By Dante Pastrana
6 April 2009
The Philippine economy is reeling under the
impact of the global recession, with growth rates slowing from 7.3 percent in
2007 to 4.6 percent in 2008 and a further steep decline expected this year.
While the country is not as heavily reliant on exports as Singapore or
Thailand, exports nevertheless averaged nearly 45 percent of GDP between 2003
and 2008.
Last year exports fell sharply. Merchandise
exports contracted by 1.7 percent, electronics by 24.3 percent, garments by 6.5
percent and other manufactured products by 32.9 percent. Exports of mineral
products slid 2.92 percent, down from a growth of more than 20 percent in 2007.
Agricultural exports measured by value rose 28 percent but only because of
rising prices. By volume, this sector also declined by 2 percent.
The Philippines’ other major export—cheap
labour—rose sharply by 28 percent, up from 1.4 percent growth in 2007. More
than 1.376 million workers left the country looking for work. Compared to 2007,
remittances rose last year by 15 percent to $17 billion, according to the World
Bank.
Three months into 2009, eight of the country’s
top ten export destinations—including the US, its main trading partner—are in
recession. As a result, the Philippine government has been forced to revise its
forecast for 2009 downward from a range of 3.7-4.7 percent to 3.7-4.4 percent.
Other predictions are worse—ranging from 3.8 percent by the Development Bank of
Singapore to 1.8 percent by the Union Bank of Switzerland.
New year-on-year data for January 2009
underscored the dimming economic prospects. Exports dropped by 41 percent after
falling sharply in December by 40 percent. Exports of manufactured goods, which
comprise 84.8 percent of the total, decreased year-on-year by 39.9 percent.
Agricultural commodities dropped by 38.5 percent and mineral products by 43
percent.
Recently released Labor Department figures for
2008 attempted to paint a picture of a resilient labour market, highlighting
the department’s claim that over 530,000 jobs were generated in 2008. The figure
was well below the 924,000 jobs created in 2007 and far less than the
government’s annual target of 1.6 million jobs. Nearly half—262,000—were in
agriculture, forestry and hunting, with average pay of $US2.7 a day, barely
above the UN poverty threshold of $2 a day. The government’s minimum
cost-of-living for a family of six is over $18 a day.
The Labor Department report acknowledged that
losses of better-paid jobs in other areas had been high. In manufacturing,
135,000 jobs with an average basic daily pay of $6 were axed. The electricity
sector lost 5,000 jobs with an average daily pay of $9. In transport, 9,000
jobs with an average daily pay of $7 were destroyed.
Intel Corporation shut down an assembly test
facility on Luzon Island and terminated 1,800 workers, more than half its 3,000
workforce. By the midyear, it expected to halt production altogether. Panasonic
announced plans to close a battery factory, with 60 employees to be terminated.
The business processing and outsourcing company, Accenture, announced a 50
percent cut in its 1,000-strong workforce. Another electronics company, Amkor
Technology, retrenched 1,500 workers, 20 percent of its workforce. More
recently, Fujitsu announced 2,000 job cuts last month, to take effect on April
18.
The official estimate for unemployment in 2008
was 7.4 percent or 2.7 million—an increase of 0.1 percent from 2007. These
figures, however, are a gross understatement. The government defines the
unemployed as those who are simultaneously without work, looking for work and
immediately available for work.