What breakthrough? Growth without jobs

The Benigno Aquino III administration flooded the media last week with the report that the economy expanded 6.8 per cent in the fourth quarter of 2012, lifting the full-year growth to 6.6 per cent.

Philippine government economists and statisticians claimed the full-year gross domestic product (GDP) growth had surpassed their 5-6-per cent target for the past year.

The result was not good enough to have any significant social impact on alleviating poverty and reducing the wealth chasm between rich and poor. Growth in the past two years has not translated into creating enough jobs for the poor that will allow them to break out of the poverty trap.

President Aquino, who had alerted the public to expect "impressive" growth data, followed up the euphoric claims with a speech at the conference in Manila last Thursday of an organisation of global parliamentarians. Aquino credited the "gains and reforms" made by his administration in promoting transparency and accountability in government for the economic expansion.

Non-government economists have emphasised that transparency and good governance are not sufficient to drive up economic growth. The president, however, acknowledged that "the gap between the powerful and powerless" has become too huge. Too many people are being left behind and it has also become clear that inequity is borne of corruption.

"The few at the top have been allowed to run roughshod over the many and have [manipulated] the system to benefit themselves, while the rest wallow in poverty," the president said.

"The greatest challenge for any modern society, then, is how to stem the corruption that has feasted on the moral fabric of our society," he added.

Aquino did nothing more than merely echo studies on the economic toll of corruption.

In remarks at the Global Organisation of Parliamentarians Against Corruption (Gopac), Naser Al Sane, outgoing chair of Gopac, cited a World Bank financial study that quantified the "devastating effect" of illicit financial flows through corruption at US$1.3 trillion a year. The World Bank Financial Integrity 2011 Report said "corruption feeds poverty and seeds violence and illicit trade".

"Illicit financial flows, including corruption, bribery, theft and tax evasion, cost developing countries $1.26 trillion per year, equivalent to the economies of Switzerland, South Africa and Belgium. This amount could lift the 1.4 billion people living on less than $1.25 a day above this threshold for at least six years," the report added.

Countries with weak governance have a 30-45 per cent higher risk of civil war, according to the World Bank Development Report 2011.

In his keynote speech at Gopac, Aquino said "corruption cannot be eliminated by sending a few offending officials to gaol … or by removing them from office".

The president offered nothing more concrete to stamp out corruption than calling for long-term structural reform, the details of which he didn't specify.

The hollowness of Aquino's report on 2012 economic growth was exposed by Socioe-conomic Planning Secretary Arsenio Balisacan at a Senate hearing where his appointment as director-general of the National Economic and Development Authority (Neda) was awaiting confirmation by the Commission on Appointments. In response to grilling by senators, he said the "impressive" 6.5 per cent growth for 2012 should be sustained for several years to allow its effects to filter down to the grassroots and benefit ordinary Filipinos.

Asked about how long it would take for the broad section of the population to benefit from the growth, Balisacan was evasive. "It should be happening, but don't expect a miracle [where poverty would be] wiped out or substantially reduced," he said.

The 6.5 per cent growth reflected "only one year's" performance of the economy. "If you note the experiences of countries around us, it takes several years of sustained or rapid growth before you can reduce poverty, say by one half for the population," Balisacan said.

How the poor can relate to and be overjoyed by the government's euphoric announcements is hard to see. There's nothing in it for them in the immediate term - except pie in the sky.

A comparative assessment of growth rates in the region has no meaning for Filipinos who have been left out of growth's windfall.

According to median forecasts from the World Bank, growth was 5.9 per cent for the fourth quarter and 6.4 per cent for the full year - slightly lower than that of the Neda and the National Statistical Coordination Board.

The Aquino administration went out of its way, with trumpets blaring, to claim that the growth was "exceptional". It claimed the growth was proof of the economy's ability to move toward "equitable progress" on the simplistic policy of good governance.

Despite the drumbeating, some independent sectors are not impressed. For example, while Benjamin Diokno, a professor at the University of the Philippines' School of Economics, agreed that 6.6 per cent for 2012 was "strong growth", he expressed doubt that the growth rate would be sustainable. Diokno pointed out that, based on October labour statistics, the recent growth may be characterised as "labour-shedding growth. Close to 1 million jobs were lost". Most Filipinos still depend on agriculture and related sectors for a living, he said.

How can the Aquino administration claim that its strategy for growth - long on sermons on good governance and short on investments in economic infrastructure - is an engine of "equitable progress"?

How can an administration claim equity in growth without jobs?