The 2012 SONA was selective in the data it presented and dealt in half-truths, A few stand out for the misleading picture of the economy that they seek to create
By Sonny AfricaIBON executive director
IBON Features– State of the nation addresses (SONAs) are typically exercises in political advertising rather than government road maps for genuinely addressing the needs of the majority of Filipinos. Pres. Benigno Aquino III’s 2012 SONA on Monday was no exception. The severity of the country’s social and economic problems was not just unmentioned but actually sought to be glossed over with an enumeration of supposed achievements. The SONA, the most important and widely publicized policy speech of the year, would have been memorable had it defined a break from the economic policies that cause severe poverty and inequality in the country.
Housekeeping rather than change
Much was reported in Pres. Aquino’s SONA– around two-thirds of the SONA was abundant detail about various government economic and social programs. Yet a large part of every administration’s work is about normal housekeeping tasks. It is in this sense unremarkable to report building roads, airports, trains, terminals and schools, hiring health professionals, paying government salaries and pensions, and others. More so if the quantities involved are not even extraordinarily larger and were just built on the accomplishments of previous administrations.
A candid reporting of the social and economic well-being of Filipinos would have been much more meaningful particularly because admitting the seriousness of the problem is the start of taking real steps to resolve this. On the other hand, painting a picture that all is well on the economic front is at the very least irresponsible and at worst deceitful.
As expected the president cited positive international credit rating actions (eight in two years), record stock exchange index highs (44 times), relatively rapid economic growth (6.4% first quarter growth in gross domestic product) and ostensibly becoming a creditor nation as proof of an economic upsurge. The president also mentioned the country’s favorable image internationally.
Even granting the glowing numbers their significance to the daily lives of the people cannot be assumed. The most eloquent refutation would come from tens of millions of Filipinos who know that their lives have not correspondingly improved in the last two years. But another way to put the self-congratulatory account into perspective is to mention some details that the SONA remained silent on.
The 2012 SONA was selective in the data it presented and dealt in half-truths. A few stand out for the misleading picture of the economy that they seek to create.
Half-truths: Social development
When the speech declared “once, we were the debtors; now, we are the creditors” it actually meant something much less impressive. More precisely, all that could be claimed is that the Philippines had technically attained creditor member nation status within the International Monetary Fund (IMF). Even more specifically, the Banko Sentral ng Pilipinas (BSP) lent foreign exchange to the IMF which is very different from saying that the national government (NG) lent the IMF money or that the Philippine economy is so awash with cash that it is now a creditor economy.
The reality is simply that the government and the country remain deeply indebted. The NG had total outstanding debt of Php5.1 trillion as of May 2012 which is Php564.8 billion more than the Php4.6 trillion in June 2010. The country’s total external debt meanwhile stood at US$62.9 billion in March 2012, of which 77% is owed by government, which is US$5.6 billion more than the US$57.3 billion in June 2010.
When the speech declared “the three millionth household-beneficiary of Pantawid Pamilya had been registered” it sought to give the impression that three million households are being lifted from poverty by conditional cash transfers (CCTs) under the Pantawid Pamilyang Pilipino Program (4Ps). Also reported were 1.7 mothers getting regular check-ups, 1.7 million children vaccinated, and 4.6 million students in school.
More precisely, however, the most that could be said is that some three million households are being given some Php6,000-15,000 in cash transfers annually for a maximum of five years which is very different from saying that they are no longer poor. For instance, when the first two million beneficiary households of the 4Ps ‘graduate’ in 2013 it is unclear how they will be any less poor with no more cash transfers amid an economy that does not generate enough quality jobs and livelihoods for its labor force. Moreover it is very unlikely that the millions of mothers, children and students only started getting check-ups, vaccinations and going to school upon the CCTs – so reporting these as if they were due to the 4Ps is inaccurate.
When the speech declared that “85% of our citizens are members of PhilHealth” it tried to give the impression that all Filipinos are well on the way to getting health care when they need it. More precisely, all that could be said is that PhilHealth liberally estimates that 85% of Filipinos are enrolled in their social insurance program. Even assuming that the poorest 5.2 million households will indeed be enrolled and get free treatment, this is very different from saying that Filipinos will get the free and comprehensive health services that is their right and that is the responsibility of the state to provide.
The reality is that the administration is shrinking the public hospital sector and building a domestic hospital sector dominated by private profit-seeking hospitals. The government plans to reduce and eventually outright remove budget support for public hospitals even as more expensive private hospitals already comprise six out of ten hospitals in the country.
The government’s budget for PhilHealth is then, in effect, increasingly a subsidy for private hospitals. And while seemingly large this budget for PhilHealth programmed by government still falls far short of the country’s health needs especially with the limited benefits given. For instance, while 40% of Filipinos were supposedly covered by PhilHealth in 2008 it only covered 7% of total health spending in the country leaving 58% still coming out-of-pocket. So even if 85% of Filipinos are covered, as reported by the SONA, it is likely that over half of total health spending will still be out of pocket.
When the speech said that “a 43.61% increase in [the] budget next year” of state universities and colleges (SUCs) is proposed it wanted to give the impression of government support for higher education. The qualification that this is going to be in accordance with an “SUC Reform Roadmap” is problematic though because, as it is, the strategic plan of the Commission on Higher Education (CHED) seeks to align higher education institutions including SUCs “to the thrusts of the Philippine Development Plan (PDP), 2011-2016”.
Yet the PDP upholds the very same decades-old globalization policies that have stunted domestic industry and agriculture, resulted in a jobs crisis driving millions of Filipinos abroad for work, repressed wages and incomes, and diminished social services. The plan’s priority sectors have been previously identified by the biggest foreign transnational corporations (TNCs) in the country and include business process outsourcing (BPOs), mining, electronics exports, agribusiness, infrastructure, tourism and a few others. The administration’s thrust is evidently to use SUCs to provide the workforce that foreign investors and their local partners need, rather for the needs of domestic development.
And when the speech said that backlogs in classrooms, chairs and textbooks will be eradicated it wanted to give the idea that it is finally resolving education shortages. However there was a conspicuous silence on the backlog of some 132,000 teachers which would have indicated a sustained commitment to basic education even more strongly than purchases of buildings and desks that are important but still essentially one-off expenses.
Half-truths: Economic development
The 2012 SONA was accurate when it asked “Is it not an apt time for us to dream of a day where any Filipino who wishes to work can find a job?” because, amid an unprecedented jobs crisis, tens of millions of Filipinos do already dream of such a day. This includes the 11.7 million unemployed and underemployed Filipinos in April 2012 – which is 780,000 more than the 10.9 million in April 2010 — and the over 10 million Filipinos forced overseas to find work. The unemployed and underemployed comprised 27.7% (11.5 million) of the labor force in 2011. These estimates seek to correct for official NSO data that has underreported unemployment since 2005.
The speech reported creating millions of jobs and declining unemployment rates in the last two years but neglected to mention that the quality of jobs has drastically worsened. Some 2.4 million jobs were created between April 2010 and April 2012 or an average of just 1.2 million jobs per year (the comparison in the SONA between July 2010 and April 2012 to be able to report a higher 3.1 million jobs created is inaccurate because of the seasonal character of the labor market).
However the number of full-time workers actually fell by 865,000 which was only compensated for by a much larger 3.2 million increase in the number of part-time work which is conventionally low-paying, insecure and without benefits. As a result part-time work has risen to now account for over four out of ten (43%) jobs in the economy or 16.2 million out of 37.8 million employed.
In any case, there were clearly more jobs available abroad than were created at home. Just a little over 1.0 million jobs were created between April 2011 and April 2012 compared to the record 1.7 million Filipinos deployed overseas in 2011 or an average of 4,559 leaving the country every day.
The SONA jobs picture would also be more accurate if it had reported the 5.5 million child workers in the country between the ages of 5 and 17 in 2011 – equivalent to almost one out of every five (19%) children aged 5-17 years old – of whom 3 million work in hazardous environments.
The speech reported that “wages are stable” which is precisely the problem. Real wages have been repressed and not kept up with the cost of living. Even with the recent staggered Php30 wage hike in NCR, for instance, the mandated minimum wage of Php446 in May 2012 is just 44% of the Php1,017 family living wage (FLW). This wage gap is even greater than a decade ago, in May 2002, when the minimum wage was 53% of the FLW. As it is the real value of wages that workers actually received was virtually unchanged between July 2010 (Php308) and July 2011 (Php307, taking inflation into account).
The administration’s attack on wages is two-fold. First, it categorically dismissed justifiable calls for an across-the-board Php125 wage hike. Second, it introduced a so-called two-tiered wage system composed of a first tier “floor wage” – which is set low and could be frozen for up to five years – and a purely voluntary second tier “productivity based pay” (PBP). The scheme’s initial implementation in CALABARZON staggers a Php255 floor wage and affirms the PBP as “voluntary in character”.
Pres. Aquino only tersely declared in his speech that “it is only just that [the Comprehensive Agrarian Reform program] sees its conclusion during my term.” Part of the reason may have been to not draw further attention to controversies around the president’s family’s Hacienda Luisita. However another reason may be the Aquino administration having the worst land distribution performance by the Department of Agrarian Reform (DAR) of any post-Marcos government.
Only an average of 9,324 hectares were distributed monthly in 2011 compared to Arroyo’s 9,342 hectares (2001-10), Estrada’s 10,106 hectares (1999-2000), Corazon Aquino’s 16,878 hectares (1988-92) and Ramos’ 24,759 hectares (1993-98). The administration is also the most below-target in its accomplishment at 55.9% of targeted area for distribution compared to Corazon Aquino (56.4%), Estrada (73.5%), Ramos (82.6%) and Arroyo (82.9%). At the current rate the extended agrarian reform program CARPer is already five years behind schedule with its June 2014 target.
Towards real change
In closing the 2012 SONA Pres. Aquino asked rhetorically: “Isn’t the agenda for change moving forward?” Unfortunately after two years, there is clearly no fundamental change and no systematic economic reforms taking place.
The directions the economy must head for to break the country’s pattern of exclusionary growth, deep poverty, severe inequality and underdevelopment are clear: thoroughgoing agrarian reform, national industrialization, asserting economic sovereignty and upholding the rights of the poor majority. Yet socioeconomic policies remain focused on giving foreign investors and their local partners opportunities to profit from cheap Filipino labor, agricultural resources and minerals even at the expense of sustainable domestic development.
Despite seeming differences with the previous administration, the Aquino government is similarly unsuccessful in proving that it is biased for the people and unable to challenge the rich and powerful foreign interests. As it is, the binding constraint to economic progress is political where the power of the government over the economy is wielded for the interest of the few over the welfare of the many. The challenge of economic development is then the deeply political task of building real democracy in the country. IBON Features
IBON Foundation, Inc. is an independent development institution established in 1978 that provides research, education, publications, information work and advocacy support on socioeconomic issues.