The coronavirus pandemic is the worst shock to the economy and millions of Filipinos since at least the global crisis a decade ago. But despite the dramatic Luzon-wide lockdown, why does it seem that the Duterte administration still has its head in the sand?
The government is muddling through its response to the worst public health crisis in the country’s history. The poorest already have it worst – and we’re not even sure if the virus is really on its way to being contained.
Not seeing the problem
Filipinos are trying to deal with the pandemic as best as they can. Medical frontliners and other responders are working to the brink of exhaustion. National and local government personnel and private sector volunteers work relentlessly in very difficult circumstances. While others are quarantined and binge-watching Netflix, many others still go to work every day to produce essential goods and services.
Above the fray, the highest levels of government are not oblivious – but they still seem too complacent for comfort.
The economic managers believe their own propaganda too much. When they announced the government’s Php27.1 billion COVID-19 response package, they downplayed the situation and said that “the impact… is expected to be limited”. Socioeconomic planning Sec. Ernesto Pernia only granted “a transitory impact on the economy”. Bangko Sentral ng Pilipinas (BSP) governor Benjamin Diokno, meanwhile, said “there is no reason to believe that the COVID-19 crisis could severely cut the Philippine growth momentum”.
The World Health Organization (WHO) stressed that testing, isolation and, contact-tracing must be the “backbone of the response in every country“. Yet the following day, the DOH said that mass testing is not yet imperative and there is no need for it. The government has to realize that militarism and population control do not a COVID-19 response make.
This dismissiveness explains why the response package is such a sham.
Hundreds of thousands of Filipinos are working hard to address the virus, but the Duterte government still has much to do to work better. It starts with admitting the seriousness of the problem.
The government’s initial downplaying of the risk of infection so as not to antagonize China has already been roundly criticized. But it is 50 days since the first confirmed novel coronavirus case in the country, and two weeks since the number of cases soared from three to 230. By all indications, the country is just at the start of its rising curve of infection which could last at least until mid-April and maybe even rise to 75,000 cases in June or beyond.
The COVID-19 response package included Php3.1 billion for health-related measures. This presumably covers the Department of Health’s (DOH) earlier request of Php3.4 billion for personal protective equipment (PPE), the Bureau of Quarantine, and 40,000 testing kits.
The Inter-Agency Task Force on the Emerging Infectious Diseases (IATF-EID) confidently said that the government “[has] the funds to battle COVID-19 and take care of all Filipinos”. Pres. Rodrigo Duterte has supposedly asked Congress to pass a Php1.6 billion supplemental budget for the country’s fight against the pandemic.
However, it remains unclear, and actually unlikely, if this is enough even for just the health-related interventions. Does the budget include sufficient funds for the necessary mass testing and surveillance, quarantine facilities in congested urban poor communities, treatment facilities, protective equipment, and other support for medical frontliners and responders? Also, decades of privatization have eroded the public health system. Is the government considering nationalization of private hospitals to enable rationally planned care for COVID-19 cases and non-COVID-19 patients?
Policymakers seem to be underestimating the specific circumstances of the poorest in the country. Out of the 50 most densely populated cities in the world, 13 are reportedly in the Philippines and all of which are in the National Capital Region (NCR). Specifically, Manila, Pateros and Mandaluyong are at the top of the list.
Homes are also extremely overcrowded. In NCR, some 1.3 million or almost half (47.7%) of homes have less than 30 square meters of floor area. This is just about two times as big as a parking space, or about seven-and-a-half times the size of a king size bed. The lockdown is keeping some 6-7 million Filipinos packed into small shanties in the capital’s overcrowded slum areas. These make social distancing an extreme challenge.
Millions of Filipinos struggle to cope with the difficulties of the Luzon-wide lockdown. The Duterte government has clearly not given enough thought to its impact especially on low-income and poor Filipinos who make up the overwhelming majority of the population.
Luzon’s eight regions span three-fourths (73%) of the economy, as of the latest data for 2018, and nearly three of five (57%) of total employed Filipinos.
It includes the nation’s capital which accounted for over half (51.6%) of all services in the country’s service-dominated economy in 2018. NCR and adjoining CALABARZON and Central Luzon are the country’s industrial heartland – accounting for three-fourths (72.9%) of all manufacturing in the country.
The latest government data from 2015 showed 13.1 million families living in Luzon – this is likely up to over 14 million families today. Most of these families are poor, have very low incomes, and little savings if any. As of 2015, 2.5 million families had monthly incomes less than Php10,000, 2.7 million had between Php10,000-15,000, and 2.2 million between Php15,000-20,000.
These 7.5 million low-income families – especially the poorest 5.2 million – face the greatest difficulties amid the lockdown and severe disruption to their mobility and economic activity.
Their breadwinners are among the 14.5 million workers and informal earners who are going to be dislocated by the lockdown, by IBON’s latest estimates. 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).
They are on top of the 1.3 million officially reported as unemployed in Luzon in 2019.
The bottom line is that, because of the lockdown, over seven (7) million Filipino families will need varying degrees of support. This is just in Luzon.
The government has so far avoided the most obvious response of giving outright unconditional cash transfers (UCTs) to those most in need and at risk. The government is supposed to have identified the 10 million poorest families in the country to be given UCTs from 2018-2020; around 5.6 million of these are likely in Luzon. This is an immediate mechanism that can be used or otherwise built on to distribute Php10,000 for each family – approximating the official monthly poverty line of Php10,727 for a family of five in 2018 – costing Php56 billion in total.
The economic relief measures announced by the government so far in its Php27.1 billion COVID-19 response package are recycled and, correspondingly, piddling. They were pre-existing programs and do not consider vast emerging needs upon the lockdown. Particularly glaring is the Php14 billion for tourism infrastructure that was given a cheap public relations spin to be pandemic-related.
There is Php2 billion financial support from Department of Labor and Employment (DOLE) for dislocated workers. If this refers to the Php5,000 wage subsidy then only 400,000 workers in the formal sector can benefit. However, subsequent DOLE pronouncements were only of a Php1.3 billion fund reaching just 260,000 workers. This fund will be even more insufficient if the promised emergency employment for informal workers is, as it seems, also charged to it.
The response package also mentioned Php1.2 billion in unemployment benefits from the Social Security System (SSS). Assuming Php10,000 per newly unemployed, this is only 120,000 workers assisted. It is also peculiar to include Php3 billion in Technical Education and Skills Development Authority (TESDA)scholarships as a COVID-19 response because this gives no relief at all and certainly not during the lockdown.
There is Php2.8 billion in zero interest loans for farmers from the Department of Agriculture (DA) under the Agricultural Credit Policy Council’s (ACPC) SURE Aid program. However, this was already previously earmarked for some 270,000 Central Luzon farmers as support especially in the wake of rice liberalization.
Finally, the COVID-19 package mentioned Php1 billion in microfinancing from the Department of Trade and Industry (DTI). There are 644,000 micro, small and medium enterprises (MSMEs) in Luzon with 3.8 million employed. Allotting Php1 billion to just the 559,000 micro enterprises means less than Php1,800 per establishment.
It is urgent to immediately protect the welfare of at least the 7.5 million low-income families in Luzon and particularly the poorest 5.2 million. A crisis situation where the priority is to ensure everyone’s health and well-being is not the time to quibble about potentially overlapping measures.
The most basic is ensuring that every household has sufficient food and supplies for preventing the spread of COVID-19. Homes that cannot afford or do not have access to these have to be given emergency relief packages. Many local government units (LGUs) have already started to distribute these but the completeness of the packages and whether they reach everyone in need is unclear. Ensuring a constant supply of water has also become even more vital.
Outright cash transfers for the poorest 5.6 million families in Luzon are necessary. The government does not have the logistical capacity to provide everyone’s needs directly so household incomes let them still buy these commercially.
Related to this is how the government needs to take much greater measures to protect those still working to provide food, utilities, and other essential goods and services. Most workers rely on public mass transport to get to and from work. These have been suspended and alternatives allowing for the requisite social distancing are crucial.
The DOLE’s establishment-based measures are supplementary at best. Partly because the funding for financial assistance is too small, but mainly because non-regular workers (6 million, by IBON’s estimates), informal sector earners (8.5 million), and unemployed (1.3 million, officially) in Luzon greatly outnumber regular workers in the formal sector (9 million).
Freezing workers’ employment status and prohibiting layoffs, granting paid leaves, advancing pay, and giving other benefits are all welcome and should be encouraged widely. Price controls, moratoriums on water, electricity and telecommunications bills, on lease rentals, and on debt likewise lessen pressures on limited household budgets.
However, these cannot substitute for new and additional government support. The conditions of the people are deteriorating rapidly and the Duterte administration will want to prevent rising unrest from increasingly desperate and angry communities. This is assuming that it is not out for yet another justification for more militarist measures and enhanced authoritarianism.
Giving more generous relief also has a view to how the economic repercussions of COVID-19 will actually extend far beyond the lockdown.
A lawmaker has taken the initiative of filing a Php108 billion Economic Rescue Plan versus COVID-19. The fiscal stimulus package allots Php43 billion for the tourism sector, Php50 billion for other businesses, and Php15 billion for displaced workers. The increased attention to workers is no doubt needed, as well for businesses if smaller enterprises are prioritized. The insistent bias for the tourism industry seems hard to justify though especially from a long-term perspective.
Looming economic turmoil
It is only a matter of time before the economic managers are forced to admit that the economy is facing a severe downturn. The economy has been slowing for three straight years throughout the Duterte administration and was headed for a fourth even before COVID-19 hit. A further slowdown in 2020 is certain and it is just a question of by how much.
The economy is not just facing the coronavirus-driven Luzon lockdown and its indirect effects on the rest of the Visayas and Mindanao. The global economy is also taking a severe hit from the global pandemic.
The world economy was already floundering from a slowdown, growing protectionism and trade wars, mounting debt pressures and financial volatility, and geopolitical hotspots. The current pandemic brings all this to the precipice of generalized economic disorder.
China and the United States (US) are going to see a contraction and Europe and Japan are already in recession territory – this is already 68% of the world economy. The disruptions in global production chains and dampening of consumer spending worldwide are going to have severe repercussions at least in 2020 and likely even beyond.
All of which makes the Duterte government’s dismissiveness about the country’s economic trajectory and the welfare of Filipinos so alarming. The current situation compels a radical rethinking of economic policy and priorities across the board.
For instance, many of the hyped Build, Build, Build (BBB) infrastructure projects will likely be even more unfeasible than before especially those built around undue optimism about tourism and global trade. More likely than not, budget allotments for these will give much greater social and economic benefits if realigned to responding to the COVID-19 pandemic.
Looking further beyond, COVID-19 will only just accelerate the anti-globalization policy trends that have been gaining momentum since the 2008/09 global financial crisis. Our economic managers have been stuck to their obsolete neoliberal ‘free market’ dogma for some time. Privatization has emaciated the public health system as much as liberalization has eroded domestic agriculture and Filipino industry.
We can only hope that they spend the quarantine time in quiet, honest reflection and emerge reformed. ###