Fudging figures in the Philippines

This is from Asia Times. No doubt the Arroyo govt. can be credited with greater sins than spinning economic data but this article at least gives a less rosy picture of the Philippine economy so that we can have a more balanced view of the situation.




Southeast Asia
Apr 25, 2009

Fudging figures in the Philippines
By Joel D Adriano
MANILA - The Philippine Labor Department has said that unemployment concerns are easing and that the government is now more vigorously tracking job gains rather than losses. This despite the fact the Philippine economy has slowed amid the global economic crisis, with export, foreign investment and corporate profit statistics all down. The Labor Department reported broadly that only 121,000 workers lost their jobs, suffered pay cuts or had their working hours reduced between October last year to mid-March this year. Officials have presented those numbers as positive news, considering they had earlier projected between 180,000 to 300,000 workers would lose their jobs by the end of the first quarter. The electronics and semiconductor sectors, which account for

nearly half of the country's export revenues, were expected to hemorrhage the most jobs. Some argue the government is obscuring the hard unemployment reality by dispensing vague measures. An April 2007 labor survey showed the manufacturing sector had lost 105,000 jobs from the same month the previous year, as global orders for computers and electronics started to collapse. Buoyed by the better-than-projected official statistics, President Gloria Macapagal-Arroyo has now predicted that unemployment will not breach the double-digit threshold this year. Recent government figures show that the unemployment rate hit 7.7% in January, equivalent to around 2.9 million jobless workers, and up from the 6.8% recorded in October of last year. The official optimism comes despite growing private economist concerns of an inrush home of overseas foreign workers (OFWs) who have lost their jobs amid the global recession. The government predicts gross domestic product (GDP) growth will slow to between 3.1%-4.1% this year, down from last year's 4.6% and well off the 7.3% recorded in 2007. The International Monetary Fund is much more pessimistic, predicting Philippine growth will be flat this year, down from its previous 2.25% prediction. Critics say the government's official measures purposefully understate what is a mounting economic problem and potentially volatile political one. That's particularly true of unemployment statistics due to Arroyo's controversial decision to change the official definition over four years ago when unemployment was hovering near double digits. The old definition of "those not working and at the same time looking for work" was changed in favor of a vague "availability of work" concept, which excluded frustrated jobseekers or those who had given up hope of finding employment after searching unsuccessfully for a certain time period. The new definition also added unpaid family labor to the number of employed as part of the distortion, said Elmer Labog of the activist labor group Kilusang Mayo Uno. According to the Social Weather Station (SWS), a private survey research firm, if the old definition were still applied, the actual unemployment rate could be as high as one-third of the total labor force. The SWS estimated that the real unemployment rate was 27.9%, representing over 10 million jobless Filipinos. The Ibon Foundation think-tank put the end-of-year figure at 4.1 million unemployed Filipinos, which was still almost 50% higher than the official rate. Both those higher figures correspond with anecdotal evidence of mounting job losses in depressed urban areas and the rural countryside, where the majority of Filipino workers still live. Even with the government's more optimistic figures, the Philippines' unemployment rate is the second-highest among core Association of Southeast Asian Nation member countries, trailing only Indonesia's 8.4%. The end of year unemployment rates in Thailand, Singapore and Malaysia were 1.4%, 2.6% and 3.3% respectively. The Philippines is also known to have a stubbornly high underemployment rate. According to a recent World Bank study, more than 60% of Filipino workers are employed in low-paid agriculture, fishing, domestic and service work sectors, many of whom are family laborers or non-wage earners. The industrial sector, where job losses are mounting as foreign investors shutter their Philippine operations, accounts for just 15% of the work force and most laborers work on a contractual basis, offering little job security or social safety net benefits, according to the World Bank. The lack of job security, some say, explains why mounting job losses have so far not resulted in more social unrest - although government concerns of unrest could explain its alleged understatement of unemployment figures. Stop-gap measuresArroyo's government has reacted to the economic slowdown by intensifying official efforts to place more Filipino workers overseas, despite the diminishing opportunities amid the rising global economic crisis. With the US and much of Europe in recession, the government is hoping to land more jobs in the Middle East. In that direction, Arroyo is also looking into lifting her government's five-year-old ban on sending workers to Iraq. The Philippines is already a top global source of skilled and unskilled migrant workers, with estimates as high as 12 million, including undocumented Filipino workers employed in over 200 foreign countries. That represents nearly 15% of the total Philippine population and their foreign currency-denominated remittances have been crucial to keeping the local economy afloat. Overseas workers sent home some US$16.4 billion last year, representing nearly one-fifth of GDP and a crucial driver of domestic consumption. Foreign remittances slipped slightly from 1.4 billion pesos in December to 1.26 billion in January, according to most recent official statistics. The World Bank has conservatively predicted a 4% decline in remittances this year, in line with expected migrant job losses overseas. Administration officials contend they have taken big steps to boost local employment and economic activity, including measures in a $2 billion fiscal stimulus package. That included a $2 million earmark for the temporary hiring of 180,000 workers, though the program is scheduled to wind down later this year. Arroyo has also called on local governments to set aside 1.5% of their budgets to create jobs. Critics argue that many of those schemes have been poorly planned, including instructions from the Department of Trade and Industry to one local government to hire people in its municipality to gather scrub plants and convert them into useful products without indicating how to structure or market the grassroots enterprises. "The government is missing on a great deal of opportunity to come up with something and make the best of the crisis," said one local official who declined to be named. "Instead, funds are wasted on activities and job placements that are hardly productive and are simply meant to justify their salaries." Economists note that ramped up spending is putting extraordinary pressures on the national budget and bond yields. The government turned in a $1 billion deficit in March, its largest-ever one-month shortfall. The overall first quarter deficit was nearly $2.4 billion, a full $2 million over target, and has raised concerns the government will need international capital markets to finance the shortfall. The government raised $1.5 billion in a sovereign bond issue in January. Socioeconomic Planning Secretary Ralph Recto has predicted that the country's budget deficit could reach $5.3 billion if tax collections fell short of target and the government failed to raise revenues through asset sales. Privatization proceeds last year, including from the sale of the government's remaining 40% share in oil giant Petron Corp, helped raise non-tax revenue by 35%. This year, officials hope to raise some $1 billion from the sale of government shares in power distribution firm Meralco to the local San Miguel Corp, the biggest food conglomerate in Southeast Asia. The company's chairman, Eduardo "Danding" Cojuangco, has pledged to help with the government's job-generation drive by hiring more local workers. But it's not clear to most that will have any meaningful impact on the Philippines' rising and largely understated unemployment problem. Joel D Adriano is an independent consultant and award-winning freelance journalist. He was a sub-editor for the business section of The Manila Times and writes for ASEAN BizTimes, Safe Democracy and People's Tonight.