Two items from yesterdayâ€™s and todayâ€™s Philippine Daily Inquirer have triggered this extremely rare rant on economic/political issues. I have always had very strong opinions regarding the loss of national talent, as our countrymen are forced (mostly due to economics) to seek jobs overseas or face unemployment, underemployment or at the extreme end, even starvation. I have also lamented the fact that our white collared professionals are likewise departing, emigrating, working abroad for other reasons (intellectual stimulation and challenge, proper management, fair treatment, leading edge technologies, etc.) in addition to the economics. Recent surveys report that a huge percentage of those asked would leave the country if an opportunity and visa presented itself. I myself studied, worked and lived abroad for over 12 years before moving back home. Recent comments on this blog regarding OFW labor by some readers almost resulted in a post on the topic, but I suppose I needed more of a â€œtipping point,â€ and these two recent news items provided it. The first item was a graph in yesterdayâ€™s Inquirer that showed comparative labor wages in selected Asian countries (compiled by Kate Pedroso of Inquirer Research and sourced from the National Wages and Productivity Commission). I presume the data referred to total daily wages of similar workers in each country: Taiwan $15.99, Malaysia $14.36, Philippines $7.22, Thailand, $5.61, China $3.35, Indonesia $3.31, Vietnam $1.25.
A quick search on the internet yielded the per capita GDP from Wikipedia (using Purchasing Power Parity PPP in 2005) in each of the countries mentioned above: Taiwan $27,122, Malaysia $11,160, Philippines $4,770, Thailand $8,542, China $6,193, Indonesia $3,853, Vietnam, $2,782. So whatâ€™s the beef(s)? Okay, so Filipinos employed in the Philippines apparently have some of the HIGHEST daily wages in the region!! That should be good, right? But if that is so good, why are 8+ million educated, intrepid, driven, hungry, adventurous and desperate countrymen voting with their feet and heading elsewhere to earn a living? Why are they putting up with often difficult conditions in countries that I would call less than the garden spots of the planet? Why do they put up with crap of the foulest kind in order to earn wages that are just a few times above those listed above as the average daily wage at home? Why does a college graduate with an Education degree and teacher’s credentials work as a nanny in HK for roughly $15 a day, and does the work of 4 equivalent staff in a Makati or Alabang household? Or worse, the same job in Kuwait or Oman or Brunei at just $8-10 a day? If our local wages were so HIGH and attractive, why are we the only country shipping out labor like it was coconut oil (Indonesia labor exports are also increasing, but to specific markets and specific blue collar roles)? Doesnâ€™t anyone else see the fact that Taiwan, with a per capita GDP at 5.5x the Philippines, only pays its laborers an average of 2.2x our own? Or that Vietnam, with a GDP just half of ours, pays 1/5th our wages? Does this mean that our minimum daily wage is in fact too HIGH??? That it possibly results in the employment of tens of millions of folks who are then in turn relatively OVERPAID for the work that they do in the context of a regional comparison? In other words, encouraging the laggards and discouraging the several million folks who have figured out their future is better served elsewhere on the planet and they thus leave permanently or temporarily? Not to mention discouraging dramatic increases in capital investments as companies find the labor here relatively overpriced?
But the natural evolution of this discussion has to be: what does the daily wage buy you in return? Or, in other words what is labor productivity? And it is here that the front page quote attributed to President Arroyo, simply irks me no end, and I quote â€œNo one can beat the Philippines when it comes to fiscal discipline, and the Filipino people when it comes to productivity and excellence.â€ ARRRGGHH!!!! I just wanted to throw up my high-calorie serving of French toast from breakfast!!! Certainly our fiscal position as evidenced by the budget deficit is improving relative to the last few years, however are we just going to ignore the fact that we spend less per student PER YEAR in our public schooling system than some western countries spend in minutes??? That our road and other infrastructure requirements have experienced minimal improvements since the 1970â€™s? That our brand new airport sits unused for four years almost finished, mired in legal battles? That our â€œskywayâ€ runs for just a few kilometers and ends abruptly, and that we have to take our cars off road one day a week to prevent gridlock? That we are considered one of the most, if not THE MOST corrupt country in the region, and that an unestimated portion of the governmentâ€™s annual budget just goes â€œPOOFâ€ into thin air? ARRRGHHH!!! That we purchase thousands of bloody lamps for the ASEAN summit at PHP85,000-300,000 a piece when they were made in China for just PHP8,000 or so (lower daily wages, you think)??? Is that FISCAL DISCIPLINE??? That we suddenly, days before the May 2007 elections, are spending 10x or more the typical amount of money to fix sidewalks, bridges, roads, markets, etc. so that the expected deficit for the next few months is PLANNED to be out of whack due to sudden “constructionitis,” a disease rooted in overpriced contracts and questionable projects fueled by billions in government budgets and even more billions in Senate and Congress chicharon barrel funds? What do politicians think, just because they say something glossy, the world will be glossy? Does is just TOTALLY skip people’s minds that the PRIMARY and LARGEST cause of a falling deficit is the SERENDIPITOUS decline in global interest rates COMBINED with a strong peso (more below) that has effectively wiped out TENS OF BILLIONS of pesos from our annual interest payments on our spectacularly large foreign loans, that now well exceed FOUR TRILLION pesos equivalent, if I am not mistaken? A 5% increase in global interest rates and a 20% decline in the peso would WIPE out all of the supposed gains in our FISCAL BRILLIANCE, so to speak!!! Actually, a 5% increase in interest rates on 4 Trillion in debt outstanding would result in as much as PHP100-150 billion (depending on loan tenors and terms) in additional annual interest payments, ballooning our current deficit by 300%!!! I could go on and on about this sub-topic alone, but you get my driftâ€¦
As for productivity, where are the Presidentâ€™s speechwriters and spinmasters getting their DATA from??? According to productivity statistics of the Asian Productivity Organization in Japan, the Philippines was the WORST country in the region (of countries tracked) when it comes to productivity gains. In fact, from 1988-1995, Taiwanâ€™s productivity index rose by 40%, Malaysia 43%, Thailand 60+%, while the PHILIPPINES rose a measly 2%. Worse, in a different method of presenting labor productivity gains from 1995-2001, the Philippines recorded average productivity gains of just 1.56% per annum (almost completely attributed to a huge rise in the year 2000, probably due to measurement methodology changes) compared with annual increases of Taiwan 4.60%, Vietnam 4.99% and Malaysia 3.76%. In other words, WE ARE NOT THE MOST PRODUCTIVE, in fact, FAR FROM IT!!! Wake up and smell your barako! Filipinos as individuals can be, and are, in fact, some of the most productive, successful, intelligent, individuals on the planet, but I would posit the theory that 8+ million of them have in fact voted instead to be productive, successful and intelligent SOMEWHERE ELSE, providing an economic boost to their foreign host countries, and simply leaving a small portion of their hard-earned wages to be remitted back home to take care of some 40+ million of their relatives or NEARLY HALF THE ENTIRE COUNTRYâ€™S population (assuming that each worker partially or fully supports five back home).
The government reported roughly $12 billion remitted back by OFWâ€™s per annum through official banking channels last year. Doesnâ€™t it also worry you that NO ONE HAS BOTHERED to point out until now that that figure represents only a fraction of the real sum, since dollars sent in cash or brought by returning OFWâ€™s is not captured, nor goods sent by balikbayan boxes for that matter? If we were to believe the $12 billion figure, then each OFW toiling abroad would only be sending home $125 a month on average, which is simply way too little considering that many household workers in HK and laborers in the Middle East send home at least $300 home per monthâ€¦and I am not counting the nurses, seamen, investment bankers, etc. If I were to estimate an adjustment on that figure based on the fact that money comes back heavily OUTSIDE of official banking channels, then the amount flowing into the country could be as much as $24-30 billion equivalent per annum, or, HELLO??!???, roughly 2/3 the total amount of the Philippine EXPORTS of manufactured goods and minerals, etc. In other words, clearly, LABOR is our BIGGEST BLOODY SINGLE EXPORT.
Bizarrely, this $24 billion or PHP1.2 trillion (PHP3 billion a DAY or PHP130 million AN HOUR) in funds is what is BUOYING the local economy (along with several billion in what are called hot funds that streamed into our stock market), resulting in billions and billions of pesos in sales of cell phones, load, computers, televisions, microwaves, shabbily built medium cost housing, clothing, food, fastfood, toys, karaokes, beer, airline and ferry tickets, motorcycles, etc. Also bizarrely, because so much cash is coming back in, the free-floating exchange rate is making the peso stronger, so all the poor folks toiling elsewhere and sending money back home now have their relatives reporting that their money buys a LOT LESS locally because the peso has gotten 15% stronger in the past 2 years. All of this hard currency is also making it easier for us as a nation to just import things made elsewhere, rather than trying to make it ourselves. We now import bags, clothing, electronics and street lamps from China, food from elsewhere in Asia and all the components, etc. needed for our electronics exports as well. And all of this brilliant business activity is making my favorite tycoons of dubious provenance (who will remain unnamed) EVEN RICHER, and companies pay far more taxes (customs, income, VAT) so that WHAT??? THE FISCAL DEFICIT DROPS!!! YES!!! And our President can claim a brilliant success??!!!
Outrageous!!! And what of the consequences??? Is this all really so bad? Am I just in a bad mood? Looking at the glass half empty rather than half full? Shall we just forget that 80% of the productivity of these 8 million people that benefits their host countries, not our own, and rightfully so? Forget that millions of couples are separated for long periods of time and that children are growing up in single parent or no parent households, often with an odd or warped sense of what is right and wrong? Forget that to make up for our absences, we indulge kids with the latest gadgets, large allowances, luxuries that are in no way related to improving their intelligence or future capacity as capable and self-sufficient human beings? Forget that we are using these funds to continue to send our kids to schools of declining quality, with textbooks marred by hundreds of factual and grammatical errors, so that they in turn may have an even smaller chance of finding good jobs in the future? Forget that despite couples split up for 99% of the year, we continue to have one of the highest population growth rates in the region, and probably one of the lowest demands for Viagra, with babies popping out at a dizzying pace, literally? Gosh, I momentarily felt bad for the teeth of all those mothers, won’t they fall off? Forget that of the folks remaining in the Philippines, fully 40% STILL FALL BELOW the poverty line, despite all of the money coming in from abroad, and some of the highest minimum wages in Asia, and a reported low unemployment rate???
And Marketmanâ€™s personal conspiracy theory? We continue to ENCOURAGE all of this so that we donâ€™t actually have to do much work back home to keep things afloat. Itâ€™s easier to send 8+ million capable folks to other economies rather than dealing with them at home, particularly if they happen to be on average more self-starters, more likely to question illogical behavior, and more determined to uplift their situation in life. Imagine if we had to provide social services, medical and health benefits, public transportation, water, electricity, waste treatment facilities for another 8 million people? That would be the equivalent of maybe 2 whole new Metro Cebu areas in terms of people!!! And better yet, the politicians and government, in effect, have now effectively â€œremovedâ€ 8 million of the â€œprimestâ€ VOTERS in the country, or as much as 25% of the total vote eligible population. This leaves the choice of our next public officials to the folks left back here at home, and a smattering of those abroad who bother to vote through absentee ballots. These same folks who in past have voted in actors, potential nutcases and other unqualified individuals into public service. The same voters who are more likely to happily watch the brain-numbing noontime television shows, that either feature a chance to win the millions that will forever change their life, or engage in dramatic alternating screaming/sobbing matches of which previous Spanish colonies seem to excel, or dance in a group facing the camera to catchy music, like perfecting their dance steps was the most important moment of their existence. The elected officials are those who then in turn perpetuate this downward spiral into a poorer, less educated and less positive nation of citizens whose ONLY remaining glimmer of hope is to be rewarded in the â€œafter lifeâ€ for all of their suffering in this one.
I mean, have you seen the current senatorial line up of both sides??? I canâ€™t even find 5 people to vote for on my ballot! So what is the point of this rant other than to let off steam? Number 1, high minimum wages is not necessarily a good thing. Number 2, we are not in fact, anywhere near the most productive nationals in the region (at least not the ones based back home), Number 3, the glossy fiscal numbers will evaporate into thin air if global interest rates start to rise dramatically AND the foreign exchange rate drops to say PHP 75 to USD1, where our labor competitiveness starts to look more realistic (but we will not reach in the near future because of the artificial double-edged sword of huge OFW remittances) and Number 4, vote wisely or if live abroad, tell your relatives at home that are living off of your largesse and generosity to vote wisely, so that we can break this vicious downward spiral into oblivion.
Most of you, including myself, will not recall that the Philippines was once one of the wealthiest, best educated, most promising economies on this side of the Pacific Ocean, not more than just 50 years ago or just 2 brief generations back. And what could have been achieved in less than five decades? A backwater called Singapore has emerged into its powerhouse state, Japan has, well, become JAPAN, China has shorn its communist mantle and become the most consistent and fastest growing “capitalist” economy for the past 15 years, South Korea, Taiwan, and even Thailand have long since surpassed us, etc. So cut the crap and call a spade a spade. Recognizing our current pathetic national situation and working our asses off to improve it is the only way we are going to claw our way back to a shadow of our old glory. Or we can just all seek work abroad, line up for emigration, give birth in the U.S. or the West to acquire blue passports for our kids, and just leave everyone else (who are unable to comprehend what this post is about) behind, to happily watch each other gyrating to a mindless beat on a noontime television showâ€¦ Or even worse, ignore the obvious, head over to the Fort and have a cup of tea and some Food for the Gods at A Different Bookstore while flipping through the latest cookbooks, as I did one day last week, and watch a previous first lady with big hair float into the shop accompanied by 10 bodyguards, yayas and alalays to do some browsing, only to sweep regally out a few minutes later and carry on with life as if nothing really mattered…
NEWS FLASH!!! Just hours after I posted this, I read with interest an article in the Inquirer Monday, by Washington Sycip of AIM and SGV fame entitled “Freedom and politicians not good for the economy” which is actually an edited version of his keynote address during the Asian Business Conference. It is worth reading if you read my post above with interest…