Feeling the pinch of the economic ‘grinch’

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MANY salaried workers could hardly feel the much-trumpeted economic growth brought about by reforms that the government has reportedly been instituting in the last four or five years, because prices of consumer goods and services keep going up without corresponding pay adjustments.

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The National Statistical Coordination Board (NSCB) recently reported that the country’s Gross Domestic Product (GDP) expanded 6.90 percent in the last quarter of 2014 over the period of the previous year.

This meant a remarkable improvement considering that the GDP annual growth rate averaged only 5.09 percent from 2001 until 2014, reaching an all-time high of 8.90 percent in the second quarter of 2010 and a record low of 0.50 percent in the third quarter of 2009.

The peak was during the last couple of months of the Arroyo Administration when expectations were high on the predictably winning Aquino presidency. The lowest GDP growth at 0.50 percent in 2009 happened during the period when former President Corazon Aquino died of cancer and charges of corruption against the Arroyos were high.

Those events were probably incidental but it is a given that unstable political environment reduces investment and the speed of economic development. In short, economic growth and political stability are, indeed, deeply interconnected. We have seen that poor economic performance often leads to government collapse and unrest.

It is just difficult to understand the situation when salaried workers have to further tighten their belts when the government says the economy is growing.

Last week, as we began to feel the scorching heat of summer, we were warned about having to pay more for fuel and electricity consumption. Those with students to send to school will have to brace for what has seemingly become an annual tradition of school administrators raising tuition and miscellaneous fees.

The Manila Electric Co. (Meralco) had announced that electricity bills starting in January increased by P0.84 per kilowatt-hour (/kWh), raising power rates to P10.51/kWh.

This means that households consuming an average of 200 kWh per month, which comprise about three-fourths of Meralco’s customer base, have to pay an additional P167.85 beginning with their February bills.

Those consuming 300 kWh, 400 kWh, and 500 kWh will pay P251.78, P335.71, and P419.63 more, respectively.

Oil companies have started to go back to the near-P50 per liter price of gasoline.

Fare rates of the Metro Rail Transit (MRT) and Light Rail Transit (LRT) have also increased.

But as early as September last year, Budget Secretary Florencio Abad had said that in so far as the 1.4 million civil servants were concerned, there would be no salary adjustment this year. This was because the government had prioritized that money it has for the rehabilitation and reconstruction of infrastructure destroyed by strong typhoons and other calamities in the recent past, including super typhoon Yolanda that severely damaged Eastern Visayas in November 2013 and the powerful earthquake that heavily damaged Bohol and nearby provinces.

In lieu of a salary increase, Abad pointed out a provision for performance enhancement incentive (PEI) that could be equivalent to “as much as one-month pay and a minimum of P5, 000, depending on how you perform as a public servant.”

At least, President Benigno Aquino 3rd had signed the long-pending bill that raised the income tax exemption for the 13th month and other bonuses from P30, 000 to P82, 000 despite strong protests from the Bureau of Internal Revenue (BIR).

On my way home two weeks ago, I heard the jeepney driver complaining to the man seated next to him that the pump price of diesel has been going up again and raised apprehension that his family would soon feel its effect on the prices of basic household goods.

The driver lamented the government’s helplessness in ensuring that price adjustments in fuel products are properly reflected in the prices of goods and services. It is unfair, he said, that prices of consumer goods are increased when fuel prices go up, but there are no reductions when fuel prices go down.

The driver’s conclusion: the government is on the side of capitalists and is indifferent to the sufferings of the poor. Only the rich, he said, can feel the growth of the economy as he noted the ongoing business expansions while the poor continue to bear the brunt of increased prices.

Last week, organized labor groups filed petitions for a P136 increase in the daily wage of private sector workers in Metro Manila. This would raise the daily wage rate from P466 to P602.

“The P136 across-the-board and region-wide daily increase is essential if workers are to cope with the rising prices of commodities and the cost of living, if they are to meet the basic needs of their families,” according to the Trade Union Congress of the Philippines (TUCP). “The P466 minimum wage is no longer enough,” explained Alan A. Tanjusay, the group’s spokesman.

The Association of Minimum Wage Earners and Advocates (AMWEA) is seeking a total of P734 in minimum wage increase, to be implemented in annual tranches of P146.80 for the next five years.

The group considered the current minimum pay as “slave wage,” noting that it is way below the P1,200 needed each day to support a family of five.

The last wage order in Metro Manila was for an increase of P10 in basic pay and P30 in the cost of living allowances, implemented in two tranches in October 2013 and in January 2014.

This early, some employers have already nixed the wage hike plea. The Philippine Exporters Confederation Inc. (Philexport), for one, said it would hinder job creation and economic growth as it “would undermine the viability, particularly of small and medium enterprises (SMEs).”

“We at Philexport remain consistent in our position against barriers to trade competitiveness, especially against our SMEs which will be directly and adversely affected by such increases. We find these petitions ill-timed and irrelevant,” said Sergio Ortiz-Luis, the group president.

So, when is the right time to raise wages? Is it when the economy is down? Why are businessmen seemingly totally indifferent when they raise prices of products and services and how these will affect consumers?

How can the hardworking ordinary Filipinos feel the positive effects of a growing economy?

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1 Comment

  1. carding valencia on

    I read through your column and I am dismayed by the your conclusions about the causes of the 0.5% growth rate in 2009 and the 8.9% growth rate in 2010. First of all 2009 was the year after the 2008 GFC. Its an amazing feat for this country to have achieved to grow its economy when the rest of the world was gripped in recession. In 2010, the world economy started showing recovery and the Philippines grew spectuacularly not because Noynoy was going to be elected. But rather the economy built on the reforms made that resulted in the Philippines growing after the GFC. I point this out as your argument in the latter part of your column loses all credibility with your lack of understanding of the significance of the growth rates you mentioned.