| Ten Million Jobs By Antonio C. Abaya July 8, 2004, Manila Standard The 10-Point Legacy that President Arroyo wants to leave behind at the end of her term in June 2010 has been criticized as �too ambitious.� Well, there is nothing wrong with being too ambitious. It is the unstated role of national leaders to motivate their people to outdo themselves. The key, pragmatic question, really, is �Will the Arroyo Government II be able to raise enough revenues to pay for all the stated goals?� In the face of the gargantuan budget deficit, the consistently poor tax collection efforts as percent of GDP, the slow inflow of foreign and domestic investments, and the modest growth of the tourism and export (except in May 2004) sectors, it is difficult to be optimistic about any future upsurge in government revenues in the near term. As ever, it is only the remittances of overseas workers that continue to register substantial increases as more Filipinos (about 3,500 every day) leave for jobs abroad that they cannot not find in the domestic economy. So when Dan Andrew asked me, during the interview portion of his news program on ANC Ch. 21 last July 3, how I would rate, on a scale of 1 to 10, the attainability of GMA�s 10-Point Legacy, I replied that it was, �sadly, below 5.� Seven of those ten points require tens of billions of pesos that the government may not have: six to ten million jobs, growth centers outside Metro Manila, computer-equipped schools for everyone, transport and telecom networks linking the entire archipelago, power and potable water in every nook and cranny, logistics centers in Subic and Clark, and automated elections (weren�t we supposed to have them in 2004?). Even the eighth, a balanced budget, presupposes the unusually large inflow of revenues to pay for ambitious goals without resorting to more borrowings (from fewer lenders and at higher interest, it must be added, as our credit rating declines).. As for those six to 10 million new jobs in the next six years, we can only wish President Arroyo good luck. I recall that some 20 years ago it was estimated that it took P100,000 worth of investments to create one job. Using that by-now outdated rule of thumb, six million jobs would need P600 billion, and 10 million jobs would require P1 trillion, worth of investments, in 1984 terms, to bring them about by 2010. Additionally, it must be asked how the government comes up with its claims of millions of jobs created in a semi-feudal economy like the Philippines�. In mature and industrialized economies like Europe�s and North America�s, the number of jobs created is accurately reflected in the rolls of the social security system which every new jobholder is required to join. The number of jobs lost is also reflected in the dips in the system as well as in the number of members who file for unemployment insurance. In the US, for example, some 2.7 million jobs are said to have been lost since George W. Bush assumed the presidency in January 2001, largely due to the outsourcing of manufacturing jobs to China and telecom and IT jobs to India. I do not know if and when the US economy has finally created enough new jobs to offset that 2.7 million loss, but in December of 2003, it created only 1,000 new jobs. So if a mature, productive, diversified and industrialized economy like the US�, with almost thrice our population and 30 times our GDP, has difficulties in creating 2.7 million new jobs in three and a half years, we have to doubt if a ramshackle Third World economy like ours, discouraged additionally by an ideological commitment to Free Trade and Globalization from engaging in broad-based manufacturing, can possibly create ten, even six, million new jobs in six. In a semi-feudal economy like the Philippines�, where the underground economy is larger than the formal economy, and where unemployment insurance does not exist, claims of millions of jobs created or to be created must be taken with a grain of salt. The millions of jobs in the underground economy are created not because of, but in spite of, government policies. These are people trying to survive, trying to keep body and soul together, in a hostile environment in which they cannot find gainful employment in the formal economy, and they do not have the financial or intellectual wherewithal to seek employment abroad. That the Arroyo Government has hired Peruvian social economist Hernando de Soto to be one of its economic advisers suggests its resignation to the fate that our formal economy is unlikely to ever reach take-off stage as it has in, say, Malaysia and Taiwan. De Soto achieved international prominence about 20 years ago with his seminal work on the underground economy in Lima and his advocacy of land titles for urban squatters to give them a little capital and some credit collateral. Since we cannot be an economic tiger like our neighbors, let us just be content to be an alley cat living off scraps in the underground economy. This feeds the common perception that in socio-economic terms, the Philippines is much closer to crisis-plagued Latin American than to bustling East Asia, which should give us pause as we hear dire warnings that we are approaching an Argentina-like meltdown. So learn to appreciate the pillars of the New Economy. These are the millions of sidewalk vendors, tricycle and pedicab drivers, marginal truck gardeners, municipal fishermen, buy-and-sell operators, jueteng runners, cargadores in the piers, family drivers, domestic helpers, assorted handymen and repairmen, fixers in government bureaus, vendors of pirated CDs and DVDs, watch-your-car boys, fruit and vegetable viajeros, ukay-ukay entrepreneurs, unskilled construction workers, gold mine prospectors, etc, but they also include drug pushers, akyat bahay operators, carnappers, cellphone snatchers, kidnappers, kotong cops, GROs, call girls and call boys, and child prostitutes. Except for the sex workers and the criminals, their toil is largely under-rewarded and their activities are generally outside the purview of government regulations and statistics. They do not become members of the SSS, nor do they file any income tax returns, the real measures for jobs created in the formal economy. But they and their daily struggles for survival are here in their tens of millions, and no government or politician, including the new employers of Mr. De Soto, should claim credit for their pluck and their resourcefulness. ***** My articles appear every Thursday in the Manila Standard and every Saturday in the Philippines Free Press magazine. All articles are archived in www.tapatt.org. OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO Reactions to �Ten Million Jobs� We can create ten million jobs by asking ten million unemployed to dig 100 holes in the ground per day and fill them up the next day and pay them with IOUs or devalued currency. What should concern us is labor and capital productivity which is low. I don't know the exact comparative figure is based on what I saw many moons ago we are the lowest in SEA except for the failed states of Kampuchea and Burma. A lot of Gloria talk is chip of the old block Cong Dadong, although in fairness to the man many presidents were doing the same rhetorical exercises. Gloria has already showed her inability to govern by yanking out Soliman and putting the brainless de Castro in a position that requires executive abilities. She could have appointed him secretary without portfolio-- for entertainment and other assorted idiocies. Ross Tipon [email protected] July 09, 2004 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Dear Tony, As usual, your article is thought provoking. I am not sure whether your conclusion of requiring P600 billion for 6 million jobs is accurate. There is something wrong somewhere. The administration says it was able to create 1 million jobs last year. Does it mean they spent a 100 billion pesos last year? Of course one can always question the figure of the administration or question their definition of job. But even then, I still think there is something wrong. (I was referring to jobs in the formal economy. Obviously, the administration was referring to jobs in the underground economy, as there was no corresponding increase in SSS or GSIS membership or in the number of income tax filers. My point was that no one should take any credit for job increases in the underground economy as these are people who could not find jobs in the formal economy and had no recourse but to eke out a living any way they could in the underground economy.) I think the concept of multiplier effect should be considered. If I set up a company worth P100,000 and spend it to buy fixed assets and working capital, the same money becomes the income of another company, who can use then that money to buy fixed assets and working capital and and the same money becomes the income of another company etc.etc.. So the same money as it passes from one hand to another hand generates jobs along the way. Hence the P100,000 will not in actuality produce only one job but through forward and backward linkage effects, produces also indirectly other jobs. Am I right or wrong? Where to get money? The pork barrel which Mr. Soliven estimates at P22 billion annually, and which Speaker de Venecia acknowledged in an interview, should go a lot in creating these jobs. Reducing graft and corruption and improving tax efficiency will add the other billions. Plus if all the businessmen would only think positive and have faith in the Filipino and not mind the politicians and the politics, then they can add not only their billions of investments but also their counterpart in foreign investments. So I think the 10 point program of GMA is very much attainable. Thanks and best regards. Bobby Tordesillas [email protected] July 09, 2004 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Dear Tony, As a pahabol to my last reply, I also think the P100,000 investment per job may be true only for industrial investments. For service type of investments, you may need only P50,000 to set up the sole proprietorship, and can employ 4 people for the business. In case of agricultural land, where it can be leased, the required investment may also be less than P100,000. In fact I think the 1,000,000 jobs that the administration supposedly created last year must have been in the agricultural sector. The thrust should really be on agriculture where the Philippines have vast lands to be developed, and a huge labor force to till it, instead of on heavy industries which is capital intensive and probably not even feasible. Where are the heavy industries that the genius Mr. Ongpin capitalized on when he was minister of DTI? They have been either shut down, sold at a loss or they are still operating at a loss. Thanks and more power. Bobby Tordesillas [email protected] July 10, 2004 MY REPLY. Most of the 11 heavy industries that Bobby Ongpin proposed during the Marcos years never got established due to lack of funding from the international finance agencies (read, the rich countries). Rich countries are not in the business of funding potential competitors to their own industries. But that did not stop South Korea, Taiwan, Singapore, Malaysia, Thailand and even Indonesia from setting up their own heavy industries. That comes from good leadership, which the Philippines has always suffered from a dearth of. Read John Mangun�s article below from his insight on Ten Million Jobs. wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Ten Million Jobs Will Cost Ten Billion Dollars To even the most astute observer whose sympathies might lie with the current administration, it would seem from the results of the last national election that the government of the Philippines was populated with thieves, intellectual dwarfs, and other assorted clowns with high name recognition. However, an occasional jewel of competency and perception can be found in government even if the press and media is so unaware of the fact. You basically have three attitudes displayed when it comes to talking about improving the Philippine economy. The government, as embodied in the inauguration speech of President Arroyo, tells us what needs to be done, that the administration will do it, and offers no plan or direct solution in public. The pro-poor believes that the economic pie will never get any bigger and would prefer everyone be equal�and poor while trying to get a few more crumbs for its constituent base. Their agenda is to raise the �poor� to higher standards; an extra can of sardines each day. They intend to achieve this by forcing those who are wealthier to eat sardines also. The �moneyed elite� (probably you and me) has a different personal solution. They ignore the big picture while concentrating on prospering in and protecting their own small world. Nevertheless, there is a bigger picture that needs to be examined and solutions developed that fit reality, outside of political considerations. Department of Trade and Industry Secretary, former SGV Chair Cesar Purisima, gave one of the most comprehensive, enlightening, and realistic appraisals of the Philippine economic situation I have heard in many years. Of course, you will not have read his observations any place else and I take pleasure in liberally quoting from his remarks as delivered before the Supreme Court as Oral Arguments in connection with the Motion for Reconsideration on the Constitutionality of the Mining Act. Bear in mind though that this man has shown he knows his business in other comments made since his appointment. While the former occupant of the office concentrated on importing �no-value added� call centers, Secretary Purisima said this a few months ago; "If we would be able to help improve (Existing Filipino) SMEs' productivity level, its impact on our country would be tremendous. The country could generate over 800,000 new jobs if each SME would add one employee�. If we had spent as much time helping Filipino business in the last years as we did �attracting foreigners�, we really might have created jobs. While we need foreign call centers, we also need to support Filipinos creating jobs for Filipinos. Truthfully though, you need to understand the problem before you can attempt to fix it. Purisima does that and the conclusions based on the President�s speech are disturbing. The President sets as a goal for her administration the creation of �even ten million new jobs� in the next six years. Of course, this is not a perfect world. However, the facts are these: �As of the latest survey by the National Statistics Office, 5 million Filipinos are unemployed (and) an average of 1.8 million Filipinos enter our labor force every year�. According the statements of Sec. Purisima that means the President and her administration needs to create ELEVEN million jobs just to have the same level of unemployment that we have right now. Therefore, what the President should have said is that even if she accomplishes her highest goal, the unemployment picture will actually be worse when she leaves office. Her best will just not be good enough. If she achieves her more conservative goal of creating six million jobs in six years, unemployment will be twice as bad as it is today. Isn�t that encouraging. I guess the election really did come down to a choice between two �evils�: twice as bad or ten times as bad an economy. What the President failed to elaborate on in her speech, and particularly since then, is what resources and effort that it will take to generate that kind of employment for the nation. Here the facts create even more apprehension as to the future. Secretary Purisima: �To create one high-value job, the Philippines needs to attract one million pesos in investments. To create one job which pays the minimum wage in a micro or small sized enterprise, that enterprise needs to allocate around Php 50,000 pesos in capital investments�. Are you hearing this? If we are to create ten million MINIMUM WAGE jobs, we need to invest 500,000,000,000 (five hundred billion) pesos. That is roughly ten billion dollars are current exchange rates. Another way of looking at that amount is noting that it is about the same as President Arroyo overspent in the last three years supporting the largest budget deficit in history. While she says she will balance the budget soon, we still need to pay back the 500 billion deficit and spend another 500 billion for all this job creation. There are solutions though and Secretary Purisima has some excellent thoughts on that next time. John Mangun [email protected] July 09, 2004 NOTE. Mr. Mangun wrote this article for his regular column in the Philippine Graphic Weekly magazine and emailed it to me as his comment on my article. wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww (Through the TAN egroup) Dear Tony and TAN members, I do not know if you remember me from the early TAN days (in 2001). I withdrew for a while from TAN so I can concentrate on my dissertation on the politics of tax reform. A by-product of dissertation writing (a task I still have to complete) is the enclosed proposal and its supporting theoretical piece. I am hoping that these pieces may be useful to you in the light of the insights you have arrived at in the column above. Maraming salamat at mabuhay ka. Bong Mendoza [email protected] July 12, 2004 NOTE: The articles sent by Bong Mendoza are archived in the Reference Material section of this website: (1) Expanding TIN Usage in the Philippines; (2) The Tri-Sectoral Model of the Philippine Political Economy; (3) Economic Performance and Strong Republics; (4) What Can the Philippine Growth Story Tell Us; and (5) How Will the �Strong Republic� Be Built? wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww |
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| ON THE OTHER HAND |
| Hi Tony! This is Ernie Ordonez. Thanks again for sending me your excellent articles.I quoted an excerpt from this one in my article today (I write every Friday in the Inquirer business section). If possible, please email me your phone number. I leave for the USA tomorrow for two weeks. Best regards, Ernie Ordonez [email protected] July 16, 2004 OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO |