Economy, Labor & employment

(Dis)Counting unemployment

Domestic job scarcity is now at its worst under the Aquino administration (Photo from

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. #


Aquino could not hide worsening economic crisis and poverty behind Corona impeachment trial

Anti-Arroyo groups trooped to the Senate on the opening day of Corona's impeachment trial.

Cause-oriented groups yesterday (Jan. 16) marked the opening of the impeachment trial of Supreme Court (SC) Chief Justice Renato Corona with a mass action near the Senate. Among those present was political satirist Mae Paner who came as Jus-tiis Juana Change (see video below). Activists deem the conviction of Corona a positive step in making Mrs. Gloria Arroyo accountable for her many abuses. But they are also warning against a possible scheme by President Benigno S. Aquino III to control the judiciary for selfish political and economic ends.

It is important to note that the ongoing impeachment trial of Corona is also happening amid a very real threat of global recession. Given the amount of national attention that is being devoted to this historic trial, which could last for several months, there are valid fears that the country might be caught flatfooted when the impact of the global economic contraction kicks in. But beyond government’s and the media’s apparent preoccupation with Corona’s impeachment trial, there are more fundamental reasons why we should be anxious. For one, the Aquino administration has not put in place an emergency program to ease the blow of the looming recession, much less reorient the economy to substantially address its external vulnerabilities.

(For more discussion on the latest economic situation and global prospects, read here and here)

Meanwhile, the people continue to be impoverished by the defective policies of deregulation and privatization. We greeted the New Year with fresh hikes in deregulated oil prices and privatized water rates. More increases are forthcoming in the costs of petroleum, toll, transportation, power, etc. Social services for the poor like health, education, and housing continue to be undermined with insufficient allocations in the 2012 budget, which as usual prioritized debt servicing as well as the public-private partnership (PPP) program. Violent demolitions of urban poor communities (such as in Corazon de Jesus in San Juan) amid lack of sustainable relocation, and the privatization and commercialization of public schools and hospitals further aggravate the plight of the people. The youth-led Mendiola campout last month tried to highlight these economic issues and engage the Aquino administration but was aggressively suppressed by security forces.

In a paper entitled “It’s the economy, student”, Arroyo also tried to draw attention to the deteriorating economic situation under her successor, claiming that Aquino squandered the supposed gains achieved by the economy during her nine-year reign. But reading the paper, the only accurate assertion made by Arroyo is when she said that Aquino “has simply not replaced my legacy with new ideas and actions of his own”. Indeed, Aquino merely continued Arroyo’s anti-people and anti-development legacy of heavy dependence on exports and foreign capital and markets; high prices and depressed wages; lack of social services and privatization; unemployment, job insecurity, and labor export; indebtedness and debt servicing; lack of genuine land reform; dole-outs, etc. that deepen the poverty of our people and backwardness of the economy.

(Read more on the economic legacy of Gloria Arroyo here)

Amid all this, there are legitimate concerns that the impeachment trial will just be used by Malacañang to distract the public and conceal its inability, or unwillingness, to address the pressing economic issues facing the people. It does not help that the degree of coverage that mainstream media is giving the trial tends to displace many important issues such as developments in the global economy, its impact on the country, what government intends to do about it, etc.

But while the mainstream media tend to focus more on the impeachment trial, an overwhelming portion of the population continues to feel strongly about the economy. The latest (Nov. 2011) Pulse Asia survey on the state of the economy shows that 8 out of 10 Filipinos feel that the economy either did not improve or deteriorated compared to the previous year. The said survey also indicates that economic issues remain the biggest source of the people’s disenchantment with Aquino, and the more bad news for the government is that this trend is worsening. Those who feel that the economy deteriorated more than doubled from 16% (Oct. 2010) to 38 percent (Nov. 2011). The disapproval rating of Aquino in terms of reducing poverty worsened from 21% in May 2011 to 36% in November 2011; on job creation (from 11 to 21%); on prices/inflation (from 21 to 37%); and on wage hike (14 to 25%).

Indeed, as much as the people long to make Arroyo and her minions accountable for their many crimes, the Aquino administration could not hope that the public would be forever distracted by the ongoing impeachment trial. Unless real reforms are implemented soon, even the conviction of Corona and Arroyo could not bail out the weakening popularity and legitimacy of the Aquino administration. #

SONA 2011

SONA 2011: Is Aquino sincere in making Gloria Arroyo accountable?

Is Aquino just utilizing the strong anti-Arroyo sentiment to cover up his own failures and address the growing disenchantment of the people in the run-up to his SONA? (Photo from

In the run-up to the second State of theNation Address (SONA) of President Benigno S. Aquino III, his camp has been playing up the theme “despite the great problems left behind by the corrupt Arroyo legacy, the seeds of change have been planted.” This premise both justifies the shortcomings of Aquino and draws the false image of a presidency bent on implementing its reform agenda amid the challenges.

Malacañang also dismisses critical Filipinos as simply “so negative” which according to Undersecretary Manolo Quezon III, is Aquino’s “biggest frustration as President.” Quezon complained that “people are quick to say you can’t do it… nothing will happen.” But really, the people are simply asking, what has happened to the promises of Aquino, foremost of which is making Mrs. Gloria Arroyo accountable?

“Seeds of change”

What are the supposed seeds of change planted by the Aquino administration in the past year? Malacañang and its supporters trumpet what they call important battles won against corruption, which has been Aquino’s banner campaign since the elections. In fact, Aquino clinched the presidency riding on an anti-corruption platform with the prosecution of Gloria Arroyo as the main goal.

Supporters point to the resignation of Ombudsman Merceditas Gutierrez as proof of the dogged intent of the President to put Arroyo behind bars. Aquino openly supported demands for Merci to quit instead of going through the arduous process of impeachment trial. With Merci out of the picture, the prospects of making Arroyo accountable have vastly improved.

Alas, more than two months have passed since the pro-Arroyo Ombudsman was forced to resign, there’s still no actual case filed by Aquino against the former President. The botched Truth Commission is supposed to be already holding tons of evidence proving that Arroyo, her family and allies had enriched themselves through massive graft and corruption. Yet, until his first year speech, all Aquino can offer are tirades that, sans concrete action, have lost their meaning.

Plunder cases filed by progressive groups

Meanwhile, progressive anti-Arroyo groups have remained determined to pin down Arroyo. Partylist group Bayan Muna filed graft, malversation, and plunder raps against Arroyo before the Ombudsman over the alleged misuse of at least P325-million Philippine Charity Sweepstakes Office (PCSO) funds. The funds allegedly were used for political largesse, partisan electoral purposes, and simply pocketed.

Migrant workers’ group MIGRANTE International and former Solicitor General Frank Chavez also sued Arroyo for plunder over the alleged misuse of P530-million Overseas Workers’ Welfare Administration (OWWA) funds. According to them, the funds were used for questionable purposes that did not benefit OFWs such as for health insurance cards to eight million indigents just a year before the 2004 presidential elections.

Peasant group Kilusang Magbubukid ng Pilipinas (KMP) has also asked the Ombudsman to include Arroyo in the earlier plunder case it filed against ex-Department of Agriculture (DA) Undersecretary Jocelyn “Joc-Joc” Bolante in relation to the P728-million fertilizer fund scam. The money was supposed to be used for the purchase of fertilizers to help the farmers but was diverted to help bankroll the 2004 presidential bid of Arroyo.

Aside from corruption, legal cases also hound Arroyo for grave human rights violations such as the P15-million civil suit filed by six members of the Morong 43, a group of health workers illegally arrested and tortured, and detained for 10 months by the Armed Forces of the Philippines (AFP).

Serious doubts

Its failure to file a case naturally raises serious doubts about the resolve of the Aquino presidency to go after Arroyo. The pretext that government would rather take it slowly but surely is a lame excuse. One year is long enough to build a strong case especially if you have the entire machinery and resources of government at your disposal. Remember that it only took three months for Arroyo to file plunder cases against deposed President Joseph Estrada before the Sandiganbayan.

This is where Aquino’s supporters miss the point when they complain that critics are impatient. Change is a long process and it does not happen overnight, they point out. But who asked Aquino to change the country overnight? Who asked him to shortcut the process? What people ask is pretty simple, doable, and concrete – file at least one case.

But Aquino had already missed the historic opportunity to do this in his first year. It’s not farfetched that for all the noise in making Arroyo accountable, the Aquino administration may be willing to compromise in the name of political expediency. Or maybe Aquino and his advisers have realized that politically, it is better that Arroyo is kept out of jail because as long she’s free, Arroyo is a convenient excuse to justify Aquino’s inadequacies and an easy target to gather popular support.

In the name of justice

This has been observed in the events following recent reports by the Social Weather Stations (SWS) and Pulse Asia showing the continuous decline in people’s satisfaction over the performance of Aquino. The “revelations” by Zaldy Ampatuan, former Governor of the Autonomous Region in Muslim Mindanao (ARMM) and one of the primary suspects in the Maguindanao Massacre, of the massive electoral fraud and corruption in Maguindanao involving Arroyo and the subsequent resurfacing of ex-Commission on Election (COMELEC) supervisor Lintang Bedol to corroborate Ampatuan’s allegations of cheating in the 2004 presidential and 2007 senatorial polls have shifted public attention from the non-achievements of Aquino to the numerous crimes of Arroyo.

Is Aquino just utilizing the strong anti-Arroyo sentiment to cover up his own failures and address the growing disenchantment of the people in the run-up to his SONA? But at what cost? Will it be at the expense of the victims of the gruesome Maguindanao massacre and their families?

In the name of justice, Arroyo must be made to pay for her many crimes against the Filipino people.  Aquino made the people believe that he will do just that and was made President in the process. But in the world of elite politics reigned by self-serving interests, many things are not as straightforward as they should be.


A scintillating 7.9 percent GDP growth?

Election-related spending acted as some sort of “stimulus” to an otherwise anemic economic growth in the first half of the year (Photo from

Maybe the government thought that after the terribly mishandled Quirino Grandstand hostage crisis, Filipinos could certainly make use of some good news. Thus, the National Statistical Coordination Board’s (NSCB) declaration today (Aug 26) of a scintillating gross domestic product (GDP) growth of 7.9 percent. The country just posted back-to-back quarterly growth of more than 7 percent, the NSCB said, after the GDP expanded by 7.3 percent in the first quarter.

But the truth is nothing in the supposedly scintillating growth is scintillating. Note, for instance, that the year-on-year GDP, which at constant 1985 prices is valued at P383.91 billion, is being compared to a very low base that barely grew from its previous level, and thus will naturally result in a high growth rate. In second quarter 2009, GDP was valued at P355.69 billion which only grew by 1.2 percent compared to 2008 (P351.57 billion) as the economy started to feel the impact of the global crisis. So if you remove this “base effect” and compare the 2010 second quarter GDP to the same period in 2008, and similarly compare 2008 to 2006 GDP figures (P313.11 billion), economic growth has in fact decelerated by more than three percentage points.

Source: National Statistical Coordination Board

Even so, it is still a “major, major” recovery from the previous year’s slowdown, the NSCB may argue. But what are the circumstances behind the supposedly scintillating recovery? Was the spurt caused by sustainable and long-term growth drivers and by a fundamental shift in macroeconomic direction? Were the gaping holes of economic vulnerabilities that expose the Philippines to the harsh impact of the still raging global crunch finally plugged by correct policies?

Election-related spending

The second quarter result is actually less anticipated than how the GDP will fare starting in the third quarter which covers the start of the new government. For one, the relatively high economic growth under the old Arroyo administration has long been exposed as hollow and meaningless in terms of addressing poverty and job scarcity. Aquino’s economic managers described the economic growth of the previous years as “poverty-inducing, narrow-based, and jobless growth” and the latest GDP figures are no exception.

Growth in the last nine years stood on shaky ground as macroeconomic policies did not address structural issues long beleaguering the economy. The GDP has instead relied on unsustainable growth drivers such as remittances from overseas Filipino workers (OFWs) for domestic consumption and export markets and foreign capital for production.

Apart from these unsustainable factors, the backward economy also got momentary spurts from four national elections held since 2001. This year’s second quarter GDP, for instance, has been inflated by election-related spending similar to the 7.3 percent growth it had in the first quarter. All in all, according to Arroyo’s NEDA, poll spending could contribute 0.34 percentage points to real GDP growth this year. NEDA, of course, wanted to downplay the actual impact of the elections on the economy in order to highlight government policies in relation to high GDP performance.

The NSCB itself noted that the last time the country posted similar successive quarterly growths of more than 7 percent was in the first two quarters of 2004, which like the first two quarters of 2010, covered a period expensive presidential elections.

In truth, the economic impact of the last elections, considered as the costliest yet in Philippine history, was without doubt higher than the NEDA estimate. For one, the agency wrongly assumed a total election spending of just P15 billion that already cover the combined spending of the Commission on Elections (COMELEC) and all the candidates. But the COMELEC alone already had a budget of P11.3 billion, of which P7.3 billion went to the lease of the controversial precinct count optical scan (PCOS) machines.

Computing the maximum spending allowed under Republic Act (RA) 7166 or the Synchronized Election Law of 1991 of the 18 presidential and vice presidential bets and 64 senatoriables that participated in the last elections would already yield around P10.34 billion. Note that there were 50,247 candidates (from presidential to municipal council bets) that participated in the May polls and many of them certainly spent way above the limits imposed by law.

For example, the Philippine Center for Investigative Journalism (PCIJ) estimated that national bets and party-list groups spent P4.31 billion on TV, radio, and print advertisements alone during the official 90-day campaign period. Candidates with larger war chests spent an additional P1.1 billion for “pre-campaign” political advertisements.

Out of the P4.31 billion in ad spending, presidential bets spent P1.11 billion, the PCIJ study said. However, based on their submitted campaign expenditure reports to the COMELEC, the presidentiables claimed to have spent a TOTAL of only P1.19 billion. The COMELEC explains that the cap on election spending is outdated which forces candidates to mis-declare their actual expenses.

Add to these enormous amounts the even larger cost of greasing the fraud machinery and maintaining political patronage that characterize elite-dominated and undemocratic Philippine elections. During the May polls, various incidents of vote-buying indicate that the buying rate per ballot now ranges from P150 to as high as P1,400.

Aside from spending their own money, candidates also got financial boost from big landlords and businesses to pay for both the legitimate and illegitimate expenses of waging an electoral campaign. Thus, the actual cost of “election-related spending” is much higher and how it distorts domestic economic growth is much deeper than what the NEDA estimate indicates.

Global crunch

Besides the one-time boost from election spending, the export-oriented, foreign investment-led economy has gained as well from the slight improvement in the global economy. But despite such improvement, vital indicators show that the global economy effectively remains in a state of depression and belie claims that the latest flare-up in the boom-and-bust crisis of monopoly capitalism is over. Even some mainstream economists point out that the global economy confronts a very real threat of double-dip recession.

North America, Europe, and Japan – major centers of monopoly capitalism – all face a raging public debt crisis and continuing destruction of jobs even as their production and consumption are again slowing down. Thus, external trade, foreign investment, and OFW remittances, most of which come from these major centers, could not sustain their “growth-inducing” impact on the GDP.

Philippine neocolonial trade, for example, has remained concentrated with the US and Japan, which took in almost one-third of the country’s total exports from January to June this year, based on data from the National Statistics Office (NSO). While shipments to China, Singapore, Hong Kong, South Korea, Thailand, and Taiwan are also significant (together they accounted for 39.7 percent of total exports in the first half of the year), a portion of these exports were re-exported to the US, Japan, and Europe.

Exports, which soared by 27.4 percent in the second quarter – the highest since third quarter 1986, the NSCB noted, but in reality simply recovered from an equally huge 18 percent contraction in 2009  – face a major slowdown or even contraction in the coming months. Latest data show that imports are substantially slowing down as the year progresses, which signals lower job orders from the US and other major export markets of the Philippines since our main exports are dependent on imported inputs.

Furthermore, as the richest capitalist countries grapple with rising debts and decelerating monopoly profits, foreign direct investment (FDI) that actually flowed into the Philippines has immensely declined. Bangko Sentral ng Pilipinas (BSP) data show that year-on-year FDI from January to May 2010 fell by 68 percent. Meanwhile, OFW remittances, based on BSP data, have also substantially slowed down to a year-on-year growth of 6.9 percent from January to June 2010. Prior to the global crisis, OFW remittances have been posting double-digit expansion every year.  

In a way, election-related spending acted as some sort of “stimulus” to an otherwise anemic economic growth in the first half of the year. But obviously it can no longer be relied upon – at least until the 2013 midterm polls – to moderate the impact of the still unfolding and protracted global financial and economic crisis.  

Real reforms in economic policies and priorities are urgently needed to lessen our vulnerabilities to the global crunch and create sustainable growth that produces jobs and boosts income. Unfortunately, based on the medium-term development blueprint that the economic managers of the Aquino administration have presented in broad strokes during their first economic briefing last August 18, no meaningful reorientation of the domestic economy is forthcoming. On the contrary, the Aquino administration is turning out to be an even fiercer advocate of flawed and long discredited neoliberal policies of privatization, liberalization, and deregulation.

2010 elections, Economy, Poverty

What Gloria did not say in her farewell speech

(Read the transcript of Mrs. Arroyo’s farewell address here.)

In a televised address last night (June 23), Mrs. Gloria Arroyo gave what Malacanang described as her last speech as president. Consistent with the “legacy” propaganda of government, an aggressive and expensive campaign that started last year and has produced numerous advertisements (worth more than P845 million in 2009 alone), a P10-million parade last June 12, and recently, two books, Mrs. Arroyo declared confidence that she is leaving a nation “much stronger than I came to office”.

In her farewell address, Mrs. Arroyo repeated her favorite themes: that she sacrificed popularity to do the right things such as raising taxes (including the notorious VAT reforms); but she only did so in order for government to have more money for education, health and job creation; that as a result we had 37 quarters of uninterrupted economic (GDP) growth; that as a result we had new and better roads, bridges, and other infrastructures; and that 9 million (yes, 9 million) new jobs have been created.

But there are many things that she did not say in her speech. She did not say that while we had 37 quarters of uninterrupted growth, we also had nine years of double-digit unemployment rate which is the longest sustained joblessness in history. Nine million new jobs? A simple comparison of the total number of jobless between the January 2001 and January 2010 rounds of government’s Labor Force Survey (LFS) shows an increase of more than 620,000 unemployed workers.  Such increase captures only a portion of how job scarcity has actually deteriorated as it does not yet account the quality of jobs available in the domestic labor market. (Note also that since its April 2005 LFS, the National Statistics Office (NSO) started to use a new definition of unemployment, which excluded discouraged workers and those not willing or available for work from the labor force. The redefinition had a net effect of “statistically” reducing the number of unemployed.)

She did not say that under her 9-year rule, the absolute number of unemployed workers has been pegged at about 4 million a year, significantly higher than during the time of former Presidents Joseph “Erap” Estrada (3.17 million); Fidel V. Ramos (2.58 million); and Corazon “Cory” Aquino (2.28 million). She did not say that her administration is the biggest exporter of Filipino workers, at about 1 million a year, because the 37 quarters of uninterrupted growth could not produce jobs for the burgeoning labor force.

She did not say that despite three-decade high economic growth, poverty has deteriorated with the number of poor Filipino families (i.e. living on around ₱1,200 a month) increasing from 25.5 million in 2001 to 27.6 million in 2006. (Preliminary data from the NSCB indicate that at best, there’s no substantial change in the 2009 official poverty figures compared to 2006 data.) She did not say that hunger incidence nearly doubled from 11.4 percent in 2000 to 20.3 percent in 2009.

She did not say that as she raised the VAT from 10 to 12 percent, and further expanded it to include power and oil among others, she also pinned government spending on health, education, and housing to their lowest levels while raising payments for government debts, which has also become her administration’s biggest source of corruption.

She did not say that she was the biggest spender on debt servicing but the most frugal on social services among all Philippine presidents. Every year since 2001, the amount of debt servicing has been equivalent to 42.7 percent of annual government expenditures and 67.4 percent of annual revenues. Meanwhile, combined government spending for education, social security, health, land distribution, and housing does not even account for half of what the Arroyo administration was spending for interest and principal payments.

Mrs. Arroyo said that she is leaving behind more roads and bridges, a stronger economy. She did not say that she is also leaving behind a gargantuan budget deficit of P162.1 billion in the first five months of 2010 alone, already higher than the first half deficit ceiling of P145.2 billion, and a 2009 full-year deficit of P298.5 billion, an all-time high in absolute terms. She did not say that from 2001 to 2009, the average national budget deficit was pegged at P148.37 billion while the average deficit as a percentage of the GDP was 2.93 percent, both historic highs.

There are many other things she did not say – how she persecuted her critics, including the 1,000 plus victims of extrajudicial killings, the 200 plus people who were abducted by her security forces like Jonas Burgos, and those like the Morong 43 that they placed behind bars for trumped up charges to silence them; how she called up Garci in 2004 and asked for a 1-million vote lead over the late FPJ; how she, her husband, their relatives and friends milked public coffers and government contracts dry; how her officially declared net worth jumped by more than 114 percent during her presidency; and how she and her friends  dined in New York for almost P1 million.

There are many other things she did not say.

She did not say goodbye, which reminds us that she will still be very much around.

2010 elections, Economy

Notes on the 7.3 percent GDP growth

Image from

The good news, according to Malacañang spokesperson Gary Olivar, is that Noynoy Aquino will be taking over a “booming economy”. “It’s obviously a great note to end the President’s term with”, Olivar said.

The country’s chief statistician agrees. “This is a glorious ending for the Arroyo administration and a good beginning for the incoming Aquino administration”, a jubilant Romulo Virola, head of National Statistical Coordination Board (NSCB), declared.

On Thursday (May 27), the NSCB reported that the country’s gross domestic product (GDP) grew by a robust 7.3 percent. The Philippine Daily Inquirer noted that it is “the strongest in almost three years and gave some relief to Arroyo who has been portrayed by critics as a corrupt ruler more focused on improving her family’s economic fortunes than the nation’s”. Mrs. Gloria Arroyo is buoyant, the Inquirer reported. 

This is classic Arroyo propaganda of a vibrant economy, a recurring theme used as a smoke screen for the corruption, plunder, sellout, political repression, and bad economic policies of the last nine years.

But the growth is hollow and artificial; it does not in any way indicate a booming economy as Mrs. Gloria Arroyo’s spin doctors want to portray it. For one, the first quarter growth was mainly pushed by election-related spending and not by sustainable factors such as healthy productive sectors (i.e. agriculture actually declined by 2.8 percent, after stagnating in fourth quarter 2009).

Elections create temporary jobs, give people instant extra money to spend, and make government to spend more. Consequently, personal consumption expenditure increased by 5.9 percent in the first quarter, outpacing its 3 percent performance in fourth quarter 2009. Government consumption expenditure, meanwhile, jumped by 18.5 percent, which the NSCB said is its highest ever recorded growth. Aside the elections, government spending was also pushed up by reconstruction and rehabilitation efforts after typhoons Ondoy and Pepeng hit the country late last year.

Election-related expenditures may continue to make its presence felt in second quarter GDP figures with campaign spending in April making a last surge. After this are uncertainties. The financial turmoil in Europe is unfolding and the Philippines, with its small domestic market and deeply export-oriented manufacturing and agriculture is very much vulnerable.

And while government hypes the 7.3 percent growth, left untold is that the economy is still reeling from the global financial and economic crunch. In fact, despite the seemingly spectacular first quarter numbers, the domestic economy is still in slowdown mode. While the GDP is forecast to grow 2.6-3.6 percent this year, up from 0.9 per cent in 2009, it is still below the 3.8 percent in 2008 and 7.1 per cent in 2007. These estimates do not yet factor in the very likely contagion of the raging crisis in Europe.

At the end of the day, however, the GDP growth needs to mean something tangible and beneficial for ordinary Filipinos. You can read my previous posts, but let me also quote Mrs. Arroyo’s erstwhile favorite economic adviser: “My biggest frustration as a presidential adviser is that 34 quarters of uninterrupted expansion in the past nine years did little to reduce poverty and the number of poor people”, reelected Albay Governor Joey Salceda said in an interview with the Inquirer last March. Citing statistics on poverty, hunger, and skewed wealth distribution, Salceda, who is now with Aquino’s Liberal Party (LP), echoed what critics – citing the same statistics – have been saying all along, “The rich got richer, the poor got poorer” under Gloria.

Now, the crucial question is can Noynoy – perhaps with Salceda again as among his economic advisers – correct this?

Sadly, despite all the rhetoric about change and justice, prospects of far-reaching reforms in economic policies and strategies under Noynoy are dim.

The problem is for Noynoy Aquino, Filipinos are jobless not because globalization destroys our local industries and people are poor because farmers and farm workers such as those in Hacienda Luisita are landless and duped by schemes such as stock distribution option (SDO). At first, I thought “kung walang corrupt, walang mahirap” was just a clever PR campaign to sell Noynoy as the complete opposite of Gloria and his fiercest presidential rival Senator Manny Villar. But looking at the people who designed his political and economic program, “kung walang corrupt, walang mahirap” is apparently more than a PR campaign but an expression of the so-called post-Washington Consensus ideology. Basically, this is an attempt by the neoliberals to justify the IMF-World Bank’s Washington Consensus (liberalization, deregulation, privatization, fiscal and tax reforms, budget cuts for social services, etc) by blaming corrupt Third World governments for the failure of globalization to bring about development and social justice.  

The next two paragraphs are portions of a recent article I wrote for the Philippine Online Chronicles:

The emerging line-up of Aquino’s Cabinet including his likely team of economic managers and advisers indicates that no qualitative change in policies and general direction is in the offing under the new administration. Aquino, in the first place, did not promise major economic reforms that will deviate from the path taken by his predecessors. In fact, some analysts point out that the main theme of his presidential campaign – “kung walang corrupt, walang mahirap” (without corrupt officials, there are no poor) – exposes the lack of intention of Aquino and his team to reconsider current policies that have impoverished the people. By erroneously narrowing the poverty discourse to governance, Aquino has greatly limited the room for fundamental, pro-people economic reforms to take place.

To illustrate, the team of economists that drafted his economic agenda and backed his presidential bid includes the most ardent champions of neoliberalism in the country, a discredited economic dogma implemented since the 1980s. They include the faculty members of the University of the Philippines School of Economics (UPSE) who pushed for bitter fiscal reforms that the Arroyo administration implemented including VAT reforms and reduced budget for social services, among others. These are also the same economists who justified wage freeze, automatic debt servicing, privatization, deregulation, liberalization, and other neoliberal reforms that have worsened unemployment and poverty in the country.

Human rights, Photo slideshow

“Parade of coffins”, march against Oplan Bantay Laya: a photo slideshow

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April 14, 2010 (MANILA) – A protest march in Manila was held today highlighted by a parade of mock coffins draped in flags of different people’s organizations whose leaders and members had been assassinated or abducted by elements widely believed from the Armed Forces of the Philippines (AFP). Human rights groups have blamed the government’s counter-insurgency program Oplan Bantay Laya (OBL) for the spate of extrajudicial killings, enforced disappearances, and other forms of human rights abuses that specifically target unarmed political activists and civilian populations.

Human rights defenders and the victims’ relatives are holding accountable Gen. Jovito Palparan, Executive Secretary Eduardo Ermita, Defense Secretary Norberto Gonzales, and President Gloria Arroyo herself for their role in the murderous OBL, which has since 2001 resulted in more than 1,000 cases of extrajudicial killings, more than 200 cases of enforced disappearances, as well as hundreds of illegal and politically motivated detention such as the controversial case of the Morong 43.

For more information on the human rights situation in the Philippines, please visit the Karapatan website.

Oil deregulation, Power industry, Privatization, Water crisis

Overpriced oil inflates costs of El Niño, power crisis

Petron and other oil firms have been jacking up pump prices in recent weeks (Photo from

Those who are ready to absolve government for the harmful effects of El Niño should think again. While El Niño is a natural phenomenon, its impact on the people and the economy could have been eased by right government policies. Sadly, the policies in place have exposed the country not only to the strongest blows from what experts describe as a “moderate” El Niño. These flawed policies have also exposed us to El Niño’s magnified impact.

Deregulated, privatized energy

Take the case of power and oil – strategic sectors that have been privatized and deregulated by government. As the water level in dams around the country fell, hydropower generation also declined. Consequently, more power is generated from plants running on expensive and overpriced oil. To make the situation worse, oil prices have been on an uptrend again in the past few weeks. Electricity bills, which are also artificially bloated, climbed as a result. Prices of other commodities and services are sure to follow.

Such predicament could have been capably addressed by a government that has the needed policy tools. But it threw away these tools when it allowed private corporations to take control of the entire energy sector. It tried to reclaim some of these tools through emergency powers but was met with understandable public skepticism. In the end, the reality that Congress could not be convened at this point in the election season forced government to give up the plan.

As an alternative, government now intends to lease modular generating sets that could produce an additional 160 megawatts (MW) of electricity for Mindanao. By itself, this plan is already costly with an initial tab of P5.5 billion aside from increasing power rates in Mindanao by P14 per kilowatt-hour (kWh). But it is made even costlier by overpriced oil that will be used in great amounts to feed the generating sets.

Amid the El Niño, energy companies, with their greed and abuses un-moderated, are having a heyday.

P8.12 per liter overpricing

In the coming months, households not only in Mindanao will have to pay for higher electricity bills. The reason is not only the limited supply of cheaper hydropower due to El Niño. As more power is generated by oil-fed power plants, consumers also become more exposed to the impact of frequent oil price hikes and overpriced petroleum.

Under Republic Act (RA) 8479 or the Oil Deregulation Law of 1998, oil companies are allowed to increase pump prices at whim. They are not even required to inform the public about their price changes, much less explain their price hikes. This policy has been abused to the hilt by the oil firms. The National Economic Development Authority (Neda) itself has once confirmed that oil firms are indeed overpricing their products.

As of January 2010, oil products in the country are still overpriced by an average of P8.12 per liter. This figure is based on the monthly difference between the ideal and actual changes in pump prices from January 2008 to January 2010. The ideal pump price adjustment is computed using the difference in the monthly averages of Dubai crude and foreign exchange (forex) rate during the said period. The actual price movement, meanwhile, is based on the Department of Energy’s (DOE) monitoring.

There is no consolidated data yet on actual pump price movement for February and March. But note that in February, there should have been an 83-centavo per liter rollback based on Dubai crude and forex monthly movements. The actual pump price of diesel, however, did not move during the said month while kerosene prices even jumped by 25 centavos a liter. In other words, the overpricing could be much higher (aside from the fact that even before imported oil reach our ports, they are already overpriced due to global monopoly control by the oil giants).

Daily overcharges of P7.44 M for Minda extra power

Meanwhile, government’s plan to lease modular generation sets to produce

Power generated by the Agus and other hydroelectric power plants in Mindanao has drastically fallen due to El Nino (photo from

an additional 160 MW of electricity in Mindanao will require millions of liters of petroleum. For purposes of comparison, let us look at the 1 MW Generac Diesel Power Module manufactured by Mitsubishi. This generator, running at 100 percent capacity, consumes 238.56 liters per hour of diesel; at 75 percent, 178.92 liters; and at 50 percent, 119.28 liters.

Using this as yardstick, and factoring in the P8.12 per liter in overpricing, we can estimate how much the people will needlessly spend for additional electricity in Mindanao. We shall use the 100 percent capacity level since the generating plants that will be leased need to run at full capacity to augment the power shortage in the region.

Per hour, the overpricing would be equivalent to P1,937.11. If a 1-MW generator runs for the entire day, the extra cost would be P46,490.57. If the entire 160 MW is generated in a day, the figure would be P7.44 million. For one month (30 days), the overpricing would be P223.15 million. If the 160-MW generators were commissioned for three months (April to June), taxpayers will unjustly shell out around P669.45 million on top of the real price of diesel and the cost of leasing the generating plants.

Unabated oil price hikes and overpricing also worsen the people’s burden due to El Niño in other ways. For instance, farmers who rely on irrigation pumps and fishers who use motorized bancas will have to pay more for gasoline. Note that due to El Niño, more farmers turn to irrigation pumps. Fishers also consume more gasoline as they spend more time fishing (warm temperature drives fish to deeper waters, fishers claim).

Overpriced power, too

Meanwhile, outstanding issues in the power sector continue to unjustly burden the people with or without an El Niño. Due to the ongoing implementation of RA 9136 or the Electric Power Industry Reform Act (Epira) of 2001, power rates remain exorbitant and continue to shoot up. Automatic adjustment in generation charges, for instance, allowed Meralco to again hike its rates for March by P1.38 per kWh. Just last year, Meralco jacked up its distribution rates by 41 centavos per kWh.

The Epira-created Wholesale Electricity Spot Market (WESM) also gave more opportunities for the new private power monopolies to manipulate electricity rates. In February this year, for example, power rates in the WESM spiked to as much as P68 per kWh, which Arroyo’s own economic adviser Albay Gov. Joey Salceda described as “unspeakable”. Apparently, power companies trading in the spot market withheld supply, a market abuse easily done by firms in control of both distribution and generation, jacking up prices in the process. Power sold in the Luzon grid is dispatched through the WESM, a mechanism that will also be set up in the Visayas soon.

These increases become more deplorable as power companies, like the oil firms, also overcharge the consumers. In its December 2009 report, for instance, the Commission on Audit (COA) said that Meralco’s illegal charges could reach more than P7 billion. And Meralco has not even com-

Activists call for the nationalization of the oil industry (photo from

pletely refunded the P34.12 billion in overcharges that it illegally imposed on its almost 5 million customers in the past.

Nationalized energy

The energy sector is a lucrative industry but the billions of profits it makes come at the expense of the people and national development. Such greed and abuse become more deplorable during times of natural calamities such as the current El Niño when the people’s poverty and hunger intensify and the domestic economy is further undermined.

What we need is an oil and power industry that is not privatized and deregulated, and that is not controlled by the Cojuangcos, Aboitizes, Lopezes, Pangilinans and their American, European, and Japanese partners. What we need is an energy sector that is nationalized, state-owned, and effectively controlled by the Filipino people. Only then can we stop overpricing in petroleum and electricity, and better plan the energy needs of our people and economy.

2010 elections, Fiscal issues

Debt and deficit as election issue

The state of public coffers as an electoral agenda in the coming May polls is not getting the national attention it rightfully deserves. Except for a recent statement by Liberal Party standard bearer Noynoy Aquino that he will not impose new taxes and raise existing ones if elected, presidentiables have not touched the crucial issues of the burgeoning budget deficit and mounting debt that government faces. Vows to curb graft and corruption, meanwhile, are statements too general to pass as a concrete platform in terms of protecting and raising public revenues.

But the reality is that whoever becomes the next President will have to run a government that is almost P5 trillion deep in debt and with a budget deficit of P300 billion or more. Thus, whatever promises about providing for the basic needs of the people especially the poor are empty rhetoric unless candidates disclose how they intend to address the worsening fiscal situation.

Debt accumulation

Every second, the country’s debt is growing by P8,394.54. That’s the average pace in the last nine years and it is still accelerating. Last year, it was expanding by P8,462.36 per second. The rate at which the debt stock is accumulating is indeed alarmingly high.

As of October last year, the total debt of the national government including its outstanding and contingent liabilities was about P4.99 trillion. Outstanding debt refers to unpaid obligations while contingent debt includes government guarantees to state-owned corporations and financial institutions.

At the end of 2000 before the current Arroyo administration took over, the total debt was P2.65 trillion. It means that under the incumbent regime, government’s debt increased by P2.34 trillion. Such huge amount of accumulated debt makes President Gloria Macapagal-Arroyo the heaviest borrower among all post-EDSA presidents.

In addition, the domestic economy despite the aggressive hype about its growth by the Arroyo administration is not coping with the rapid accumulation of government debt. From 2001 to 2008, government’s annual outstanding debt as a portion of the yearly gross domestic product (GDP) was pegged at 67.8 percent. Comparing it with its immediate predecessor, the Estrada administration (1998 – 2000), the debt-to-GDP ratio was at 60.1 percent. Note that the GDP under Arroyo supposedly expanded by 4.8 percent per year and only 3.5 percent per year under deposed President Joseph Estrada.

For creditors, the higher the debt-to-GDP ratio, the higher the risk of default or inability to make future payments. But for the great majority of the people, it means that the economy, already hampered by structural issues of highly skewed distribution of wealth, would be further unable to provide opportunities for decent living.

Impact on the people

Current debt levels mean that each of the 92.23 million Filipinos is now practically in debt by around P54,093.46 to government’s creditors. And at the rate that government debt is growing since 2001, each Filipino would have a debt of about P56,965.97 by the end of 2010.

But the direct impact on the people of this huge debt can be measured by how much pressure it puts on public resources. The Arroyo administration has shelled out more than twice the amount it borrowed from creditors. From 2001 to 2009 (until November only), government has so far paid its creditors a total of P5.06 trillion for interest and principal payments.

It means that every second, the country is giving out P17,970.90 to pay for government debts. It also means that each Filipino has practically shelled out P54,832.39 to pay for such debts and yet still owes government’s creditors almost the same amount.

Every year since 2001, the amount of debt servicing has been equivalent to 42.7 percent of annual government expenditures and 67.4 percent of annual revenues. Stated more simply, it means that for every P10 that government spends more than P4 go to its creditors while out of every P10 it collects from the people’s taxes and other revenue measures, almost P7 are used to pay for its debt.

More money that go to debt servicing means less money that go to the people for social services. To compare, in 2008 (latest available data), debt servicing for interest and principal payments comprised 47.6 percent of total public expenditures. Education, culture, and manpower development accounted for only 14.5 percent; social security, welfare and employment, 5.5 percent; health, 1.2 percent; land distribution, 0.3 percent; housing and community development, 0.02 percent; and other social services, 0.1 percent. Even if we add the share of these social services together, they will still not comprise even half of public expenditures that went to debt servicing.

Note that the public expenditures for health, education, and housing cited above include spending for police and military schools, hospitals, and housing programs. Thus, actual spending that directly benefited the civilian poor are much smaller. Unfortunately, such data for the said period are not available.

Budget gap and debt trap

Government justifies its heavy borrowing by pointing to the budget deficit, or the gap between its revenues and expenditures. To bridge this gap, government is forced to borrow. And just how big is this gap? As of November 2009, the budget deficit is pegged at P272.52 billion – already an all-time high in absolute terms (and the December figures have not yet been accounted for). It is also P22.52 billion higher than what government anticipated for the whole 2009.

From January to November last year, total revenues was at P1.02 trillion but total expenditures was bigger at P1.29 trillion. To finance the deficit, government raised P541.02 billion through borrowing during the period, mostly through the foreign and domestic bond markets. But if government’s deficit is only P272.52 billion, why did it borrow almost twice the amount? Because portion of the borrowings will cover not only interest payments (which is 20.1 percent of the reported expenditures) but also for principal amortization, which reached P332.91 billion during the 11-month period. In other words, government borrows not only to bridge the deficit gap but to settle as well its old and existing debts.

This cycle goes on and on, worsening in every turn.

What must be done?

One way is to raise revenues. But it does not necessarily mean new (such as the text tax) and higher taxes as the Arroyo administration repeatedly claims. There are numerous ways to raise public resources without subjecting the people to additional burden – curb corruption and bureaucratic wastage, reverse trade and investment liberalization, improve tax collection efficiency, collect proper taxes from the biggest foreign and local corporations instead of giving over generous fiscal incentives, to name a few.

As pointed out in a previous article: “even without modifying our existing commitments with the World Trade Organization (WTO) and other free trade deals, the Philippines can hike tariffs across the board and raise billions of pesos in revenues. Note that due to continuing trade liberalization, total collections from tariffs on imported goods and services under Arroyo now only account for 2.8% of total revenues and gross domestic product (GDP), compared to around 4.5% for most of the 1990s. In the first half of 2009 alone, we are giving up almost P117 million in potential revenues per month due to lower duties.”

In fact, even onerous taxes such as the 12 percent value added tax (VAT) especially on oil, power, and other essential goods and services can be scrapped and still government can raise needed revenues.

But raising revenues in a pro-people way is just one aspect of the urgent fiscal reforms that we need today. Unless we plug the largest fiscal hole that is debt servicing, our resources will continue to be drained. Thus, all presidentiables must also outline how they intend to address the country’s debt crisis that has been raging on for almost three decades now.

More concretely, what do candidates intend to do with Executive Order (EO) 292 or the Administrative Code of 1987 that provides for automatic debt servicing at the expense of social services? What do they intend to do with odious debts or those debts incurred by past and present administrations that were tainted with corruption and anomalies ala-NBN-ZTE? Or those that only caused death and destruction of livelihood for marginalized communities such as the San Roque Dam?

These are some of the most pressing questions that those who want to steer government in the next six years (if Arroyo’s Charter change scheme will not push through) will have to answer now. ###


NG debt (in P billion)
Indicator 2000 2008 2009*
Outstanding 2,134.12 4,220.90 4,424.08
Contingent 514.69 545.58 564.96
Total 2,648.81 4,766.48 4,989.04
*As of October
Source: Bureau of the Treasury
NG debt servicing for interest & principal (in P million)
Year Total Interest Principal
2001 274,439 174,834 99,605
2002 357,959 185,861 172,098
2003 469,990 226,408 243,582
2004 601,672 260,901 340,771
2005 678,951 299,807 379,144
2006 854,374 310,108 544,266
2007 614,069 267,800 346,269
2008 612,682 272,218 340,464
2009* 593,055 260,147 332,908
Total 5,057,191 2,258,084 2,799,107
*Jan to Nov
Source: Bureau of the Treasury
Debt servicing vs social services expenditures (in P million), 2008
Indicator Amount % of total (w/ principal payments)
Total expenditure (social services + others) 1,015,597.59
Total expenditure with principal repayments 1,287,815.59 100%
Debt servicing (interest & principal) 612,682 47.6%
Education, culture, & manpower development 186,619.70 14.5%
Health 15,729.22 1.2%
Social security, welfare, & employment 70,307.56 5.5%
Housing & community development 274.42 0.02%
Land distribution 4,166.94 0.3%
Other social services 1,266.45 0.1%
Source: Bureau of the Treasury, BESF 2010
2010 elections, Human rights

Mission accomplished? Arroyo lifts martial law

Photo from Reuters

Of course, the decision by Mrs. Gloria Arroyo to lift martial law in Maguindanao last night (Dec. 12, 9PM) after one week must be welcomed. But looking at the bigger picture, the people must also be alarmed. Why, what are the dangers?

The lifting of Proclamation 1959 preempted Congress and the Supreme Court (SC) from deciding on the legitimacy of martial law. As such, questions on its legality have remained unresolved. House Speaker Prospero Nograles and Senate President Juan Ponce Enrile already said that they are adjourning the joint session on Proclamation 1959 on Monday, Dec. 14. As for the SC, it is hoped that it would still pursue the seven petitions versus martial law filed before it last week. The SC is supposed to determine whether or not Mrs. Arroyo abused her constitutional power to declare martial law.

As of this posting, however, there is still no official announcement from the SC. It only said its order for Malacañang to answer the petitions will stay. But the SC also added that the executive can manifest that martial law has been lifted (and thus the subject of the petitions no longer exists). If it decides to discontinue hearing the petitions, then we are in an even more precarious situation. Mrs. Arroyo can just impose martial law at whim, anywhere, using flimsy grounds like concocted rebellion. All she has to do is lift it before Congress and the SC can intervene. And then she can get away with murder.

With elections just around the corner, this is dangerous since military rule can be used to sabotage the polls. Imagine a scenario when martial law is declared on Election Day, or days before to lay the ground for fraud or election failure in certain areas. These unnerving possibilities are not farfetched especially with an incumbent President who will at all costs prolong her stay in power. The lifting of Proclamation 1959 did not ease fears of what Sen. Miriam Santiago called a “conspiracy” to expand martial law outside Maguindanao. We can thus expect more beheadings, hostage takings, clan wars, bombings, etc. in the months leading to the 2010 elections.

The other danger involves the cases facing the Ampatuans. Five members of the Ampatuan clan have already been charged with multiple counts of murder for the massacre. One of them is main suspect Datu Unsay Mayor Andal Ampatuan Jr. But other important members of the clan, including its patriarch Andal Sr. have been charged with rebellion instead. Pundits noted that the rebellion charge is actually an escape route for the Ampatuans. Because most of them were accused with a political crime (i.e. rebellion) and not a criminal case (i.e. murder), there is more room for compromises including pardon or even acquittal.

There is also a chance that evidence such as the caches of arms and ammo seized from the Ampatuans during martial law could be questioned in courts. Ampatuans’ lawyers may argue that such evidence was illegally seized under Proclamation 1959, whose legitimacy was not resolved. Thus, martial law was effectively used to dilute the case versus the warlord clan.

Executive Secretary Eduardo Ermita said they lifted martial law because it has already achieved its objectives. If these objectives are to make Proclamation 1959 a dry-run for future wider martial law and to weaken the criminal liability of the Ampatuans, then it is indeed mission accomplished for Malacañang.