The worst economic impact of the pandemic is not the huge fall in the country’s GDP of 16.5 percent in the third quarter and a forecast overall decline for the whole year of anywhere from 7 to 10 percent. What should worry us most is that 4.5 million more Filipinos may slide back to poverty as future waves of the virus may require more strict lockdowns as is happening in many countries all over the world. This means that there could be as many as 22.2 million Filipinos living in dehumanizing conditions by the end of 2020, considering that in 2018 there were 17.7 million Filipinos living in poverty. Worldwide, the United Nations already is resigned to the fact that the goal of eradicating extreme poverty by 2030, a key Sustainable Development Goal (SDG) may no longer be possible as the Coronavirus pandemic wipes out a decade’s worth of gains on this front in the worst case scenario. In a policy brief dated October 5, 2020, the UN Department of Economic and Social Affairs estimated that 3.5 percent of Asia’s population would remain poor by 2030 while the worldwide share of extreme poor is estimated to be at a higher 5.6 percent. Even in the most optimistic scenario, where GDP per capita growth is assumed to average 6.9 to 9.9 percent and income equality falls by 25 to 50 percent, 1.4 to 1.9 percent of the population of Asia and 2.7 to 4.2 percent globally will stay poor.
These figures should not just be regarded as cold facts by those who are better off in their living conditions but should serve as a strong spur for all concerned citizens to do everything possible to apply emergency measures to immediately alleviate the sufferings of the poor and, more importantly, to address the structural roots of mass poverty. We cannot possibly consider the so-called New Normal to which we are aspiring after putting the pandemic under reasonable control just to be business as usual as regards the practices and structures of our so-called “free market” economy. Pope Francis issued a herald call in his latest encyclical Fratelli Tutti (All Brethren) when he wrote: “The world was relentlessly moving towards an economy that, thanks to technological progress, sought to reduce ‘human costs’ : there were those who would have had us believe that freedom of the market was sufficient to keep everything secure. Yet the brutal and unforeseen blow of this uncontrolled pandemic forces us to recover our concern for human beings, for everyone, rather than for the benefit of a few. Today we can recognise that we fed ourselves on dreams of splendour and grandeur, and ended up consuming distraction, insularity and solitude. We gorged ourselves on networking, and lost the taste of fraternity. We looked for quick and safe results, only to find ourselves overwhelmed by impatience and anxiety. Prisoners of a virtual reality, we lost the taste and flavor of the truly real. The pain, uncertainty and fear, and the realization of our own limitations, brought on by the pandemic have only made it only more urgent that we rethink our styles of life, our relationships, the organization of our societies and, above all, the meaning of our existence.”
All of Philippine society—the Government, civil society and the business sector—must be one in thinking first of how to reduce the number of those who are below the poverty incidence, before thinking of how to help big business survive. Big business is indeed important for generating employment and producing essential goods and services for the masses. But it has been proved time and again that the so-called “trickle down” approach does not work. Even if big business is greatly benefited by a high growth of the Gross Domestic Product, the success of the business sector does not always translate to the alleviation of the sufferings of the poorest of the poor. That is why as an economist, I am less concerned about what will happen to the GDP this year. The drop of 16.5 percent in our GDP in the second quarter of 2020 was not as meaningful to me as the fact that the poverty incidence increased from 16.7 per cent in 2019 to 17.5 percent during the pandemic and that some 4.5 million more Filipinos could slide back to poverty if 75 percent of the economy goes into a strict form of lockdown if there are future waves of the Coronavirus. The highest priority must be given to address the short-term sufferings of these millions of Filipinos struggling to put body and soul together.
The first order of the day is the effective and graft-free implementation of the Bayanihan 2 Recover as One package by the Government. It is quite clear that in the dire circumstances in which we are the market should take second place to the State in addressing the problem of mass poverty. Fortunately, at least over the last decade or so our fiscal managers have been quite responsible in keeping our fiscal deficit and debt-to-GDP ratio under control. During these hard times, our Government can afford to borrow aggressively without endangering our financial stability. It is also providential that even the International Monetary Finance (IMF) has been very vocal in encouraging governments to use as much fiscal stimulus as possible to address the negative economic impact of the pandemic. Our Government has already committed some P165 billion to the Bayanihan 2 To Recover as One Program. Some P140 billion is being appropriated for various emergency packages and P25 billion as standby fund.
Because the economic environment will be abnormal for at least for the next twelve to eighteen months as we face the possibility of new waves of the virus, as is already happening in many countries in Europe and elsewhere, spending should be directly aimed at alleviating the short-term basic needs of the poor, such as nutrition, health and basic education for the children. Assistance to industry, whether large or small, should be subordinated to alleviating the sufferings of the poor over the short run. There should be more emphasis on programs similar to the Pantawid Pampamilya Pilipinas Program (4 P) which consisted in conditional cash transfers to poor households to immediately improve their health, nutrition and education. The beneficiaries should be the poorest of the poor, i.e. farmers, fisherfolk, homeless families, indigenous peoples, those in the informal sector, those in geographically isolated areas and places with no electricity. Especially as regards the children of these households, if they are not immediately helped to attain a minimum level of material welfare, they will be forever damaged and will always be handicapped in their adulthood vis-a-vis the children of the well to do. For example, if because of the pandemic, children of the poor household do not get enough nutrition (especially protein), their brains would be already permanently damaged and would therefore find it hard to be productive citizens when they grow up. The same can be said about the health and educational opportunities of the children of the poor.
Therefore, the Government, private business and civil society should give the highest priority in the next twelve to eighteen months, when the pandemic is still expected to be raging, to direct cash assistance to the poorest of the poor, close to 22 million people who fall below the poverty line of about P50 per person per day. As was the policy in the 4 P program of the Department of Social Welfare and Development, there should be strict conditions to be imposed for those who receive the cash assistance. Among them are: a) pregnant women should avail of pre-natal service, give birth in a health facility attended by a skilled health professional and receive post-partum and post-natal care for the newborn; b) children one to fourteen must avail of deworming pills at least twice a year; c) children 3 to 18 years must have school attendance of 85 percent; and d) at least one responsible person must attend family development sessions conducted by the DSWD. We should put physical survival of the poorest of the poor ahead of subsidizing businesses, whether large and small. The poorest of the poor may be the least vulnerable to COVID-19 but their life or at least long-term physical and mental health may be at risk if in the next twelve to eighteen months they don’t have the wherewithal to feed themselves, receive a minimum of health care and have their children access basic education services. To be continued.
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