Aquino government to focus on four priority areas

The Aquino government would focus on four priority areas of reforms over the next one-and-a-half years which are considered critical by the National Economic and Development Authority (NEDA).

Economic Planning Sec. Arsenio Balisacan stressed that in the last 15 months of the Aquino administration, the government would guard against future increases in food prices.

Balisacan noted that the gains from increased incomes were unfortunately negated by faster and higher inflation in food prices especially of rice. “There is a need to revisit the grains sector policy, particularly the quantitative restrictions on rice imports. The government needs to weigh the benefits of this policy deemed favorable to rice farmers, as we are seeing its negative impact on poor consumers and the Philippine economy as a whole.”

“We are pushing for a sounder package of policy reforms and programs to enhance agricultural productivity that will increase farmers’ incomes.”

Balisacan pointed out the need to reduce further the cost of doing business. “While both domestic and foreign businesses remain optimistic, business prospects in 2015 are conservative. To address this and ensure a stable business environment, there is a pressing need to address infrastructure bottlenecks, port congestion, and power woes.”

“We should strengthen support for the passage of anti-trust or competition law to improve the country’s business climate and competitiveness. This will encourage firms to innovate and improve the quality of goods and services that they provide,” said Balisacan.

The government would ensure that there is a strengthened and reliable social protection in place so that people and businesses will have the confidence to adjust to changes brought about by various reforms being implemented, said Balisacan.

“We should also revisit the National Disaster Risk Reduction and Management law to improve the coordination system and institutional arrangement in terms of disaster response management. More importantly, we must invest more in prevention and mitigation to build better and more resilient communities.”

With only one and a half years remaining, the government is working double time in delivering the commitments of the current administration. “We need to continue the momentum of reforms in economy and governance, even as we face even greater challenges as we approach 2016,” Balisacan added.

Philippine unemployment rate drops to 6.6%

The number of jobless Filipinos has further declined in January 2015 as the country’s unemployment rate dropped to 6.6 percent from 7.5 percent in January 2014.

The National Economic and Development Authority (NEDA) says that the country’s labor market is continuously improving and fuelling hopes that better employment figures will sustain recent findings of increased incomes of low-income families.

The January 2015 Labor Force Survey (LFS) revealed that figures for employment, unemployment, and underemployment have improved during the period.

The Philippine Statistics Authority (PSA) reported that employment rate grew by 2.8 percent to 37.5 million from 36.4 million in the same period last year. This means an additional 1.04 million Filipinos employed from January 2014 to January 2015, almost four times the 281,000 jobs generated in the previous year.

Economic Planning Sec. Arsenio Balisacan says the labor market got a boost from a stronger growth in all sectors mainly driven by services which grew by 3.9 percent, contributing a 766,000 net employment gain in January 2015.

“With employment growing faster at 2.8 percent compared to the labor force growth of 1.8 percent and partly due to the stronger growth of services employment, the number of unemployed went down by 334,000 to 2.6 million during the period,” said Balisacan.

All regions posted a decline in unemployment rate during the period as the unemployment rate among the youth dropped to 15 percent from 17.3 percent in January 2014.

Likewise, underemployment, which refers to those who are working but wanted more work, went down to 17.5 percent from 19.5 percent a year ago. This translates to a reduction in the number of underemployed workers to 6.5 million in January 2015 from about 7.1 million a year ago.

“For this period, the number of underemployed persons contracted among wage and salary workers, as well as self-employed workers, which possibly means greater availability of more remunerative jobs and more profitable ventures,” said Balisacan.

“From employment gains to reductions in unemployment and underemployment, the labor market is becoming robust, and we hope that this will continue and further benefit the poor, especially as the economy grows faster at a higher trajectory.”

Balisacan stressed the importance of ensuring that the gains in employment and income are not eroded by high food prices.

“The recent report on poverty highlighted the impacts of high food prices mostly to low-income families. Our significant strides in poverty reduction through better quality jobs and higher incomes must move forward along with cheaper food prices. Elevated rice prices are of particular concern, as rice takes up about 20 percent of the budget of the poor,” said Balisacan.

He also pointed out that the government must continue its efforts to create a more supportive business environment, allowing the private sector to create more and better jobs.

Labor and employment data for the January 2015 LFS round still excluded Region 8, in order to be comparable with the labor and employment data released by the PSA in the January 2014 LFS round.

Region 8 suffered from devastation by typhoon Yolanda causing labor displacement and thus no survey was conducted in the area last year. An alternative estimate which excludes Leyte only, rather than the whole Region 8, in the January 2015 LFS round shows little effect on the estimate of the national unemployment rate.

Philippine poverty incidence rises to 25.8%

Poverty incidence in the Philippines rose to 25.8 percent in the first half of 2014 due to the rapid increase in food prices and the lingering effects of Typhoon Yolanda.

Data from the Philippine Statistics Authority’s (PSA) annual poverty indicators survey (APIS) revealed that poverty incidence among Filipinos rose by 1.2 percentage points in the first semester of 2014 from the 24.6 percent registered in the first half of 2013. Among Filipino families, poverty incidence increased by 1.1 percentage points in the first semester of 2014 from 18.8 percent in the same period in 2013.

Economic Planning Sec. Arsenio Balisacan noted that per capita income in the first semester of 2014 was higher by 6.4 percent than in 2013. Among the bottom 30 percent of income-earners, per capita income increased by about 7.3 percent in the same period in the previous year.

The fastest growth rate was observed among those in the fifth income decile (8.5%) and the slowest increase was experienced by the top income decile (4%).

“Per capita income data in 2014 showed that economic growth has benefited the lower income groups, including the poor. This means that the twin strategies of encouraging investments and production alongside the implementation of a large-scale income redistribution program have worked,” said Balisacan.

However, the country’s inflation rate rose near the higher-end of the inflation target in the first half of 2014. The consumer price index for food went up to 6.5 percent and 2.7 percent for the non-food items in the same period. These eroded the growth in per capita income of Filipinos, said Balisacan.

He noted that the high prices of food wiped out the gains in per capita income. “This situation could have been avoided especially in the case of rice, which is a staple food for low-income and vulnerable families, usually accounting for 20 percent of their budget. Just at the time when the world price of rice was declining, the domestic price of rice was sky-rocketing,”

Balisacan stressed the need to revisit the government’s grains sector policy, particularly the quantitative restrictions policy on rice to achieve rice self-sufficiency goal, taking into consideration its broader impact on food prices and poverty.

“While we definitely need to support the agriculture sector in general, we should also maximize the gains from trade and globalization. The private sector should be allowed to take the driver’s seat while government simply facilitates the access to both the import and export markets,” Balisacan said.

Rice prices posted a double-digit growth of 11.9 percent in the first semester of 2014 from only 1.7 percent in the same period in 2013, on the back of a tight supply given lean harvests coupled with less imports. Inflation, however, tempered in the latter part of 2014 after measures to address supply constraints were implemented.

Balisacan said higher food prices resulted in a huge increase in poverty thresholds. Food poverty threshold rose by 9.5 percent while overall poverty threshold increased by 9.4 percent year-on-year in the first six months of 2014.

Ten out of the 17 regions experienced double-digit increases in their poverty thresholds. The highest was observed in Region VIII with 14.2 percent, possibly due to the lingering effects of Typhoon Yolanda, then in NCR with 13.5 percent, as it had to face the highest price of rice during the period.

Balisacan also stressed the need of updating budget components of government poverty reduction programs to balance the movement of prices and incomes of the poor.

“The government’s social development programs, particularly the Conditional Cash Transfer provided through the Pantawid Pamilyang Pilipino program, may have provided additional support to temper the rise in poverty but could have contributed more towards reducing poverty had the value of the grants increased with inflation,” he said.

“It is also important to ensure the timely disbursement of the budget to maximize the impact of programs and projects,” Balisacan added.

The income and poverty estimates were generated from the 2014 annual poverty indicators survey but do not include sample households from Batanes due to less than 100 sample households and Leyte with no survey conducted since Typhoon Yolanda.