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Many economists see frightening paradoxes in the
formerly robust Philippine economy. Among others, there is very
little formal production. Starting in the last four years, markedly
under the Arroyo watch, many formal enterprises have even started
their slow demise, cutting down production as each year unfolds. Yet
small workshops and production units thrive in the country.
One economist even estimated that
at least 60 percent of the Philippine economy is founded on the
informal sector, and this is sending chilling messages to
development workers who know that this sector is also perennially
marginalized from many government programs, scoffed at, their very
contributions questioned.
This sector that has facilitated
many economic exchanges is also among the least served. Its workers,
actually their self-employed owners, are not registered with the
Social Security System, not eligible to benefit from formal social
security schemes mandated by law since they have not made any
contributions. The more socially insensitive have even insisted that
since informal workers have not paid any tax, they should not avail
of any kind of social service at all.
The informal sector consists of
households operated by own-account workers, explaining the absence
of any marked division between labor and capital, or household and
production operations. Some informal enterprises employ unpaid
family workers, or may hire a small base of casual workers.
Production is small-scale, and there is a very low level of
organization and technology.
The sector is peopled by
unincorporated household operated enterprises that produce goods and
services that are not illegal, per se, but are not registered to
avoid government taxes and stiff regulations, such as payment of
social security contributions and compliance with labor laws.
The informal economy has
extensive operations, with its workers into all areas of economic
production. They are into unlicensed trading, manufacturing
and services, such as backyard farming or raising of poultry and
livestock; small-scale manufacturing of food, clothing, or wood
products; operation of tricycles, taxis, jeepneys; money changing
and lending; leasing operations; subcontracting and catering
services, ambulant peddling, money lending, unlicensed placement
agencies, unregistered small-scale household processing, gold
panning, tailoring and dress shops operated at home.
For all its puny operations, the
informal sector is productive and tremendous amounts of money
exchange hands among actors, no matter how unincorporated and
small-scale are the operations. Enterprises may not be registered,
but have a sizable part of the market.
Consider the friendly
neighborhood barbecue vendor who earns in a few hours the revenue
that a small restaurant earns in a day. On top of that, there is
very little overhead. The informal entrepreneur has no commercial
space to rent, no taxes to pay, very little hired labor, no business
processing expenses, among others.
Yet, marvel at their real
contributions to the ebb and flow of life in the country. They have
even facilitated the flow of technology in areas where there’s
supposedly none to speak of. Wherever you go in the Philippines,
there are always mechanics to fix your vehicle, and artisans to
fashion farm implements for farmers, even if there is hardly any
workshop to speak of.
Some researchers have opined that
operationally, delineation between underground and informal sector
production may not always be possible. Informal jobs are usually
resorted to as alternatives to unemployment in unemployed-rich
Philippines, and many of their contributions are unrecorded.
Because of unrecorded production,
statistical deficiencies can arise in reckoning the extent of the
significance of the informal sector, including the number of people
it employs, its areas of economic coverage and number of
enterprises.
This has produced a major problem
in research and documentation. The extent of unrecorded production
poses problems in estimating the gross domestic product and gross
national product, and dealt with only through adjustments in the
economic or national income accounts.
Unfortunately, for all their
contributions, people in the informal sector are also the least
reached by services and social security schemes, which, are only
available to the people in the formal sector.
For those caught in the informal
sector, various antipoverty programs have been devised by a
succession of administrations to give them socioeconomic relief. The
continuing deterioration in the economic situation only bespeak of
the lack of clear success in implementing antipoverty measures
supposedly intended to alleviate the poverty of the perennially
marginalized informal sector.
Aside from the overseas Filipino
workers, the informal sector is the real savior of the Philippine
economy and they who work in this sector deserve all the support
they can get from this government.
ngamolo@manilatimes.net
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