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2017 GDP growth accompanied by job destruction — IBON

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PHILSTAR

ROBUST GAINS in gross domestic product (GDP) were accompanied by job destruction, with a contraction seen in the labor market, think tank IBON Foundation said in its 2017 year-end report.

“There is scant attention (being paid) to how employment actually contracted in 2017 by the biggest amount since the Asian financial crisis. This vividly underscores the exclusionary nature of the country’s growth,” IBON noted in its Birdtalk 2017 series, “Dutertenomics and Dictatorship: Thwarting Democracy.”

The Philippine Statistics Authority (PSA) last week reported a 6.6% rise in fourth-quarter GDP, bringing full-year economic growth to 6.7%.

IBON’s assessments were based on its computations, which re-estimates government data to “make it more comparable with historical data.”

It said the number of employed fell by 663,000 year on year to 40.3 million while the unemployed rose by 66,000 to 4.1 million.

“This is the largest contraction in employment in 20 years or since the 821,000 lost in 1997,” IBON noted.

It also estimated a decrease in the country’s labor force participation rate (LFPR) to 63.7%, which is “the lowest in over three decades since the 63.1% rate during the severe economic crisis in 1985.”

“It is conspicuous that while the number of those 15 years old and over (i.e. the potential labor force) rose by 1.6 million, the labor force actually shrank by 545,000 and the number of those not in the labor force grew by a huge 2.1 million,” IBON said.

“These trends in 2017 are little changed even if official government figures are used,” it added.

In the October round of last year’s labor force survey, the PSA reported a 5% employment rate, compared to 4.7% a year earlier, equivalent to 2.19 million Filipinos (up from 2.04 million) with an LFPR at 62.1%, lower than 63.6% in 2016.

IBON likewise underscored the loss of employment in the agriculture sector despite being one of the highlights of the country’s economic performance last year as it picked up slack from the slowdown recorded in services, which included business process outsourcing.

“This is a serious blow to farmers remaining in deep rural poverty from wide landlessness and uncompleted agrarian reform, backward production methods and government neglect, and vulnerability to natural calamities,” IBON said.

The think tank likewise noted flat real wages, or wages controlling for inflationary effects, claiming that the government’s periodic increase in the minimum wage is not enough to offset inflation.

“[W]hile the economy has more than doubled in size in real terms (120%) in the 16 years since 2001, the real average daily basic pay of wage and salary workers is unchanged with an insignificant half a percentage point (0.54%) increase over that same period,” IBON said.

Aside from the widening gap between nominal and real wages, the group also pointed that the gap between the minimum wage and the family living wage (FLW) “remain wide.”

“IBON estimates the FLW for a family of six, with families tending to be larger at lower income levels, at P1,171 in end-2017; the equivalent figure for a family of five is some P976,” the report read.

These gaps, IBON claimed, would even be more felt with the implementation of  package 1 of the Tax Reform for Acceleration and Inclusion (TRAIN) this year.

“[U]sing data on TRAIN’s impact in 2018 from the DoF (Department of Finance) clearly establish TRAIN’s regressiveness. The six lowest income deciles or the poorest 60% of families lose 0.7-0.8% of their income, while those in the four highest income deciles gain 5.5-12.3% of their income. Even the top 1% apparently gain 2.8% of their income.”  

“These figures disregard the cash transfers because these are temporary for just three years and adding them covers up the permanent tax burden. They also disregard the imputed PIT (personal income tax) gains for the poorest six deciles because most families here are unlikely to be paying PIT  to begin with.”

“The eventual tax burden is also very likely much higher than as estimated by the DoF because oil excise taxes continue to rise in 2019 and 2020 which means additional inflationary impact. It also remains to be seen if actual movements in prices will be higher or lower than as simulated by the DoF.”

Officials from the National Economic and Development Authority had yet to respond to request for comment at deadline time. — Jochebed B. Gonzales