Manila: President Benigno Aquino has approved a proposed P2.3 trillion (Dh191.6 billion) budget for 2014, including higher amounts of grants for the poor.
The grants are being funded by the World Bank, to bridge the gap between the rich and the poor, prompting analysts to call for a long-term industrialization plan for real development and poverty reduction.
The government’s proposed budget has a high component of poverty reduction, apart from development, Budget Secretary Florencio Abad said.
Last year, Congress approved the allotment of P44.25 billion (Dh3.68 billion) conditional cash transfer (CCT) programme of the government for 3.5 million households in the 2013 budget.
The programme allows the social welfare department to disburse less than P 1,000 a month per household, money for poor children enrolled in primary and secondary public schools and to health centres.
It also includes a health awareness drive for low-income communities. It encourages them to send their children to school, to prepare them for jobs and to make their lives better.
“The programme has a long-term benefit,” said Abad, who did not say the amount allocated for CCT and the number of poor people to be covered in the proposed 2014 budget.
It has been criticised as a source of corruption in local government units because village level authorities handle the money’s disbursement in slum areas.
Critics say it encourages dependency among poor people, who are given money as incentive to send their children public health centres and public schools which already give free services. It promotes patronage politics and emboldens politicians to coddle slum dwellers for votes, critics said.
The government’s continuation of the CCT program, which was begun by former President Gloria Arroyo, is further justified by a poverty incidence of 27.9 per cent in the first semester of 2012, compared to 28.6 per cent in 2009.
The Philippines is also in a rush. It has committed to lower poverty incidence to 16.6 per cent by 2015, in compliance with the United Nation’s Millennium Development Goals (MDG).
A report of the National Statistical Coordinating Board (NSCB) showed that in 2011, the rich (who represents 15 per cent of the country’s population of 100 million) generated 10.4 per cent income growth; the middle class, 4.3 per cent; and the lower class, 8.2 per cent.
A family of five with a monthly salary of P7,821 (Dh663.82) is right on the poverty line. A family that earns higher than twice to 10 times this amount belongs to the middle class, NSCB said.
The expanding inequity between the rich and poor contrasted with the country’s 6.8 per cent overall GDP growth in 2012; and 7.8 per cent in the first quarter of 2013.
Vowing to work harder for better economic indicators, President Aquino promised, “We must make certain that this growth becomes even more inclusive — that the economic benefits do not merely trickle down to our people, but that every Filipino is able to ride the rising tide of progress (in the Philippines).”
Presidential spokesman Edwin Lacierda pointed out the additional impact of NSCB’s sectoral income growth report: “There has been growth in the lowest levels.”
There is an ongoing focus on job-generating in sectors like agriculture, infrastructure, manufacturing, and tourism, said Ramon Carandang, chief secretary of the Presidential Communications Development and Strategic Planning Office, in response to criticism that heads of poor households still need jobs even if their children are socially protected and subsidised by the government’s CCT program,.
But reporting on the distribution of the labour force last April, the Labour Force Survey said only eight per cent of Filipinos are in the manufacturing sector; 16 per cent in industry, 31 per cent in agriculture and 53 per cent in services (which is considered the least productive).
These is evidence that the country’s employment and job generating model is hard to realise in the industrial and manufacturing sector.
Secretary Arsenio Balisacan, head of the National Economic Development Authority (NEDA) said that industrialization and manufacturing are the real answers to development and poverty reduction.
Subsidies for the poor and aiming for high annual national budgets will generally follow if the government starts building up on industrialization and manufacturing, Balisacan argued.
“The Philippines had a 39 per cent manufacturing-GDP ratio in the 1980s; and 33 per cent manufacturing-GDP ratio from 2010 to 2012. In comparison, Thailand has 44 per cent manufacturing-GDP ratio from 2010 to 2012, from a low of 30 per cent in the 1980s,” said Balisacan, who pointed out the real reason why other Asian countries have overtaken the Philippines.
Meanwhile, some 10 million overseas Filipino workers (OFWs), who represent 10 per cent of the country’s population, have been buoying the Philippine economy, rising to become on of the biggest sources of government revenue.
OFWs sent $ 21 billion to their relatives in the Philippines in 2012, fuelling a consumer-led economy.
Analysts from international funding agencies have said the OFWs must be empowered by helping them channel their money to investments in the manufacturing and industry sectors.
The Philippine government has responded with lectures on the importance of investment and entrepreneurship.