Commitment and coherence; a tall order?
Every change in administration sees a renewed commitment to alleviate or eradicate poverty, and President Joseph “Erap” Estrada is no exception. The actor-turned-politician won in the 1998 national elections with the slogan “Erap is for the poor”. Estrada aims to reduce poverty from 32% in 1997 to 25% in 2004. But his term started in 1998, when the Asian financial crisis raised poverty incidence to 35%. It took nine whole years, from 1988 to 1997, to reduce poverty incidence by eight percentage points (40% - 32%). A further reduction of ten percentage points in six years, is it possible?
The currency turmoil and the need for social safety nets
Government officials contend that, since the Philippine economy contracted least among Asian countries in the Asian economic crisis, it should recov quickest. Their contention belies the following facts:2
> The Asian crisis was the second economic downturn in less than a decade;
> There was a recession in 1998;
Unemployment and Underemployment
Unemployment and under-employment rates have risen.3 Unemployment in April 1998 of 13.3% may be attributed to El Niño (the drought), but the July and October 1998 rates were linked to the financial crisis as industrial employment had begun to drop.
Table 1
Unemployment and Under-employment Rates (%)
April 1997-October 1998
|
Unemployment
Rate |
Under-employment
Rate |
April 1997 |
10.4 |
23.4 |
July 1997 |
8.7 |
23.1 |
Oct 1997 |
7.9 |
20.8 |
Jan 1998 |
8.4 |
21.6 |
April 1998 |
13.3 |
21.0 |
July 1998 |
8.9 |
20.8 |
Oct 1998 |
9.6 |
23.7 |
Source: Current Labour Statistics, Department of Labour and Employment
The number of establishments reporting closures, retrenchments and rotations in 1997 almost doubled for the period of January-September 1998. Some 115,000 workers were affected with 50.7% laid off permanently, 32.1% laid off temporarily and 17.1% put on job rotation. Hardest hit was the industrial sector, particularly manufacturing.
Table 2
Workers affected by closures and retrenchments
(as percentages of total)
|
Total |
Permanent |
Temporary |
Rotation |
All Industries |
100.0 |
50.7 |
32.1 |
17.1 |
Agriculture |
1.5 |
1.2 |
0.3 |
0.1 |
Industry |
73.2 |
30.4 |
28.0 |
14.8 |
Mnfg. |
62.0 |
24.7 |
24.0 |
13.3 |
Services |
25.3 |
19.2 |
3.8 |
2.3 |
Note: Total number of workers affected, 155,478.
Source: Department of Labour and Employment
Poverty Profile
Using Philippine data, Arsenio M. Balisacan of the University of the Philippines School of Economics reaffirmed that macroeconomic shocks such as the Asian crisis tend to systematically hit hardest the poorest groups in society.4
A significant 37.7% of the poorest 40% took their children out of school (Table 3). Given the strong inverse correlation between educational attainment and poverty, safety nets geared toward providing targeted educational assistance to the poorest decile of the population must be devised. (Table 4)
Least Hit, First Out?
Contrary to predictions, the Philippines, least hit by the crisis, is recovering more slowly. In 1998, the Philippines posted the lowest economic contraction (-0.5%) compared with South Korea (-5.8%); Thailand (-9.4%); and Malaysia (-7.5%). In 1999, however, its growth rate of 3.6% was dwarfed by Koreas 9.8% and Malaysias 4.1%. Other comparative figures are shown in Table 4.
The proof of the pudding is in the eating
Spending for social services has increased since 1995 to 34% in the proposed FY 2000 budget.
Table 3
Social Allocation Ratios, 1995-2000 (%)
Year |
Social Allocation Ratio* |
1995 |
26.9 |
1996 |
29.5 |
1997 |
32.3 |
1998 |
32.6 |
1999 |
33.8 |
2000 |
34.1 |
*The Social Allocation Ratio measures the share of the social services sector in the national budget.
Source: Budget of Expenditures and Sources of Financing, Department of Budget and Management
Most education indicators improved, but with the exception of participation in elementary school, which exceeded the target, the rest did not meet the 1998 targets and achieving current literacy targets is viewed sceptically because the poor are taking their children out of school.
There is pressing need to address the wide gender disparities in the quality of basic education across provinces. The 1999 to 2004 Medium Term Plan wrote: While gender disparities are not evident in basic education, they do persist in higher levels. In addition, the incidence of low-quality education is apparent in some regions and groups especially in indigenous communities. For instance, the average functional literacy rates in some provinces ... are just a little over half the functional literacy rates of the top-performing provinces.
This may explain the modest targets set by the Estrada administration for education. Even the basic literacy target has been lowered from 98% by 1998 under Ramos to 97.4% by 2004 under Estrada.
Table 4
Household Responses to Crisis
Income per |
Total HHs |
Percent of HH Responding to Crisis by |
|||||
Decile
(1997
FIES) |
responding |
Changing
eating
pattern |
Taking
children
out of
school |
Migrating
to city or
other
countries |
Receiving
assistance
from other
households |
Receiving
assistance
from
government |
Increasing
working
hours |
|
|
|
|
|
|
|
|
1 |
2,256 |
56.7 |
12.4 |
7.8 |
16.5 |
10.7 |
37.5 |
2 |
2,223 |
52.3 |
9.3 |
5.4 |
17.1 |
8.8 |
36.8 |
3 |
2,211 |
50.7 |
7.3 |
5.4 |
16.3 |
8.4 |
33.6 |
4 |
2,206 |
51.0 |
8.7 |
5.2 |
17.0 |
6.8 |
33.1 |
5 |
2,180 |
47.8 |
7.1 |
4.5 |
17.2 |
5.9 |
29.4 |
6 |
2,155 |
48.3 |
5.6 |
3.8 |
16.4 |
5.7 |
27.0 |
7 |
2,138 |
47.0 |
5.0 |
3.7 |
15.0 |
4.5 |
26.1 |
8 |
2,125 |
44.1 |
3.5 |
3.4 |
12.5 |
2.9 |
22.3 |
9 |
2,097 |
41.4 |
3.2 |
3.1 |
13.8 |
3.9 |
23.1 |
10 |
2,011 |
33.3 |
1.2 |
3.5 |
12.0 |
2.6 |
18.2 |
|
|
|
|
|
|
|
|
Total |
21,602 |
47.5 |
6.4 |
4.6 |
15.4 |
6.1 |
28.9 |
Source: Panel data (23,150 households) constructed from the 1997 Family Income and Expenditure Survey and the 1998 Annual Poverty Indicator Survey.
Table 5
Economies worst hit by the crisis
|
GDP
Growth
1998 |
GDP
growth |
Exports(USD) |
Per-capita GNP (nominal USD) |
Inflation |
Current account balance (USD) |
Net foreign debt |
Indonesia |
-13.4% |
1.8% |
48.2b |
460 |
1.3% |
4.4b |
138.0b |
Malaysia |
-7.5% |
4.1% |
76.9b |
3,092 |
2.4% |
9.2b |
42.3b |
Philippines |
-0.5% |
3.6% |
32.3b |
907 |
5.7% |
3.4b |
48.6b |
Singapore |
1.5% |
6.7% |
110.0b |
21,828 |
0.9% |
19.0b |
NA |
South Korea |
-5.8% |
9.8% |
136.0b |
6,810 |
0.3% |
30.2b |
142.6b |
Thailand |
-9.4% |
3.5% |
53.9b |
1,850 |
-1.1% |
13.3b |
79.3b |
Note: Year is 1999 unless otherwise indicated.
Source: Asiaweek, October 29th 1999
Healthier People?
Common health indicators show an improvement in health. Life expectancy rose from 66.6 years in 1993 to 68 years in 1997. Infant mortality and crude death rates dropped from 52% to 45.8% and 6.9% to 6.1% respectively. School childrens nutritional status also improved from 1992 to 1996. All are well within the 1998 targets
Former Asian Social Watch Coordinator Leonor M. Briones points to other indicators that are equally important.5 Subclinical Vitamin A Deficiency6 continues to be present in up to 35% of preschool children and iron-deficiency anaemia is prevalent across all age groups. The country is still plagued by diseases of the poor such as cholera, dysentery, malaria and dengue fever even as statistics for heart disease and other diseases of the rich appear to be rising.
Table 6
Social Services
|
Nominal Levels (in million pesos)* |
Percentage Change from 1997 Figures |
|||||
1997 (Actual) |
1998 (Adjusted) |
1999 (GAA) |
1998 |
1999 |
|||
Nominal |
Real |
Nominal a |
Real a |
||||
|
|
|
|
|
|
|
|
Education and Manpower |
94,973 |
106,267 |
112,375 |
11.89 |
4.26 |
18.32 |
2.09 |
Development |
|
|
|
|
|
|
|
Basic Education |
77,780 |
85,086 |
90,506 |
9.39 |
1.93 |
16.36 |
0.40 |
Informal |
938 |
903 |
746 |
-3.76 |
-10.33 |
-20.44 |
-31.35 |
Higher Education |
14,801 |
17,180 |
17,757 |
16.07 |
8.15 |
19.97 |
3.51 |
Middle-Level Skills |
1,453 |
2,291 |
2,302 |
57.64 |
46.89 |
58.38 |
36.65 |
Others |
|
807 |
1,064 |
|
|
|
|
Health |
14,154 |
13,743 |
14,108 |
4.20 |
-2.80 |
18.00 |
-1.80 |
Preventive Health Care |
1,530 |
1,414 |
1,465 |
-7.57 |
-13.87 |
-4.23 |
-17.37 |
Curative Health Care |
7,756 |
7,540 |
8,414 |
-2.79 |
-9.42 |
8.48 |
-6.40 |
Others |
4,868 |
4,790 |
4,229 |
-1.61 |
-8.31 |
-13.13 |
-25.05 |
Social Security, Welfare and |
20,263 |
21,124 |
23,906 |
4.20 |
-2.80 |
18.00 |
-1.80 |
Employment |
|
|
|
|
|
|
|
Housing and Community |
2,438 |
1,647 |
1,790 |
-32.40 |
-37.00 |
-26.60 |
-36.70 |
Development b |
|
|
|
|
|
|
|
1 Includes health, education and work-skills development, social security welfare and employment, and housing and community development, only.
1997 USD1 = PhP 29.47
1998 40.89
1999 40.00
Wheres the money?
Education receives the biggest piece of social services spending in the 2000 budget, but its share decreased from 19.2% in 1999 to 18.1% in 2000 with real budget allocations declining. The same is true for health services.7
According to NEDAs progress report on implementation the 20:20 Initiative, government expenditures for human development priorities increased from 15.7% in 1995 to 16.4% in 1997. But official development assistance (ODA) resources for basic social programmes from 1995 to 1998 were unstable: 14.7% in 1995, 9.6% in 1996, 18.45% in 1997, and 6.06% in 1998. This seems to indicate donor preference for financing tertiary services and infrastructure-related projects.
Table 7
Health Indicators
1993 | 1997 | 1998 | |
Life Expectancy (years) |
66.6 |
68.0 |
67.0 |
Infant Mortality (per 1000 livebirths) |
52.0 |
45.8 |
49.4 |
Crude Death Rate (per 1000 persons) |
6.9 |
6.1 |
6.3 |
1992 | 1996 | 1998 | |
Underweight pre-school children |
10.0 % |
8.4 % |
8.4 % |
Underweight school children |
9.4 % |
7.4 % |
8.4 % |
* Target
The National Anti-Poverty Commission (NAPC) was created by Congress under the Ramos government. Since it is the principal task of NEDA to address poverty, it is not clear why another bureaucracy was created. In April 1999, the NAPC was directed to establish livelihood programmes for the 100 poorest families in each province and city. Funding for these programmes is allocated through different agencies including members of Congress and municipal mayors. Since this arrangement is conducive to political patronage, the straightforward intention of helping the poorest may lead to more chaos than coherence.
As the Philippines enters the 21st Century, the popularity rating of its president is at record low levels. Reform-oriented cabinet secretaries have resigned, raising issues of transparency and accountability. There is a ballooning budget deficit, and people are waiting for the next round of oil price increases. Given this situation, we hope the Estrada Administration will focus on its original goal. Alleviating poverty is indeed a tall order, but if the government focuses its energies on achieving this commitment, then Estrada will be remembered by our people as the only one who delivered.
Notes: