Philippines 2010: Distorted Development On the national economic situation IBON Foundation September 19, 2010 Rapid economic growth… Philippines Real GDP Growth by Administration, 1986-2009 8.0 7.0 6.0 Aquino: ave. 3.9% Arroyo: ave. 4.5% Ramos: ave. 3.8% Estrada: ave. 2.4% 5.0 % 4.0 3.0 2.0 1.0 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 0.0 (1.0) Year … rising unemployment… Highest sustained unemployment, 11.2% (ave. 2001-09) Unemployment Rate, 1956-2009 (% ) 14.0 12.0 10.0 % 8.0 6.0 Rising during period of “globalization” 4.0 2.0 Year 07 20 04 20 01 20 98 19 95 19 92 19 89 19 86 19 83 19 80 19 77 19 74 19 71 19 68 19 65 19 62 19 59 19 19 56 0.0 … during “globalization”… Unemployment Rate, 1956-2009 (% ) 14.0 12.0 10.0 8.0 % 1980s Tariff Reform Programs: TRP I, II at III 6.0 1990-2004 Lower tariffs/removal of import restrictions •In agriculture, lowered by 85% down to 9% average •In industry, lowered by 92% down to 3% average 4.0 07 04 01 98 95 92 89 86 83 80 20 20 20 19 19 19 19 19 19 1994 World Trade Organization (WTO), ASEAN Free Trade Area (AFTA), 2008 JPEPA, 2010 ATIGA Year 19 74 19 71 19 68 19 65 19 62 19 59 19 19 56 0.0 19 2.0 77 1991 Foreign Investments Act, 1993 Build-OperateTransfer (BOT), 1993 Removal of forex controls, 1995 National Water Crisis Act, 1998 Oil Industry Deregulation, 2001 EPIRA; 1992 Liberalization of water transport, 1993 telecommunications, 1994 banking and shipping, 1995 airlines, 2000 retail trade … record joblessness… Real unemployment rate* 4.3 M unemployed (2009) 28.1 M in poor quality work, of 35.1 M “employed” in 2009: 4.2 M “unpaid family workers” 12.2 M “own account workers” 11.7 M “wage and salary workers” without written contracts (IBON estimate on NSO data) * adjusting for govt’s change in methodology in April 2005; 2009 labor force ~ 39.4 million (IBON estimates on NSO data) … record forced migration 2008: 8.2 M Pilipino forced abroad for work (stock of “permanent” & “temporary” workers) 2009: 3,900 leaving daily Overseas Remittances, 1980-2009 (US$ million, % of GDP) 20,000 18,000 2004-2009: Flattening share of GDP? OFW remittances (US$ million) As percentage of GDP (% ) 16,000 10 1990-2004: Rapidly growing share of GDP 14,000 8 12,000 10,000 6 1980-90: Slowly rising share of GDP 8,000 6,000 4 4,000 2 2,000 0 0 1980 1982 1984 1986 1988 1990 1992 1994 Year 1996 1998 2000 2002 2004 2006 2008 % of GDP US$ million, current 12 28 M poor? (NSCB, 2006) Official poverty line (2006) = P41 = = 1 kilo rice, 1 egg 33% Official poverty incidence 66 M poor! (94 M population, 2010) Alternative poverty line (2006) = P86 = = 67% Self- rated poverty (April 2010) 70% Poverty incidence Deep poverty among poorest Severe inequality Net income of Top 1,000 corporations: 2001: P116 billion 2002: 2003: 2004: 2005: 2006: 2007: P173 P176 P371 P497 P599 P686 B B B B B B 2008: P416 billion Ave. 2002-08: P417 billion US$15.6 billion Net worth of 20 richest Filipinos (2006) Combined income in a year of poorest 10,400,000 families (52,000,000+ Filipinos) Gross Domestic Product, by Industry 1946-2009p (% of GDP, current prices) 60 50 Agriculture, fishery & forestry Industry Manufacturing Services 40 % Manufacturing 30 as small as in 1950s 21.8% 20 18.1% Agriculture 10 smallest in history 2009p 19 46 19 49 19 52 19 55 19 58 19 61 19 64 19 67 19 70 19 73 19 76 19 79 19 82 19 85 19 88 19 91 19 94 19 97 20 00 20 03 20 06 20 09 0 Year 1st semester 2010 trends 7.9% GDP growth (NSCB) Listed companies doubled 1st quarter profits (PSE) 1Q-09 : P64.1 billion 1Q-10 : P137.1 billion Apr 2010 (NSO) 4.7 million unemployed Filipinos 11.6% unemployment Political economy of underdevelopment Political repression & human rights violations 1,205 extrajudicial killings, 206 enforced disappearances, 371 political prisoners Militarist approach to armed conflict 2001 National Internal Security Plan (NISP), National Military Strategy (NMS), Oplan Bantay Laya 1 & 2 Erratic peace talks with CPP-NPA-NDFP & MILF US military aid (2001-11): US$427 million up to est. US$1.3 billion; helicopters, aircraft, ships, boats, trucks, rifles, helmets, vests… Declining unionism… Union Membership, 1978-2007 4,500,000 4,000,000 Number 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 1978 1981 1984 1987 1990 1993 Year 1996 1999 2002 2005 2008 Ja n86 Ja Ju n- l 87 Ja Ju n- l 88 Ja Ju n- l 89 Ja Ju n- l 90 Ja Ju n- l 91 Ja Ju n- l 92 Ja Ju n- l 93 Ja Ju n- l 94 Ja Ju n- l 95 Ja Ju n- l 96 Ja Ju n- l 97 Ja Ju n- l 98 Ja Ju n- l 99 Ja Ju n- l 00 Ja Ju n- l 01 Ja Ju n- l 02 Ja Ju n- l 03 Ja Ju n- l 04 Ja Ju n- l 05 Ja Ju n- l 06 Ja Ju n- l 07 Ja Ju n- l 08 Ja Ju n- l 09 Ja Ju n- l 10 Pesos … flattening wages NCR Daily Non-Agricultural Minimum Wage, 1987-2010p (Pesos, 2000=100) 450 400 100 50 Nominal w age 350 Real w age (inflation-adjusted) 300 Aquino: rose P82 250 120.92 238.10 203.10 200 201.02 150 Ramos: P16 Month 242.35 216.63 237.42 216.16 Estrada: P22 Arroyo: P5 0 … declining land ownership… By farm area: 63% (1971) 51% (2002) By number of farms: 58% (1971) 48% (2002) Hacienda Luisita SDO, evasion of land reform… Oligarchic rule Political dynasties, warlords & electoral violence Ex. Aquino-Cojuangco, Marcoses c/o CenPEG – 16 senators (67%), 130+ congressmen (60% of regular seats), 53 gov/26 vice gov from political families Money/big biz-driven victories Tens/hundreds of millions & billions of pesos to finance campaigns c/o NEDA – P10 billion campaign spending by all candidates c/o PCIJ – P4.3 billion in just ad spending by natl/partylist candidates US influence in spirit of ‘democratization’ Elite political power New old senators Revilla (Lakas-Kampi), Estrada (PMP), Defensor-Santiago (PRP), Drilon (LP), Enrile (PMP), Cayetano (NP), Marcos (NP), Recto (LP), Sotto, III (NPC), Osmena, III (LP), Lapid (Lakas-Kampi), Guingona, III (LP) Millionnaire Congress (HOR) 75% triple or double-digit millionnaires (P10.5 - 947.9M) The story so far… “Insanity: doing the same thing over and over again and expecting different results.” Albert Einstein 1879-1955 Elite economics: Aquino administration policy thrusts 1. No asset/wealth redistribution – ex. real and speedy land reform 2. Increased foreign domination of economy i. ii. Free trade agreements – ex. “WTO+” with EU Privatization through public-private partnerships (PPPs) 3. Reliance on overseas work as safety valve 4. Mining liberalization & plunder of national patrimony 5. Disguising poverty (in absence of basic reforms) – ex. conditional cash transfers (CCTs) Salamat po www.ibon.org IBON Foundation is on Facebook twitter.com/IbonFoundation Policy challenges 7 major tasks 1. 2. 3. 4. 5. 6. 7. Immediate social & economic relief Avert fiscal crisis in a progressive manner Address jobs crisis of record high unemployment, poor quality work and low earnings Rectify severe inequalities in income, wealth and assets (including of land) Promote real democracy & human rights Curb pervasive corruption including electoral fraud Restore country’s sovereignty in its international economic and political affairs Building economic momentum: Anti-globalization 1. 2. 3. 4. 5. 6. 7. 8. 9. Cancel Hacienda Luisita SDO and distribute land to the farmers; real accounting of land distribution Immediate across-the-board nationwide Php125 wage hike Repeal RVAT Law; place revenue burden on wealthy/big corporations Repeal automatic debt appropriation law Ensure social service budgets of at the very least P281 B for education, P39 B for health and P13 B for housing in 2011 Deliberate national industrial policy Suspend & review JPEPA & EU-RP PCA Convene multi-stakeholder review of ASEAN negotiating strategy and deals Convene multi-stakeholder review to identify local products for tariff protection Building political momentum: Pro-democracy & peace 1. 2. 3. 4. 5. Investigate/prosecute former Pres. Arroyo/allies for electoral fraud, corruption and serious human rights violations (HRVs) Investigate/prosecute military & police officials for involvement in serious HRVs; transmit 1998 ICC Rome Treaty to Senate for ratification Independent probe of May 10 elections Suspend/review Visiting Forces Agreement (VFA) with US and, in meantime, expel US forces Immediately resume formal peace talks with NDFP and MILF Release all political prisoners as confidencebuilding and goodwill measure State of play: Possibilities & realities (–) (+) Inadequate & misdirecting framework Simplistic “Kung walang corrupt, walang mahirap”; no devt vision Rather, main problem: reckless ‘globalization’ policies So far… Traditional Cabinet economic team steeped in failed/obsolete economics unable to assert people’s rights & national sovereignty State of play: Possibilities & realities (+) (–) … Continued globalization offensive – Economic life under control of private profit-seeking interests Privatization – “Public-Private Partnerships” (ex. water/power rate hikes, LRT/MRT rate hikes, toll fees…) FTAs – DTA Sec. Domingo: “We’ll try to join as many trade agreements as possible…” … Continued anti-people fiscal policy To pay rising debt service… Higher taxes, fees & charges ?! Why not tax wealthy/high-income Decreased spending on social & economic services State of play: Possibilities & realities (–) (+) … Continued political violence … Continued militarism Strengthening military/rising spending 6-month OBL 2 extension Uncertain peace processes w/ MILF/NDFP … Continued neglect of human rights 3 political killings, Mendiola peasant dispersal w/ 42 arrested “Truth Commission” mainly corruption-focused, aside from having weak powers … Continuing neglect of agrarian reform Not admin priority, HLI scam compromise… Pagbabago? Bangayan: Kamaganak Inc, Trapo LP, Hyatt 10, The Firm, Soc Dem/civil society… Ochoa (Exec Sec), Abad (PMS), Lacierda (Spokesman), de Mesa (Legal counsel) de Lima (DOJ), Romulo (DFA), Robredo (DILG) Paderanga (NEDA), Purisima (DOF), Henares (BIR), Abad (DBM), Domingo (DTI) Reyes (DAR), Alcala (DA), Paje (DENR), Baldoz (DOLE), de Jesus (DOTC), Singson (DPWH), Almendras (DOE), Lim (DOT), Montejo (DOST) Soliman (DSWD), Deles (OPAPP), Luistro (DepED), Licuanan (CHED), Ona (DOH) Gazmin (DND), David (AFP chief-of-staff), Verzosa (PNP chief) Pagbabago? de Lima (DOJ) – most positive appointment; strong HR advocate Romulo (DFA) – recycled, pro-VFA, favored Daniel Smoth transfer to US embassy, pro-JPEPA, ex-DFA/DOF Paderanga (NEDA) – ex-NEDA, ex-ADB, Foundation for Economic Freedom, pro-neoliberal globalization, UPSE Purisima (DOF) – Hyatt 10, pro-VAT, ex-SGV/Ernst & Young, Arthur Andersen Domingo (DTI) – ex-SM Investments Corp, ex-Chase Manhattan/Chemical Bank, ex-DTI USec Henares (BIR) – ex-World Bank, ex-BIR Pagbabago? de Jesus (DOTC) – ex-president Meralco Singson (DPWH) – ex-Maynilad CEO Almendras (DOE) – ex-president Manila Water Lim (DOT) – Makati Business Club Soliman (DSWD)/Deles (OPAPP) – anti-Left Luistro (DepED) – no public school experience Ona (DOH) – pro-health privatization, procorporatization