Aquino government clueless over PH unemployment problem

The report of the National Statistics Office that the country’s unemployment rate has worsened to 7.5 percent last January (from 7.1 percent January 2013) has thrown cold water over President Aquino’s boasts about the Philippines supposedly achieving tiger-economy rates of growth under his watch.

What’s the use of growth if it isn’t creating jobs for the poor, and even burying them deeper in poverty? The rich after all, don’t really need to work. What’s the use of the double-digit growth rates of Philippine conglomerates like Henry Sy’s SM empire, the Ayala group, and the Indonesian Salim empire if these just lead to their owners getting higher rankings on the global billionaire lists while the poor get hungrier and less able to buy medicines they need?

What adds bitterness to the bad news is that Aquino and his officials blame super-typhoon Yolanda and other disasters for the worsening unemployment rate. Obviously they didn’t even bother to read the NSO report.

A reporter like the intrepid Anthony Taberna who doesn’t specialize in economic news pointed out—correctly, and ridiculed Aquino’s officials for the boo-boo, deservedly—that the NSO report quite clearly specified that its survey did not include Region 8, of which the typhoon-ravaged Samar and Leyte are part.

Palace spokesperson Herminio Coloma even made a comedy of the tragic news when he tried to explain the rise in unemployment by claiming that refugees from typhoon-ravaged areas couldn’t find work in Metro Manila and other better-off areas because they had “lost their ID cards and transcript of (educational) records” during the typhoon.
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I nearly fell from my chair reading that. How can he say that? Didn’t he even check that the NSO’s labor force survey involves 50,000 respondents all over the country? While these are much bigger than the respondents of “pay-per-view” Social Weather Station and Pulse Asia, it means that the NSO survey had 3,000 respondents per region.

Now what are the chances that the NSO interviewed a refugee from Leyte or Samar, who reported that he couldn’t find work because he lost his ID and records?

Maybe Coloma has just been too busy making up excuses for his boss’ failings to have the time to study the matter, and he is in the first place not qualified to comment on economic issues. But even Aquino’s economic adviser, Socioeconomic Planning Secretary Arsenio Balisacan, who supervises the NSO, blamed the disasters: “The January result of the LFS is quite unique in that it comes as an aftermath of two extreme disasters in 2013. We are now observing the lingering effects of the disruptions caused by these disasters on the supply chains not only in disaster-affected areas but also in neighboring areas.”

“The devastation wrought by these disasters probably affected tourism and demand for leisure and wellness services,” the economist Balisacan claimed.

Didn’t he bother to read the data generated by an office under him which showed that the proportion of workers employed in the services sector, especially those directly involved in the tourism industry (the “accommodation and food services” item in the NSO’s tables) had remained the same from its January 2013 levels?

Jobs plan
What demonstrates this administration’s incompetence is the plan “unveiled” by Coloma to provide jobs to Filipinos:

“We will … facilitate their employability by assisting job applicants in reconstructing pre-employment documents (that they lost in the typhoons).”

We are in a hopeless situation with a government run by nincompoops who don’t realize that jobless growth is our biggest, nearly intractable problem, one that we can only start to solve if our economic structure’s flaws are addressed and useless government policies — like the conditional cash transfer program — are junked.

The chart accompanying this column points to the enormity of our unemployment. To be fair to the Aquino administration, the country’s unemployment problem has dogged us for decades. While the data I’ve managed to acquire starts only with 1982, I suspect it was in the 4 percent levels from the 1960s and 70s.

After what was really an economic Armageddon from 1982 to 1986 (when the economy contracted for three years in such a magnitude never seen before or after due to the perfect storm of an economic and a political crisis), the unemployment rate has steadily risen up to 2004.

Although a change in the definition in unemployment explains much of the steep drop in 2005, there has been a downward, but not spectacular, trend since 2005 to 2013. But it is rising again.

Compare our unemployment rates since 1980 with Thailand, and see that ours are contained in the 6 to 8 percent band, while our neighbors are in the 1 percent levels, so that theoretically they are full-employment economies. Something is deeply wrong with ours.

Clear program needed
The next government would have to really have a clear idea of our unemployment problem, and a clear program of action, instead of a fuzzy economic agenda.

My studies, though, point to at least five major reasons for our unemployment situation.

High electricity costs. We have the 5th highest electricity cost in the world, and the highest in Asia. This has been the biggest disincentive, not only for foreign investors, but even for local investors, to go into manufacturing for export and local consumption. And manufacturing, except in very rare cases, has been proven to be the biggest employment generator.

Weak infrastructure, which has made logistics for industries expensive in the country. A strong infrastructure (trains for instance to areas outside Metro Manila) would create other viable areas for investment other than metropolitan Manila, whose congestion has created massive traffic congestion (that reduces workers’ productivity) and astronomical property prices.

The coconut industry, a dying industry that has kept at last 2 million Filipinos in poverty, and more and more creating unemployment in provinces which are dominated by it.

A flawed financial system, in which banks are controlled by conglomerates so that these would finance their expansion Credit. As a result to those businesses without such banks, and most especially, entrepreneurs, loans are expensive and scarce.

What has made our country’s unemployment worse is that this government practically has not undertaken any move, or only feeble initiatives, to address these.

Its flagship effort has been the conditional cash-transfer program, a massive dole-out system whose flaw can easily be appreciated if you think of that adage, “Don’t give a hungry man a fish but instead teach him to fish.” Mr. Aquino cannot junk it as it is a massive vote-buying scheme, the only strength he can give his anointed to win in 2016.

From 2010 to this year, the government budget for the CCT will total an astounding P166 billion. Consider that as a 30 percent “equity,” that is, it can mobilize credit of P387 billion. Which means a fund of P553 billion, or half a trillion.

How many 600-MW power plants, highways, and ports for inter-island shipping would that half-a-trillion peso fund build?