News and Issues
ECONOMIC GROWTH REMAINS UNSUSTAINABLE, UNABLE TO CREATE JOBS
IBON Media Release / 26 August 2010
ECONOMIC GROWTH REMAINS UNSUSTAINABLE, UNABLE TO CREATE JOBS
The 7.9% growth in gross domestic product (GDP) is welcome at least for appearing to be mainly driven by domestic investors, according to research group IBON. Net foreign capital inflows in the first five months of 2010 were earlier reported to be 68% lower than in the same period last year.
However, the group said that overall the growth remains disappointing because it is still not creating enough jobs. Despite the 7.9% reported growth in both the 2nd quarter and 1st semester as a whole, there was only a tepid 1.2% growth in employment in April 2010 from the year before. Job creation is unable to even keep pace with the growth of the labor force (about 2%) or of the working age population (2.5%), and unemployment has continued to rise to a record 4.67 million Filipinos with an unemployment rate of 11.6 percent.
The 3% contraction of agriculture in the second quarter was accompanied by a massive 802,000 jobs lost in the sector in April. Philippine unemployment, whether according to the old (11.6%) or new definition (8.0%), is the worst in Asia with for instance comparative rates of only 1.5-7.7% in Thailand, Vietnam, Indonesia, Malaysia, Brunei, Singapore, Taiwan and South Korea.
Manufacturing was the most important source of growth and of jobs (221,000) in the first half of the year but this can only be sustained if demand fundamentally comes from domestic sources. Unfortunately there are signs that the spurt in electronics exports will not be sustained as the United States (US), Europe, Japan and others cut back on their stimulus programs and as even China slows down – constituting some two-thirds of the world economy.
Indeed the 2nd quarter and 1st semester results affirm why the country cannot and should not rely on external sources of growth amid the still unfolding global crisis. Earnings of overseas Filipinos and from business process outsourcing (BPO) service exports both continued to slow. Net factor income from abroad, mostly consisting of overseas Filipino incomes, is markedly slowing and only grew 7.7% in the 2nd quarter compared to 30.4% growth in the same period last year. Business services growth, which includes BPOs, in turn slowed to 10.2% from 13.8% last year.
The administration is challenged to build domestic economic momentum but the 2011 budget submitted to Congress unfortunately even drastically cuts spending on economic services which falls to PhP361.1 billion in 2001 from PhP398.9 billion this year. These services include vital power, water, communications, roads and other transport infrastructure that need to be under firm government control and regulation to prevent profiteering by private monopolies.
Rapid asset- and wealth-distributing agrarian reform is also vital to reduce rural poverty and expand incomes in a sector that accounts for a third of total employment (32.5% in April). The administration however seems more inclined to continue with the protracted Comprehensive Agrarian Reform Program (CARP) through its second extension CARPer that for two decades now has failed to genuinely distribute land and rural wealth. (end)
The 7.9% growth in gross domestic product (GDP) is welcome at least for appearing to be mainly driven by domestic investors, according to research group IBON. Net foreign capital inflows in the first five months of 2010 were earlier reported to be 68% lower than in the same period last year.
However, the group said that overall the growth remains disappointing because it is still not creating enough jobs. Despite the 7.9% reported growth in both the 2nd quarter and 1st semester as a whole, there was only a tepid 1.2% growth in employment in April 2010 from the year before. Job creation is unable to even keep pace with the growth of the labor force (about 2%) or of the working age population (2.5%), and unemployment has continued to rise to a record 4.67 million Filipinos with an unemployment rate of 11.6 percent.
The 3% contraction of agriculture in the second quarter was accompanied by a massive 802,000 jobs lost in the sector in April. Philippine unemployment, whether according to the old (11.6%) or new definition (8.0%), is the worst in Asia with for instance comparative rates of only 1.5-7.7% in Thailand, Vietnam, Indonesia, Malaysia, Brunei, Singapore, Taiwan and South Korea.
Manufacturing was the most important source of growth and of jobs (221,000) in the first half of the year but this can only be sustained if demand fundamentally comes from domestic sources. Unfortunately there are signs that the spurt in electronics exports will not be sustained as the United States (US), Europe, Japan and others cut back on their stimulus programs and as even China slows down – constituting some two-thirds of the world economy.
Indeed the 2nd quarter and 1st semester results affirm why the country cannot and should not rely on external sources of growth amid the still unfolding global crisis. Earnings of overseas Filipinos and from business process outsourcing (BPO) service exports both continued to slow. Net factor income from abroad, mostly consisting of overseas Filipino incomes, is markedly slowing and only grew 7.7% in the 2nd quarter compared to 30.4% growth in the same period last year. Business services growth, which includes BPOs, in turn slowed to 10.2% from 13.8% last year.
The administration is challenged to build domestic economic momentum but the 2011 budget submitted to Congress unfortunately even drastically cuts spending on economic services which falls to PhP361.1 billion in 2001 from PhP398.9 billion this year. These services include vital power, water, communications, roads and other transport infrastructure that need to be under firm government control and regulation to prevent profiteering by private monopolies.
Rapid asset- and wealth-distributing agrarian reform is also vital to reduce rural poverty and expand incomes in a sector that accounts for a third of total employment (32.5% in April). The administration however seems more inclined to continue with the protracted Comprehensive Agrarian Reform Program (CARP) through its second extension CARPer that for two decades now has failed to genuinely distribute land and rural wealth. (end)
Commission Omission
Posted on 08:11 PM, August 05, 2010 Vantage Point -- By Luis V. Teodorofrom http://www.bworldonline.com/main/content.php?id=15404
As the concept has evolved, a truth commission is tasked with investigating and revealing wrongdoing by a past government, or a succession of governments. Its formation, as in Argentina, Chile, South Africa, Peru, and El Salvador -- the countries where truth commissions have been most successful -- is driven by the scale of the misdeeds. Because of these offenses’ impact on society they have to be documented, their perpetrators identified, and if necessary prosecuted.
In Chile, South Africa, Argentina, Peru, and El Salvador, the mission of the truth commissions was to determine the extent, causes, and cases of state-sponsored crimes committed against the citizenry so that they may never again be repeated. They were also meant to identify and recommend prosecution of the guilty, and compensation for the victims and survivors, or their kin.The need for a truth commission was evident in all the above countries. In Chile, only through a truth commission could the extent of the crimes of the Augusto Pinochet military regime -- which was replaced in a 1990 election 17 years after seizing power in a 1973 coup d’etat against the democratically elected government of Salvador Allende -- be established.
The Pinochet regime was aided by University of Chicago economists in drafting its economic policies. Corruption among the US-backed Chilean military once these policies were in place was rampant. But the 1990 truth commission focused on the human rights violations the regime committed in behalf of the local elite and US multinational interests, among them the arbitrary arrests and detentions, the summary executions, enforced disappearances, abductions, torture and assassinations that targeted leftwing and church activists, trade union and student leaders, artists and journalists, and members of opposition groups.
Of particular concern were the disappeared, or desaparecidos -- those abducted by the military, and about whose fate their kin needed to be certain. Once what happened to the victims of repression was established, they themselves or their surviving kin filed charges against those responsible. A number of military officers were prosecuted and imprisoned for their roles in the repression. Until he died, Pinochet himself was hounded by criminal charges filed in Chile and other countries.
The prosecution of those responsible for some of the worst, most systematic, and most extensive violations of human rights in recent memory was necessary not only for the sake of justice, but also to provide some assurance, through collective remembrance, that the same crimes will never happen again.
In the Philippines, the need for a truth commission occurred after the overthrow of the Marcos regime in 1986.
But the need for one today, in the aftermath of the Arroyo regime, is as evident, on the same urgent grounds as in post-EDSA 1986.
At the end of the Marcos regime, a truth commission could have performed exactly the same role as the truth commissions of Chile, Peru, South Africa, El Salvador, and Argentina: that of once and for all establishing -- and disseminating among Filipinos so they will remember -- that the acts the past regime had committed in the name of democracy and order were indeed crimes for which those responsible had to be prosecuted, and how and why they occurred, so that the country could put that period behind it in the certainty that it will not happen again.
The alternative was for the country to remain divided on what happened during the dictatorship; confusion on who were responsible for it; uncertainty as to what happened to those the military abducted; and worst of all, to risk its repetition. That is exactly what has happened since.
The uninformed maintain that it was a period of peace, stability, and relative prosperity. The torturers and killers of that era are unpunished. The fate of scores of the disappeared has not been established. And the country remains in peril of dictatorships.
Part of the reason why what happened during the martial law period is still debated even today is that the late President Corazon Aquino did not create a truth commission to establish the truth about that dark chapter of history. Instead she created a poor copy of one, the Presidential Commission on Good Government (PCGG), with a limited mandate and limited powers.
The PCGG mandate of looking into cases of ill-gotten wealth and corruption during the Marcos regime was similar to that of the "truth commission" Benigno Aquino III created last week, apparently on the twin assumptions that corruption was the most outstanding offense of the Arroyo regime, and that corruption is a stand-alone offense against the nation.
And yet, equally evident, together with the many corruption scandals the Arroyo regime generated, were the human rights violations that could be laid at its door.
These violations -- the disappearances, assassinations, torture, massacres, arbitrary arrests, and imprisonment, among others -- were part of the regime’s counter-insurgency strategy. But they were at the same time the instrument of regime determination to prevent exposure of its misdeeds and to silence criticism of the corruption that has metastasized throughout government.
At the same time that they were, and still are, part of a brutal anti-insurgency policy, the extrajudicial killings and other crimes against political activists, progressive church people and local officials, lawyers, labor, student and farmers’ leaders, and even journalists also had the effect of terrorizing regime critics.
Mr. Aquino can do worse than to widen the mandate of the truth commission to include an inquiry into the extent of the human rights violations committed during the Arroyo regime as an instrument in its effort to conceal corruption; whether they were indeed state policy; the fate of the abducted and disappeared; and who were responsible.
The truth commission could thus live up to its name, rather than being limited to duplicating the functions of the Ombudsman and the Department of Justice, and open to complaints as to its legality.
The country missed an opportunity to understand what happened during the martial law period. It shouldn’t miss the opportunity to understand what happened during a regime that’s been justly compared to Marcos’ own.
Comments and other columns: www.luisteodoro.com
In Chile, South Africa, Argentina, Peru, and El Salvador, the mission of the truth commissions was to determine the extent, causes, and cases of state-sponsored crimes committed against the citizenry so that they may never again be repeated. They were also meant to identify and recommend prosecution of the guilty, and compensation for the victims and survivors, or their kin.The need for a truth commission was evident in all the above countries. In Chile, only through a truth commission could the extent of the crimes of the Augusto Pinochet military regime -- which was replaced in a 1990 election 17 years after seizing power in a 1973 coup d’etat against the democratically elected government of Salvador Allende -- be established.
The Pinochet regime was aided by University of Chicago economists in drafting its economic policies. Corruption among the US-backed Chilean military once these policies were in place was rampant. But the 1990 truth commission focused on the human rights violations the regime committed in behalf of the local elite and US multinational interests, among them the arbitrary arrests and detentions, the summary executions, enforced disappearances, abductions, torture and assassinations that targeted leftwing and church activists, trade union and student leaders, artists and journalists, and members of opposition groups.
Of particular concern were the disappeared, or desaparecidos -- those abducted by the military, and about whose fate their kin needed to be certain. Once what happened to the victims of repression was established, they themselves or their surviving kin filed charges against those responsible. A number of military officers were prosecuted and imprisoned for their roles in the repression. Until he died, Pinochet himself was hounded by criminal charges filed in Chile and other countries.
The prosecution of those responsible for some of the worst, most systematic, and most extensive violations of human rights in recent memory was necessary not only for the sake of justice, but also to provide some assurance, through collective remembrance, that the same crimes will never happen again.
In the Philippines, the need for a truth commission occurred after the overthrow of the Marcos regime in 1986.
But the need for one today, in the aftermath of the Arroyo regime, is as evident, on the same urgent grounds as in post-EDSA 1986.
At the end of the Marcos regime, a truth commission could have performed exactly the same role as the truth commissions of Chile, Peru, South Africa, El Salvador, and Argentina: that of once and for all establishing -- and disseminating among Filipinos so they will remember -- that the acts the past regime had committed in the name of democracy and order were indeed crimes for which those responsible had to be prosecuted, and how and why they occurred, so that the country could put that period behind it in the certainty that it will not happen again.
The alternative was for the country to remain divided on what happened during the dictatorship; confusion on who were responsible for it; uncertainty as to what happened to those the military abducted; and worst of all, to risk its repetition. That is exactly what has happened since.
The uninformed maintain that it was a period of peace, stability, and relative prosperity. The torturers and killers of that era are unpunished. The fate of scores of the disappeared has not been established. And the country remains in peril of dictatorships.
Part of the reason why what happened during the martial law period is still debated even today is that the late President Corazon Aquino did not create a truth commission to establish the truth about that dark chapter of history. Instead she created a poor copy of one, the Presidential Commission on Good Government (PCGG), with a limited mandate and limited powers.
The PCGG mandate of looking into cases of ill-gotten wealth and corruption during the Marcos regime was similar to that of the "truth commission" Benigno Aquino III created last week, apparently on the twin assumptions that corruption was the most outstanding offense of the Arroyo regime, and that corruption is a stand-alone offense against the nation.
And yet, equally evident, together with the many corruption scandals the Arroyo regime generated, were the human rights violations that could be laid at its door.
These violations -- the disappearances, assassinations, torture, massacres, arbitrary arrests, and imprisonment, among others -- were part of the regime’s counter-insurgency strategy. But they were at the same time the instrument of regime determination to prevent exposure of its misdeeds and to silence criticism of the corruption that has metastasized throughout government.
At the same time that they were, and still are, part of a brutal anti-insurgency policy, the extrajudicial killings and other crimes against political activists, progressive church people and local officials, lawyers, labor, student and farmers’ leaders, and even journalists also had the effect of terrorizing regime critics.
Mr. Aquino can do worse than to widen the mandate of the truth commission to include an inquiry into the extent of the human rights violations committed during the Arroyo regime as an instrument in its effort to conceal corruption; whether they were indeed state policy; the fate of the abducted and disappeared; and who were responsible.
The truth commission could thus live up to its name, rather than being limited to duplicating the functions of the Ombudsman and the Department of Justice, and open to complaints as to its legality.
The country missed an opportunity to understand what happened during the martial law period. It shouldn’t miss the opportunity to understand what happened during a regime that’s been justly compared to Marcos’ own.
Comments and other columns: www.luisteodoro.com
ADOPT PRO-PEOPLE MEASURES TO GENERATE REVENUE, AQUINO URGED
IBON Media Release | 16 July 2010
The urgent challenge for the new Aquino administration is to increase revenues, but research group IBON urges government to place the burden of adjusting to the fiscal crisis on those that have the greater capacity to pay.
The new Aquino administration is faced with a serious fiscal crisis that could deteriorate rapidly or compel severe austerity if the revenue effort does not quickly improve. The first quarter deficit is already at 8.4% of the gross domestic product (GDP) from 7% of GDP in the first quarter of 2009.
IBON said that being a new administration, the Aquino government enjoys a measure of goodwill, and it can translate this to revenue generation measures that will not burden the public. Among these measures are restoring the import tariffs to their 1993 levels, or at 5.6% of the gross domestic product (GDP). This will create an estimated revenue of P427 billion, instead of the P220 billion generated in 2009 (at 2.9% of GDP).
Another measure is restoring the corporate income tax from 30% to 35 percent, which will generate an estimated revenue of P16 billion for the government. This is possible because top corporations saw a 20%-increase in their 1st quarter 2010 profits. Moreover, the top 1,000 corporations registered a profitability rate of 11.7% in 2007 from 3.2% in 2001.
According to IBON, the supposed 36 straight quarters of GDP growth trumpeted by the past government has not been accompanied by corresponding increases in real jobs and decent wages, further deepening poverty while expanding the wealth of those in the top income deciles. Amid rising poverty and increasing incomes of the corporations and individuals, the Aquino government can therefore look into increasing wealth taxes such as on high value real estate, luxury goods and services, and others.
IBON said that the Aquino government is in a good position to establish democratic instincts including implementing pro-poor measures in managing the fiscal crisis. This would be more productive instead of considering conventional approaches such as removing rice subsidies, increasing taxes, etc. (end)
The new Aquino administration is faced with a serious fiscal crisis that could deteriorate rapidly or compel severe austerity if the revenue effort does not quickly improve. The first quarter deficit is already at 8.4% of the gross domestic product (GDP) from 7% of GDP in the first quarter of 2009.
IBON said that being a new administration, the Aquino government enjoys a measure of goodwill, and it can translate this to revenue generation measures that will not burden the public. Among these measures are restoring the import tariffs to their 1993 levels, or at 5.6% of the gross domestic product (GDP). This will create an estimated revenue of P427 billion, instead of the P220 billion generated in 2009 (at 2.9% of GDP).
Another measure is restoring the corporate income tax from 30% to 35 percent, which will generate an estimated revenue of P16 billion for the government. This is possible because top corporations saw a 20%-increase in their 1st quarter 2010 profits. Moreover, the top 1,000 corporations registered a profitability rate of 11.7% in 2007 from 3.2% in 2001.
According to IBON, the supposed 36 straight quarters of GDP growth trumpeted by the past government has not been accompanied by corresponding increases in real jobs and decent wages, further deepening poverty while expanding the wealth of those in the top income deciles. Amid rising poverty and increasing incomes of the corporations and individuals, the Aquino government can therefore look into increasing wealth taxes such as on high value real estate, luxury goods and services, and others.
IBON said that the Aquino government is in a good position to establish democratic instincts including implementing pro-poor measures in managing the fiscal crisis. This would be more productive instead of considering conventional approaches such as removing rice subsidies, increasing taxes, etc. (end)
