Sona 2012: Reviewing Aquino’s “Social Contract” and performance (Part 1)
Cf: http://arnoldpadilla.wordpress.com/2012/06/28/sona-2012-reviewing-aquinos-social-contract-and-performance-part-1/
Aquino promised “inclusive growth” that creates jobs at home. After two years, his administration has turned out to be the largest exporter of Filipino workers (Photo from inquirer.net)
On job creation
On June 30, President Benigno Aquino III will mark his second year in office. Then on July 23, he will deliver his third State of the Nation Address (Sona). How do we assess his performance so far? One approach is to gauge Aquino’s achievements vis-Ã -vis the promises he made to the people in 2010. This series of articles reviews the performance of the President in terms of his campaign promises on improving the economy and the living condition of the people.
Promises
As reference, we will use the document “A Social Contract with the Filipino People”. In this document, then presidential bet Aquino outlined his platform of government. We will also refer to the Philippine Development Plan (PDP) 2011-2016, which details how Aquino plans to implement his so-called Social Contract.
Among others, Aquino promised to transform national leadership:
From a government that merely conjures economic growth statistics that our people know to be unreal to a government that prioritizes jobs that empower the people and provide them with opportunities to rise above poverty
From relegating education to just one of many concerns to making education the central strategy for investing in our people, reducing poverty and building national competitiveness
From treating health as just another area for political patronage to recognizing the advancement and protection of public health, which includes responsible parenthood, as key measures of good governance
From government policies influenced by well-connected private interests to a leadership that executes all the laws of the land with impartiality and decisiveness
From treating the rural economy as just a source of problems to recognizing farms and rural enterprises as vital to achieving food security and more equitable economic growth, worthy of reinvestment for sustained productivity
From government anti-poverty programs that instill a dole-out mentality to well-considered programs that build capacity and create opportunity among the poor and the marginalized in the country
From a government that dampens private initiative and enterprise to a government that creates conditions conducive to the growth and competitiveness of private businesses, big, medium and small
From a government that treats its people as an export commodity and a means to earn foreign exchange, disregarding the social cost to Filipino families to a government that creates jobs at home, so that working abroad will be a choice rather than a necessity; and when its citizens do choose to become OFWs, their welfare and protection will be the government’s priority
These Social Contract commitments can be categorized into five: (1) Job creation; (2) Provision of social services; (3) Poverty reduction; (4) Agricultural development; and (5) Promotion of private business.
New jobs
Aquino criticized the Arroyo administration for conjuring false growth statistics. In his PDP, Aquino said that his government will aim for inclusive growth. This means economic expansion which translates to more jobs. The PDP has specifically set a target of one million new jobs every year, based on an annual growth of 7-8% in the gross domestic product (GDP).
Using official data from the National Statistics Office (NSO), the average number of jobs in 2010 was about 36 million. It increased to 37.2 million in 2011 and to 37.6 million this year. Aquino, thus, has “created” around 1.6 million new jobs or 800,000 a year. This seems impressive considering that the GDP grew by an average of just 4.5% a year during the period.
But the additional jobs are negated by the increase in the size of the labor force. From 2010 to 2012, the labor force grew by 1.6 million, the same volume as the increase in the number of jobs. Hence, official unemployment did not improve during the period, remaining at more than 7 percent.
Dismal quality
Further, the quality of additional jobs remained dismal. Of the 1.6 million new jobs, more than 800,000 were produced by the services sector, characterized by highly irregular, less productive employment. They include jobs covered by “endo” (end of contract) and “5-5-5” schemes, where workers are hired under rotating 5-month contracts. Aquino has rejected proposals to fully ban contractualization, along with the ₱125 wage hike bill, claiming they will create “more problems”.
Also, more than 500,000 of the new jobs were self-employed and unpaid family workers. This implies that almost a third of jobs created were a result of workers’ own efforts to cope with limited employment opportunities. Meanwhile, underemployment, which captures the unsatisfactory quality of present jobs, increased by about 149,000 from 2010 to 2012. Estimates
Of course, it could be argued that low quality jobs are better than no jobs at all. But what Aquino promised are new jobs that empower the people and give them the chance to get out of poverty. To be sure, part-time, insecure or unpaid jobs do not allow workers to be productive enough and improve their miserable condition. Worse, jobs being created are not only low quality but also insufficient in relation to the burgeoning labor force.
Flawed count
It does not help that NSO data on employment tend to understate domestic job scarcity. Official methodology counts as employed those who “worked” for even just one hour in a week, which artificially bloats the number of employed. On the other hand, it excludes as unemployed the job seekers who are unavailable for work despite an opportunity due to illness, family obligations, etc. This falsely deflates the number of jobless.
Aquino is aware of this anomaly. In one of his press briefings prior to official proclamation, he said one of the first things he will do is to clarify how government counts the jobless. This, according to Aquino, will let government design a more reliable employment program. Alas, Aquino chose to continue the unreliable NSO methodology began by the Arroyo administration in 2005 in an obvious attempt to hide the worsening jobs crisis.
Deteriorating crisis
Fortunately, independent surveys, such as the one regularly conducted by the Social Weather Stations (SWS), provide us a more dependable picture of the domestic labor market. In its latest (March 2012) survey on adult unemployment, the SWS reported that 34.4%, or about 13.8 million workers, are jobless. Using SWS surveys, it appears that the incidence of unemployment is worst under Aquino, averaging 26.8% in his first two years. During the term of Gloria Arroyo, it averaged 19.6%; Joseph Estrada, 9.2% and; Fidel Ramos, 10.3 percent. Unemployment is on its way to triple its level from just two decades ago.
The current jobs crisis is the result of the accumulated impact of decades of defective and destructive economic programs implemented by previous regimes such as trade and investment liberalization, neoliberal restructuring of agriculture, etc.
Aquino is not expected to fully reverse this long-term trend of deteriorating job scarcity in two years. But instead of laying down the groundwork to address the jobs crisis such as reviewing and scrapping laws that liberalized key sectors of the economy, it’s business as usual under the Aquino administration.
No industrialization plan
Export-oriented, foreign capital-dependent industries that are vulnerable to global boom and bust continue to be promoted under the PDP 2011-2016. Local micro, small and medium enterprises (MSMEs), which account for around 61% of employment, remain marginalized as policies continue to favor big and foreign corporations.
There is no plan to reverse trade and investment liberalization that destroyed local industries and jobs, especially MSMEs. There is no industrialization plan anchored on vibrant domestic production and consumption. MSME development is still geared towards linking them to the highly volatile foreign markets and as subcontractors of mostly foreign firms. Thus, the potential of MSMEs to massively and sustainably contribute to domestic job creation remains greatly hampered.
Also, Aquino does not have a genuine land reform agenda, which is another program that can create a huge number of jobs. Instead, he has been promoting public-private partnership (PPP) in agriculture that tends to displace farmers and farm workers, while peddling the deception of the Comprehensive Agrarian Reform Program Extenstion with Reforms (Carper). (More on this in a separate article.)
Largest exporter of workers
Indeed, this administration does not have a comprehensive and sustainable job creation plan to speak of. Contrary to the Social Contract’s pronouncement that it will create jobs at home and will not treat our workers as export commodities, Aquino has turned out to be the largest exporter of Filipino workers among all Presidents. In the past two years, Aquino has aggressively pursued new bilateral deals with various countries to create additional market for Philippine labor export. It has recently lifted the deployment ban in politically turbulent countries like Libya, Sudan and Nigeria as well as in Iraq and Afghanistan.
Data from the Philippine Overseas Employment Administration (POEA) show that the deployment of overseas Filipino workers (OFWs) under Aquino has already reached around 1.4 million a year. During Arroyo’s time, annual deployment was pegged at 1 million; Estrada, 0.84 million; Ramos, 0.69 million; and Cory Aquino, 0.47 million. OFW deployment has already almost tripled since the administration of Aquino’s mother.
Neglecting OFW welfare
Worse, Aquino has been remiss even in his commitment to ensure the welfare and protection of OFWs. Migrante International noted in a report that the 2012 budget for OFW welfare and services has been cut by ₱792 million. Per OFW, the Aquino administration is allocating a measly ₱262 for welfare and services. Meanwhile, it is collecting a huge ₱20,000 from each OFW for various fees and taxes.
Aquino’s neglect of migrant workers is further illustrated in the inept evacuation of OFWs from MENA (Middle East and North Africa) countries undergoing political turmoil, not to mention the four Filipinos executed abroad in the past two years.
Part-2
Sona 2012: How the rich is getting (scandalously) richer under Aquino
Among the major commitments he made in his so-called Social Contract, creating favorable conditions for private business is the only promise that Aquino has been fulfilling (Photo from The Philippine Star)
Part II: Reviewing Aquino’s “Social Contract” and performance
Read Part I here
In 2009, the Forbes magazine reported that the 40 richest Filipinos had a combined wealth of $22.4 billion. Last year, the amount more than doubled to $47.43 billion, amid deteriorating poverty and joblessness. What explains such rapid accumulation of wealth? The short and simple answer is that government, including the incumbent Aquino administration, has been creating the most favorable policy environment for big business.
Indeed, Aquino’s apathy to the working class is matched only by his concern for big business. In fact, among the major commitments he made in his so-called Social Contract, creating favorable conditions for private business is the only promise that Aquino has been fulfilling.
In particular, the administration is creating a conducive environment and providing more profit-making opportunities for big business through further privatization of infrastructure, utilities, social services and other vital sectors, or what is called public-private partnership (PPP). Aquino has also aggressively promoted extractive industries including foreign-dominated, export-oriented mining and oil and gas exploration that create social, development and ecological issues.
Privatization and plunder
He has been calling it “daang matuwid” but Aquino’s good governance campaign is more about instituting reforms to reduce business costs and risks than going after big-time plunderers like Mrs. Gloria Macapagal-Arroyo. His campaign to oust Renato Corona as Chief Justice of the Supreme Court (SC) was less about his supposed reform agenda but more about consolidating his control over the entire bureaucracy.
Executive hegemony over government branches that make policies (Congress) and review the legality of such policies (Judiciary) creates an even more favorable political environment to push for retrogressive economic programs that favor certain big local businesses and their foreign partners. They include those who are closely associated with the Cojuangco-Aquino clan and are taking advantage of government’s centerpiece program, the PPP, as well as new contracts in mining and oil and gas exploration, among others.
These big business interests are the same companies that have been expanding their economic empire by taking over, through PPP deals, infrastructure development in energy, telecommunications, transport, and water and storage in the past almost three decades. They include the Ayala family ($10.2 billion in investment commitments from 1984 to 2009); Lopez ($7.1 billion); Pangilinan ($5.3 billion); Razon ($3.2 billion); Aboitiz ($2.8 billion); Ang/Cojuangco of SMC ($2.6 billion); and Consunji ($1.1 billion).
Expectedly, they are the same families that are bagging PPP contracts under the current regime. The Ayalas and its Spanish partner, for instance, cornered the ₱1.9-billion Daang Hari – SLEx link road project. Meanwhile, the Ayala family is also competing with the Ang/Cojuangco group, Pangilinan and Consunji and their respective foreign partners for the ₱60-billion LRT Line 1 extension project. PPP projects oppress the poor not only through higher user fees. To give way to PPP projects, tens of thousands of urban poor families are also being displaced from their communities. (More on this in the next article)
Aside from infrastructure and utilities, another major source of massive profits for the local elite and foreign corporations is the wanton extraction and exploitation of the country’s natural wealth; in particular the vast domestic reserves of mineral and energy resources. Three of Aquino’s closest businessmen-allies are already dominating the energy sector with power firms associated with Cojuangco, Aboitiz and Lopez controlling more than half of the national generating capacity.
For sure, these families were able to increase their power portfolio even before Aquino became President. But under Aquino, they are enjoying even more opportunities for expansion as government implements the Electric Power Industry Reform Act (Epira) of 2001 even more aggressively. Aquino has made a strong pitch to fully implement the Epira in Mindanao, where Cojuangco and Aboitiz have pending coal-fired power plant projects and where private power operators are eyeing the privatization of the Agus-Pulangi hydropower complex.
Meanwhile, it is estimated that some 24% of approved mining applications have been clinched in the first two years of the Aquino administration. As such, it’s not a coincidence that Cojuangco’s SMC has been on a buying spree of mining firms in the past two years.
In 2011, it bought 10.1% stake in Australian firm Indophil Resources NL which owns 37.5% of Sagittarius Mines Inc. (the rest owned by Swiss firm Xstrata Copper), the operator of the estimated $5.9-billion Tampakan copper-gold project in South Cotabato – one of the world’s largest undeveloped sites. In 2010, SMC bought three coal mines in South Cotabato and Sultan Kudarat previously owned by Daguma Agro Minerals, Inc., Bonanza Energy Resources, Inc. and Sultan Energy Mining and Development Corp.
But mining, while profitable, is also contentious and invites strong opposition from various sectors. Consistent with the deception of daang matuwid, Aquino recently issued Executive Order (EO) No. 79, which supposedly attends to concerns on environmental degradation and negligible economic benefits from mining.
While the EO imposes a mining ban on 78 areas designated as ecotourism sites (including Palawan, apparently to appease Gina Lopez and co.) and a moratorium on new mining deals until Congress passes a new law that will increase government’s mining revenues, it will not stop controversial and greatly destructive mining projects such as SMC’s Tampakan. More significantly, Aquino does not intend to reorient the industry and reverse its liberalization the Mining Act of 1995.
Land (un)reform
In his Social Contract, Aquino also promised to recognize farms and rural enterprises as vital to achieving food security and more equitable economic growth. In his PDP, he identified food security and increased rural incomes as among the major goals of government. Also, for agriculture to fulfill its role in reducing rural poverty and achieve food security in the long term, increased incomes, productivity and production shall be enhanced, according to the PDP.
While government boasts of improving rice and food production, even claiming that the country may become self-sufficient in rice by next year, agriculture officials also admit that domestic agriculture remains very dependent favorable weather. But what make domestic food production especially vulnerable to adverse weather events are the accumulated effects of decades of neoliberal restructuring such as trade liberalization, land use conversion, promotion of export crops, etc. which aggravate the basic problems of backward agricultural system (one report said Philippine agriculture is among the least mechanized in Southeast Asia) and landlessness among the direct food producers.
Alas, Aquino is not reversing these neoliberal policies much less implement genuine land reform. The dismantling of large haciendas for land distribution is not in Aquino’s agenda, which of course is not unexpected for someone who comes from one of the wealthiest and most influential landlord clans in the country. Last year, the Department of Agrarian Reform (DAR) was able to distribute just 113,196 hectares (insert link) out of the already small target of 200,000 hectares, or an accomplishment rate of below 57 percent.
DAR data also show that since taking over as President in July 2010, Aquino’s land acquisition and distribution (LAD) has averaged below 18,000 hectares a month – the second lowest among all post-Edsa administrations. As of yearend 2011, government still needs to acquire and distribute almost 962,000 hectares of land, which at its current LAD rate will be accomplished two to three years after the 2014 deadline set by the Comprehensive Agrarian Reform Program Extension with Reforms (Carper).
Such lackluster performance in LAD is indicative of how the landlord President is indifferent to the plight of landless farmers. The Aquino family’s Hacienda Luisita remains a contentious target for land distribution despite the Supreme Court (SC) ruling, which revoked the stock distribution option (SDO) and ordered the transfer of the sprawling sugar estate to the direct control of farmers and farmworkers.
Taking advantage of the basic flaws of Carper, the President himself is pushing for so-called “just compensation” that his family calculates at a staggering ₱10 billion – a further insult to the poor farmers who are the real owners of the hacienda.
Instead of land reform and consistent with its bias for big corporations, the Aquino administration has been promoting projects that result in further displacement of farmers such as the case of almost 700,000 hectares of agricultural lands that foreign firms from the US, Europe, Middle East and others control (or will control) through agribusiness deals. And as mentioned, the PPP and mining projects that also grab lands away from tillers.
Genuine land reform is indispensable if Aquino truly wants to increase rural income and reduce rural poverty like he stated in his Social Contract and PDP. As shown in previous studies, dismantling the land monopoly will generate an enormous amount of income and free up huge resources, in the process reducing poverty in the countryside where two out of three poor Filipinos live.
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