Bernardo M. Villegas
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Food Stolen From The Poor (Part 3)
published: May 29, 2020


Food Stolen From the Poor (Part 2)
published: May 22, 2020

Food Stolen from the Poor (Part 1)
published: May 15, 2020



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What Lies Ahead After COVID-19? (Part 5)

          The fourth pillar, according to Secretary Dominguez will consist in the economic recovery plan to create jobs and to sustain economic growth.  Here, the participation of the various industry associations and business think tanks will be crucial to work closely with the National Economic and Development Authority (NEDA) that has been tasked to come out with this recovery plan.  I am confident that the young and dynamic new NEDA Director General Karl Chua has the qualifications and competence to lead in this crucial task.  Just one unsolicited advice to our new Secretary of Economic and Social Planning:  he should remove his  former hat as tax revenue task master and put on a new one as a development strategist that, as he himself has said, will assign the highest priority to promote the welfare of the poor and the low-income but not poor households, by removing all the obstacles to both domestic and foreign direct investments.  In the long run, it is private investments, whether domestic or foreign, that will create the jobs needed by the poor and the low-income households to lift themselves from  their precarious economic  and social conditions. 

         It is obvious that such temporary and emergency measures as the Conditional Cash Transfer to the poorest of the poor and even the Bayanihan to Heal as One program of a monthly cash subsidy of P5,000 to P8,000 to poor households are very short-term measures to help the poor.  Since 75 per cent of the poor are in the rural areas and are mostly involved in subsistence farming or fishing, a large part of the Build, Build, Build program should be used for farm-to-market roads, irrigation systems, post-harvest facilities and the support services needed by the small farmers (especially the coconut farmers) to be more productive and increase their meagre incomes.  Among the urban poor and low-income households, most of whom are employed by MSMEs, payroll subsidy to these employers would be an important measure to prevent the low-income and even middle income households from falling below the poverty line.  To sustain these MSMEs, even non-wage costs should be subsidised. This may be done through loan facilities from private banks but backed up by the BSP as long as loans are contingent on maintaining the employment relationship.  According to Secretary Dominguez,  some 3.5 million workers would be benefited by loan guarantees amounting to P35 billion and subsidies amounting to P51 billion to MSMEs.  Banks are also required not to collect loans immediately, allowing for delays in amortization, and not to charge interest on interest.  For middle-income households, housing and credit card loans will be made available with BSP support. These are only a small sample of what have to be done to prevent low-income and middle-income households from suddenly finding themselves among the poorest of the poor as a result of the pandemic.

         The P51 billion wage subsidy program for workers of MSMEs will benefit some 1.6 million small businesses in the formal sector employing some 3.5 million workers whose livelihoods have been disrupted during the ECQ in Luzon.  MSMEs are those business establishments with an asset size of P3 million to P100 million, excluding land assets and with less than 200 employees.  According to government data, MSMEs comprise some 99 percent of the total number of business establishments in the country and account for 60  percent of total employment.  It is extremely important that as many of them as possible are able to survive the Coronavirus crisis.   To make this possible, they must be able to retain the employment status of their workers who would be provided a wage subsidy to be paid out in two tranches:  from May 1 to 15 and from May 16 to 30.  Those who already received the P5,000 assistance from the Labor Department’s COVID-19 Adjustment Measures Program will no longer be entitled to the first tranche of subsidy in May.  The money will be disbursed through the Social Security Services (SSS) UMID card, or through the employee’s bank account.  Alternative forms of payment  are through a quick card, Paymaya, or e-wallet arrangements, or even through money remittances.  As mentioned above, these employees of MSMEs are generally those who belong to the low-income-but -not-poor households who are in great danger of falling below the poverty line if they are not able to survive an economic crisis such as we are experiencing during this pandemic.

         On top of all these sources of funding, Rep. Stella Luz Quimbo, an economist herself, filed a bill titled “Economy Moving Forward as One,” that would budget an additional P370 billion , on top of the P300 billion that the Government has already rolled out through the social amelioration program (SAP) under the Bayanihan To Heal As One Act.  According to Rep Quimbo, the proposed P370 billion will be utilised for wage subsidies for companies that are forced to suspend operations but continued to pay salaries for their workers during the ECQ; for interest free loans at expanded loan guarantees to businesses; and for grants to medium and small-scale industries, tourism-related businesses and exporters and importers.  Such amounts would give additional vigour to the domestic market, thus helping consumption expenditures to recover from the slump of the first semester of 2020.

         We should be thankful that both the executive and legislative branches of government are strongly determined to revive the economy through pump priming measures that are targeted to put incomes into the hands of the lower-income households which consist of two groups:  those who fall below the poverty line (16 %) and those who are low-income but not poor (estimated to be 43%).  This more realistic calculation of the beneficiaries of the Bayanihan Healing As One Act may not reach the oft-quoted 18 million households.  But at 13 million households among a total of 22 million, they are large enough to make a difference in attaining what we can call inclusive growth during a period of great human distress.    For comments, my email address is bernardo.villegas@uap.asia