Counting the poor, measuring poverty

SWS poverty

Just before the Holy Week break, the Philippine Statistics Authority (PSA) reported that the country’s poverty incidence dropped to 16.1% of families in the first half of 2018 from 22.2% during the same period in 2015. Among individuals, the poverty incidence fell to 21% from 27.6 percent. This supposedly means that the Duterte administration is on track to meet its target of lifting one million Filipinos from poverty every year.

Absurdly low threshold

Expectedly, government’s claim of improved poverty situation has been met with strong criticisms, not to mention ridicule, from various sectors. The biggest flak remains the absurdly low threshold that the PSA continues to use to count the number of poor Filipinos. For the first half of 2018, the poverty threshold was pegged at Php10,481 per month, which for government represents the minimum amount that a family of five needs to be considered not poor.

That threshold translates to a measly sum of Php69.87 per person per day. As state statisticians try in vain to defend the methodology that produced their preposterous poverty threshold, the simple challenge from the incredulous public is for government officials to live off Php70 a day.

Malacañang officials did not accept the challenge, and instead argued that poverty is a matter of lifestyle. “Depende sa lifestyle nung kumakain. Kasi kapag tanungin mo iyon mahirap, sabihin niya, asin lang. Magdidildil kami ng asin, nakakakain na kami,” presidential spokesperson Salvador Panelo was quoted as saying when asked if a family can survive on the PSA threshold.

And there’s the rub. For government, poverty is an issue of lifestyle, not based on any reasonable or acceptable standard of income and consumption, and of access to adequate social services such as health, education and shelter. If a household can survive on salt, then Php70 for each of the family members must be enough.

But the idea of measuring poverty is not simply to count how many are poor. Ultimately, it is about ensuring, as a matter of policy, that people achieve a decent living to become not poor. Decent living thus is not an issue of lifestyle but creating, among other things, enough economic opportunities and a conducive social environment for people to afford life’s basic necessities and achieve a certain level of comfort in a sustainable way. Any poverty threshold should be set based on such standard and principle.

Need for higher standards

At the global level, there are already many studies that attempt to define the quality and quantity of decent living. These efforts are in response to the deemed inadequacy of existing global standards in measuring poverty such as World Bank’s US$1.90 per capita poverty threshold (the International Poverty Line or IPL) based on 2011 Purchasing Power Parity (PPP). In macroeconomic theory, PPP compares different countries’ currencies through a “basket of goods” approach.

In Philippine peso, a US$1.90 PPP poverty line translates to an even lower threshold of Php40.20 in 2015, according to World Bank calculations. The PSA’s annual per capita poverty threshold in 2015 (full-year) was Php21,753 or Php59.60 per day.

Much like the PSA, World Bank is widely criticized for systematically understating the extent of global poverty by using a low poverty line. Partially acknowledging the criticisms, World Bank for the first time presented alternative and higher poverty lines (i.e., at US$3.20 per day for lower-middle income countries such as the Philippines and at US$5.50 per day for upper-middle income countries) in its latest (2018) annual global poverty report.

But the adjustments still fall way short in depicting a more realistic picture of poverty. For instance, World Bank standard of US$3.20 PPP poverty line for the Philippines as a lower-middle income country translates to just about Php67.80 in 2015.

Nonetheless, the magnitude of poverty among the population increases significantly even with insignificant increases in the poverty line. To illustrate, 21.93 million Filipinos fell below the PSA poverty threshold of Php59.60 in 2015. With an additional eight pesos to match World Bank’s new poverty line for countries like the Philippines (i.e., Php67.80 in 2015), the number of poor swells by almost six million to 27.5 million Filipinos.

Imagine then the impact of a truly meaningful upward adjustment in poverty lines in terms of measuring the real magnitude of poverty. Just by way of illustrating this point, look at the number of poor people worldwide using World Bank’s poverty lines for low-income countries (i.e., US$1.90) and upper-middle income countries (i.e., US$5.50). At US$1.90, the number of poor people in 2015 by World Bank calculations was only 10% of global population (736 million people); but at US$5.50, poverty incidence rises to 46% of global population (almost 3.4 billion people).

Cost of decent living

So, what should be the higher standard with which to measure if Filipinos are poor or not? Concretely, how much is the cost decent living? Duterte’s economic managers apparently know that current official poverty threshold does not allow a family to afford a life out of poverty, much less a decent living.

Remember when the National Economic and Development Authority (NEDA) came under fire last year for reportedly claiming that Php10,000 is enough budget for a family of five to survive? The ruckus forced Duterte’s socioeconomic planning secretary Ernesto Pernia to give an estimate on how much a family would actually need to live decently – i.e., Php42,000 a month.

Pernia, of course, would later clarify that the Php42,000 is “not official NEDA figures” and was just “top of mind”, aware of the implications on government’s wage policy. But that amount was not pulled out of thin air. The NEDA chief said he came up with the figure based on the assumption that there are two people working in the family and each earns at least Php21,000 a month. It approximates the average family monthly income of about Php23,000, based on the latest (2017) Annual Poverty Indicators Survey (APIS) of the PSA.

Using Php21,000 to Php23,000 as proxy for the cost of decent living, how do Filipino families measure up in terms of income? Based on the 2017 APIS, 70% of Filipino families are earning below Php22,500 a month. Put another way, seven out of every 10 Filipino families fail to meet the “cost of decent living”. This is a far cry from the two out of every 10 families that the PSA counts as poor.

Other ways of measuring poverty

Family income is actually just one aspect of measuring poverty. Decent living is only completely achieved if a family has sufficient access to basic services such as education, housing, health, utilities, transportation, etc. as well as provision for rest and recreation and savings for emergency expenses. While a substantial income will allow a family to meet most of these basic needs, availability of infrastructure and provision of state support is also equally crucial.

As a consequence of lack of sufficient income and of an even greater lack of public investments, a significant portion of Filipino families are deprived of these basic services. According to the 2017 APIS, 33% of those in school age (i.e., 3 to 24 years old) from all families are not attending school; 39.8% of them cited high cost of education or financial concern and need to look for work as reasons for not attending school. Also, only 10.9% of all family members finished college while only 19.5% finished high school. For the poorest 30% of families, only 1.9% finished college and 15.4% finished high school.

Almost half (49.4%) of Filipino families do not have access to individual or household taps (i.e., piped into dwelling) and get their water from unsafe sources including public taps, wells, springs, etc. About 78% of the poorest 30% of families get their water from sources other than individual or household taps. Meanwhile, 95.4% of all families do not have access to pipe/sewer system; for the poorest 30%, 97.8% do not have access to such sanitation facility. Some 35.8% of all families have houses (i.e., walls) built from light and salvaged materials; for the poorest 30%, it is at 61.1 percent.

Aside from these indicators of access to and deprivation of basic needs, another way of measuring poverty is to ask the people if they feel they are poor such as the regular self-rated poverty survey of the Social Weather Stations (SWS). In its latest quarterly survey (Dec 16-19, 2018), SWS reported that 50% of Filipino families consider themselves poor. That’s equivalent to an estimated 11.6 million poor families.

The SWS itself pointed out that the results of its self-rated poverty surveys are consistent with the easing trend in poverty (but obviously not in terms of scale) indicated in the official PSA survey (i.e. comparing the first half of 2015 to the first half of 2018). But looking at the trend between the two periods actually shows a deteriorating poverty situation that could only be explained by the policies Duterte implemented which directly impacted people’s income such as the TRAIN Law and the high inflation it triggered.

Using SWS self-rated poverty surveys, poverty appears to be worsening under President Duterte. In the first half of 2016 (or the immediate period before Duterte assumed power), there was an estimated average of 10.4 million families that count themselves as poor. The number declined to 9.7 million families in the second half of 2016 but climbed to 10.6 million families in full year 2017 (or average of the four SWS quarterly surveys) and further to 11.2 million in full year 2018.

Thus, based on these estimates, the number of poor families that consider themselves poor increased by an estimated 800,000 under the Duterte administration – from 10.4 million in first half 2016 to 11.2 million in 2018.

That’s equivalent to about four million additional poor people. Instead of lifting one million people out of poverty annually based on its target, the Duterte administration apparently is pushing almost two million people to poverty every year. ###

Economy, Labor & employment, Poverty, SONA 2014

Poverty trends

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:

Hunger

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, Governance, Labor & employment, Poverty

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 (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.

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Economy, Poverty

Economic growth not creating jobs, excluding the poor

Aquino is the worst performing President in terms of job creation. Adult unemployment under him, using SWS surveys, is averaging 26.8% compared to Arroyo’s 19.6%; Estrada’s 9.2%; and Ramos’s 10.3% (Photo from BusinessWorld/AFP)

First published by The Philippine Online Chronicles

For the Aquino administration, the past week has been all good news. First, the impeachment it initiated against Renato Corona ended in its favor, with the Senate convicting 20-3 the former Chief Justice. Second, first quarter data showed that the economy grew by 6.4%, which officials said is the second highest in Asia behind China.

As expected, Malacañang was quick to squeeze brownie points from the two developments. In a speech, President Benigno Aquino III hailed the conviction as proof that change can be achieved under his administration. The economic growth, meanwhile, was pledged to be more “inclusive” and will benefit everyone.

Exaggerated gains

In both cases, however, it appears that Aquino is exaggerating the gains for the people. The ouster of Corona, while widely seen as positive for anti-corruption efforts, is also tainted by the political and economic agenda of the Aquino administration. Valid concerns on the Supreme Court (SC) undermining its earlier decision on Hacienda Luisita, for instance, are being raised. A subservient Judiciary has also put the ruling Liberal Party (LP) in a better position to consolidate and perpetuate its reign.

The same overstatement of gains for common folks is true with regards to the reported expansion in the economy. Trends on joblessness, poverty and hunger don’t support government’s claim of robust and inclusive growth.

Above expectations

The National Statistical Coordination Board (NSCB) called the 6.4% growth of the gross domestic product (GDP) in the first quarter of the year “above expectations”. It was higher than the 5-6% full-year target of the National Economic and Development Authority (Neda) and the 4.8% forecast of most analysts. Even more remarkable was that the growth was attained amid a deteriorating global economy. And as mentioned, it’s number two in the region after China.

This, said the NSCB, put the economy to a “rousing start” after a lackluster performance in 2011 when GDP grew by 4.9 percent. Main growth drivers during the quarter were the services sector (8.5%) and industry (4.9%) while agriculture posted anemic growth (1%). On the expenditure side, growth was pushed by the 24% increase in government spending.

What jobs?

Economic growth is often dismissed as meaningless due to lack of tangible gains for the people, especially the poor. Not this latest growth, if we were to believe government claims. New Neda head Arsenio Balisacan said that the quarterly growth produced some 1.1 million jobs, which bodes well for the Aquino administration’s efforts to cut poverty.

It was not clear where Balisacan got his 1.1 million jobs created by the 6.3% GDP growth. The latest jobs data from the National Statistics Office (NSO) refer to the January 2012 survey, which showed 37.39 million employed workers. That’s 1.1 million higher than the January 2011 survey of 36.29 million workers.

Misleading the public

If the Neda chief was referring to these NSO data, then he is misleading the public. A comparison of the January surveys does not capture the number of jobs created in the first quarter. Comparing the number of workers between January and April this year (the next survey round) would have been more appropriate.

Further, the number of jobs actually fell by 1.16 million between the January and October 2011 surveys of the NSO. This means that the first quarter growth should have produced at least 2 million additional jobs for Balisacan’s claim of 1 million jobs created to be true.

Worst performing President

Truth is, like in the past, the economic expansion during the quarter failed to generate jobs. In fact, the period even saw the number of jobless balloon by more than 4 million, based on surveys done by the Social Weather Stations (SWS). In its March 2012 survey, the SWS reported that a record high 34.4% were jobless, equivalent to about 13.8 million workers. In its December 2011 survey, unemployment was pegged at 24% or about 9.7 million workers.

Miserable living

Because growth is not creating long-term and sustainable livelihood opportunities, living conditions have continued to deteriorate. Again using SWS surveys, poverty worsened to 55% in March from 45% in December. That translates to around 2 million families (from 9.1 million to 11.1 million) added to the number of poor during the quarter when the economy was supposedly growing by 6.4 percent.

Poverty in the country has been chronic and even the drastically expanded conditional cash transfer (CCT) program under Aquino is not mitigating it. On the contrary, poverty has been alarmingly on an uptrend in recent SWS surveys. Before Aquino took over, poverty was pegged at 43% and has since steadily climbed. It breached the 50% mark in four of the last eight quarters and is now at its highest since September 2008.

Hunger also rose to an all-time high 23.8% of families in the first quarter of the year. The number of families that experienced involuntary hunger reached 4.8 million in March from December’s 4.5 million (22.5%). The average incidence of hunger under Aquino (20.9%) is more than double that of the level under Estrada (10%) and significantly higher than Arroyo (14.1%).

Excluding the poor

Inclusive growth is the favorite mantra of Aquino when talking about his plans for the economy, such as in his speech during the Asian Development Bank (ADB) meeting in Manila last month. It is the central theme of his Philippine Development Plan (PDP) 2011-2016. But the policies he promotes in the PDP, under the tutelage of foreign creditors like the ADB, are the same policies that have long been excluding the poor.

His centerpiece program, the public-private partnership (PPP), for instance, is harming the poor twice. First, physically through brutal demolition to accommodate PPP projects. Second, economically through prohibitive rates in toll, power, fares, water, hospital fees, tuition and others.

Also, because the path is towards privatization, Aquino is spending less on social services and more on debt servicing so government can borrow more to fund its PPP initiatives. Credit rating agencies like Aquino more than Arroyo not because of his supposed anti-corruption reforms but because he is a better payor. Since taking over, Aquino has been paying creditors P60.37 billion a month compared to Arroyo’s P48.18 billion.

Growth for the elite

While excluding the poor, Aquino’s programs greatly benefit the rich including his relatives and cronies such as Danding Cojuangco, Manny Pangilinan, the Lopezes, Ayalas, Aboitizes and others who are expanding their business interests by bagging large PPP contracts. These elite families and their foreign partners also rake profits from the economy under Aquino’s policies of low wages, contractualization, liberalization and deregulation.

Last year, these billionaires saw their wealth expand tremendously even when the economy slowed down. The 40 richest Filipinos posted a collective $34 billion in net worth in 2011, more than $11 billion bigger than 2010’s $22.8 billion.

The economy did grow by 6.4% but not for everyone. #

Economy, Labor & employment

(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. #

Consumer issues, Oil deregulation

More Filipinos think Aquino not addressing oil overpricing

"Heartless" oil firms hit for Valentine's Day price hikes

The latest survey of the Social Weather Stations (SWS) shows that while the Aquino administration continues to enjoy high public satisfaction ratings, more Filipinos are dissatisfied with government response on the issue of oil prices. According to the SWS’s Dec. 3-7, 2011 survey, published yesterday (Feb. 13) by the BusinessWorld, the Aquino administration maintained a high 56% net public satisfaction on its general performance.

But the administration also posted a negative 3% on its performance on the specific issue of “Ensuring that oil firms don’t take advantage of oil prices”. The negative 3% is 7 percentage points lower than the already low 4% that it recorded in SWS’s previous survey in September 2011. Furthermore, the issue of oil is also just one of two among the 19 specific performance indicators included in the SWS survey wherein the Aquino administration registered a negative net satisfaction rating. The other is “Resolving the Maguindanao massacre case with justice” wherein government recorded a negative 18 percent.

(Download the complete results of the SWS survey here)

The survey results came out amid fresh rounds of oil price hikes and widespread public perception that oil companies are overpricing their products and accumulating huge amounts of profits at the people’s expense. The SWS findings clearly indicate that the public is not buying the Aquino administration’s response to the problem of high oil prices and overpricing charges against the oil firms. This includes the Pantawid Pasada program and the establishment of a so-called independent panel to review “the books of oil companies to ensure transparency in fuel pricing”.

The adverse public opinion against the profit-greedy oil companies and lack of government action against their abuses should compel policy makers to initiate reforms in the downstream oil industry. Unfortunately, it is obvious that the people could not expect President Aquino to instigate this policy shift. Aquino has shown unwillingness to heed the demand to repeal the Oil Deregulation Law (ODL) or Republic Act (RA) 8479 and establish a regime of effective state regulation to “ensure that oil firms don’t take advantage of oil prices”. Aquino has also rejected calls for not just the scrapping of the 12% value-added tax (VAT) on petroleum products but even its suspension to at least mitigate the oil price hikes.

But fortunately, some lawmakers have taken notice of the perennial problem of high, escalating, and questionable oil prices and made proposals to look into the ODL and the oil VAT. At the House of Representatives (HoR), for instance, aside from the representatives of progressive partylist groups, legislators from mainstream political parties as well as from moderate partylist groups have also filed bills ranging from amendments of to outright repeal of RA 8479 and suspension or repeal of the VAT on oil.

A quick look at the webpage of the HoR’s committee on energy shows at least five (5) bills proposing to repeal RA 8479 and at least two (2) bills and one (1) resolution proposing review and amendments. On top of these, there are also at least five (5) resolutions calling for a probe on oil pricing as well as one (1) resolution seeking emergency powers for the President to address the oil crisis. Aside from proposals on what to do with RA 8479, at least three (3) congressmen have also filed bills removing or at least suspending the VAT on petroleum products. All in all, there are currently 17 bills and resolutions filed in the 15^th Congress of the HoR that aim to reduce and/or control high and escalating oil prices. Meanwhile, at the Senate, at least three (3) bills have been filed that propose to amend RA 8479; institute a system of fair fuel pricing; and impose a cap on the profits of the oil companies.

The following are the bills and resolutions filed at the energy committees of the HoR and Senate on the issue of ODL and oil prices as well as proposals to remove or suspend the VAT on oil filed at the lower chamber’s committee on ways and means:

House Bill (HB) 4355 – An act regulating the downstream oil industry and repealing RA 8479 (filed by Rep. Teddy Casiño, Bayan Muna) (Download here)
HB 4317 – An act repealing RA 8479 (Rep. Rafael Mariano, Anakpawis)
HB 2569 – An act regulating the oil industry, establishing the oil price stabilization fund, and repealing RA 8479 (Rep. Rufus Rodriguez, Partido ng Masang Pilipino or PMP) (Download here)
HB 5295 – An act regulating the oil industry thereby repealing RA 8479 (Rep. Winnie Castelo, Liberal Party or LP)
HB 00347 – An act regulating the downstream oil industry (Rep. Danilo Suarez, Lakas-Kampi) (Download here)
HB 3267 – An act amending RA 8479 (Rep. JV Ejercito, PMP) (Download here)
HB 4893 – An act to ensure transparency in pricing, amending RA 8479 (Rep. Romeo Acop, Nationalist People’s Coalition or NPC)
House Resolution(HR) 00672 – A resolution directing the energy committee persistent oil shortage and recent spate of oil price hikes (Rep. Ben Evardone, LP)
HR 00880 – Resolution directing the energy committee to investigate the price monitoring and regulatory system instituted by the DOE in the light of overpricing allegations (Rep. Luz Ilagan, Gabriela Women’s Party or GWP)
HR 01027 – A resolution authorizing President Aquino to exercise emergency powers to address a possible oil crisis in the country (Rep. Teodorico Haresco Jr., Kasangga)
HR 01170 – Resolution directing the energy committee to investigate unusually high oil prices in Negros Occidental and other areas outside Metro Manila (Rep. Teddy Casiño, Bayan Muna)
HR 01310 – A resolution directing the energy committee to investigate high oil prices in Bacolod City and Negros Occidental (Rep. Roilo Golez, LP)
HR 01464 – A resolution directing the energy committee to investigate DOE’s decision of clearing oil firms of price-fixing allegations (Rep. Rufus Rodriguez, PMP)
HR 01627 – Resolution urging the HoR to review the ODL for possible amendments (Rep. Mitos Magsaysay, Lakas-Kampi)
HB 02806 – An act suspending the VAT on oil (Rep. Rufus Rodriguez, PMP) (Download here)
HB 04554 – An act exempting petroleum products from the VAT (Rep. Ma. Theresa Bonoan-David, Lakas-Kampi)
HB 2719 – An act exempting petroleum products from the VAT (Rep. Teddy Casiño, Bayan Muna) (Download here)
Senate Bill (SB) 1828 – Fuel pricing fairness act (Sen. Miriam Defensor-Santiago, People’s Reform Party or PRP) (Download here)
SB 754 – An act amending RA 8479 (Sen. Jinggoy Estrada, PMP) (Download here)
SB 2529 – Imposing a 12% cap of paid-up capital on the maximum allowable profits of oil companies (Sen. Antonio Trillanes IV, Indpendent)

There is no shortage of proposals on what to do with the problem of high and soaring oil prices and the abuses that oil companies commit. The public, meanwhile, is deeply discontented with what the Aquino administration has been doing (or not doing) to address the issue. The conditions are favorable to aggressively push for the proposals pending in Congress against the ODL and the oil VAT and compel the Aquino administration to support these initiatives or be further exposed as anti-people and pro-oil cartel. #

A Radical's Nut

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