The measures to address the COVID-19 pandemic will have a severe effect on the economy as a whole and on Filipinos in particular, especially those from the lowest income groups who make up the majority of the population. Emergency socioeconomic relief measures costing a total of Php296.2 billion are necessary to protect vulnerable Filipinos and ensure a minimum level of welfare for all.
Even before the COVID-19 health crisis, the economy was already slowing in the three years since the start of the Duterte administration and facing a further slowdown in 2020. A drastic slowdown this year is now a certainty because of the measures needing to be taken to contain the virus in the Philippines and around the world. This alone compels the government to radically revisit its economic policies not just for 2020 but for the period to come.
The crisis however is already upon tens of millions of Filipinos who have been economically dislocated. Those in Luzon are the most severely affected because of the lockdown, but the disruption in livelihoods will soon be felt across the country in the Visayas and Mindanao.
The immediate priority is to contain the spread of the virus. The one confirmed case and one death at the start of March has increased to 462 cases and 33 deaths in just three weeks. The Department of Health (DOH) earlier estimated the number of cases to soar to 75,000 by June. A comprehensive package of health-related measures is urgent.
Progressive health sector groups from civil society have already proposed the extent of intervention needed. The government is compelled to ensure adequate: mass testing and surveillance; personal protective equipment (PPE) and other logistical support for medical frontliners and responders; isolation and quarantine facilities in congested urban poor communities; treatment facilities; and medical supplies.
The COVID-19 crisis underscores the importance of a strong, effective and well-funded public health system. Government health workers and facilities are the backbone of responding to the people’s health needs. Decades of privatization has eroded public capacity and they need to be bolstered significantly and immediately. This will however still not be enough and the government also needs to ensure that the private health sector is mobilized or otherwise contributes, including through taking direct control of their resources as necessary.
However, socioeconomic interventions are also urgent to ensure the health and well-being of tens of millions of vulnerable Filipinos during virus containment measures and in the period immediately after.
There are 24.8 million Filipino families of which some 12.4 million (50%) have monthly incomes of around Php15,000 or less, according to the latest Family Income and Expenditure Survey (FIES) of the Philippine Statistic Authority (PSA) for 2018. Another 3.7 million have incomes of around Php15-20,000.
These 16.1 million families or poorest two-thirds (65%) in the country – and especially the poorest half or 12.5 million – are the most vulnerable. They face the greatest difficulties amid the severe disruption to the mobility and economic activity of their breadwinners.
The first wave of economic displacement is already being felt by the families based in Luzon and under lockdown since mid-March. IBON’s latest estimate is that 14.5 million Luzon-based workers and informal earners are going to be dislocated to varying degrees by the lockdown. Most of these are: vendors, shopkeepers, and sales persons in the wholesale and retail trade subsector (3.6 million); construction workers (2.4 million); pedicab, tricycle, jeepney and truck drivers and mechanics in the transport sector (1.5 million); manufacturing workers (1.2 million); and hotel and restaurant employees (891,000).
The second wave of displacement in the Visayas and Mindanao will add to this. Assuming less restrictive containment measures than the Luzon lockdown, IBON’s initial estimate is that another 4.4 million workers and informal earners are going to be dislocated. Most of these are in: agriculture and fisheries (1.3 million); wholesale and retail trade (812,000); construction (373,000); transport (313,000); and manufacturing (288,000). All this is on top of 2.3 million officially reported as unemployed nationwide in 2019.
It is urgent to provide emergency social protection for poor and low-income families with particular focus on the most vulnerable. Existing government and private sector mechanisms are proposed to be used as much as possible for the most expedient response. It is possible that interventions will overlap with families receiving more than one form of support. This is not seen as undesirable from the point of view of the priority objective of ensuring that every vulnerable family is reached.
Emergency socioeconomic relief
The most basic support is ensuring that every household has sufficient food and supplies for preventing the spread of COVID-19. The Department of Social Welfare and Development’s (DSWD) Listahanan or National Household Targeting System for Poverty Reduction (NHTS-PR), which reportedly assessed 15.1 million households, can serve as an initial database with allowance given for needy families that may not have been covered.
1. Emergency relief packages for the poorest 5 million families. These packages must contain nutritious food, vitamins, face masks, medicines, soap, sanitizers, and disinfectants. The recipients can include the current 4.3 million Pantawid Pamilyang Pilipino Program (4Ps) beneficiaries with the balance identified using the Listahanan. Local government units (LGUs) must, moreover, ensure a continued water supply for consumption and sanitation. At an estimated cost of Php3,000 per relief package, this will cost Php15 billion.
2. Php10,000 in unconditional cash transfers (UCTs) for each of the poorest 10 million families. The government does not have the logistical capacity to provide everyone’s needs directly so supporting household incomes allows them to still buy these commercially. The proposed amount approximates the official poverty threshold of Php10,727 for a family of five and can use the mechanisms for giving short-term UCTs to 10 million families under the Tax Reform for Acceleration and Inclusion (TRAIN) law. Given as Php10,000 immediately for a month or Php5,000 for two months, this will cost Php100 billion.
3. Php5,000 wage subsidy for an estimated 10.7 million affected workers in formal establishments. This is outright grant support for the most vulnerable half of the country’s 21.4 million employees in private establishments, according to the latest labor force survey (LFS) for 2019. The Department of Labor (DOLE) has already issued Department Order No. 209, Series of 2020 with guidelines for implementing its COVID-19 Adjustment Measures Program (CAMP). This will cost Php53.5 billion.
To protect workers further, prohibit layoffs and retrenchments during the lockdown. Also ensure mandatory paid leave separate from regular leave credits. The DOLE can provide assistance to micro, small and medium enterprises (MSMEs) genuinely having difficulty giving these. Employers should also be encouraged to be flexible in terms of giving advanced pay, medical support, and other benefits to their employees.
4. Php5,000 financial assistance for an estimated 5.2 million informal earners. This is outright grant support for informal sector earners – estimated by subtracting farmers and fisherfolk from the self-employed, employer in own farm or business, and unpaid family workers in the latest LFS for 2019. The DOLE can build on its existing Tulong Panghanapbuhay sa Ating Disadvantaged/Displaced Workers (TUPAD) program for this. This will cost Php26 billion.
5. Php10,000 financial assistance for 9.7 million farmers and fisherfolk. This is outright grant support for farmers, fisherfolk and forestry workers reported in the latest LFS for 2019. The recipients can be initially identified using the Registry System for Basic Sectors in Agriculture (RSBSA) which reportedly already contains details for 9.8 million agricultural producers. The support also contributes to ensuring continued food production. This will cost Php97 billion.
6. Php1,000 emergency support for 3.8 million indigent senior citizens and Php500 for 1.8 million Social Security System (SSS) and Government Service Insurance System (GSIS) pensioners. Old-age pensioners are Filipinos who have reached the age of 60 and are among the COVID-19 risk groups. There are 3.8 million indigent senior citizens supposedly receiving a Php500 monthly stipend under the Expanded Senior Citizens Act of 2010 (RA 9994), 1.5 million SSS pensioners, and some 300,000 GSIS pensioners. This will cost Php4.7 billion.
Vulnerable groups as well as the general population can be further protected aside from the emergency packages and income-based measures. These can be implemented at least during the lockdown and possibly as long as the state of calamity and public health emergency is in effect.
The pressure on household budgets can be lessened with price controls as well as moratoriums on water, electricity and telecommunications bills, and lease rentals. Households will benefit from debt relief on consumer loans and home mortgages. Likewise, small businesses will benefit from extension, moratoriums or even cancellations on their bank and other loans. All related penalties for non-payment can be cancelled.
Demolition of urban poor communities are disturbing during normal times but extremely inhumane during the current pandemic emergency; these should be prohibited. Homeless and street dwellers are extremely vulnerable and should be given adequate accommodation aside from the relevant socioeconomic relief measures.
The economic repercussions of the COVID-19 pandemic will last long beyond the one-month Luzon lockdown. The health-driven disruption to economic activity in the country and around the world is unprecedented in modern history and has been compared to a war-time situation. This severe impact will need its own response over the medium- to long-term.
The government has already acknowledged the urgency to ensure that the production and distribution of food, utilities, and other essential goods and services is uninterrupted. Current efforts to address the huge logistical challenges can still be much improved to ensure that essentials remain affordable and accessible to all. Government should also not hesitate to mobilize, regulate and even take over private sector resources to meet the crisis, as necessary, under conditions of transparency.
For now, the most urgent matter is to ensure that every Filipino is protected hence these proposed socioeconomic relief measures.