For all of 2020 and most of 2021, the average middle-income Filipino family will have to tighten their belts as the Philippines is expected to experience a deep recession which could see the Gross Domestic Product of the country taking a dip of anywhere from 3 to 5 percent for the whole year of 2020. The worst hit region will be Metro Manila (the National Capital Region) and some provinces in Central Luzon and CALABARZON that have had the longest and strictest lockdowns, together with Metro Cebu. Fortunately, there are provinces and regions that will not be as badly hit. In fact, for the last five years, even before the pandemic, the NCR has been one of the slowest growing regions. Regions outside of Metro Manila like Central Luzon, Southern Luzon, Bicol, Northern Luzon and provinces like Davao and Iloilo have grown much faster. The pandemic has widened the gap in growth rates between NCR and these other regions, especially those that are more agricultural since agriculture has still been growing, albeit at a minimal rate of 1 to 2 percent. One implication of this phenomenon is that families in the Metro Manila area are well advised to listen to the advice of the Government that is advocating a “balik probinsiya” (go back to the countryside) policy. The first move of people in the heart of Metro Manila could be towards the provinces of Batangas, Quezon, and Rizal where there are emerging semi-urban communities and employment opportunities, not only in high-value agriculture (vegetables, fruits, livestock) but also in construction and services (education, domestic tourism, IT-BPO). Another equally attractive region for relocation of both employment and residence would be Central Luzon, especially the so-called Pampanga Triangle consisting of Angeles, San Fernando and Clark. With all the new infrastructures whose construction is ongoing or planned (such as the railroad from Clark to Manila), Central Luzon will be a bustling metropolis in no time soon.
In equally overcrowded Metro Cebu, families should seriously consider relocating to Iloilo (the most improved city infrastructure-wised in the Visayas), Bacolod, Dumaguete, Davao, Cagayan de Oro and General Santos, among others. It was providential that areas farther away from the Metro Manila area have been the least infected by the Corona virus. Since the virus is expected to linger long, even when a vaccine is discovered and widely distributed, it would really be wise for many families to look for opportunities of employment or entrepreneurial activities in regions as far as possible away from the National Capital Region. What is helping this return to the countryside is the increasing share of the Build, Build, Build program budget that is being allocated to infrastructures in regions outside of Metro Manila. It is encouraging to witness that the less restrictive lockdowns prevailing in areas outside the National Capital Region and Cebu are permitting the projects under the Build, Build, Build, program to resume and be given a big push in the second half of 2020 and beyond. The Government alone is setting aside P1.12 trillion pesos or 5.4 percent of GDP for the infrastructure program planned for 2021. This level of spending is expected to continue far beyond the present Administration since it will take at least another decade or so before Philippine infrastructures can come close to the quality of those of our Asian neighbors like South Korea, Taiwan, China, Singapore or even Vietnam whose per capita income is still lower than ours. Fortunately, our economic managers over at least the last three Administrations have been fiscally responsible, keeping our debt to GDP ratio and fiscal deficits at prudent levels, permitting the Government now to borrow heavily to address the COVID-19 challenge and stimulate economic recovery over the next two to three years.
Most Filipino families are headed by relatively young people below the age of forty. The young and growing population of the Philippines is one of the major reasons why our country is considered by many outside independent think tanks and institutions to be among the fastest to recover from the economic depression brought about by the pandemic. It is providential that Filipino couples have generally been spared the contraceptive mentality prevalent in many developed countries today and have maintained our fertility rate above the zero population growth level of 2.1 babies per fertile woman. The average Filipino family still has about 3 children. This is one of the reasons that the economy can quickly rebound once the pandemic is put under control, say within the next two years. A large and growing population (and in our case English speaking) is a great advantage in a world where practically all developed countries are suffering from rapid ageing and are in need of workers to supplement their own labor forces to take care of their numerous senior citizens.
We have already seen how over at least the last fifteen years, anywhere from 10 to 12 percent of our GDP came from remittances of the earnings of our Overseas Filipino Workers. Just before the pandemic, the annual figure was close to $33 billion. For 2020 and possibly 2021, we may experience a drop of 3 to 5 percent in these remittances (compared to an average 3 to 5 percent annual growth in the past). As economies in the developed world recover, there will be a large increase in the demand for Filipino workers all over the world, especially in Northeast Asia and Europe because of the premium given to Filipino workers for their soft skills, especially in health-related and hospitality services, not to mention in construction and seafaring. Even during the height of the pandemic, I have met Japanese and German nationals who are actively teaching Filipino health workers and care givers in their respective languages to prepare them for employment in their respective countries. The other sectors where the demand for Filipino Overseas Workers will be large once the global economy recovers are in education, IT, and construction.
Another economic advantage derived from a young and growing population is the stimulus it gives to domestic consumption, which in the case of the Philippines accounts for more than 70 percent of our GDP. In fact, over the last ten years our GDP growth of over 6 percent per annum has been mainly propelled by our 110 million (and growing) population spending on a wide range of consumer goods and services. Unlike many of our East Asian neighbors, we are not heavily dependent on exports for our GDP growth. Even when the whole world is suffering from a recession (as in 1997 to 1999 and 2008 to 2012), our GDP can still grow reasonably fast since our businesses have a large market to which to sell. That is why as long as we can put a limit to the number and degree of the lockdowns occasioned by the pandemic which will allow Filipino consumers to start spending on more than the basic of food, shelter and clothing, our consumption-driven growth will resume. Together with the stimulus packages from the Government and resumed investments from both domestic and foreign businesses, we can return to the 6 to 7 percent growth path by 2022. In fact, growth rates of 7 to 9 percent are possible if we are able to address with some degree of success the growth dampeners, such as very low agricultural productivity, obstacle to doing business put up by national or local government agencies, corruption and poor governance, very high electricity rates, poor internet connections and shortage of technical skills (due to the obsession with a college diploma of most parents and their children). To be continued.
The Filipino Family Post Pandemic (Part 3)
October 20, 2020
The misallocation of our abundant human resources as evidenced by a shortage of technical skills, such as those in construction, highlights the importance of enlightened parents’ participation in the choice of careers, occupations or professions by their children. This brings up the whole issue of how the pandemic has given parents a wider opportunity to be the “first educators” of their children. The long months of lockdowns which enabled parents to spend a great deal more of time, especially with their children below 20 years of age who were among those whose movements were restricted, hopefully have reminded parents at all social levels of what St. Josemaria Escriva, the modern saint who has taught and written most about marriage and family life, has emphasized about the role of parents in the education of their children. Quoting from an article in the Opus Dei website entitled 14 Questions about the Family, St. Josemaria taught: “The parents are the first people responsible for the education of their children, in human as well as in spiritual matters. They should be conscious of the extent of their responsibility. To fulfil it, they need prudence, understanding, a capacity to love and a concern for giving good example…Imposing things by force, in an authoritarian manner, is not the right way to teach. The ideal attitude of parents lie more in becoming their children’s friends—friends who will be willing to share their anxieties, who will listen to their problems, who will help them in an effective and agreeable way…Being a father or a mother is not simply a matter of bringing children into the world. The capacity for generation, which is a share in the creative power of God, is meant to have a continuation. Parents are called to cooperate with the Holy Spirit in the development of their children into men and women who will be authentic Christians.”
A very important part of being “an authentic Christian” is to use one’s talents and gifts for the common good of society. Hopefully, the five or more months of very close contact of parents with their young children have reopened the eyes of parents on how they can take a more active part in the moral, intellectual and spiritual formation of their children. I would consider this opportunity for closer bonding of parents with their children as another blessing in disguise of the pandemic. This enforced confinement, so to speak, in the home has given parents the opportunities to make up for their previous lack of time devoted to their children (because of work and other commitments) and observe more closely the moral virtues and intellectual achievements in which their children can grow more. This greater time spent at home should have given parents clearer ideas on the very important balance between exercising parental authority and educating their children in the proper use of their freedom. Again, St. Josemaria gives the most practical advice about how to make this difficult balancing act that has bothered parents since time immemorial: “I always advise parents to try to be friends with their children. The parental authority which the rearing of children requires can be perfectly harmonized with friendship, which means putting themselves, in some way, on the same level as their children…Children—even those who seem intractable and unresponsive—always want this closeness, this fraternity, with their parents. It is a question of trust. Parents should bring up their children in an atmosphere of friendship, never giving the impression that they do not trust them. They should give them freedom and teach them how to use it with personal responsibility…It is better for parents to let themselves ‘be fooled’ once in a while, because the trust that they have shown will make the children themselves feel ashamed of having abused it—they will correct themselves. On the other hand, if they have no freedom, if they see that no one trusts them, they will always be inclined to deceive their parents.”
This greater involvement parents as the first educators will actually be heightened by the “new normal” in education resulting from the pandemic. Until face-to-face classes can be held again (which may still be in the first quarter of 2021), formal education at all levels will be delivered through distance learning. A great deal of learning even of the youngest children will have to happen at home either through digital means or through learning modules that will be distributed to the students. At least at the primary and secondary levels, the parents cannot shirk their responsibility of assisting their children adapt to this new normal in the educational process. Parents will have to take more seriously the various seminars that will be sponsored by the schools in which their children are enrolled about the nature of blended learning. No matter how busy they are in both their professional occupations and household work, both parents must participate in some form of home schooling. They will have to acquire a minimum understanding of what synchronous and asynchronous online sessions, the Canvass learning management system and other learning modalities are all about. Fortunately, some of the educational institutions that are leading in the transition to on-line distance learning, such as the schools of the Affordable Private Education Centre (APEC) founded by the Ayala group and the Far Eastern University, are actively educating parents on how they can assist their children at home in making the most out of this new normal in the delivery of formal education at the basic education level.
In terms of the family budget, a larger percentage will have to be devoted to improving internet connections for those who can afford them and to constantly upgrade such digital devices as smart phones, lap tops, desk tops and other items I foresee a shift of family expenditures from such non-basic items such as eating out, foreign traveling, lavish celebrations like those during weddings, anniversaries, graduations, birthdays, etc. towards requirements of the new normal, e.g. digital tools and services. In fact, there are already anecdotical reports that parents from lower-income households are already bartering poultry and other agricultural products with second-hand smart phones and other digital devices so that they their children will be able to participate in the blended learning that even the public schools are obliged by the circumstances to adopt. Especially for those households at the middle-income level, the pandemic has already resulted in a drastic change in consumption patterns. The consumer goods and services that will constitute the bulk of their expenditures will also shift towards pharmaceutical and other products needed for health and wellness, hospital and other medical fees and products and services that will strengthen their immunity not only against COVID-19, which is expected to linger for a long time, but also other types of illnesses.
A recent study by economists from the Philippine Institute of Development Studies (PIDS) reported a slight delay in the Philippines graduating from low-middle-income to upper-middle-income status that has been caused by COVID-19. It is expected, though, that within the next five years or so, the Philippines can attain the upper-middle-income status by attaining a per capita income of more than $4,000. At this level, aspirations of households include educating children until college, owning a car, owning a medium-sized house, finding time to relax with family and friends, owning a business and being able to travel around the world. Once the economy is able to attain a GDP annual growth rate at the pre-pandemic level of 6 to 7 percent, these aspirations will lead to a recovery in the sales of the automotive industry, a continuation of the growth of the economic housing segment of the real estate industry, and a moderate recovery of the restaurant business which is essential for relaxing with family and friends. The desire to travel abroad may have to be postponed for a much longer time. What could grow almost instantly once people are allowed to move more freely from one province to another and from one island to another is domestic tourism. Before the pandemic, there were over 60 million middle-class people who spent part of their leisure time traveling to the many tourist destinations within the Philippine Archipelago. It will be domestic tourism that will enable the hospitality industry to recover. For comments, my email address is email@example.com.