LGU consolidation and declining unemployment

Last Friday, Feb. 6, the 4th Ruperto P. Alonzo UP School of Economics – Program in Development Economics annual memorial lecture was held at the UP School of Economics (UPSE) in Diliman, Quezon City. The main speaker was Department of Budget and Management (DBM) Acting Secretary Rolando Toledo and the two discussants were UPSE Prof. Cielo Magno and Congressional Policy and Budget Research Department (CPRBD) head Romulo Emmanuel “Jun” Miral, Jr.

Mr. Toledo discussed the various reforms that the DBM has started and is continuing so that there will be more transparency and accountability in budget planning to disbursement, including the use of blockchain to control corruption and help achieve fiscal consolidation.

Ms. Magno mentioned the big increase in unprogrammed appropriations under the current administration that even bumped off counterpart funding for foreign assisted projects.

Mr. Miral discussed the Philippines’ high number of local government units (LGUs) and their overlapping functions with National Government agencies, leading to legislators raiding national revenues for local projects that contributed to the flood control corruption and related scandals.

I particularly like the two slides he showed, which I integrated into one of the tables accompanying this piece. The Philippines has the greatest number of first-tier LGUs, meaning there are many local politicians (governors, city mayors, vice-governors, vice-mayors, and provincial and city councilors).

Consider the scope of the land they control. Indonesia has 47,700 sq.km. of land per province or independent city, Malaysia has 20,300 sq.km., Vietnam has 9,200 sq.km., Thailand has 6,600 sq.km., meanwhile the Philippines has only 2,500 sq.km. per province or independent city.

Our three industrialized neighbors have reduced and consolidated their LGUs. Japan cut their municipalities from 15,900 to only 1,700. China cut their counties from 2,000 to 1,300 (see Table 1).

Retired faculty member Winnie Monsod spoke during the open forum and castigated UPSE alumni who were in high government positions when the infrastructure corruption was building and blew up. Retired faculty and former Finance Secretary Ben Diokno also spoke, and he explained the budget-bloating role of legislators which is outside the control of the Executive. Both Monsod and Diokno were my teachers at UPSE, as was Ruping Alonzo.

The closing remarks were made by Mel Alonzo, Ruping’s widow (the couple were my wedding godparents). Ninang Mel thanked the UPSE and the Program in Development Economics Alumni Association for continuing the memorial lectures in honor of Ruping, now the fourth year in a row.

A yummy reception was prepared by the Philippine Center for Economic Development for the speakers, UPSE officials and faculty, PDE alumni, and friends. San Miguel Corp. donated a few cases of canned beer. My special thanks to Ferdie Constantino, the former CFO of San Miguel, for endorsing my request for a quick donation as I wrote to him only three days before the lecture.

LABOR DATA
This week the Philippine Statistics Authority released the country’s labor data for December 2025, and we see that unemployment was at 4.4% and the full year unemployment was 4.2%. This is higher than in 2024 but lower than the levels in 2022-2023.

I checked the unemployment numbers of other countries in 2025, and ours was the second highest in the ASEAN-6 but lower than India and China, and lower than many North American and European countries.

While most Asian nations have seen declining or flat unemployment rates from 2022 to 2025, the US and many European countries have had high or rising unemployment over the same period, especially Austria, Poland, Germany, and the UK (see Table 2).

Consistent with the decline in Philippines unemployment, the Philippines Stock Market recently rebounded from a low of 5,600 last November, to 6,400 recently. Some things were put in good order by the administration led by the Executive Secretary, Ralph Recto.

A good observation was also made by Jesus L. Arranza, Chairman Emeritus of the Federation of Philippine Industries (FPI). He said, “President Marcos is doing the right thing by staying focused on the work. His calm, steady demeanor signals that he’s in control and well on top of the situation, and markets respond to that kind of leadership. Calmness begets calmness.

“For the business community, the message is simple: keep building, keep investing, keep doing our part in growing the economy. We condemn those behind the flood control anomalies and want swift accountability. But we also have to stay anchored on the country’s economic goals. You rarely go wrong when you respect duly constituted authority and keep the focus where it belongs — on progress.”

Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an internationa fellow of the Tholos Foundation.