Poverty, joblessness despite GDP growth puzzling

May 27, 2010

by superadmin

The incoming Aquino administration needs to acknowledge that it is inheriting a distorted economy that is not delivering development to the people.

The reported 7.3% growth in gross domestic product (GDP) in the first quarter of 2010 is seemingly good news especially coming from the steep fall in economic growth since 2008. However any enthusiasm has to be tempered by the persistence of unprecedented high unemployment and poor quality work, according to research group IBON Foundation.

The outgoing Arroyo administration has the dubious distinction of presiding over both the fastest economic growth and the worst unemployment since the Marcos dictatorship. The first quarter 2010 growth performance consolidates the Arroyo administration’s relatively rapid economic growth which had already averaged 4.5% over the period 2001-2009 or higher than during the previous administrations of Estrada (2.4%, 1998-2000), Ramos (3.8%, 1992-1997), and Aquino (3.9%, 1986-1991).

Yet this apparently favorable growth performance has puzzlingly failed to meaningfully impact on unemployment. The Arroyo administration also has the worst record of joblessness with unemployment averaging some 11.2% annually over the period 2001-2009 compared to 10.4% under Estrada, 9.3% under Ramos, and 10.1% under Aquino.

This distorted kind of economic growth that creates wealth for a few without trickling down in terms of work and higher incomes for the majority of Filipinos has apparently continued in the first quarter of 2010. The reported growth is hailed as the fastest since the first quarter of 2000. But the first quarter National Statistics Office (NSO) labor force survey also shows at least 4 million jobless Filipinos– according to the old definition of unemployment– aside from some 28.5 million in insecure, unprotected and poorly earning or even non-earning work. This poor quality work consists of the 3.82 million unpaid family workers and 12.09 own account workers reported by the NSO, and some 12.59 million wage and salary workers without written contracts estimated by IBON.

The country’s economic growth is failing to create jobs because the most dynamic sectors are export-oriented and poorly integrated into the local economy. For instance, among the fastest growing manufacturing subsectors that have driven growth are the petroleum products, electrical machinery, and chemicals which are moreover even heavily foreign-dominated. In contrast the subsectors which the underdeveloped economy is potentially in a better position to maximize such as footwear and textiles have continued to collapse. This lack of domestically-grounded industries is among the underlying factors causing record joblessness and driving millions of Filipinos abroad for work.

The incoming Aquino administration needs to acknowledge that it is inheriting a distorted economy that is not delivering development to the people. Sound socioeconomic reforms and a nationalist development agenda creating strong domestic industry and agriculture are needed. This also creates a stronger base for the country to face the inevitable next global economic shock. (end)