Benefits of strong GDP growth have not trickled down to the grassroots

MANILA, Philippines - The economy’s stronger-than-expected economic growth of 7.9 percent in the second quarter of the year has not trickled down to the grassroots, according to the non-government think-tank and research group IBON.

IBON pointed out that economic growth has not been translating to higher wages and employment.

“Even as government reports a “scintillating” 7.9 percent growth in the gross domestic product (GDP) in the second quarter and two consecutive periods of “above-trend growth”, this has not been accompanied by corresponding increases in real jobs and decent wages,” IBON said.

It pointed out that employment only registered a 1.2 percent growth in April 2010 from a year ago which, it said, could not keep pace with the growth of the labor force or the working age population.

“Unemployment continued to rise to 4.7 million in April 2010 and the unemployment rate of 11.6 percent is the worst in Asia. The agriculture sector meanwhile lost 802,000 jobs in April,” it said.

According to IBON, only companies that raked in profits grew along with the economic expansion.

“What has instead grown with the economic expansion is an increase in the profits of the top 1,000 corporations from P116.4 billion in 2001 to as much as P686.3 billion in 2007. Profitability or the rate of profits against revenues also increased from 3.2 percent in 2001 to 11.7 percent in 2007. There was a decrease in profits to P415.1 billion in 2008, presumably due to the global economic crisis, but there was still a 7.02 percent profitability alongside a zero percent wage increase,” it said.

IBON said the economy’s fundamentals remain weak and that it should remain an urgent concern for the Aquino administration.

Socioeconomic Planning Secretary Cayetano Paderanga Jr., for his part, said the government would continue to improve the business climate in the country so that it would be able to attract enough investments.

The government is targeting an economic growth of five percent to six percent for the full year.