ANALYSTS POINT OUT KEYS TO POVERTY REDUCTION

‘Invest to create jobs, control population’

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Private analysts said the key to reducing poverty in the Philippines is in the hands of the government and must use it to unlock more inclusive growth: control the rise in population, reform government agencies and enhance the climate for investment that creates jobs.

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Last week, the Annual Poverty Indicators Survey (APIS) released by the Philippine Statistics Authority (PSA) revealed that poverty incidence in the country worsened to 25.8 percent in the first half of 2014 from 24.6 percent a year earlier.

The government said increases in consumer prices last year and the impact of Super Typhoon Yolanda raised the poverty level in the country.

Population growth
“The equation is rather simplistic but it tells of the story—higher prices, stagnant wages, many jobless (people) and an increasing population base. If you translate all those into actual numbers, then the tendency is really for poverty incidence (as a percentage of the population) to increase,” Justino Calaycay, analyst at Accord Capital Equities Corp., said.

Calaycay said, however, the government could still be on target in its poverty alleviation advocacy if it beefed up its efforts in terms of population control, investment and reform.

“Then again, government should address population growth—hopefully the Reproductive Health law will be a crucial hinge to doing so —and of course, generate more employment through an investment- and business-friendly economic policy environment, including the reforms this government has put in place,” he told the Manila Times.

Safety nets
Meanwhile, the effect of higher prices seen in the first half of 2014 on overall poverty highlights the vulnerability to inflation of the lives of majority of Filipinos, according to Nicholas Antonio Mapa, associate economist at the Bank of the Philippine Islands.

“A slight uptick in prices, especially in the basic commodities like food, can have a very adverse impact on the poor,” he said.

Mapa recognized that the government has made strides in trying to alleviate poverty not just in the short term but in the long run as well, given their reliance on the conditional cash transfer (CCT) system.

However, he said the government must continue to improve the provision of safety nets to ensure that the poor and vulnerable sectors are protected against spikes in inflation and natural calamities.

“The government can continue its anti-poverty programs such as the CCT but it must also ensure that inefficient agencies, sometimes headed by political allies, are reformed so as not to let the most vulnerable of our citizens bear the brunt of the suffering,” he added.

‘Improve irrigation systems’
On the other hand, Victor Abola, economist at the University of Asia and the Pacific, said that what the country needs to do to alleviate poverty is improve irrigation systems that will increase rice output in the country, as well as encourage expansion in job-creating industries.

“For the irrigation systems, history has already adequately shown that if they are kept in government hands, maintenance is poor and non-payment of irrigation fees become rampant,” he said.

Abola suggested that irrigation systems in the country should be turned over to the private sector for operation and maintenance under a public-private partnership scheme.

Respect for contracts
For job creation in industries, Abola said the government needs to have a more positive attitude toward business, which is the real job-generator. Currency valuation must also be improved, he added.

“It’s lack of respect for contracts and previous biddings, especially in utilities, tollways, etc., has discouraged investors in general. Besides, job creation is not that fast despite rapid growth because of an erroneous foreign exchange policy that allows the significant appreciation of the peso,” he concluded.

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