Connecting Coverage of Economic Gains to the Poor

THE WORLD Bank and the Asian Development Bank expects the Philippines to sustain the 6.7 to 6.9 percent gross domestic product (GDP) growth according to their 2018 economic updates. Both reports credited the sustained economic standing to the boost in investments from the Duterte administration’s nationwide infrastructure build up.

According to the ADB report, the country is experiencing a unique period of growth that can be considered as a ‘golden age’ in the Philippine economy.

The recently enacted Tax Reform Acceleration and Inclusion (TRAIN) law also “sets the ground for sustained economic growth by allowing greater fiscal space,” Kelly Bird, ADB country director for Philippines, said. The pick up in inflation coupled with a vibrant household spending “is indicative of a successful economy,” he added. Greater fiscal space means there is more room in the government’s budget  to provide resources without jeopardizing the stability of the economy.

This may be considered as good news especially for businessmen and investors, but Filipinos who are not included in the circle of growth will find it difficult to appreciate the good news about the country’s economy.

Cheers to Rappler, Malaya Business Insight and BusinessWorld for being inclusive in their reports and giving other perspectives in a supposedly positive economic update.

Rappler’s January 9 report used the situation of Royd Agapito (not his real name), a 25-year-old market analyst, to explain the practical experience of a wage earner. He got an additional PHP3,438 a month in his PHP30,000 monthly salary due to lower income deductions mandated by the TRAIN law, but he has had to deal with higher monthly household expenses. Agapito said that in the end, there is no significant positive gain for an average wage earner who uses the salary gain for higher electricity, transport, and grocery bills (“EXPLAINER: How the tax reform law affects Filipino consumers”).

If someone who earns PHP30,000 a month like Agapito already has to tighten his belt, what about those who earn less?

Rappler also presented someone like Meanne Reyes (not her real name), a small-time vendor who sells sugar-sweetened drinks, snacks, and tobacco along Amang Rodriguez Avenue in Pasig City, who already has two kids.

For Meanne, a stick of cigarette which used to cost PHP5 now sells for PHP7 each. Since an entire pack is now more expensive, Reyes is forced to buy fewer supplies and keep a lower inventory, lowering sales potential. The price hike is significant. What will happen to people like her who have no fixed income and depend on sidewalk vending to earn a living?

An April 3 article by BusinessMirror reported National Economic and Development Authority’s (NEDA) statements on the government’s priority to keep inflation in check because of its dampening effect on Filipino’s incomes, which is central to reducing poverty. The inflation rate rapidly increased from 3.6 percent last year to 4.8 percent earlier this year.  Rosemarie Edillon, NEDA Undersecretary for Planning and Policy, said food inflation is particularly important since this accounts for half of the expenses of poor households especially rice (“Neda eyes inflation target review after CPI changes”).

The Philippine Statistics Authority (PSA) reported that families in the bottom 30 percent income group spend 59.7 percent of their income on food. This is higher than the 38.8 percent food expenditure for families in the upper 70 percent income group.

With food prices rising to 5.7 percent last month and predicted to still increase, how can the government alleviate the financial strain on the bottom 30 percent income group?

To protect the poor from higher prices of commodities, Finance Secretary Carlos Dominguez III said the Department of Social Welfare and Development (DSWD) is mandated to provide targeted cash transfers to the poorest 10 million households. Each household would get PHP2,400 per year in 2018, as well as PHP3,600 per year in 2019 and 2020 (“EXPLAINER: How the tax reform law affects Filipino consumers”).

However, a BusinessWorld report on April 17 emphasized that the country needs to produce better jobs in order to reduce poverty and dampen the effects of the TRAIN law. According to the article, the World Bank said that better quality jobs and faster real wage growth are essential to reducing poverty and inequality in the country, even if the government pursues more aggressive infrastructure development (“WB tags better jobs as economy’s ‘missing link’”).

“The key challenge facing the government is not unemployment, but rather the poor quality of jobs in the labor market, as a large share of employment opportunities in the Philippines consist of low-paid jobs,” the World Bank said in the Philippine Economic Update.

The good news is not necessarily felt in the bottom 30 percent of household incomes. Millions of minimum wage earners do not benefit since their salary is lower than the tax-free threshold and the prices of basic commodities continue to go up.

Business reports should continue or even improve their inclusivity. While these economic updates might be good news to investors and businessmen, the media should also cater to other sectors of society since the country’s economy affects everyone.