-criminality and anti-drugs operations, coordinated and systematic killings of civilians tagged as communist supporters have been gripping the island and have already claimed 116 victims between July 2016 and August 2019.

Thus, far from feeling secure, an overwhelming portion of the population are becoming more and more concerned about their personal safety amid the unabated EJKs. According to the latest survey (December 2018) of the Social Weather Stations (SWS), 78% of Filipinos are worried that they or anyone they know will be a victim of EJK. The results are even worse than the already high 73% recorded in June 2017.

Even foreigners see the Philippines under Duterte as one of the most dangerous places to live in the world. A 2019 survey of more than 20,000 expats ranked the Philippines as 14th out of 64 countries as most dangerous in terms of peacefulness, personal safety and political stability. In the same survey conducted in 2018, the Philippines ranked 11th out of 68 countries.

Intel funds for what?

In his 2020 budget proposal, Duterte is asking Congress to allocate a massive Php8.28 billion in intelligence and confidential funds for the executive branch, more than half of which (i.e. Php4.5 billion) will go directly to the Office of the President. The AFP and the Department of National Defense (DND) will have Php1.7 billion in intel funds while the PNP and the Department of Interior and Local Government (DILG) will get Php806 million.

Duterte’s (i.e., Office of the President and other executive agencies) 2020 intel and confidential budget is 49% higher than its level in the first Duterte proposed budget in 2017. From just Php5.57 billion in 2017, the intel and confidential funds of the Executive branch have jumped to an average of more than Php7.82 billion in the national budget from 2018 to the proposed 2020 budget.

Intel and confidential funds directly under the Office of the President are averaging Php3 billion per year (2017 to 2020) under Duterte, more than six times the annual average of his immediate predecessor Benigno Aquino III (2011 to 2016). (See Chart)

Tab 3 Average intel funds by president

But the increased intel and confidential funds of the President and of the police and military establishments does not guarantee that the rising terrorist bombings in Mindanao will be quelled. On the contrary, as Duterte’s surveillance funds increased, so has the frequency of terrorist attacks in Mindanao. Among other factors, this is the result of poor military and police intelligence and assessment, despite a huge boost in public funding.

Meanwhile, the illegal drug trade remains robust amid the bloody drug war of the administration and the campaign’s ballooning intel and confidential funds. Billions of pesos of illegal drugs continue to be smuggled into the country such as the Php11-billion worth of shabu that slipped past the customs and then mysteriously disappeared. Subsequent probes established that those who were in charge of customs intelligence, along with police officials, were involved in the smuggling of the enormous shabu shipment. Note that the estimated Php11-billion worth of missing shabu is already equivalent to almost half of the total worth of shabu that Duterte’s drug war has seized from July 2016 to March 2019; and it is just one shipment.

What’s even more disturbing is the very real possibility that intel and confidential funds are being used to bankroll not just shadowy but outright illegal activities that spell the death of thousands on the pretext of promoting national security and peace and order. The vigilante killings that target perceived enemies of the state, for instance, are so systematic that – coupled with Duterte’s notorious past as a longtime city mayor of endorsing, if not using, death squads to shortcut due process – it is not hard to believe that they are state-sponsored operations.

It is clear that Duterte is using the deteriorating situation on terrorism in Mindanao and illegal drugs and the resilient communist insurgency to justify an ever-growing unaccountable budget in the name of national security. In fact, it is using its own failures to sufficiently deal with the country’s national security issues not only to justify greater intel and confidential budget but to push for even more repressive measures. ###

Standard
Consumer issues, Oil deregulation

Amid Saudi attacks, no need for oil price hikes

Amid a looming oil crisis precipitated by the attacks on Saudi Arabian plants that effectively shut down 6% of global oil supply, oil companies in the Philippines can still afford not to raise prices. This is because they have overpriced domestic petroleum products to the tune of Php4.38 per liter for gasoline and Php1.80 for diesel from January 2018 up to the first week of September 2019.

This “overpricing” is the result of the oil firms implementing price adjustments that do not properly reflect movements in global price benchmarks, in particular the Mean of Platts Singapore (MOPS) for diesel and gasoline, as well as fluctuations in the US and peso foreign exchange (forex) rates. To illustrate, the net price adjustment for diesel in 2018 based on MOPS and forex was a rollback of Php2.08 per liter. But the actual price adjustment was a rollback of only Php0.60, or a difference (overpricing) of Php1.48 per liter. For 2019, up to the first week of September, the actual price hike for diesel was Php3.15 per liter when the adjustments should have only been Php2.83, or a difference of Php0.32 per liter.

Similarly, there should have been a net rollback of Php5.83 per liter for gasoline in 2018, but the actual reduction was only Php2.35 or a difference of Php3.48 per liter. For 2019, as of the first week of September, the total adjustment in gasoline prices should have only been Php3.25 per liter, but actual price hikes have reached Php4.15 per liter at that point, or a difference of Php0.90 per liter.

So-called global price benchmarks like MOPS, of course, do not show the actual price of oil, which tends to be artificially high because of global oil monopolies that dictate supply and prices. With or without an oil price hike, prices are bloated because of global monopoly control by the oil giants like Shell and Chevron. But on top of this monopoly price, oil firms even profit more by taking advantage of lack of government control on domestic prices and supply. Under oil deregulation, oil firms hike or roll back local pump prices by much higher (in case of price hikes) or lower (in case of rollbacks) than the movements in global benchmark prices and forex.

Can Duterte curb this abusive practice of the oil companies? Not under Oil Deregulation Law, which took away government’s capacity to regulate and ensure fair domestic prices and price adjustments. Will Duterte stop local oil overpricing? Not if his government is raking in about Php7.72 million every day in additional VAT (value added tax) revenues on overpriced diesel and gasoline.

Standard
2019 elections, Governance

22 dahilan bakit dapat iboto si Neri Colmenares sa Senado

Neri poster

22. Para sa mga manggagawa, gaya ng wage hike at pagwawakas sa endo

21. Para sa mga magsasaka, gaya ng tunay na reporma sa lupa

20. Para sa senior citizens, gaya ng pagtaas ng SSS pension

19. Para sa mga kabataan, gaya ng sapat na badyet para sa edukasyon

18. Para sa mga maralita, gaya ng sapat na serbisyong pabahay

17. Para sa sapat na serbisyong pangkalusugan, lalo na para sa mahihirap

16. Para sa mga katutubo at Moro, at karapatan nila sa sariling pagpapasya

15. Para sa maliliit na lokal na negosyante, laban sa labis na dayuhang produkto at kapital

14. Para sa abot-kayang presyo ng bigas at suporta sa mga magsasaka ng palay

13. Para sa murang singil sa kuryente, bantay sa pang-aabuso ng Meralco, atbp.

12. Para sa murang singil sa tubig, bantay sa pang-aabuso ng Manila Water, Maynilad, atbp.

11. Para sa mababang presyo ng langis at bantay sa pang-aabuso ng kartel ng langis

10. Laban sa mga pahirap na buwis gaya ng nasa TRAIN Law at VAT

9. Laban sa korupsyon sa gobyerno, gaya ng pork barrel

8. Laban sa patuloy na pamamayagpag ng mga political dynasty

7. Para sa kalayaan, laban sa diktadura at Martial Law

6. Para sa mga karapatang pantao at bantay sa mga paglabag dito

5. Laban sa panghihimasok ng sinumang dayuhan, US man o China

4. Mahusay na abogado, kongresista at aktibista

3. Hindi magnanakaw at walang bahid ng korupsyon

2. Hindi hawak sa leeg ng administrasyon, tunay na oposisyon

1. Subok na para sa bayan at tunay na pagbabago

22 Neri Colmenares For The Win

Standard
Economy

Economy continues slowdown under Duterte

The gross domestic product (GDP) grew by just 5.6% in the first quarter of 2019. That’s the slowest quarterly growth in four years.

Duterte’s economic managers are pinning the blame on the delayed passage of the 2019 national budget. What they do not say is that the slowdown this quarter is just a continuation of the overall trend of slowing economic growth since the Duterte administration took over in 2016. (See chart below)

Annual GDP growth rate averaged 6.9% in 2016, then slowed down to 6.7% in 2017, and further to 6.2% last year.

Not that the economy was in a better shape under Aquino and the previous regimes.

But the slowdown under Duterte shows that absent fundamental economic reforms to boost agricultural production and encourage manufacturing expansion that will create long-term, productive jobs; promote domestic consumption as growth driver (e.g., through substantial wage hikes and removal of onerous taxes); etc., the relatively rapid growth in the first half of 2010s is not sustainable.

What we have seen under Duterte so far is the further destruction of agriculture and rural livelihoods such as through the Rice Tariffication Law; continuation of the low wage policy to attract foreign investors; additional tax burden under the TRAIN Law, etc.

Duterte’s economic managers think that infrastructure spending (i.e., “Build, Build, Build”) will impact GDP figures positively. But this may be true only in the short term. As the program relies heavily on public debt, not to mention that most of the infrastructure will be privatized anyway, it will actually create more problems for the economy and the people in the long term. ###

Standard
Labor & employment

Wage hikes, slowest under Duterte

May 1 wage hikes

(UPDATED May 1, 2019) Did you know that among all post-EDSA presidents, the minimum wage has increased at the slowest pace under Pres. Rodrigo Duterte?

In his first three years in office, the minimum wage in NCR (non-agricultural rates and including allowance) has only increased by an average of 9.8 percent. At the start of his term, the minimum wage in NCR was Php454 to Php491 and are today pegged at Php500 to Php537.

During similar periods in their respective terms, the minimum wage in NCR has increased by 32.6% under Corazon Aquino (from Php89 to Php118); 22.9% under Fidel Ramos (from Php118 to Php145); 17.0% under Joseph Estrada (from Php198 to Php213-250); 13.1% under Gloria Arroyo’s first term as Estrada’s replacement (from Php213-250 to Php243-280) and 26.9% in her “second” term (from Php243-280 to Php313-350); and 16.1% under Benigno Aquino III (from Php367-404 to Php429-466).

Wage rates compared above are since the passage of the Wage Rationalization Act of 1989 (Republic Act 6727) and exclude wage adjustments on or before May 1, as reported by the National Wages and Productivity Commission (NWPC). The wage rates under Corazon Aquino cover her three last years in office since RA 6727 was passed in June 1989, while the period under Joseph Estrada includes wage rates up until his ouster in January 2001.

PH labor condition, worst in Southeast Asia

Filipino workers are worse off than most of their counterparts in Southeast Asia. Consider these comparative data culled from various regional and global institutions:

Unemployment is worst in the Philippines:

  • The Philippines has the lowest labor force participation rate at 60.7%, compared to Cambodia (86.6%); Vietnam (76.3%); Lao (74.5%); Brunei (69.5%); Indonesia (69.0%); Thailand (68.1%); Malaysia (68.0%); Singapore (67.7%); and Myanmar (61.5%), ASEAN Secretariat in its ASEAN Key Figures 2018 report (comparing 2017 data)
  • The Philippines has the highest unemployment rate at 6.6%, compared to Thailand (1.2%); Cambodia (1.6%); Lao (1.8%); Vietnam (2.0%); Myanmar (2.1%); Singapore (3.1%); Malaysia (3.4%); Indonesia (5.3%); and Brunei (6.1%), according to the ASEAN report.

Wages in the Philippines are among the lowest:

  • According to a 2018 survey of JETRO (Japan External Trade Organization), the base salary of a Filipino manufacturing worker at US$220 a month is much smaller than Malaysia (US$413); Thailand (US$413); Indonesia (US$296); and Vietnam (US$227).
  • Year-on-year wage hike for manufacturing workers in the Philippines in 2017-2018 and 2018-2019 averaged 4.8%, much slower than Indonesia (8.1%) and Vietnam (7.1%) that are already providing higher base wages to their manufacturing workers; and while faster than Malaysia (4.2%) and Thailand (4.2%), wages there are already almost twice compared to the Philippines, based on the JETRO survey.

Official poverty in the Philippines is among the highest:

  • Based on World Bank data from its Poverty and Shared Prosperity 2018 report, the mean consumption or income per capita in the Philippines is growing every year at just 1.4% (2009 to 2015), way behind Malaysia (5.9%, 2011 to 2015); Indonesia (4.8%, 2015 to 2017); Vietnam (3.7%, 2010 to 2016); and Thailand (3.0%, 2010 to 2015).
  • Comparing 2015/2016 national poverty incidence, the Philippines recorded the highest rate at 21.6%, according to the ASEAN Key Figures 2018 report. This was way higher than the poverty rates in Malaysia (0.4%); Vietnam (7.0%); Thailand (8.6%); and Indonesia (10.9%). ###
Standard