Restrictions on children and family activities are dragging down the recovery of the Philippines’ consumption-driven economy, the National Economic and Development Authority (NEDA) said.

Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua, said that children and family activity restrictions have dampened demand for non-essential services that employ bulk of the country’s labor force.

As young population forms a large part of the labor force, Chua said that a big part of the estimated P21 billion forgone wages due to quarantine controls every month come from children and family activity restrictions.

“For years, the country’s strong growth has been supported by its demographic dividend, where the country’s young population forms a large part of the labor force, earning income and driving demand,” Chua said.

The Philippine median age is 25, and 36 percent of the population is 18 years old or younger.
According to the 2018 family income and expenditure survey, families of at least three members account for around 90 percent of total non-essential spending.

Moreover, based on a 2019 study commissioned by a private firm and shared with NEDA, parents are the largest contributors to the P574 billion total informal eat out market, which includes quick service restaurants.

Parents account for around 48 percent of the spending, and is equivalent to P277 billion.

However, the community quarantines have restricted economic activity from children and families. In fact, non-essential spending contracted by 51 percent in the third quarter.

 “Since children are not allowed to go out of their homes, even to study, family activities are restricted, and thus a big part of the economy is not functional,” Chua said.

“If there were no such restrictions, GDP growth in third-quarter 2020 could have been four  percentage points better at -7.5 percent rather than the -11.5 percent recorded,” he added.

Based on consultation with leading malls and fast-food chains, some 32 to 50 percent of their sales are driven by family consumption as opposed to individual or worker consumption.

A leading fast-food chain estimates that food bought with kids and for kids comprise 43 percent of total sales.

Similarly, prior to COVID-19, a shopping mall chain estimates that about 46 percent of foot traffic came from parents with children. This translates to families contributing almost half of total sales.

 “If we allow more consumption activities to resume, this will encourage firms to utilize excess capacity, which will eventually stimulate new investments to serve new demand,” Chua said.