Calling a spade
Business World, 9 January 2013
It may be rather late to do a yearender, but much of what I’ve read so far tends to be either fulsome (sycophantically so, actually) or excessively critical. So this is going to be a pluses-and-minuses review, albeit partial, of both the economy and the polity, with the time period under review including the first nine days of the new year.
With respect to the economy, 2012 ended with some major pluses — arising directly from the administration’s having, after many false starts, finally cleared the bottom portion of its J-shaped learning curve. First, it looks like the economy is starting to hit its stride insofar as growth is concerned (remember that the medium-term Philippine Development Plan target is an average of 7% growth for the plan period), what with the third quarter showing a growth rate of 7.1% — the first time it performed so well since the third quarter of 2010. Second, there is the average inflation rate for the year, which, at 3.2% is the lowest it has been since 2007. Third, the quality of employment — if we assume that wage and salaried employment is of better quality than own-account (self-employed) employment or unpaid family labor — has reached a historic high of 57% of total employment (it took years for it to breach the 50% level).
It is thus not any wonder that the Philippines, in the latest (2012/2013) Global Competitiveness Report, has moved up to the top half of the countries appraised, coming in 65 out of 144 (from 75 in the previous year and 85 two years before). In terms of Macroeconomic Environment, it ranked 35 out of 144 — which means the Philippines in the top 25% of countries as far as macroeconomic environment is concerned. Again, no wonder that it has attracted a lot of portfolio investment which made the Philippine Stock Exchange one of the most active in the world.
Were there any minuses for the economy in 2012? Yes. One major minus is that the number of jobs (employed persons) decreased by almost 900,000 between Oct. 2011 and Oct. 2012 (from 38.6 million to 37.7 million). On a net basis, jobs were lost. In this case, though, it does not mean that the pool of unemployment increased by that amount because of a mitigating or aggravating factor, depending on what its cause was.
Even if the number of jobs in the economy decreased by almost 900,000, unemployment actually increased by only 110,000, even if the unemployment rate went up from 6.4% to 6.8%. That is because the labor force participation rate (LFPR) — the percentage of the working age population either working or looking for work — decreased by 2.4 percentage points, from 66.3% to 63.9% between the two Octobers. Which means that even as working age population increased by more than a million, the labor force decreased by about 800,000. Why the participation rate dropped so precipitously has still to be explained. If it is because more youth 15 years and over have remained in school rather than joined the labor force, that can only augur well for the future. If, however, it is because people dropped out of the labor force because they have become discouraged from ever securing jobs, then there is a problem.
Another major minus for the economy was its inability in 2012 to attract foreign direct investments. Portfolio, yes (as seen by the tremendous activity in the stock market). Direct, no. And alas, it is direct foreign investments (the proper kind, that is), that will create additional jobs and increased production in the economy. However, we can derive consolation from the fact that it was only in the latter half of the 2012 where the good economic results came out, so perhaps in 2013 the country will no longer be at the bottom of the list of foreign direct investment destinations.
Turning now to the polity, 2012 also had major pluses, even if they came very late in the year: the passage of the sin tax and RH bills into law. The message is clear: things can happen if there is political will — not just from the politicians, but at least equally important, from civil society as well (e.g., various NGOs, various medical organizations). What was also important was the quality of their interventions — evidence-based rather than sloganeering.
Insofar as the Global Competitiveness Report is concerned, the country has improved considerably (although still in the bottom half of the set of 144 countries) in areas such as government spending (less wastefulness), politics (higher trust for politicians), corruption (less bribes/irregular payments) etc. Except, unfortunately, the very recent news report about giving unconscionably large “bonuses” to favored senators (although the 250,000 bonus that was reportedly given to the less favored ones is nothing to sneeze at), and generally very large bonuses to all Senate employees, is certainly a minus.
Another major plus has been the continuing effort of the government at transparency, as far as government expenditures are concerned. It seems the effort at allowing the public to look over the shoulders of their leaders in this area is not a ningas-kugon one.
Was the result of the impeachment trial of former Chief Justice Renato C. Corona a plus or a minus, or a zero for the polity. Certainly it doesn’t seem to have had a salutary effect on the House of Representatives — who still do not make accessible their SALNs for public scrutiny. Nor on the Office of the Ombudsman, which seems to be just as intransigent. I am not sure at this point whether the Supreme Court has made the SALNs of its justices and the members of the Judiciary more accessible.
Whether the conviction of Justice Corona has had a salutary effect on the performance of the Judiciary as well — which was one of the objectives — is a question on which the jury is still out, no pun intended. And any gains that could have been made on this score may at the same time have been neutralized by the unnecessary and arbitrary breaking of Supreme Court traditions.
Clear minuses: the failure to pass the Freedom of Information Bill, which was, let us be reminded, a campaign promise of PNoy; and the failure to address the problem of corruption (read jueteng) in the PNP, and even the military. Judging from that shoot-out-rub-out in Quezon, we’re talking about mafia-like organizations within these two agencies.
The above review, as I said, is not complete, and no attempt has been made at giving grades and weights. But arguably, the pluses outweigh the minuses. More importantly, it is clear that PNoy is trying his darnedest. And it is clear that he is not enriching himself while in office (one cannot say the same for some of his subordinates). Asking that he should be less hard-headed, under the circumstances, would be asking too much.
