Duterte admin’s econ direction troubling, but peace talks may stir change?

January 18, 2017

by IBON Foundation

While the unorthodox Pres. Rodrigo Duterte gained popular support due to its pro-poor pronouncements and promise of change, research group IBON said that the neoliberal economic agenda prevails as  Duterte’s economic managers and other dominant groups push big business-biased/free market-oriented policies over people-centered reforms.

Nevertheless, IBON also said that the ongoing peace negotiations between the Philippine government and the National Democratic Front of the Philippines (NDFP), of which social and economic reforms and political and constitutional reforms are the next substantive agenda, remain an opportunity to push steps that can benefit the Filipino majority.

IBON conducted its 2016 yearend analysis of economic and political trends during the Duterte administration’s first six months In its briefing paper, the group noted the following as among the glaring socioeconomic challenges that persist:

  • Contracting agriculture.The fastest growing sectors wereconstruction and real estate followed by trade and manufacturing,but agriculture contracted.  The share of agriculture in the economy has shrunk to 8.5%. The production sectors consisting of agriculture, manufacturing, construction and mining slightly declined to 38.5%, the smallest recorded shares in the country’s history.
  • Worsening inequality.The net worth of the 40 richest Filipinos grew by almost 14% between 2015 and 2016 and the profits of Philippine Stock Exchange (PSE) by over 18%; real minimum wage in the National Capital Region (NCR), a proxy for workers’ wages, fell by almost 3% in the same period.
  • Deteriorating jobs. Two out of three employed (63%) or 24.4 million Filipinos are non-regular, agency- hired, informal sector, or unpaid family workers, meaning low-paying and insecure work with poor or no benefits. One of three (34.5%) rank and file workers are non-regular workers. Initial IBON re-estimates of labor force survey figures are over four million unemployed Filipinos and an unemployment rate of over 9%. Underemployed number 7.5 million with an 18.3% rate in 2016. Taken together there are 11.5 million who are without work or are still seeking more work
  • Widening wage gap.  Daily NCR minimum wage remains at Php481. According to IBON estimates, this is barely half of the family living wage (Php1,119 as of 2016) or the amount needed by a family of six for their basic needs. The wage gap again widened from 55% (2015) to 57% (2016).
  • Prevalent poverty. Government reported a lower population poverty incidence of 21.6%, counting 21.9 million poor Filipinos for 2015, or 1.8 million less compared to 2012 figures. However, this employs a very low poverty threshold of just Php60 per person per day based on a conservative food threshold and an outdated estimation of non-food expenses, thus reflecting the situation only of Filipinos in extreme poverty. IBON estimates some 66 million poor Filipinos struggling to survive on around or even less than Php125 per day. IBON’s latest national opinion survey meanwhile showed seven of 10 Filipinos rating themselves ‘poor’.
  • Elusive right to education. . The additional Php8.3 billion allocated is short of being able to give free tuition to all 1.7 million students enrolled at all levels in State Universities and Colleges (SUCs), and does not cover other considerable expenses for registration and other pertinent fees. IBON estimates that an additional Php4.4 billion is needed to provide free tuition for all SUC students. The group also said that since the added budget depended on the discretion of lawmakers and the availability of funds, it may not last beyond 2017. The Commission on Higher Education (CHED) has even announced that not all SUC students will be covered.
  • Shallow ‘universal’ health coverage.  While an additional Php3 billion was reportedly allocated to the Phililppine Health Insurance Corporation (PhilHealth) to ensure coverage for all Filipinos, the support value of PhilHealth remains at 50% while the balance of 50% is still paid out of pocket. Also, the poor and sick remain burdened with hospital expenses as 40% of the number of claims paid to indigent/ sponsored program beneficiaries still needed co-payments. Moreover, the  no balance billing policy for indigents is only applicable to increasingly underfunded government hospitals.
  •  People-centered reforms opposed. While additional support for national irrigation has been approved, the Duterte government’s economic directors are opposed to a moratorium on land use conversions, which further institutionalize land grabbing to the detriment of farmers. The economic managers have also been opposed to granting the Php2,000 pension to the elderly, arguing, among others, that it is anti-poor. Earlier, the Duterte administration clarified that by ending contractualization it meant prohibiting the practice of terminating workers before they assume regular status, thereby still allowing all other forms of contractualization where workers are denied the benefits naturally accorded to regulars.
  • Rich relieved, poor burdened further with tax reform package. The administration plans to fund its infrastructure expansion through a consistently regressive tax plan, which will relieve the richest and big corporations. But the poor will be further burdened through additional taxes on a wider range of goods such as fuel products, and  increased value-added tax (VAT).
  •  Unaddressed roots of “war on drugs”. While there have been 2,166 deaths of ‘drug personalities’ during police operations aside from at least 4,049 more victims of drug-relatedextrajdicial or vigilante-style killings, the socioeconomic roots of the drug problem remain largely unaddressed.

According to the group, the new government may appear different from its predecessors but there are very few indications that substantial change is underway. Under the same profit-driven, market-oriented economic policy framework, the country’s resources remain concentrated in the hands of the wealthiest families and corporations. Despite the President’s strong pronouncements, an independent foreign policy has not been forged; the country has not broken free from foreign powers with geopolitical interests in the Philippines whether it be, for instance, the US or China. Traditional politics prevail. Relatedly, the administration repeatedly dangles authoritarian measures, putting at risk assertions of democracy that are gaining ground.

Nevertheless, IBON said that while prospects for change are getting dimmer rather than brighter, it remains to be seen how the peace negotiations could still possibly effect initial people-centered reforms. It is an opportune time to challenge the administration to, beyond paper, step out of its neoliberal economic and undemocratic political tradition in the direction of crafting policies in the interest of the majority of poor and marginalized Filipinos, said the group.