Since it came into office one year ago, the administration of President Rodrigo Duterte has made two major economic commitments to the nation. One is that between now and the end of Mr. Duterte’s term—June 30, 2022 —this country will experience a Golden Age of Infrastructure, with P8 trillion worth transportation and communication facilities put in place. The other major commitment made by the Duterte administration was that by June 30, 2022 the national poverty rate will have been brought down to 14 percent.
Is a reduction of the national poverty rate to 14 percent within the next five years something achievable? My answer Is “Positive but highly unlikely.”
To put things in time-perspective terms, going back five years in time would bring us back to 2012 and going back ten years would bring us back to 2007. In 2012 Benigno Aquino III was in the third of his six years as President of the Philippines, and five years earlier Gloria Macapagal-Arroyo was seven years into her 10-year stay in Malacanang. Try as they did, their administrations were never able to bring the national poverty rate below 20 percent. Mr. Aquino left office with the national poverty rate at 21 percent.
That reducing the national poverty rate to a tolerable level is a very difficult exercise is an understatement. It requires nothing less than a gargantuan, total-focus effort. I think that the Duterte administration is not capable of such an effort: it is headed by a person who has many distractions and is weighed down by much personal baggage.
Target-setting is a necessary part of good governance. But the policy targets that governments set must be within the realm of realism. When I first read about the target of 14 percent national poverty by 2022, the question that immediately came to my mind was, what made the Duterte administration’s socio-economic planners set a target as unrealistic as that?
Given today’s 21 percent national poverty rate, achieving the Duterte administration’s target will entail trying to take 7 percent of this country’s estimated 107 million people out of the clutches of poverty. That in turn will mean providing 7 million Filipinos with incomes sufficient to buy three meals a day, meet the cost of a roof over their heads and pay for utilities (electricity, water and fares), health care charges and education-related outlays. That is a tall order, considering that most of the Filipinos covered by the 21 percent poverty rate do not receive such incomes. Many of them do not even earn the P19,000 that the National Statistics Authority (NSA) has estimated to be the minimum average monthly income needed to support a family of five.
The key to income adequacy for the nation’s poor is a minimum daily wage for industrial and agricultural workers. Realizing that private employers could not be relied upon to pay their workers a living wage—a wage sufficient to enable a family to pay for its daily needs—Congress adapted the Western concept of minimum wage-setting and passed the Minimum Wage Act. Though the Act has been amended numerous times, with each amendment providing for a minimum-wage increase, the resulting wage has been either inadequate or barely adequate for the daily needs of poor Filipino families.
The minimum wage should lead the way toward higher incomes for low-income Filipinos, but unfortunately the Minimum Wage Act is widely violated. Given this fact, repeatedly increasing the national minimum wage is only a part of the needed remedial action; enforcement of the Act needs to be much improved. Nor should the minimum wage be continually raised, considering the adverse impact of wage increase on the viability and competitiveness of the nation’s SMSEs (small and medium-scale enterprises).
Bad socio-economic conditions are part and parcel of—and dramatize—the condition of poverty in which 21 percent of Filipinos find themselves. The backlog of decent housing has not only shrunk; it has been lengthening continuously, thanks to the relentless increase in the national population. And though Philhealth has been succeeding in bringing thousands of Filipinos into its rolls, a disconcerting number of Filipinos continue to pass out of this world without having known the benefit of maternity and other medical care. Turning this socio-economic situation around will require a heroic effort involving a huge amount of public expenditure.
The trickle-down theory of economic development held that as an economy developed, the condition of the poorer sectors of society would progressively improve as the benefits of economic growth trickled down to them from the top. The theory has not been effective in this country and the rising tide of economic growth has not raised the boats of the poor.
Recognizing the non-trickle-down of the benefits of economic growth, the Arroyo administration decided to adopt Brazil’s conditional cash transfer system, under which cash transfers are directly made to poor families on the basis of conditions relating to maternal care and children’s school attendance. The domestic version, the 4Ps (Pantawid Pamilyang Pilipino Program) gives every eligible family P1,400 per month. The 4Ps program was continued by the Aquino administration and has been retained by the Duterte administration. It has been criticized for being supportive of mendicancy,, but there is recognition that the program has been effective in allowing the poor to directly share in the benefits of Philippine economic growth.
The monthly 4Ps cash transfer will have to be far higher than P1,400 if the Duterte administration’s target for national-poverty-rate reduction is to have a chance of attainment.
E-mail: rudy.romero@gmail.com
