The
coronavirus pandemic is the worst shock to the economy and millions
of Filipinos since at least the global crisis a decade ago. But
despite the dramatic Luzon-wide lockdown, why does it seem that the
Duterte administration still has its head in the sand?
The
government is muddling through its response to the worst public
health crisis in the country’s history. The poorest already have it
worst – and we’re not even sure if the virus is really on its way
to being contained.
Not
seeing the problem
Filipinos
are trying to deal with the pandemic as best as they can. Medical
frontliners and other responders are working to the brink of
exhaustion. National and local government personnel and private
sector volunteers work relentlessly in very difficult circumstances.
While others are quarantined and binge-watching Netflix, many others
still go to work every day to produce essential goods and services.
Above
the fray, the highest levels of government are not oblivious – but
they still seem too complacent for comfort.
The
economic managers believe their own propaganda too much. When they
announced the government’s Php27.1 billion COVID-19 response
package, they downplayed the situation and said that “the impact…
is expected to be limited”. Socioeconomic planning Sec. Ernesto
Pernia only granted “a transitory impact on the economy”. Bangko
Sentral ng Pilipinas (BSP) governor Benjamin Diokno, meanwhile, said
“there is no reason to believe that the COVID-19 crisis could
severely cut the Philippine growth momentum”.
This
explains why the response package is such a sham.
There was Php3.1 billion for real COVID-19-related measures; the
Department of Health (DOH) earlier said that it needed Php3.4 billion
for personal protective equipment (PPE), the Bureau of Quarantine,
and 40,000 testing kits. But most of the package is just a
hodge-podge of recycled pre-COVID-19 programs. This includes Php14
billion for tourism infrastructure that was given a cheap public
relations spin to be pandemic-related.
The
World Health Organization (WHO) stresses that testing, isolation and
contact-tracing must be the “backbone
of the response in every country“. Yet the following day,
the DOH said that mass testing is not yet imperative and there is no
need for it. The government has to realize that militarism and
population control do not a COVID-19 response make.
Worsening
pandemic
Hundreds
of thousands of Filipinos are working hard to address the virus, but
the Duterte government still has much to do to work better. It starts
with admitting the seriousness of the problem.
The
government’s initial downplaying of the risk of infection so as not
to antagonize China has already been roundly criticized. But it is 50
days since the first confirmed novel coronavirus case in the country,
and two weeks since the number of cases soared from three to 230. By
all indications, the country is just at the start of its rising curve
of infection which could last at least until mid-April and maybe even
rise to 75,000 cases in June or beyond.
The
Inter-Agency Task Force on the Emerging Infectious Diseases
(IATF-EID) confidently said that the government “[has]
the funds to battle COVID-19 and take care of all Filipinos”.
Pres. Rodrigo Duterte has supposedly asked Congress to pass a Php1.6
billion supplemental budget for the country’s fight against the
pandemic.
However,
it remains unclear, and actually unlikely, if this is enough even for
just the health-related interventions. Does the budget include
sufficient funds for the necessary mass
testing and surveillance, quarantine facilities in congested urban
poor communities, treatment facilities, protective equipment, and
other support for medical frontliners and responders? Also, decades
of privatization have eroded the public health system. Is the
government considering nationalization of private hospitals to enable
rationally planned care for COVID-19 cases and non-COVID-19 patients?
Policymakers
seem to be underestimating the specific circumstances of the poorest
in the country. Out of the 50 most densely populated cities in the
world, 13 are reportedly in the Philippines and all of which are in
the National Capital
Region (NCR). Specifically, Manila, Pateros and Mandaluyong are at
the top of the list.
Homes
are also extremely overcrowded. In NCR, some 1.3 million or almost
half (47.7%) of homes have less than 30 square meters of floor area.
This is just about two times as big as a parking space, or about
seven-and-a-half times the size of a king size bed. The lockdown is
keeping some 6-7 million Filipinos packed into small shanties in the
capital’s overcrowded slum areas. These make social distancing an
extreme challenge.
Vulnerable
Filipinos
Millions
of Filipinos struggle to cope with the difficulties of the Luzon-wide
lockdown. The Duterte government has clearly not given enough thought
to its impact especially on low-income and poor Filipinos who make up
the overwhelming majority of the population.
Luzon’s
eight regions span three-fourths (73%) of the economy, as of the
latest data for 2018, and nearly three of five (57%) of total
employed Filipinos.
It
includes the nation’s capital which accounted for over half (51.6%)
of all services in the country’s service-dominated economy in 2018.
NCR and adjoining CALABARZON and Central Luzon are the country’s
industrial heartland – accounting for three-fourths (72.9%) of all
manufacturing in the country.
The
latest government data from 2015 showed 13.1 million families living
in Luzon – this is likely up to over 14 million families today.
Most of these families are poor, have very low incomes, and little
savings if any. As of 2015, 2.5 million families had monthly incomes
less than Php10,000, 2.7 million had between Php10,000-15,000, and
2.2 million between Php15,000-20,000.
These
7.5 million low-income families – especially the poorest 5.2
million – face the greatest difficulties amid the lockdown and
severe disruption to their mobility and economic activity.
Their
breadwinners are among the 14.5 million workers and informal earners
who are going to be dislocated by the lockdown, by IBON’s latest
estimates. Most of these are: vendors, shopkeepers, and sales persons
in the wholesale and retail trade subsector (3.6 million);
construction workers (2.4 million); pedicab, tricycle, jeepney and
truck drivers and mechanics in the transport sector (1.5 million);
manufacturing workers (1.2 million); and hotel and restaurant
employees (891,000).
They
are on top of the 1.3 million officially reported as unemployed in
Luzon in 2019.
Unresponsive
response
The
bottom line is that, because of the lockdown, over seven (7) million
Filipino families will need varying degrees of support. This is just
in Luzon.
The
government has so far avoided the most obvious response of giving
outright unconditional cash transfers (UCTs) to those most in need
and at risk. The government is supposed to have identified the 10
million poorest families in the country to be given UCTs from
2018-2020; around 5.6 million of these are likely in Luzon. This is
an immediate mechanism that can be used or otherwise built on to
distribute Php10,000 for each family – approximating the official
monthly poverty line of Php10,727 for a family of five in 2018 –
costing Php56 billion in total.
The
economic relief measures announced by the government so far in its
Php27.1 billion COVID-19 response package are recycled and,
correspondingly, piddling. They were pre-existing programs and do not
consider vast emerging needs upon the lockdown.
There
is Php2 billion financial support from Department of Labor and
Employment (DOLE) for dislocated workers. If this refers to the
Php5,000 wage subsidy then only 400,000 workers in the formal sector
can benefit. However, subsequent DOLE pronouncements were only of a
Php1.3 billion fund reaching just 260,000 workers. This fund will be
even more insufficient if the promised emergency employment for
informal workers is, as it seems, also charged to it.
The
response package also mentioned Php1.2 billion in unemployment
benefits from the Social Security System (SSS). Assuming Php10,000
per newly unemployed, this is only 120,000 workers assisted. It is
also peculiar to include Php3 billion in Technical
Education and Skills Development Authority
(TESDA)
scholarships as a COVID-19 response because this gives no relief at
all and certainly not during the lockdown.
There
is Php2.8 billion in zero interest loans for farmers from the
Department of Agriculture (DA) under the Agricultural
Credit Policy Council’s (ACPC) SURE Aid program. However, this was
already previously earmarked for some 270,000 Central Luzon farmers
as support especially in the wake of rice liberalization.
Finally,
the COVID-19 package mentioned Php1 billion in microfinancing from
the Department of Trade and Industry (DTI). There are 644,000 micro,
small and medium enterprises (MSMEs) in Luzon with 3.8 million
employed. Allotting Php1 billion to just the 559,000 micro
enterprises means less than Php1,800 per establishment.
Urgent
relief
It
is urgent to immediately protect the welfare of at least the 7.5
million low-income families in Luzon and particularly the poorest 5.2
million. A crisis situation where the priority is to ensure
everyone’s health and well-being is not the time to quibble about
potentially overlapping measures.
The
most basic is ensuring that every household has sufficient food and
supplies for preventing the spread of COVID-19. Homes that cannot
afford or do not have access to these have to be given emergency
relief packages. Many local government units (LGUs) have already
started to distribute these but the completeness of the packages and
whether they reach everyone in need is unclear. Ensuring a constant
supply of water has also become even more vital.
Outright
cash transfers for the poorest 5.6 million families in Luzon are
necessary. The government does not have the logistical capacity to
provide everyone’s needs directly so household incomes let them
still buy these commercially.
Related
to this is how the government needs to take much greater measures to
protect those still working to provide food, utilities, and other
essential goods and services. Most workers rely on public mass
transport to get to and from work. These have been suspended and
alternatives allowing for the requisite social distancing are
crucial.
The
DOLE’s establishment-based measures are supplementary at best.
Partly because the funding for financial assistance is too small, but
mainly because non-regular workers (6 million, by IBON’s
estimates), informal sector earners (8.5 million), and unemployed
(1.3 million, officially) in Luzon greatly outnumber regular workers
in the formal sector (9 million).
Freezing
workers’ employment status and prohibiting layoffs, granting paid
leaves, advancing pay, and giving other benefits are all welcome and
should be encouraged widely. Price controls, moratoriums on water,
electricity and telecommunications bills, on lease rentals, and on
debt likewise lessen pressures on limited household budgets.
However,
these cannot substitute for new and additional government support.
The conditions of the people are deteriorating rapidly and the
Duterte administration will want to prevent rising unrest from
increasingly desperate and angry communities. This is assuming that
it is not out for yet another justification for more militarist
measures and enhanced authoritarianism.
Giving
more generous relief also has a view to how the economic
repercussions of COVID-19 will actually extend far beyond the
lockdown.
A
lawmaker has taken the initiative of filing a Php108 billion Economic
Rescue Plan versus COVID-19. The fiscal stimulus package allots Php43
billion for the tourism sector, Php50 billion for other businesses,
and Php15 billion for displaced workers. The increased attention to
workers is no doubt needed, as well for businesses if smaller
enterprises are prioritized. The insistent bias for the tourism
industry seems hard to justify though especially from a long-term
perspective.
Looming
economic turmoil
It
is only a matter of time before the economic managers are forced to
admit that the economy is facing a severe downturn. The economy has
been slowing for three straight years throughout the Duterte
administration and was headed for a fourth even before COVID-19 hit.
A further slowdown in 2020 is certain and it is just a question of by
how much.
The
economy is not just facing the coronavirus-driven Luzon lockdown and
its indirect effects on the rest of the Visayas and Mindanao. The
global economy is also taking a severe hit from the global pandemic.
The
world economy was already floundering from a slowdown, growing
protectionism and trade wars, mounting debt pressures and financial
volatility, and geopolitical hotspots. The current pandemic brings
all this to the precipice of generalized economic disorder.
China
and the United States (US) are going to see a contraction and Europe
and Japan are already in recession territory – this is already 68%
of the world economy. The disruptions in global production chains and
dampening of consumer spending worldwide are going to have severe
repercussions at least in 2020 and likely even beyond.
All
of which makes the Duterte government’s dismissiveness about the
country’s economic trajectory and the welfare of Filipinos so
alarming. The current situation compels a radical rethinking of
economic policy and priorities across the board.
For
instance, many of the hyped Build, Build, Build (BBB) infrastructure
projects will likely be even more unfeasible than before especially
those built around undue optimism about tourism and global trade.
More likely than not, budget allotments for these will give much
greater social and economic benefits if realigned to responding to
the COVID-19 pandemic.
Looking
further beyond, COVID-19 will only just accelerate the
anti-globalization policy trends that have been gaining momentum
since the 2008/09 global financial crisis. Our economic managers have
been stuck to their obsolete neoliberal ‘free market’ dogma for
some time. Privatization has emaciated the public health system as
much as liberalization has eroded domestic agriculture and Filipino
industry.
We can only hope that they spend
the quarantine time in quiet, honest reflection and emerge reformed.
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