AS the country enters the second year of the presidency of Rodrigo Duterte, various analysis have been made of his first year in office. The assessments largely focused on the administration’s war on drugs and criminality and its lack of focus on other issues. Instead of making an assessment, we would like to look ahead and point out critical issues that are currently or not being addressed at all. We premise this view from the societal challenges that led to this administration’s victory in last year’s election.
Our column prior to the election last year pointed out that the survey, known as Ambisyon 2040, has a lot to say about the aspirations of our people. The results showed that the issues that matter the most are as follow: eradication of poverty and hunger; adequacy of jobs; provision of housing; education and health as the most pressing needs. It also talks about the issues that hound ordinary people each day. On top of these are petty corruption and ease and efficiency of government transactions—showing the people’s frustrations on the government’s inefficiency at the local and national levels.
Some of these are already being addressed in different levels. We focus on how the aspirations on jobs, finance and transport need more attention.
On jobs, recent results of the labor force surveys (LFS) have been encouraging. In fact, the October 2016 round showed that unemployment have reached about 5 percent—the lowest in decades. The quality of jobs have also improved with more people entering wage employment.
However, the government is seen to be more focused on pushing entrepreneurship, as evidenced by recent policy pronouncements. This is coupled with the existing support being provided for the small and medium enterprises (SMEs) as the centerpiece of our hosting of the Asean Summit.
Nonetheless, the push might not be what is desired since the Ambisyon survey says that a majority still wanted to have jobs than be in business. The desire to have jobs are higher in C, D and E classes where 41 percent, 42 percent and 50 percent of the respondents said so.
Related to jobs and income, the Ambisyon survey also asked questions related to their current financial status. In particular, the survey revealed that people are having difficulty to save. About 23 percent does not have enough savings to last expenses for a month, while 19 percent has savings to last three weeks.
This difficulty in saving is also described in the BSP 2015 Financial Inclusion Survey, which says that 43 percent of the population has savings. In our own study called the Remittance Investment Climate for Rural Hometowns (Ricart), we found out that about 35 percent of the respondents we have surveyed have savings.
In particular, 43 percent of migrant families and 58 percent of nonmigrant families spend more than what they earn. The difficulty of saving has been traced to income- and price-related challenges as can be seen in the chart below.
The primary reason for lack of savings is the prevalence of loans. This is consistent with our findings in Ricart, where people have more loans than savings.
But what is more critical to consider is that people are not able to save because of personal illness and natural disasters.
These are things preventable by insurance. In the BSP Financial Inclusion Survey, only 16 percent has life insurance and 25 percent has health insurance, even if 67 percent and 77 percent of the respondents, respectively, are aware of both types of insurance.
In our Ricart study, only 7 percent has life insurance and 39 percent has PhilHealth coverage.
After these, increasing prices and low salary impede savings. Relatively, prices have not risen as fast as they were a decade ago but to lower-income people, a slight increase in the price of basic commodities will significantly affect their capacity to buy. Interestingly, the lack of savings also revealed that it is because they are being used to fund their business capital. This may be because of a mismatch of funding for entrepreneurs and the market for funds.
The lending to SMEs by the banking system has fallen from 20 percent in 2008 to less than 10 percent in the first quarter of 2017. Funds are available but may be difficult to access by smaller entrepreneurs.
Finally, a reason for low savings is the high cost of transportation. This is related to prices in general. But, the other elements of the Ambisyon survey also reveal that an overwhelming majority wanted to have at least one vehicle and 35 percent wanted a good and affordable public transportation. This is something that the current administration is lagging severely behind. Traffic and the lack of consistent and reliable public transportation are commonalities in almost all major cities of the country. It has reached disaster levels and is significantly affecting the budget of people. Thus, it will be tricky to apply additional taxes on oil. These points are imperative that need to be given more effort and emphasis beyond rhetorics. For certain, they will come up again as key issues in the 2019 midterm elections.