Labor labors under Noy – Sunday, 01 May 2016
Another year, another Labor Day, another chance to see the incompetence of the six-year Aquino regime.
Despite the steady economic growth of about six percent a year some 3 million to 4 million remain jobless while up to 15 million are considered underemployed, which explains, in simple terms, why a steady 25 million Filipinos remain poor under Noynoy’s watch.
Former Department of Budget and Management (DBM) Secretary Ben Diokno coined a term for the paradox of high growth rates and low jobs availability calling it “job-shedding growth.”
While the economy grows among the fastest in the region, the country’s average jobless rate of between six to seven percent, or even the recent low of 5.6 percent, is among the highest in Asia.
The reason for this is that the sources of growth for the past few years are more external in nature rather than development of the domestic economy through local industries which are the sources of sustainable growth.
Asian economies such as Thailand, Malaysia and even Singapore all have industrial bases that guarantee a stronger rebound for their economies when the global market improves.
The local economy, in contrast, relies mainly on consumption spending fed by remittances from Filipinos working abroad and salaries of business process outsourcing (BPO) agents which in nature earn incomes from abroad.
The residues of the BPO boom such as growth in the property sector and the spread in fast-food outlets to serve BPO workers who work irregular hours also contributed to growth but these businesses all depend on the outsourcing boom being maintained.
Diokno and other economists believe that the job-growth paradox is also the result of the government’s failure to control rampant smuggling.
The proliferation of low-cost smuggled goods in the local market perks up spending but at the same time kills domestic industries and constricts the job market as factories close shop.
Diokno, for instance, noted that some entrepreneurs, blinded by big profits, abandon their legitimate businesses and would spend effort and capital not on productive ventures but in becoming smugglers and in bribing government officials.
Those who have the determination to become Filipino industrialists are in turn confronted with hurdles instead of incentives.
Aside from competing with smuggled goods, local industries are also faced with electricity prices which are among the highest in the world; lack of infrastructure and pervasive corruption and red tape.
The economy is also missing opportunities for stronger growth due to the Aquino administration’s poor spending clip.
Agriculture output also dropped as a result of not only the impact of strong typhoons but the worsening impact of competition from low cost imports if not smuggled farm products.
Such competition from foreign products becomes more pronounced with the opening of the Asean Economic Community that removes all tariff on goods traded within the region.
Government consumption and public construction are two areas where the government has direct control. In both areas, the figures showed that both indicators fell during Aquino’s term.
Diokno said the administration of Noynoy has no one to blame for the poor public spending but itself since it can’t blame Congress which had religiously approved the President’s budget before the start of the fiscal year and nearly intact to the last figure.
Diokno said government underspending was an offshoot of poor budget preparation since the budget that Noynoy transmits to Congress contains many programs and projects that are not ready for implementation.
“Worse, it includes projects that are yet to be identified. In brief, the DBM has failed to do its job carefully and diligently,” he said.
He said the DBM allowed a lot of “fat” in lump-sum appropriations within agency budgets and under the Special Purpose Funds in the President’s Budget in response to the Supreme Court decision on the unconstitutionality of the Disbursement Acceleration Program.
He saw a lot of “fat,” for instance, in the Miscellaneous Personnel Benefits Fund.
“The enormous gap between actual budget deficit (total revenues less total disbursements) versus planned deficit suggests the severity of unmet expectations. Agency heads are not delivering public services that they promised Congress they will deliver,” he added.
The job generation program of the six-year administration of Noynoy was mostly found in mantras and catchphrases that the Palace dishes out particularly during this Labor Day celebration.