A 15-year record high inflation rate last year left the poorest 30 percent of Filipinos most affected, revealed think tank IBON Foundation during its 2024 Yearstarter Birdtalk on Thursday at the UP Diliman Institute of Biology Auditorium.
The 2023 inflation rate, which measures how much the price of commodities rose, was 6.0 percent. But for the bottom 30 percent of the population, it was 6.7 percent. For the families who spend most of their income on basic commodities, the higher inflation was largely due to more expensive transport and food costs—particularly rice, which rose by 19.6 percent in December.
“Our economic managers are gushing, overeager to claim credit for whatever favorable statistics there are, even if there hasn't been visible hands-on management on their part," IBON Research Head Rosario Guzman said.
Despite the 5.9-percent growth in gross domestic product (GDP) in the third quarter of 2023 being the highest among major Asian countries, it is actually lower than the 7.7-percent growth in the same quarter in 2022. This indicates a slowdown of the Philippine economy over the last six quarters, said Guzman.
Families also spent less in the third quarter of 2023 than in the third quarter of 2022, with household consumption only growing by 5 percent from 8 percent. Instead, GDP growth was primarily driven by government spending, particularly in infrastructure.
“[The government] spends lavishly on infrastructure, which is insane because … [from] 2016 to 2019, yung mataas na infrastructure spending failed to arrest a slowing economy and the erosion of agriculture and manufacturing,” said Guzman.
Growth in the agriculture, manufacturing, and service sectors slowed compared to 2022. Most notably, the manufacturing sector shrunk to only 17.5 percent of GDP as it saw a decrease in production of beverages, chemicals and chemical products, and basic metals. This GDP share is its smallest in 75 years.
The downturn of manufacturing translated to the loss of 1.4 million jobs or around a third of the sector’s workforce–the worst employment contraction in the sector in over 20 years, said Guzman.
Yet, the government still boasted a lower unemployment rate in November 2023 than 2022, reporting only 1.8 million unemployed Filipinos.
IBON said a portion of those no longer counted in the labor force are “discouraged workers,” bringing unemployment closer to 4 million. But even among those employed, 70 to 80 percent are informal or self-employed workers in low-wage, low-benefit, and vulnerable jobs that leave them more susceptible to poverty.
The think tank attributed the increase in the number of informal workers to “the inability of the economy to create meaningful jobs.” These jobs include part-time workers, or those who work less than 40 hours in a week, compared to wage and salary workers who are paid regularly and have more social benefits.
But instead of stimulating the jobs market toward and creation of stable jobs, the government prioritized anew infrastructure spending, allotting P1.42 trillion. Health, social security, welfare, employment, housing, and other social services combined were only granted P849.4 million.
The current employment and poverty issues only strengthen the need for more social assistance, said IBON Executive Director Sonny Africa. He added that the government could also create a public works program to guarantee that every Filipino can have at least a minimum wage job for three months of a six-month period.
Moreover, the government must strengthen agriculture and domestic industry instead of focusing only on importation and foreign investment, Africa said, contrary to what is being pushed through the so-called economic charter change. While foreign investment can be used to develop local industries, it must still be regulated so as to not outweigh domestic public interest, he added.
"Iwasto yung pag-isip sa ekonomiya. Wag lang mag-focus on foreign investment [and] importing stuff. Kaya kailangan i-reorient ang ekonomiya sa tamang direksyon," said Africa. ●
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