Poverty trends

Original photo from www.solarnews.ph

Original photo from www.solarnews.ph

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

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

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

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

The annual averages are presented in the following charts:

Poverty:

SWS poverty, hunger, joblessness | 2010-2014

Hunger

SWS hunger

Joblessness

SWS joblessness

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

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

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

 

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

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

On job creation

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

Promises

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

Among others, Aquino promised to transform national leadership:

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

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

New jobs

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

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

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

Dismal quality

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

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

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

Flawed count

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

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

Deteriorating crisis

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

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

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

No industrialization plan

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

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

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

Largest exporter of workers

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

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

Neglecting OFW welfare

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

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

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

(Dis)Counting unemployment

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

PH economy in 2011 (Part 2): The elusive “inclusive growth”

Activists mark today's (Jan. 6) Three Kings feast by reminding the Aquino administration to address the pressing economic issues facing the people and not only squeeze political brownie points from the Corona impeachment trial

First published by The Philippine Online Chronicles

(Read part 1 here)

Government’s so-called “inclusive growth” outlined in the Philippine Development Plan (PDP) 2011-2016 rests on a target of 7 to 8% annual expansion in the gross domestic product (GDP). But due to various factors, GDP growth for 2011 – the first full year of the Aquino administration – is hoped to grow, at best, by 5.5%. This is the official forecast of the interagency Development Budget Coordination Committee (DBCC), an optimism that is not shared by most analysts and institutions. Both the International Monetary Fund (IMF) and the World Bank, for instance, project a moderate growth of just 3.7% in 2011. (Read here and here.)

Indeed, the promised inclusive growth of President Benigno S. Aquino III remains elusive as ever. Unlike the common criticism, however, the poor GDP showing in 2011 is not simply the result of government underspending. Rather, the slowdown actually highlights the structural defects of the economy that has since time immemorial depended too much on the volatile world economy. Further, beyond the quantitative failure to meet the target for inclusive growth are the far more important qualitative issues hampering long-term development and poverty alleviation in the country.

Slow GDP growth

The National Statistical Coordination Board (NSCB) reported in November that the GDP for the third quarter of 2011 grew by just 3.2 percent. While slightly higher than the recorded 3.1% in the previous quarter, the latest data continued the downward trend in the country’s economic performance. Since peaking at 8.9% in the second quarter of 2010, GDP growth has progressively decelerated. Also, the average GDP growth through the three quarters of 2011 is pegged at 3.6%, way below the 8.2% it posted during the same period in 2010. (See Chart)

2010, of course, was an election year. As such, it artificially boosted consumption and production due to election-related spending (including the cost of greasing the contending politicians’ fraud machineries). There was also the base effect of the low growth in 2009 due to the global recession. However, the huge drop of 4.6 percentage points in GDP growth last year was equally compounded by the continuing and worsening crisis facing the world economy.

Export-oriented domestic production is thus vulnerable. Philippine exports from January to October 2011 declined by 4.3% compared to the same period in 2010, according to the National Statistics Office (NSO). Electronic products, which comprised more than 50% of the total value of exports, fell by 21.9 percent. Almost 74.5% of electronic exports were semiconductors, which contracted by 24.9 percent.

Falling demand in the country’s major foreign markets explain the decline. Some 45.3% of Philippine exports in 2011 went to Japan, the US and Europe, which all confronted a substantial slowdown in their economy this year. The country’s total exports to the European Union (EU) – currently dealing with a grave sovereign debt crisis – fell by 19.5% while exports to the US fell by 6.9 percent. These significant declines offset the 15.5% increase in exports to Japan. Meanwhile, exports to its Southeast Asian neighbors, which accounted for 18.4% of total exports, declined by a huge 23.3% this year. Many of these exports actually end up in Japan, the US and Europe, accounting for the big drop.

Unemployment

But despite the slowdown, government claims that economic growth is becoming more inclusive as unemployment supposedly eased last year. The October 2011 round of the Labor Force Survey (LFS) of the NSO reported that the jobless rate declined to 6.4% from 7.1% in the same period last year. For the whole year, official unemployment rate averaged 7%, which was lower than 2010’s 7.4 percent.

Official employment data, like the poverty data, are unfortunately not a reliable yardstick to measure the extent of joblessness. The NSO, for instance, 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.

Despite this defect in determining the volume of jobless, trends in the quality of employment in official statistics still could not conceal a deteriorating jobs situation. Underemployment worsened to 19.3% last year, according to NSO data, from 2010’s 18.8% or an increase of 525,000 workers. Underemployed refers to all employed persons who want to have additional hours of work in their present job or an extra job, or to have a new job with longer working hours.

Still using the NSO data, between 2010 and 2011, the share of productive sectors to total employment declined. Industrial jobs fell from 15% to 14.8%, with manufacturing falling from 8.4% to 8.3 percent. Similarly, the share of agricultural jobs declined from 33.2% to 33 percent. In contrast, the share of services to total employment increased from 51.8% in 2010 to 52.2% this year. While these annual changes may seem small, they continue the long-term trend of declining employment in the productive sectors.

Also, the services sector accounted for the largest number of workers permanently displaced and firms resorting to permanent closure/retrenchment due to economic reasons last year. January to June 2011 data from the Bureau of Labor and Employment Statistics (BLES) show that out of 14,598 workers displaced due to economic reasons, 8,697 (59.6%) were service workers. In addition, out of the 968 firms that closed shop or retrenched workers, an overwhelming 729 establishments (75.3%) were from the service sector. In 2010, services accounted for 67.9% of workers displaced and 76.5% of firms resorting to permanent closure/retrenchment due to economic reasons. These numbers highlight the unsustainability of job creation that has been increasingly relying on the less productive service sector.

Meanwhile, a more realistic count of unemployed is provided by the Social Weather Stations (SWS). Unemployment rate this decade, based on compiled SWS survey results, has averaged by almost 20% a year from just 10% in the 1990s. In its last survey on adult unemployment in March 2011, the SWS reported that 27.2% or around 11.3 million workers are jobless.

Labor export

As always, labor export has filled in a portion of the gap in domestic jobs available and labor supply due to lack of a long-term and effective government program. Deployment of overseas Filipino workers (OFWs) from January to October 2011 increased to 1.35 million from 1.28 million during the same period in 2010. Furthermore, OFW remittances have also become a significant contributor to domestic consumption, propping up an otherwise cash-strapped consumer market. From January to October last year, OFW remittances reached $16.53 billion, which was 6.9% higher than 2010’s similar period.

But again, because of the deteriorating crisis and worsening overall global economic condition, labor export is becoming less and less reliable as a source of remittances and even jobs. Compiled data from the from the Philippine Overseas Employment Administration (POEA) show that from an annual deployment growth of 6.9% in the 1990s, the figures have slowed down to 5.6% in the 2000s, and to about 4.3% in the past two years. OFW remittances are slowing down even more sharply, based on data from the Bangko Sentral ng Pilipinas (BSP). From a robust 23.2% annual growth in the 1990s, it has declined to 10.3% in the 2000s, and to just about 7.6% in the last two years.

The still increasing, albeit slower, deployment of OFWs amid the declining economic opportunities abroad means even more intense exploitation and oppression for desperate migrant workers in the form of depressed wages, harsher working conditions and other forms of abuse. According to Migrante International, more than 120 OFWs are in death row while some 7,000 are in jail in various countries worldwide. Every day, as high as 10 migrant workers are being sent back home dead due to various causes. Crisis and poverty are forcing more and more migrant workers to illegal activities including drug trafficking that led to the execution of four Filipinos in China last year alone. The sorry plight of migrant workers is aggravated by government neglect like budget cuts and missing funds for OFW welfare. #

To be concluded (read here)

SONA 2011: Making sense of Aquino’s facts and figures (part 1)

Activists burn the Penoy effigy, a symbol of the oppressiveness, incompetence, and subservience to the US of the Aquino administration during the SONA protest organized by BAYAN (Photo by Josh Castro)

Malacañang promised that this year’s State of the Nation Address (SONA) will present “undisputed facts and figures” instead of motherhood statements. President Benigno S. Aquino III did use a lot of numbers in his SONA speech (Read the full text) to underscore the supposed economic gains of the past year. But there were still motherhood statements and the usual “walang wangwang” rhetoric. The figures, meanwhile, are still disputable, carelessly used by his speech writers in an attempt to paint a bright picture of the present state and direction of the economy.

On hunger and poverty

Aquino cited as one of the gains of his government the decline in self-rated hunger from 15.1 percent in June from 20.5 percent in March. This is equivalent to one million families who no longer experience hunger, said Aquino. The figures are from the second quarter 2011 hunger survey of the Social Weather Stations (SWS).

But quarterly hunger surveys are sometimes volatile (e.g. self-rated hunger fell from 21.1 percent to 15.9 percent in Aquino’s first 100 days) so it is important to look at the long-term trend. In the first year of the Aquino administration, quarterly self-rated hunger averaged 17.4 percent. During the nine years of the Arroyo government, it averaged a lower 14.58 percent and just 9.96 percent under deposed President Joseph Estrada. These numbers indicate that the country is still on the path of worsening hunger.

Malacañang, through Presidential Communication Operations Office Secretary Sonny Coloma, has earlier attributed the decline in self-rated hunger to Aquino’s conditional cash transfer (CCT) initiative or the Pantawid Pamilyang Pilipino Program (4Ps), a poverty alleviation measure first started in the country by Gloria Arroyo. In his SONA, Aquino boasted that the 4Ps has already registered 2 million families as beneficiaries, of which 1.6 million are already receiving the cash grant. This means, according to the President, that more than 100,000 families are being saved from the clutches of poverty (naiaahon sa kahirapan) every month.

If this is true, then the Aquino administration can reduce by 2.3 million – the target number of CCT beneficiaries by the end of 2011 – the number of poor families by yearend through the simple provision of cash grants. The total number of poor as of 2009 is just 3.67 million families as officially defined and measured by the National Statistical Coordination Board (NSCB). Thus, by 2012, there will only be 1.37 million poor families (assuming official poverty levels remain the same) – a number that Aquino intends to wipeout with his plan, as he said in his SONA, by including an additional 1.3 million beneficiaries in the CCT program.

But that is going by Aquino’s poverty mathematics which is based on a flawed official definition of who is poor. According to the NSCB, anyone who has P46 a day is not poor – a ridiculously low standard resulting in absurdly low poverty levels. Based on the June 2011 survey of the SWS, 9.8 million households consider themselves poor or almost three times the number of poor families as measured by the NSCB. This means that more than 6.1 million poor families are not covered by the CCT program.

However, its small coverage relative to the total number of poor is just a minor issue compared to the more fundamental issue of sustainability and long-term impact of the program. How can the CCT achieve its stated objective of investing in the poor when it’s funded by debilitating foreign debt and not even complemented by substantial investments in public education, health, and housing? What will happen to the beneficiaries of CCT once the program is over and still no jobs are available?

On jobs

But as far as Aquino is concerned, jobs are being created. In his SONA, he mentioned that the unemployment rate in April went down to 7.2 percent in April 2011 from 8 percent during the same period last year, crediting the efforts of his administration. Some 1.4 million jobs have been supposedly created in his first year. The numbers are from the Labor Force Survey (LFS) of the National Statistics Office (NSO).

The 1.4 million jobs supposedly created between April 2011 and April 2010 could not be attributed to government intervention. In the first place, the only job generation program that the Aquino administration has so far initiated is the Community Based Employment Program (CBEP). This program has only created 170,000 jobs out of a target of 1.1 million. About 63 percent of these jobs are in infrastructure/construction, of low quality, and highly temporary. The 170,000 could even be deceitful because a worker can avail of more than one CBEP job.

Looking at the NSO data, more than 456,000 jobs of the 1.4 million additional jobs are classified as those who worked for private households (domestic help, etc.), self-employed without any paid employee (vendor or sari-sari store owner, etc.), employer in own-family operated farm or business, and worked without pay in own-family operated farm or business. In other words, a significant part of the additional employment in the past year was due to the people’s sariling diskarte and not because of any meaningful job generation program of government. (See Table)

Figures in '000

Furthermore, 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.

Because of such distortions, the number of jobless according to the April 2011 LFS of the NSO is just 2.9 million workers. In contrast, adult unemployment rate as measured by the SWS in its own survey was pegged at 27.2 percent or 11.3 million workers in March 2011. Like in the case of hunger, it is important to study the long-term trend to determine if headways are being made in job creation.

Based on SWS data, the average adult unemployment rate under Aquino is 23.2 percent, a continuation of the deteriorating domestic jobs situation. Under Arroyo, it was 19.77 percent; Estrada, 9.66 percent; and Fidel Ramos, 9.66 percent. NSO employment data since April 2005, meanwhile, could no longer be compared to previous years because of a redefinition made by the National Statistical Coordination Board (NSCB). The shift in definition “reduced” official unemployment by 1.9 million in the April 2005 survey. (To be concluded)

On college graduates and the labor market

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

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

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

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

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

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

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

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

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

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

Congratulations, graduates. Welcome to the real world.