The worst economic impact of the pandemic is not the huge fall in the GDP of 16.5 per cent in the third quarter and a forecasted overall decline for the whole year of anywhere from 7 to 10 percent.  What should worry us most is that 4.5 million more Filipinos may slide back to poverty as future waves of the virus may require more strict lockdowns as is happening in many countries all over the world.  This means that there could be as many as 22.2 million Filipinos living in dehumanizing conditions by the end of 2020, considering that in 2018 there were 17.7 million Filipinos living in poverty.  Worldwide, the United Nations already is resigned to the fact that the goal of eradicating extreme poverty by 2030, a key Sustainable Development Goal (SDG) may no longer be possible as the Coronavirus pandemic wipes out a decade’s worth of gains on this front in the worst case scenario.  In a policy brief dated October 5, 2020, the UN Department of Economic and Social Affairs estimated that 3.5 percent of Asia’s population would remain poor by 2030 while the worldwide share of extreme poor is estimated to be at a higher 5.6 percent.  Even in the most optimistic scenario, where GDP per capita growth is assumed to average 6.9 to 9.9 percent and income equality falls by 25 to 50 percent, 1.4 to 1.9 percent of the population of Asia and 2.7 to 4.2 percent globally will stay poor.

         These figures should not just be regarded as cold facts by those who are better off in their living conditions but should serve as a strong spur for all concerned citizens to do everything possible to apply emergency measures to immediately alleviate the sufferings of the poor and, more importantly, to address the structural roots of mass poverty.  We cannot possibly consider the so-called New Normal to which we are aspiring after putting the pandemic under reasonable control just to be business as usual as regards the practices and structures of our so-called “free market” economy.  Pope Francis issued a herald call in his latest encyclical  Fratelli Tutti (All Brethren)  when he wrote:  “The world was relentlessly moving towards an economy that, thanks to technological progress, sought to reduce ‘human costs’ : there were those who would have had us believe that freedom of the market was sufficient to keep everything secure.  Yet the brutal and unforeseen blow of this uncontrolled pandemic forces us to recover our concern for human beings, for everyone, rather than for the benefit of a few.  Today we can recognize that we fed ourselves on dreams of splendor and grandeur, and ended up consuming distraction, insularity and solitude.  We gorged ourselves on networking, and lost the taste of fraternity.  We looked for quick and safe results, only to find ourselves overwhelmed by impatience and anxiety.  Prisoners of a virtual reality, we lost the taste and flavor of the truly real.  The pain, uncertainty and fear, and the realization of our own limitations, brought on by the pandemic have only made it only  more  urgent that we rethink our styles of life, our relationships, the organization of our societies and, above all, the meaning of our existence.”

         All of Philippine society—the Government, civil society and the business sector—must be one in thinking first of how to reduce the number of those who are below the poverty incidence, before thinking of how to help big business survive.  Big business is indeed important for generating employment and producing essential goods and services for the masses.  But it has been proved time and again that the so-called “trickle down” approach does not work.  Even if big business is greatly benefited by a high growth of the Gross Domestic Product, the success of the business sector does not always translate to the alleviation of the sufferings of the poorest of the poor.  That is why as an economist, I am less concerned about what will happen to the GDP this year.  The drop of 16.5 percent in our GDP in the second quarter of 2020 was not as meaningful to me as the fact that the poverty incidence increased from 16.7 per cent in 2019 to 17.5 percent during the pandemic and that some 4.5 million more Filipinos could slide back to poverty if 75 percent of the economy goes into a strict form of lockdown if there are future waves of the Coronavirus.  The highest priority must be given to address the short-term sufferings of these millions of Filipinos struggling to put body and soul together.

         The first order of the day is the effective and graft-free implementation of the Bayanihan 2 Recover as One package by the Government.  It is quite clear that in the dire circumstances in which we are the market should take second place to the State in addressing the problem of mass poverty.  Fortunately, at least over the last decade or so our fiscal managers have been quite responsible in keeping our fiscal deficit and debt-to-GDP ratio under control.  During these hard times, our Government can afford to borrow aggressively without endangering our financial stability.  It is also providential that even the International Monetary Finance (IMF) has been very vocal in encouraging governments to use as much fiscal stimulus as possible to address the negative economic impact of the pandemic.  Our Government has already committed some P165 billion to the Bayanihan 2 To Recover as One Program.  Some P140 billion is being appropriated for various emergency packages and P25 billion as standby fund.

         Because the economic environment will be abnormal for at least for the next twelve to eighteen months as we face the possibility of new waves of the virus, as is already happening in many countries in Europe and elsewhere, spending should be directly aimed at alleviating the short-term basic needs of the poor, such as nutrition, health and basic education for the children.  Assistance to industry, whether large or small, should be subordinated to alleviating the sufferings of the poor over the short run.  There should be more emphasis on programs similar to the Pantawid Pampamilya Pilipinas Program (4 P) which consisted in conditional cash transfers to poor households to immediately improve their health, nutrition and education.  The beneficiaries should be the poorest of the poor, i.e. farmers, fisherfolk, homeless families, indigenous peoples, those in the informal sector, those in geographically isolated areas and places with no electricity.  Especially as regards the children of these households, if they are not immediately helped to attain a minimum level of material welfare, they will be forever damaged and will always be handicapped in their adulthood vis-a-vis the children of the well to do.  For example, if because of the pandemic, children of the poor household do not get enough nutrition (especially protein), their brains would be already permanently damaged and would therefore find it hard to be productive citizens when they grow up.  The same can be said about the health and educational opportunities of the children of the poor. 

         Therefore, the Government, private business and civil society should give the highest priority in the next twelve to eighteen months, when the pandemic is still expected to be raging, to direct cash assistance to the poorest of the poor, close to 22 million people who fall below the poverty line of about P50 per person per day.  As was the policy in the 4 P program of the Department of Social Welfare and Development, there should be strict conditions to be imposed for those who receive the cash assistance.  Among them are:  a) pregnant women should avail of pre-natal service, give birth in a health facility attended by a skilled health professional and receive post-partum and post-natal care for the newborn;  b) children one to fourteen must avail of deworming pills at least twice a year; c) children 3 to 18 years must have school attendance of 85 percent; and d) at least one responsible person must attend family development sessions conducted by the DSWD.  We should put physical survival of the poorest of the poor ahead of subsidizing businesses, whether large and small.  The poorest of the poor may be the least vulnerable to COVID-19 but their life or at least long-term physical and mental health may be at risk if in the next twelve to eighteen months they don’t have the wherewithal to feed themselves, receive a minimum of health care and have their children access basic education services.  (To be continued).                  

Giving Priority to the Poor (Part 2)

November 17, 2020  

         Since over 50 percent of the meager income of the poorest of the poor is spent on food, it is only logical that whatever short-term program will be devised to help them survive during the pandemic is to give them access to sufficient food, especially for their children who are the ones most harmed by inadequate or unhealthy nutrition.  Part of the 4 P program could be given in kind, especially in the form of rice and milk.  Since government resources are always never enough for these emergency solutions, civil society and the business sector must think of creative solutions to the problem of hunger among the poorest of the poor.  NGOs, with the help of the business sector, must try to replicate the experiences of the Philippine Food Bank Foundation (foodbank.org.ph) , which for the last four years have benefited close to four million poor Filipinos, especially children, by recycling soon-to-expire (SOTEX) processed food products from food processing companies like Alaska, Nutriasia, Century Can, and Del Monte as well as restaurants like Jollibee, Max’s Group, Starbuck, Mary Grace, and Krispy Kreme.   These food products are distributed through the appropriate logistics to orphanages, prisons, schools where the children of the poor study, feeding clinics and other institutions where the poorest of the poor are given shelter.  The Foundation has been also successful in approaching social clubs as the Makati Sports Club to share their surplus food resulting from banquets and other celebrations so that they can be distributed to families of informal settlers and especially orphanages run by religious organizations.

         Since hunger will continue to be a serious problem during the pandemic, I encourage many middle and high-income families to replicate at a smaller scale the model of the Philippine Food Bank Foundation.  Especially now that there are a good number of  households where some of the members have been using their culinary skills to come out with all types of dishes and confectionaries, some enterprising millennials and centennials  living in the gated subdivisions where these households are can use their logistical expertise to gather surplus or soon-to-expire food items that can then be distributed to nearby informal settlers.  It is rare to find subdivisions of well to do families in the National Capital Region that are not close to communities of informal settlers, whether they be in Makati, Pasig, Quezon City, Taguig, or elsewhere.  In fact, collecting these surplus products or soon-to-expire dishes and distributing them to needy families would be a very appropriate way of developing experience and skills in this most important sector of supply chain management.  The vehicles used need not be more sophisticated than what drivers of Grab or similar delivery services utilize.  These smaller-scale replications of the Philippine Food Bank Foundation and similar large food distribution foundations can be started in other metropolitan areas such as Metro Pampanga, Metro Cebu, Metro Davao, Metro Iloilo and Metro Cagayan de Oro.

         Another model that can be followed is that described by former Undersecretary of Agriculture and of Trade and Industry, Ernie Ordonez, in his regular column in The Inquirer.  In fact, he presents an even more dire set of statistics about the hunger rate in the Philippines.  According to him, the rate increased from 9 percent last December 2019 to 31 percent in September 2020.  He confirms the view that no matter how determined the Government is to address the dire consequence of the pandemic, these efforts are never enough.  The private sector will have to fill in the gaps.   He cited the laudable efforts of Mr. Jose Ma. Montelibano, special projects head of Gawad Kalinga and chair of Ateneo de Manila University 616569 Foundation, who has been involved in feeding programs for both organizations for the last ten years.  Montelibano led the organization of the Walang Iwanan Alliance (WIA) whose main mission is to increase awareness of the hunger issue. He developed a platform that will fund donations to credible organizations with a successful track record in high priority hunger areas.  WIA can handle donations as small as P100, which can provide one meal for one day to four hungry people.  Its battlecry is “Kung hindi gutom, kayang tumulong” (if one is not hungry, he can help).  WIA keeps a platform that has a database of where the hungry are and which private sector groups are already helping in those areas.  The WIA operating in Metro Manila is supported by people like former education secretary Brother Armin Luistro, president of the Philippine Business for Social Progress.  Another private sector group very active in hunger alleviation is led by Vicky Wienecke, President of Kabisig ng Kalahi which has a multi awarded 20-year track record.  Globe Telecom studied WIA and officially announced a Globe Rewards program for WIA (Website: walangiwananalliance.com, phone 0916-533-3311, 0908-688-3300).

         There should be similar initiatives in addressing the health and wellness needs of the poorest of the poor.  Efforts of the Department of Health and other public agencies are also never enough, especially considering the unfortunate corrupt practices that have been uncovered in the implementation of public health programs.  An equivalent foundation to the Philippine Food Bank Foundation should be organized to distribute soon-to-expire medicine from the local and multinational pharmaceutical firms.  People in the medical and nursing profession who are not in the front line of addressing the COVID-19 pandemic should be organizing numerous medical missions to the poorest rural districts where medical attention is either scarce or non-existent.  Private hospitals, within bounds of financial stability, should be encouraged to provide free medical attention to the most marginalized households in their districts.  Potential beneficiaries can be taken from the list of 4P program of the Government, especially for pre-natal and post-partum and post-natal care.  The model of the foreign organization Medicins Sans Frontieres should be replicated by Filipino doctors within the Archipelago, especially in the most far flung areas.

         The third sector in which there should be civil society initiative in helping the poorest of the poor is education.  We should make it possible for their children to acquire an adequate education at the basic education level in the public schools.  With all the challenges being faced by most families in addressing the shift to blended education for their children, there should a special attention to what the children of poor households need in terms of digital devices and services.  Community centers should be put up by private foundations in depressed areas where public school children would be provided adequate space and facilities for “home learning” since their own homes would be completely inadequate for this purpose.  This community center should serve as “study centers” where families of the well to do can donate their second hand smart phones, I-Pads and laptops so that they can be used by the pupils for the necessary online learning (although most of them would still be using printed teaching modules).  It is difficult to predict when face to face classroom instruction will be widely permitted.  We cannot allow a whole generation of children to be left behind because of their lack of access to the necessary blended learning that is now being implemented in schools at all levels.  These are only preliminary ideas about what those who are better off in life can do now to make sure the poorest of the poor are not left behind.  For comments, my email address is bernardo.villegas@uap.asia.