Why do Filipinos still ‘feel’ poor despite economic growth and lower unemployment?

Can the nearly P4.5 trillion worth of foreign investment pledges from President Ferdinand Marcos Jr.'s trips improve the economy for everybody?

MANILA, Philippines – During a Senate briefing on the state of the economy, the country’s chief economist had to grapple with a difficult question: despite the Philippines having one of the fastest economic growth rates in Asia, why hasn’t this rapid growth translated into better living conditions for ordinary Filipinos?

“The country has made remarkable strides in reducing poverty levels between 2021 and 2023,” National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said on Tuesday, July 30.

On paper, it was true. The poverty incidence rate for individuals had fallen to 15.5% in 2023 from 18.1% in 2021, which is equivalent to 2.45 million Filipinos being lifted out of poverty between those years.

But that was certainly not what most Filipinos felt. A Q2 2024 self-rated poverty survey by Social Weather Stations found that 58% of families considered themselves poor, and 12% considered themselves on the borderline. Only 30% of families surveyed said they did not feel poor.

“Although the numbers are quite rosy, all surveys with self-rated poverty are high. That means they’re employed, but what they bring home isn’t enough to cover the daily needs of their families,” Senator Juan Miguel Zubiri, chairman of the Senate committee on economic affairs, said in a mix of English and Filipino.

How did Balisacan explain the discrepancy? The chief economist pins it on job quality. As of May 2024, the unemployment rate is only at 4.1% while the underemployment rate has reached a record low of 9.9%, figures which Balisacan said were almost at par with developed economies. But these may not tell the full picture.

“The way employment here is measured doesn’t take into account the quality of your employment. Whether you’re working 2 hours a day or 8 hours a day, it’s the same count,” the NEDA secretary said.

Even if an individual is technically employed, Balisacan said this is “not the kind of employment that we really want our population to have.”

“Many of these employed people are in the very informal sector, highly unproductive sectors, like watching your sari-sari store that hardly sells P500 a day. But you’re still employed,” he added.

The solution that he pitched was to diversify the sources of growth so that the economy is not just dependent on consumption and services. Foreign direct investments are one way to get there.

“There is no shortcut. You need massive investment — not just domestic, but also foreign,” he said.

What about the investment pledges from Marcos’ trips?

Another question raised during the hearing was the status of the investment pledges touted after every foreign trip that President Ferdinand Marcos Jr. makes. In 2023 alone, the jet-setting President made 11 trips to 9 countries.

According to the Department of Trade and Industry (DTI), Marcos’ foreign trips have brought in $76.6 billion or nearly P4.5 trillion in foreign investments as of June 2024. Trade Secretary Alfredo Pascual also confirmed that $19 billion worth of those pledged investments are “already cleared and registered” with investment promotion agencies.

However, when the economic team was called to the Senate, none from NEDA, DTI, or the Department of Finance could immediately explain the exact status of the investment pledges made during Marcos’ trips. Pascual did not join the briefing.

The latest data from the Bangko Sentral ng Pilipinas shows that net foreign direct investments reached more than $3.5 billion from January to April 2024, which was an 18.7% increase from the same period a year ago. However, the central bank does not indicate whether these investments were tied with the pledges made during Marcos’ trips.

Meanwhile, Balisacan tried to temper expectations, emphasizing that it takes a long time to actualize investment pledges.

“Understandably, there’s quite a long period from pledges to actual realization because some of these will require due diligence by the investing public, feasibility studies, financing,” the NEDA secretary said.

“It’s not something pledged in one year and in that same year, you see the investment. It doesn’t work that way,” he added.

Balisacan also said that when it comes to some renewable energy projects, it could take up to five years to go from intention to actual realization. – Rappler.com