Getting richer?

The Economist, a respected publication that usually tells you the whole story, has come up with a report on the Philippines titled: Without fanfare, the Philippines is getting richer. If you only read the headline, you would think it is an advertorial supplement bought by the government.

I have problems with impressions made from economic data presented out of context. The reality may not be as hopeful as the numbers may seem to suggest.

The Economist carelessly claims “The country is at a demographic sweet spot, with a bulge of working age citizens. With half of its people still living in the countryside, there is plenty of potential to shift from farming to better paid urban jobs...”

That’s a mouthful. The demographic sweet spot may not really be that sweet. We may have a bulge of working age citizens but many are unemployed or unemployable. That’s a sour spot. The economy simply cannot produce the kind and number of jobs to take advantage of this demographic sweet spot.

Worse, the education system has all but collapsed and those working age citizens, according to international tests, can hardly read, write or count to save their lives. Rather than contribute to economic growth, they are a burden dependent on government hand-outs or on the patronage of corrupt politicians.

The Economist is mistaken. Those still in the countryside can hardly hope to shift from farming to a limited number of better paid urban jobs. Our manufacturing sector is pitifully small and the jobs there require some amount of training and skills migrants from the farms do not have. Most likely, workers fleeing the farms end up abroad as construction laborers or household workers. That’s how they feed and educate the families they left behind.

The Economist rightly acknowledges the contributions of our OFWs. “Though their numbers are equivalent to a mere four percent of the labor force, they send home the equivalent of nine percent of GDP, a cash gusher that flowed steadily even during the pandemic. Remittances kickstart small businesses in every village.”

Then there are the BPOs or the business process outsourcing industry. It employs more than 1.7 million people. It is one of only two legs of our economy, the other being OFWs. The Economist quotes the industry association spokesman predicting “revenue growth of nearly nine percent in 2024 to $40 billion, as banks and health insurers move more back-office operations offshore.”

And our BPO industry is not afraid of artificial intelligence destroying jobs. They told The Economist that because their main challenge is getting sufficiently skilled staff, AI could help make the less capable ones more productive. But I hear from some in the industry that they are starting to lose jobs on the lower end of the business to AI. And if Trump wins and decides to bring back overseas outsourcing jobs to the US, where will we be?

Sorry but contrary to the kicker in The Economist article, a Trump-proof tiger we are not.

The Economist suggested adding another leg to our economy: tourism. That, even as it acknowledged that our tourism sector “attracted only a fifth as many international tourists as Thailand in 2022, partly because it is so hard to get there. CLSA, a bank, predicts that annual tourist arrivals will soar from 5.5 million in 2023 to 43 million by 2030 and tourism revenues will grow from nine percent of GDP to a hefty 22 percent.” That’s assuming China doesn’t prevent their tourists from coming over.

My main beef about the article is the impression that we are indeed getting richer. Assuming it is true based on some macroeconomic figures, war-torn Vietnam was a lot poorer than us in the 80s, but is richer than us today. What did we do wrong and is still doing wrong today?

Our government technocrats and their political-bosses love to say we will soon become an upper-middle income country based on the World Bank’s definition. But as UP economist JC Punongbayan pointed out, “we were projected to achieve this status as early as 2018. Six years later, we’re still dreaming of it. Indonesia made the transition just this year and Vietnam is on track to cross over faster than us. We must all ask: why is the Philippines taking too long to become an upper middle-income country?”

Still, The Economist captured the essence of where we are today, the optimistic claims of our economic managers notwithstanding. “The Philippines,” The Economist declared, “is often an afterthought for investors: neither a giant like India nor a manufacturing superstar like Vietnam.”

Most misleading about the article’s headline is how it ignores the cruel fact that most of our people do not feel getting rich at all. The national Social Weather Survey of March 21-25, 2024, found 46 percent of Filipino families rating themselves as Mahirap or Poor, 30 percent rating themselves as Borderline (by placing themselves on a horizontal line dividing Poor and Not Poor), and 23 percent rated themselves as Hindi Mahirap or Not Poor. In other words, 76 percent of Filipinos think they are poor or near poor.

The Economist may have been fooled about our country quietly getting rich. What they really saw was our economic elite getting richer and richer while leaving the vast majority behind. That’s a widening gap that spells worsening social inequality. It is a social time bomb.

I expected more from The Economist to at least not mislead our people who are already daily misled by our political leaders. Reality should keep everyone on their toes, because there is so much more to do before we can say we have turned the corner and are truly getting richer.

Boo Chanco’s email address is [email protected]. Follow him on Twitter @boochanco