Christmas 2019

Christmas is about love and peace. And hope.

Pulse Asia has a nationwide survey about the holiday season. For the past two years, the survey outcome has shown that Filipinos are overwhelmingly filled with hope. In December 2018, 91% of Filipinos said they were hopeful for the new year. In the survey conducted in December 2019, 93% of Filipinos responded that they face 2020 with hope. What is striking this year is that among the poorest of the poor (Class E), the number of those who have expressed hope increased significantly by 15 percentage points — from 76% in 2018 to 91% in 2019.

A less impressive but still encouraging outcome is that 48% of Filipinos said that this Christmas will be more prosperous for their family, while 11% of Filipinos said that they will be poorer, compared to last year.

An older survey from Social Weather Stations (SWS) — for the third quarter of 2019 — had a similar outcome. Those whose lives improved for the year made up 36% of adult Filipinos, but 25% said their lives worsened. Related to this, 46% of Filipinos expected their lives to improve in the next 12 months, while five percent expected their quality of life to worsen.

The Pulse Asia and SWS surveys yield similar results although one may note that perception during the Christmas season is brighter.

The self-rating or perception is consistent with the latest poverty estimates derived from the 2018 Family Income and Expenditure Survey (FIES). The FIES shows a significant drop in the number of poor. The number of poor people as a percentage of the total population fell from 23.3% in 2015 to 16.6% in 2018. The sharp decline is equivalent to 6.7 percentage points, which happened in a short period of three years.

This was different from previous episodes of growth, a pattern of growth that was accompanied by a slow decrease in poverty incidence or worse, a rise in poverty incidence. The sustained growth since 2012 (marked by a growth rate of 6% and above) has made an impact on poverty. But it is not growth per se, but the quality of growth — featuring an increasing number of wage workers in the formal economy — that explains rising incomes and spending and hence faster poverty reduction.

From the FIES, one can also obtain the income factors that explain poverty reduction. It turns out that the domestic remittances of workers employed in urban areas to their families in rural areas principally account for reducing poverty. Government cash transfers and overseas remittances also alleviate poverty, but not as big as the impact of domestic remittances.

This suggests that further strengthening industry, specifically manufacturing, is the key to faster poverty reduction. What seems ironic though is that rural economic activities even worsen poverty. Agriculture has been stagnant for so long.

But there is hope for agriculture. It may seem counter-intuitive that the recent rice tariffication policy will help agriculture, particularly our rice farmers. To be sure, the consumers (which include many farmers who are net consumers of rice) are benefitting from the lower rice prices. On the other hand, the rice farmers have lost incomes in the face of the entry of imported rice, which is more efficiently produced. The challenge thus is how to achieve much higher productivity.

The previous regime of quantitative restrictions only made everyone complacent. However, the commitment to compensate farmers for losses and to pour additional resources to improve rice productivity in the Philippines will translate into benefits. The tariffication program compels the government and the rice producers to enable bigger reforms that will redound to the farmers.

The economy now has momentum. Successive reforms, particularly the comprehensive tax reform that has given government much space to address binding constraints like infrastructure and human development, will sustain the performance.

Still, we face serious problems along the way. Rule of law is undermined as shown by the President’s arbitrariness and disrespect for contract enforcement. (The threat to disregard the international arbitration award that Manila Water obtained and to scrap the agreements with the private water concessionaries is most chilling for investors.) This has an adverse consequence on poverty reduction since investor confidence is a necessary condition for quality growth.

Economic performance ultimately has to serve the poor. The Christmas season makes this message all the more relevant and pronounced.

Christmas is about hope, especially hope for our poor. That Jesus, son of God, was born in wretched conditions — being homeless and settling in a cold manger — is symbolic of his being one with the poor.

Let’s realize the hope of the people for a much better future. Ahon Laylayan, the call of Vice-President Leni Robredo, captures the call of the times.

This is the message of Christmas, exemplified in the life of Jesus — He who gave hope; he who became one with the masses, he whose incarnation symbolized salvation from spiritual and temporal poverty.

Filomeno S. Sta. Ana III coordinates the Action for Economic Reforms.

www.aer.ph