5 reasons why workers will reject “Daang Matuwid” in the May elections

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Photo from gettyimages.com

The “Daang Matuwid” regime of outgoing President Benigno Aquino III, which Liberal Party (LP) standard bearer Secretary Mar Roxas vows to continue, has been notoriously anti-worker throughout its six-year rule. Below are five reasons why Filipino workers will overwhelmingly reject the “Daang Matuwid” regime in the upcoming May 9 elections:

  1. Daang Matuwid opposed any meaningful increase in the daily minimum wage and further cheapened the already low wages of workers

Daang Matuwid has consistently opposed proposals for a substantial wage hike. Since 2010, the daily minimum wage in the Philippines has only increased by Php13 (Ilocos Region or Region I) to Php77 (National Capital Region or NCR). These adjustments are insignificant amid the soaring cost of living. For instance, in NCR where the minimum wage is the highest and which also posted the largest wage hike among all regions, the estimated cost of living jumped by more than Php114 during the same period, easily offsetting the Php77-adjustment in the minimum wage. Consequently, the already big gap between the daily minimum wage and the daily cost of living has even furthered widened under Daang Matuwid – from Php571 in 2010 to about Php608 today. This means that the capacity of workers and their families to meet basic food and non-food needs has been further eroded.

Worse, instead of a substantial wage increase, Daang Matuwid introduced the so-called two-tiered wage system that provided capitalists another tool in pressing down the pay of their workers. Under the two-tiered wage system, companies will give workers a basic floor wage, which is computed above the official poverty threshold but below the existing average pay. Employers can then voluntarily increase the basic floor wage depending on their own computation of the workers’ productivity. Such system means greater abandonment of government of its obligation to set wages that would allow workers and their families to achieve decent living while giving profit-seeking firms more freedom to exploit the workers.

  1. Daang Matuwid worsened the burden of workers with onerous taxes

Daang Matuwid oppressed Filipino workers with onerous taxes. Compared to other countries in Southeast Asia, the Philippines has the highest rates for income tax (5-32%) and for the value-added tax or VAT (12%). The tax system is so oppressive that that those earning about Php50,000 a month pay the same tax rate of 32% as the billionaires who own and run the country’s biggest conglomerates. Meanwhile, the regressive 12% VAT punishes the ordinary income earners as even the most basic goods and services are covered including water, electricity and petroleum products, which all directly impact on the standard of living and inflate the cost of other commodities.

There have been several proposals in Congress to correct this injustice but were rejected by the Daang Matuwid regime, dismissing them as populist and impractical measures. “Kung papogihan lang ito, wag na tayong mag-income tax,” Mar Roxas was quoted as saying. But the issue, of course, is much deeper than “papogihan” as a progressive tax reform system will allow a just distribution of wealth, help improve the living condition of many, and spur economic growth driven by domestic spending.

Another additional tax burden imposed on Filipino workers by Daang Matuwid is the so-called sin tax on alcohol and tobacco products. Guised as a measure to supposedly address health concerns caused by smoking and drinking (even as the national health budget remains grossly inadequate, state hospitals are being privatized, and poverty-related illnesses remain widespread amid low wages/incomes and lack of jobs), the sin tax in reality is primarily aimed at raising government revenues at the expense of ordinary income earners.

  1. Daang Matuwid rejected calls to increase the limited benefits enjoyed by workers such as their SSS pension

Just early this year, President Aquino vetoed the bill hiking the monthly pension (which has been at a paltry Php1,200 for almost two decades now) of 2.1 million members of the Social Security System (SSS). The Daang Matuwid regime justified its heartless decision by claiming that the SSS might go bankrupt if the proposed Php2,000-pension hike is implemented.

But as proponents of the pension hike led by Bayan Muna Rep. and Makabayan senatorial bet Neri Colmenares pointed out, SSS can avoid bankruptcy if it will improve its collection efficiency that currently stands at a dismal 35-38% (including an uncollected amount of Php13 billion as of 2014) and cut back questionable expenses such as massive bonuses for its board members (e.g. Php200 million in retirement package). The administrative cost of SSS at almost 7% of contributions is too high compared to other countries (e.g. Singapore’s 0.5% or Malaysia’s 2%). By stoking bankruptcy fears, the Daang Matuwid regime is also oblivious to its legally mandated obligation to replenish the SSS should it incur a deficit arising from the pension hike.

For the elderly workers, the Php2,000-pension hike means duly recognizing their contribution not only to the SSS fund but to the national economy while promoting their capacity to support themselves in their retirement.

  1. Daang Matuwid failed to address the jobs crisis and to promote the job security of workers

The Daang Matuwid regime would want us to believe that the jobs situation has improved under its watch. But nothing could be farther from the truth. While 692,000 jobs a year appear to have been created between 2010 and 2015, almost 7 out of 10 of the additional jobs were made in hotels, restaurants, call centers, malls, and other less productive sectors as well as in highly seasonal, contractual work like construction. In addition, research group IBON Foundation noted that job creation under Daang Matuwid is much weaker compared to previous years. Between 2000 and 2009, for instance, 732,000 jobs were created annually.

Chronic job scarcity is being concealed by distorted official employment data as government labor surveys tend to exclude jobless workers who have already been discouraged by lack of employment opportunities. Including such workers, IBON estimates that unemployment rate remains at double-digit with more than 4 million jobless workers today – or basically the same as the situation before Daang Matuwid took over.

A separate survey by the Social Weather Stations (SWS), on the other hand, shows that the number of jobless actually increased from an average of 9.5 million in 2010 to 9.8 million in 2015.

Also, four out of 10 workers are own-account and unpaid family workers that further illustrate the low quality of jobs in the country. Job insecurity, meanwhile, remains severe. IBON estimated that four out of 10 rank and file workers are in non-regular work – e.g., contractual, probationary, casual, seasonal, apprentice workers or agency-hired.

  1. Daang Matuwid continued neoliberal policies like PPP that resulted in higher prices and fees

Daang Matuwid’s centerpiece economic program – the public-private partnership (PPP) – is a continuation, expansion and deepening of the same neoliberal privatization policy started by the first Aquino administration in the 1980s. Under PPP, fares in the LRT 1 and 2 and MRT 3 have jumped by as much Php10 to 13. Among the most affected are the workers/employees and job seekers who comprise about 59% of LRT and MRT commuters. Another 32% are students mostly from working class families.

While the Daang Matuwid has vehemently opposed substantial wage hike, increase in SSS pension, and reduction in taxes, it has showered with generous perks the billionaire oligarchs who cornered PPP contracts. Under the LRT 1 PPP deal, for instance, the Daang Matuwid regime has given enormous benefits to the consortium of Ayala Corp. and the Manny Pangilinan group. Of the total project cost of Php64.9 billion, Daang Matuwid made the public shoulder Php34.9 billion or 54% of the total. Government share includes expenses for right of way acquisition, purchase of additional coaches, civil works and construction of depots. The Ayala-Pangilinan group also enjoys real property tax exemptions reportedly costing Php64 billion. ###

Poverty trends

Original photo from www.solarnews.ph

Original photo from www.solarnews.ph

In its latest survey, the Social Weather Stations (SWS) said that the number of Filipino households that consider themselves poor has slightly declined to 53% in the first quarter of 2014 from 55% in the last quarter of 2013. The Aquino administration was quick to point out that the SWS findings mirror the official poverty data released by the Philippine Statistics Authority (PSA). Two days before Labor Day, the PSA released the Annual Poverty Indicator Survey (APIS) which reported that the number of Filipinos considered poor based on their average income fell to 24.9% in first semester of 2013 from 27.9% in the same period in 2012.

The presentation of these two surveys, released one week apart, depicts a picture of an improving poverty situation. The National Economic and Development Authority (NEDA) described the findings as a “remarkable improvement” in poverty and credited the “strong economic growth” and “government investments in social development programs”. But their manner of presentation is misleading. First, a two or three point decline in poverty is hardly a remarkable improvement especially when one considers government’s claim of rapid economic growth and massive expansion in conditional cash transfer (CCT) funds. Second, comparing poverty figures on a quarterly or semestral basis tends to hide long-term trends, which provides a more useful and accurate appreciation of poverty’s general direction.

Indeed, if one is to look at poverty figures since the Aquino administration took over, what can be seen is the indisputable trend of worsening poverty and living condition. I have been compiling the quarterly surveys of SWS on self-rated poverty, involuntary hunger and adult unemployment from 2010 to their latest available reports. The trends, based on the latest results, are summed up below:

  • From 2010 to 2014 (first quarter), the number of Filipino families that consider themselves poor is growing by 700,000 a year (or 3.5 million Filipinos annually at 5 members per family)
  • From 2010 to 2013, the number of Filipino families that experience hunger is increasing by 200,000 a year (or 1 million Filipinos annually)
  • From 2010 to 2013, the number of jobless Filipino workers is expanding by 500,000 a year

The annual averages are presented in the following charts:

Poverty:

SWS poverty, hunger, joblessness | 2010-2014

Hunger

SWS hunger

Joblessness

SWS joblessness

Meanwhile, even government’s own APIS does not illustrate a substantial improvement in poverty, pegged at 19.7% of families in 2012 (full-year); 20.5% in 2009; and 21% in 2006. Even worse is how government measures poverty – a person with P52.75 a day is not counted as poor. Such amount approximates the World Bank’s $1.25 per person a day poverty standard, which is being criticised by experts as being too low and artificial. (For instance, read here

But who needs an expert when common sense tells us that P52 could not afford decent living? Using P100 to P125 per person a day as standard, IBON Foundation estimated that the number of poor Filipinos could reach 56 to 66 million, or about 60-70% of the population.

If government’s economic managers could not even correctly count the number of poor and properly interpret poverty trends, how can the people expect the Aquino administration to address the country’s worsening poverty, much less end its structural roots? ###

 

Economy in 2012: Rising joblessness, poverty amid Aquino admin’s claims of growth

Joblessness, poverty and hunger are reaching record highs under the Aquino administration amid claims of growing economy

Joblessness, poverty and hunger are reaching record highs under the Aquino administration amid claims of growing economy (Photo from www.flickr.com)

In 2012, the dominant theme peddled by the Aquino administration was “good governance is good economics”. The main propaganda line of Malacañang is that the “daang matuwid” (straight path) has created a favorable environment for economic growth that is inclusive. From being the sick man of Asia, the country now brims with vitality, declared President Benigno Aquino III in his State of the Nation Address (Sona).

To the uncritical, such assertions would seem hard to doubt. For one, the national accounts do show rosy numbers. The Philippines is beating expectations and has been one of the supposed few bright spots amid a gloomy world economy. International banks, local and foreign investors, credit rating agencies and multilateral financial institutions are one in saying that the prospects are indeed upbeat for the country. There are even claims that we are the new tiger in the region, joining the likes of Singapore and South Korea.

Good news for big business

After growing by 7.1% in the third quarter, way above the market’s media forecast of 5.4%, the gross domestic product (GDP) has now expanded by 6.5% for the year. The strong third quarter performance prompted economic managers to revise upwards their 2012 full year GDP growth projection with the National Economic and Development Authority (Neda) claiming that the GDP will likely grow by 7% this year, well beyond the earlier official forecast of 5-6 percent. Many share the same optimism like the World Bank which also raised its projection to 6% from the previous 4.2 percent.

Meanwhile, Standard and Poor’s (S&P) upgraded the credit rating of the Philippines from “stable” to “positive” following the GDP report which put the country on track to make investment grade by next year. Officials say this means lower borrowing cost for government and lower cost for doing business in the Philippines. Prior to the S&P upgrade, the country has already posted eight credit rating upgrades since 2010. These developments continued to feed optimism in the market with trading at the Philippine Stock Exchange posting 38 record highs this year, making it one of the most vibrant equities market worldwide.

Other economic data, as culled by the Christmas Day Inquirer editorial, also seem encouraging. In the first nine months of the year and amid the global crisis, exports grew by 7.2% and foreign direct investments (FDI) by 40% compared to the same period in 2011. Consequently, as of November, the country has an all-time high of $84.1 billion in gross international reserves (GIR) and a balance of payments (BOP) surplus of $2 billion, five times its value during the same month last year.

The country’s big business groups share government’s high optimism, citing the so-called good economic fundamentals in 2012 that can lead to a “super-year” in 2013. They see more opportunities to further boost profits with the anticipated investment grade rating, the implementation of public-private partnership (PPP) projects and the upcoming midterm elections.

Big business, of course, has every reason to be upbeat. High GDP growth, robust stock market and favorable credit rating all reflect not the state of the ordinary people but of how lucrative the economy is for the moneyed few. Further, past and present policies of privatization and deregulation have allowed them to monopolize and greatly profit (through generous perks, incessant hikes in rates and user fees, and exploitation of workers) from key economic activities including public utilities and infrastructure development.  This small group of the super-rich has seen their wealth balloon in recent years. In 2009, the Forbes magazine reported that the 40 richest Filipinos had a combined wealth of $22.4 billion and in 2011, the amount more than doubled to $47.43 billion. The economy is growing but that’s good news only for big business.

Hard realities

Because amid the purportedly stellar growth of the economy, series of credit rating upgrades, streak of stock market highs and favorable reviews by banks, fund managers and investors are the hard realities of rising joblessness, worsening hunger and deteriorating poverty. Social indicators which are most vital to the people have been deteriorating in the past three years amid the record-high profits and wealth of elite families, high investor confidence and positive market sentiment.

Official unemployment rate as measured by the National Statistics Office (NSO) averaged 7% in 2011 and 2012 from 7.3% in 2010. We are supposed to be the second fastest growing economy in the region just behind China but the official jobless rates of our neighbors are much lower. Thailand’s is 0.7%; Singapore, 2.1%; Malaysia, 3%; South Korea, 3.8%; China, 4%; and Taiwan, 4.2 percent. To be sure, like in the Philippines, these official unemployment figures understate the true extent of domestic joblessness in the respective countries. But we cite them for the simple comparison of official data on the labor markets in the region. (Data on Asian countries are as of first quarter 2012 as compiled by the Bangko Sentral ng Pilipinas or BSP. During the same period, our official unemployment rate was 7.2 percent.)

And we have not even looked at the quality of available jobs. A quick peek at the NSO’s preliminary October 2012 Labor Force Survey shows that underemployed workers – those who are employed but are still looking for additional work – numbered 7.2 million; self-employed without any paid employee, 10.7 million; and unpaid family workers, 4.1 million. That’s easily 22 million out of the reported 37.7 million employed workers (more than 58%) with disputable quality of jobs.

Then for wage and salary workers, there’s the issue of extremely low pay amid a very high cost of living (made even worse by Aquino’s enforcement of the two-tier wage system which imposes a floor wage that is even lower than the minimum wage) as well as job insecurity amid widespread labor contractualization. The last time the National Wages and Productivity Commission (NWPC) issued its estimate of family living wage (which could approximate the amount needed by a regular family to live decently) it pegged it at ₱917 per day as of September 2008 in Metro Manila. More than four years later, Metro Manila’s daily minimum wage is still a measly ₱419-456.

To have an idea of how massive job scarcity in the Philippines could be, we may refer to the regular surveys of the Social Weather Stations (SWS). In 2010, 22.5% of Filipino workers said they were jobless which increased to 23.6% in 2011. This year, it ballooned to 30.1 percent. In absolute terms, there were about 9.5 million unemployed workers in 2010 and 2011; this year, it climbed to 12.1 million workers. In Aquino’s first three years in power, the number of workers who said that they were jobless increased by 2.6 million based on SWS surveys.  (Results of SWS surveys cited in this article all refer to annual averages.)

With the economy not producing enough jobs and livelihood opportunities even as wages become even more depressed, poverty and consequently hunger have been at their worst. Again using the SWS surveys, 47.5% of Filipino families considered themselves poor in 2010. Since then, the percentage has steadily climbed to 49.3% in 2011 and 51% this year. There are now around 10.3 million families who consider themselves poor, up from 9.9 million in 2011 and 8.9 million two years ago. Thus, in the first half of Aquino’s term, the number of poor families ballooned by 1.4 million. This means that some 7 million Filipinos have been added to the number of poor in the past three years. Note that between 2009 and 2012, the budget for the controversial conditional cash transfer (CCT) program swelled from just ₱5 billion to ₱39.4 billion (a whopping 688% increase) but apparently failing to make a dent on poverty.

Hunger incidence, still as surveyed by the SWS, follows the same path. In 2010, the percentage of families who reported to have experienced hunger was at 19.1 percent. It climbed to 19.9% the next year and to 21.1% this year. In absolute figures, there were 3.6 million hungry families in 2010; 4 million in 2011; and 4.3 million in 2012. Under Aquino, the number of Filipino families who experience hunger has so far grown by 700,000 or about 3.5 million people as measured by the SWS.

ph economy in 2012 - table

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Sona 2012: Reviewing Aquino’s “Social Contract” and performance (Part 1)

Aquino promised “inclusive growth” that creates jobs at home. After two years, his administration has turned out to be the largest exporter of Filipino workers (Photo from inquirer.net)

On job creation

On June 30, President Benigno Aquino III will mark his second year in office. Then on July 23, he will deliver his third State of the Nation Address (Sona). How do we assess his performance so far? One approach is to gauge Aquino’s achievements vis-à-vis the promises he made to the people in 2010. This series of articles reviews the performance of the President in terms of his campaign promises on improving the economy and the living condition of the people.

Promises

As reference, we will use the document “A Social Contract with the Filipino People”. In this document, then presidential bet Aquino outlined his platform of government. We will also refer to the Philippine Development Plan (PDP) 2011-2016, which details how Aquino plans to implement his so-called Social Contract.

Among others, Aquino promised to transform national leadership:

  1. From a government that merely conjures economic growth statistics that our people know to be unreal to a government that prioritizes jobs that empower the people and provide them with opportunities to rise above poverty
  2. From relegating education to just one of many concerns to making education the central strategy for investing in our people, reducing poverty and building national competitiveness
  3. From treating health as just another area for political patronage to recognizing the advancement and protection of public health, which includes responsible parenthood, as key measures of good governance
  4. From government policies influenced by well-connected private interests to a leadership that executes all the laws of the land with impartiality and decisiveness
  5. From treating the rural economy as just a source of problems to recognizing farms and rural enterprises as vital to achieving food security and more equitable economic growth, worthy of reinvestment for sustained productivity
  6. From government anti-poverty programs that instill a dole-out mentality to well-considered programs that build capacity and create opportunity among the poor and the marginalized in the country
  7. From a government that dampens private initiative and enterprise to a government that creates conditions conducive to the growth and competitiveness of private businesses, big, medium and small
  8. From a government that treats its people as an export commodity and a means to earn foreign exchange, disregarding the social cost to Filipino families to a government that creates jobs at home, so that working abroad will be a choice rather than a necessity; and when its citizens do choose to become OFWs, their welfare and protection will be the government’s priority

These Social Contract commitments can be categorized into five: (1) Job creation; (2) Provision of social services; (3) Poverty reduction; (4) Agricultural development; and (5) Promotion of private business.

New jobs

Aquino criticized the Arroyo administration for conjuring false growth statistics. In his PDP, Aquino said that his government will aim for inclusive growth. This means economic expansion which translates to more jobs. The PDP has specifically set a target of one million new jobs every year, based on an annual growth of 7-8% in the gross domestic product (GDP).

Using official data from the National Statistics Office (NSO), the average number of jobs in 2010 was about 36 million. It increased to 37.2 million in 2011 and to 37.6 million this year. Aquino, thus, has “created” around 1.6 million new jobs or 800,000 a year. This seems impressive considering that the GDP grew by an average of just 4.5% a year during the period.

But the additional jobs are negated by the increase in the size of the labor force. From 2010 to 2012, the labor force grew by 1.6 million, the same volume as the increase in the number of jobs. Hence, official unemployment did not improve during the period, remaining at more than 7 percent.

Dismal quality

Further, the quality of additional jobs remained dismal. Of the 1.6 million new jobs, more than 800,000 were produced by the services sector, characterized by highly irregular, less productive employment. They include jobs covered by “endo” (end of contract) and “5-5-5” schemes, where workers are hired under rotating 5-month contracts. Aquino has rejected proposals to fully ban contractualization, along with the ₱125 wage hike bill, claiming they will create “more problems”.

Also, more than 500,000 of the new jobs were self-employed and unpaid family workers. This implies that almost a third of jobs created were a result of workers’ own efforts to cope with limited employment opportunities. Meanwhile, underemployment, which captures the unsatisfactory quality of present jobs, increased by about 149,000 from 2010 to 2012. Estimates

Of course, it could be argued that low quality jobs are better than no jobs at all. But what Aquino promised are new jobs that empower the people and give them the chance to get out of poverty. To be sure, part-time, insecure or unpaid jobs do not allow workers to be productive enough and improve their miserable condition. Worse, jobs being created are not only low quality but also insufficient in relation to the burgeoning labor force.

Flawed count

It does not help that NSO data on employment tend to understate domestic job scarcity. Official methodology counts as employed those who “worked” for even just one hour in a week, which artificially bloats the number of employed. On the other hand, it excludes as unemployed the job seekers who are unavailable for work despite an opportunity due to illness, family obligations, etc. This falsely deflates the number of jobless.

Aquino is aware of this anomaly. In one of his press briefings prior to official proclamation, he said one of the first things he will do is to clarify how government counts the jobless. This, according to Aquino, will let government design a more reliable employment program. Alas, Aquino chose to continue the unreliable NSO methodology began by the Arroyo administration in 2005 in an obvious attempt to hide the worsening jobs crisis.

Deteriorating crisis

Fortunately, independent surveys, such as the one regularly conducted by the Social Weather Stations (SWS), provide us a more dependable picture of the domestic labor market. In its latest (March 2012) survey on adult unemployment, the SWS reported that 34.4%, or about 13.8 million workers, are jobless. Using SWS surveys, it appears that the incidence of unemployment is worst under Aquino, averaging 26.8% in his first two years. During the term of Gloria Arroyo, it averaged 19.6%; Joseph Estrada, 9.2% and; Fidel Ramos, 10.3 percent. Unemployment is on its way to triple its level from just two decades ago.

The current jobs crisis is the result of the accumulated impact of decades of defective and destructive economic programs implemented by previous regimes such as trade and investment liberalization, neoliberal restructuring of agriculture, etc.

Aquino is not expected to fully reverse this long-term trend of deteriorating job scarcity in two years. But instead of laying down the groundwork to address the jobs crisis such as reviewing and scrapping laws that liberalized key sectors of the economy, it’s business as usual under the Aquino administration.

No industrialization plan

Export-oriented, foreign capital-dependent industries that are vulnerable to global boom and bust continue to be promoted under the PDP 2011-2016. Local micro, small and medium enterprises (MSMEs), which account for around 61% of employment, remain marginalized as policies continue to favor big and foreign corporations.

There is no plan to reverse trade and investment liberalization that destroyed local industries and jobs, especially MSMEs. There is no industrialization plan anchored on vibrant domestic production and consumption. MSME development is still geared towards linking them to the highly volatile foreign markets and as subcontractors of mostly foreign firms. Thus, the potential of MSMEs to massively and sustainably contribute to domestic job creation remains greatly hampered.

Also, Aquino does not have a genuine land reform agenda, which is another program that can create a huge number of jobs. Instead, he has been promoting public-private partnership (PPP) in agriculture that tends to displace farmers and farm workers, while peddling the deception of the Comprehensive Agrarian Reform Program Extenstion with Reforms (Carper).  (More on this in a separate article.)

Largest exporter of workers

Indeed, this administration does not have a comprehensive and sustainable job creation plan to speak of. Contrary to the Social Contract’s pronouncement that it will create jobs at home and will not treat our workers as export commodities, Aquino has turned out to be the largest exporter of Filipino workers among all Presidents. In the past two years, Aquino has aggressively pursued new bilateral deals with various countries to create additional market for Philippine labor export. It has recently lifted the deployment ban in politically turbulent countries like Libya, Sudan and Nigeria as well as in Iraq and Afghanistan.

Data from the Philippine Overseas Employment Administration (POEA) show that the deployment of overseas Filipino workers (OFWs) under Aquino has already reached around 1.4 million a year. During Arroyo’s time, annual deployment was pegged at 1 million; Estrada, 0.84 million; Ramos, 0.69 million; and Cory Aquino, 0.47 million. OFW deployment has already almost tripled since the administration of Aquino’s mother.

Neglecting OFW welfare

Worse, Aquino has been remiss even in his commitment to ensure the welfare and protection of OFWs. Migrante International noted in a report that the 2012 budget for OFW welfare and services has been cut by ₱792 million. Per OFW, the Aquino administration is allocating a measly ₱262 for welfare and services. Meanwhile, it is collecting a huge ₱20,000 from each OFW for various fees and taxes.

Aquino’s neglect of migrant workers is further illustrated in the inept evacuation of OFWs from MENA (Middle East and North Africa) countries undergoing political turmoil, not to mention the four Filipinos executed abroad in the past two years.

Part II: How the rich is getting (scandalously) richer under Aquino

(Dis)Counting unemployment

Domestic job scarcity is now at its worst under the Aquino administration (Photo from pinoy-ofw.com)

When the Social Weather Stations (SWS) released its survey showing that the Aquino administration continues to enjoy a very good net satisfaction rating of 56%, presidential spokesperson Edwin Lacierda had this to say:

“This recent measurement of public opinion indicates that the public not only sees, but has tangibly felt, the government’s efforts to improve services, push for inclusive growth, and upgrade response to disasters. It contradicts the hypercritical few who refuse to see the government doing its work, under the indivisible view that justice and expanding the economy must be jointly pursued.”

But when the same survey group disclosed that unemployment in the country has worsened to 24%, Malacañang sang a different tune. Disputing the survey, Lacierda said: “We have 54,000 respondents… In fact, based on our figures for 2011, the unemployment figures went down.”

President Aquino himself questioned the SWS survey on unemployment. “What was shown to me in general is… there is a .4 percent reduction, from 7.4 to 7 percent, that’s our unemployment figure. (This) seems to belie the SWS survey. I think they cannot be both, they are opposites, they cannot be both true at the same time.”

Lacierda and the President are citing the official Labor Force Survey (LFS) that the National Statistics Office (NSO) conducts every quarter.

But can SWS be both right and wrong at the same time? This seems to be the logic of Malacañang after claiming that the SWS survey on net satisfaction validated the good performance of government while rejecting the same group’s report that unemployment is deteriorating. Note that both results were generated from the same Dec. 3-7, 2011 survey of the SWS covering 1,200 respondents nationwide.

SWS survey shows that there about 9.7 million jobless workers as of December 2011, or almost four times the official unemployment data of about 2.6 million as of October 2011. This wide discrepancy in the number of unemployed is explained by the problematic methodology being used by the National Statistics Office (NSO) in measuring unemployment. As I have pointed out in a previous post:

NSO jobs figures have long been unreliable for distorting the concept of unemployment and statistically deflating the extent of job scarcity in the country. For instance, the NSO does not count as unemployed those who are seeking work but for one reason or another (e.g. school or family obligations, illness, etc.) will be unavailable for work despite an opportunity within two weeks after the survey. Meanwhile, household members, who help operate the small family farm, sari-sari store, or eatery, are considered employed, including those who helped for even just one hour in the past week before the NSO survey.”

Until 2004, SWS unemployment survey (which started in 1993) tracked the official jobless rate. However, the data sharply diverged from each other beginning in 2005 when the NSO changed its definition of employment. (See Chart 1)

The new definition of unemployment that the NSO started using in its April 2005 LFS round excluded discouraged workers and those not willing or available for work from the labor force. (The redefinition is contained in Resolution No. 15 passed by the National Statistical Coordination Board or NSCB in 2004. You may access the said resolution here.)

This redefinition, which further distorted the already problematic old official definition of employment, had the net effect of further statistically reducing the number of unemployed. In 2007, the year the NSO last provided comparative data on employment figures based on its old and new definitions, the LFS showed only an annual unemployment average of 2.6 million workers under the new definition, or around 1.4 million less than the unemployment average using the old definition.

When the NSO adopted the new definition in 2005 and stopped releasing unemployment figures based on the old definition in 2007, it effectively discouraged the comparison of long-term annual averages in the country’s unemployment. Prior to the redefinition of employment in 2005, official NSO data on joblessness showed a steady deterioration of the domestic labor market starting in the mid-1970s. (See Chart 2)

Annual averages in official unemployment rate under the old definition progressively climbed up from 5.1% in the 1970s to 7.1% in the 1980s; 9.5% in the 1990s; and 11.3% from 2000 to 2006 (figures based on the old definition are available until 2006). Under the new definition, official unemployment has averaged 7.3% (2007 to 2011). This has serious policy making implications because the change in definition suddenly erased the historical trend of worsening joblessness and how the domestic economy has failed to produce jobs due to defective programs implemented by administrations in the past 40 years.

Fortunately, we can still rely on the SWS survey to see how unemployment has moved since the second half of the 2000s. Using SWS data, unemployment is now at its worst under the Aquino administration which posted an average of 23% (2010 to 2011) as compared to Arroyo’s 19.6% (2001 to 2009); Erap’s 9.2% (1998 to 2000); and Ramos’s 10.3% (1993 to 1997). (See Chart 3)

To be sure, the Aquino presidency has just started and it could certainly argue that it still has until 2016 to reverse the worsening jobs crisis in the country. But looking at the administration’s development blueprint gives no hope that unemployment will improve soon. (Read here, here, and here) Worse, Aquino is not only continuing the flawed programs of Gloria Arroyo, but like his predecessor, is also resorting to statistical distortion to hide job scarcity and conceal his lack of long-term job creation program. #

On college graduates and the labor market

PUP students protest 1,567% tuition hike (photo from Kabataan partylist as posted by Bulatlat.com)

Thanks to the intense and “fiery” student protests, the Commission on Higher Education (CHED) chair was forced to issue a statement he will not allow the planned hike in the Polytechnic University of the Philippines’ (PUP) tuition by an outrageous 1,567 percent (P12 to P200 per unit). Otherwise, incoming PUP freshmen, which the PUP administration claims are the ones to be affected by the tuition hike, will be forced to pay exorbitant fees.

And worse, these freshmen – like those before them – will discover four, five years later (if they manage to graduate amid the progressively increasing tuition and other costs) that no job awaits them. This is another dimension in the increasingly commercialized tertiary education in the country – as state colleges and private universities squeeze students and their parents dry, government could not even guarantee employment for the college graduates.

Consider these numbers. For every 2 new college graduates produced in the last 8 years, only 1 job that befits the skills and qualifications of these degree holders is added  to the domestic labor market. And they will have to compete for this job with the unemployed college graduates from previous years.

Dr. Romulo Virola, Secretary General of the National Statistical Coordination Board (NSCB), devised a method to estimate the capacity of the labor market to absorb the graduates of tertiary schools. He related the number of tertiary graduates with new hires by major occupation group.

Virola deducted the employment for laborers and unskilled workers, farmers, forestry workers, fishermen, and plant operators based on the assumption that college graduates will apply for work only in the other occupation groups. He estimated the number of new hires by obtaining the difference in employment between the present year and the previous year. Finally, Virola divided the number of new hires with the number of tertiary graduates.

Using this method,  processed data from the Labor Force Survey (LFS, January rounds) of the National Statistics Office (NSO) and the CHED will show that from 2003 to 2010 (variables for earlier years are incomplete), the number of new hires as a percentage of the total number of college graduates is pegged at only 63 percent per year.

This suggests a very tight labor market for the country’s new graduates, which reach more than 439,000 annually in the last eight years. The number of new jobs created every year in occupation groups where the college graduates may want to apply for such as officials of government and special interest organizations, corporate executives, managers, managing proprietors, and supervisors; professionals; technicians and associate professionals; clerks; service workers and shop and market sales workers; and trade and related workers is pegged at only less than 270,000.

Note also that the portion of college graduates among the ranks of the unemployed has been increasing through the years. Available data show that from 15.8 percent in 2004, the portion of college graduates among the unemployed has increased to more than 18 percent annually in the last four years.

So where will our college graduates go? Call center? New call center jobs are expected to drop dramatically this year – from 50,000 in 2008 to just 10,000 in 2010, according to an ANC news report. Work abroad? The number of newly hired land-based overseas Filipino workers (OFWs) declined by 30 percent between 2007 (306,383 new hires) and 2008 (216,803). Or just follow former National Economic and Development Authority (NEDA) chief and now Liberal Party senatoriable Ralph Recto’s advise to graduates last year  – “do not look for work, go back to school” – because the backward Philippine economy and the recession-hit global economy could not produce jobs?

Congratulations, graduates. Welcome to the real world.

Post-SONA notes: Gloria’s statistically incoherent 8 M jobs

Mrs. Arroyo delivering her SONA 2009 speech (Reuters photo)

Mrs. Arroyo delivering her SONA 2009 speech (Reuters photo)

She promised one million new jobs a year but critics are one in saying that the jobs crisis is at its worst under her administration.

To silence her critics and justify her regime, did Mrs. Gloria Arroyo ask government statisticians to give her, at all cost, “one million jobs a year” that she can cite in her State of the Nation Address (SONA)?

On her ninth and ostensibly final SONA last July 27, Mrs. Arroyo declared:

“Lumikha tayo ng walong milyong trabaho, an average of a million per year, much, much more than at any other time”.

Throughout the much anticipated SONA speech, it was the only reference that Mrs. Arroyo made to her job generation efforts. But it was a major statement which concretely summed up the supposed gains of the Arroyo administration in creating jobs since 2001.

I immediately wondered where Mrs. Arroyo’s speech writers got the figure of 8 million jobs. Official employment records released by the National Statistics Office (NSO) do not add up to 8 million additional jobs since 2001. Thus, I tried to find the explanation in the Technical Report that usually accompanies the SONA of Mrs. Arroyo but as of this writing, such report has not been made public yet.

Further research revealed an interesting discovery. On the website of the Bureau of Labor and Employment Statistics (BLES), an announcement on “Methodology in computing employment creation under President Arroyo administration: 2001-2009 (April)” is posted.

The BLES also posted a link on a resolution of the National Statistical Coordination Board (NSCB), Resolution No. 9 “approving and adopting the official methodology for generating annual labor and employment estimates”.

The announcement and the NSCB resolution on the BLES website, which were posted after the SONA, are attempts to “statistically” explain the 8 million jobs Mrs. Arroyo cited. But instead of providing satisfactory answers, they exposed the brazen lie behind the SONA claim on jobs created by the Arroyo administration.

NSCB Resolution No. 9 was supposedly approved on July 6, or three weeks before the SONA. It stated that in generating annual labor and employment estimates, the average estimates of the four rounds of Labor Force Survey (LFS) shall be used. The NSO conducts the LFS every January, April, July, and October.

Using this official methodology, the BLES computed employment creation under the Arroyo administration and arrived at the figure of 8.095 million jobs. (See Table)She promised one million new jobs a year but critics are one in saying that the jobs crisis is at its worst under her administration.
To silence her critics and justify her regime, did Mrs. Gloria Arroyo ask government statisticians to give her, at all cost, “one million jobs a year” that she can cite in her State of the Nation Address (SONA)?
On her ninth and ostensibly final SONA last July 27, Mrs. Arroyo declared:
“Lumikha tayo ng walong milyong trabaho, an average of a million per year, much, much more than at any other time”.
Throughout the much anticipated SONA speech, it was the only reference that Mrs. Arroyo made to her job generation efforts. But it was a major statement which concretely summed up the supposed gains of the Arroyo administration in creating jobs since 2001.
I immediately wondered where Mrs. Arroyo’s speech writers got the figure of 8 million jobs. Official employment records released by the National Statistics Office (NSO) do not add up to 8 million additional jobs since 2001. Thus, I tried to find the explanation in the Technical Report that usually accompanies the SONA of Mrs. Arroyo but as of this writing, such report has not been made public yet.
Further research revealed an interesting discovery. On the website of the Bureau of Labor and Employment Statistics (BLES), an announcement on “Methodology in computing employment creation under President Arroyo administration: 2001-2009 (April)” is posted.
The BLES also posted a link on a resolution of the National Statistical Coordination Board (NSCB), Resolution No. 9 “approving and adopting the official methodology for generating annual labor and employment estimates”.
The announcement and the NSCB resolution on the BLES website, which were posted after the SONA, are attempts to “statistically” explain the 8 million jobs Mrs. Arroyo cited. But instead of providing satisfactory answers, they exposed the brazen lie behind the SONA claim on jobs created by the Arroyo administration.
NSCB Resolution No. 9 was supposedly approved on July 6, or three weeks before the SONA. It stated that in generating annual labor and employment estimates, the average estimates of the four rounds of Labor Force Survey (LFS) shall be used. The NSO conducts the LFS every January, April, July, and October.
Using this official methodology, the BLES computed employment creation under the Arroyo administration and arrived at the figure of 8.095 million jobs. (See Table)

But here’s the rub.

BLES defined employment creation as the annual increments in number of employed workers. Mrs. Arroyo said in her SONA speech that the jobs created reached 8 million or one million per year. Thus, it means the annual increments from 2001 to 2008.

Applying the NSCB Resolution No. 9 and the BLES-defined employment creation on the period 2001 to 2008, the jobs “created” is only 6.64 million. But Mrs. Arroyo needed 8 million. The solution – add the increment in the number of employed for 2009.

For consistency, the BLES should have computed the average estimates for the January and April LFS (the July and October rounds are not yet available) but this will only produce 535,000 jobs and the number needed is at least 1.36 million. To address this, the BLES instead compared the difference between the April 2009 LFS and the April 2008 LFS and found its needed figure – 1.46 million.

So, they arrived at a statistically incoherent 8 million jobs – the sum of the annual increments in the average employment results of four LFS rounds per year from 2001 to 2008 plus the increase in the number of employed between the April LFS rounds in 2008 and 2009.

Actually, BLES further statistically distorted the meaning of job creation by simply adding up the increments in the number of employed workers per year. It did not factor in the increase in the number of unemployed which should have been subtracted from the increase in the number of employed to arrive at “net job creation”. Using this methodology, we will arrive at a smaller job creation figure of around 5.92 million from 2001 to 2008.

This is how they gave Mrs. Arroyo her 8 million jobs created, or one million jobs per year.

These issues are just the tip of the iceberg in terms of government’s systematic efforts to hide job scarcity through flawed methodologies and distorted labor and employment definitions. For instance, we did not discuss yet the kind of jobs supposedly generated since 2001 – are they productive, gainful, secure, etc.?

Government agencies are expected to generate credible and reliable data and statistics to help guide in policy making and development planning. That they are being used to conjure illusions of prosperity only shows the extent of desperation of the Arroyo administration to justify its illegitimate and prolonged rule.