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Business

Rich got richer after COVID

DEMAND AND SUPPLY - Boo Chanco - The Philippine Star

The COVID pandemic has exacerbated economic inequality across the world, particularly in developing countries like the Philippines. You would think that with the lockdowns adversely affecting businesses, the misery was fairly distributed among all social classes.

According to Forbes magazine, the wealth of Philippine tycoons surged by 30 percent amid the pandemic.

Topping the Forbes 2021 Philippines Rich List were the heirs of the late SM Group founder Henry T. Sy, Sr., with a $16.6 billion fortune after gaining $2.7 billion this year. The closure of malls and the property sector in hibernation didn’t negatively affect their bottomline.

Real estate tycoon and former Senate president Manuel B. Villar, Jr. saw his wealth increase by $1.7 billion to $6.7 billion this year. In April, Forbes named Mr. Villar the Philippines’ richest man. Again the slump in property sales didn’t dent Manny’s bankbook.

Overall, the 50 richest families and individuals in the Philippines saw a “robust recovery”, as their collective wealth surged by 30 percent to $79 billion (P3.94 trillion) this year, even as the pandemic continued, according to Forbes. That’s because the economy did rather well, and as usual there was no trickle down.

Forbes said the Sy family, Mr. Villar, and Mr. Enrique Razon, Jr of ICTSI, Solaire, and now Manila Water, were also the biggest dollar gainers this year, adding nearly $6 billion to their wealth.

Google confirmed the rising inequality in the post-COVID environment, based on an analysis of Google searches.

“While everyone’s way of life has undoubtedly shifted this past year, the pandemic didn’t affect everyone the same way. It not only exposed existing inequalities, but accelerated them,” Google observed.

The ‘inequality virus,’ was harsher on the poor. “While many of these inequalities existed before COVID-19,” Google observed, “the pandemic has played a role in exacerbating them, and the most vulnerable in society have been disproportionately hit.”

More specifically, Google cited how lower income households experienced a higher concentration of job losses, while their children missed twice as many days in a school year compared with those from high income families.

“In the Philippines, women, too, suffered increased violence, with increased calls to domestic violence helplines and increased searches related to violence against women and children.”

To overcome these inequalities, Google reports that people are searching online for solutions to help themselves and their communities. Their searches range from unemployment benefits and “buy now pay later” financing options to topics on discrimination and women’s rights, reflecting their growing interest in social issues.

It is the same story from Oxfam. It published a report claiming that the COVID-19 pandemic had resulted in a “staggering rise in inequality” in Asia, inflating the wealth of the region’s billionaires by $1.46 trillion while pushing tens of millions into poverty. Oxfam also observed that COVID-19 has “set back progress on equitable development by decades.”

“While rich elites are able to protect their health and wealth, the poorest people and minorities face a greater risk of illness, death, and destitution,” Oxfam reports.

“While the wealthy were able to shield themselves from the full impact of the coronavirus, secluding themselves in gated communities or traveling abroad to avoid the worst of the lockdowns, such options were not available to those filling out the wide base of the region’s wealth pyramid.

“The poorest Asians also lack ready access to proper healthcare services, including to treat COVID-19 if they catch it. The report cites a statistic showing that as of August 2020, 46 percent of people in the Philippines reported missing out on medical attention due to a lack of money. By May 2021, this had increased to 59 percent.”

There are long term implications to all these. The most threatening is leaving the poor wide open to the overtures of authoritarian populists. And there goes our democracy.

Indeed, The Diplomat traces the global democratic retreat to “the economic inequality that has drained the legitimacy and prestige of democratic political systems and opened up a space for authoritarian leaders.”

The rise of Rodrigo Duterte, The Diplomat observed, can be traced “from the years of liberal elite failure that made it reasonable for an ordinary Filipino, slipping through a threadbare social safety net and facing the daily reality of the country’s rampant drug problem, to consider someone like Duterte a viable solution.”

The statistics cited by Dr. Jose Ramon Albert in a PIDS paper describes the challenge well.

“In particular, 47.7 percent of households are low-income, while about half (50.1 percent) are middle-income, and 2.1 percent are high-income.

“Of the middle-class households, about two thirds (63.6 percent) are in the lower middle group (comprising about 7.6 million households), about a quarter (26.2 percent) are middle middle group (consisting of 3.1 million households), and a tenth (10.1 percent) are in the upper middle group (made up of 1.2 million households)...”

The eruption of the social volcano is held at bay by the ability of Filipinos to get jobs abroad.

“Among the estimated 23.7 million households in 2018, three-tenths (29.7 percent) had overseas remittances. Their remittances averaged P100,000, slightly more than a quarter of total household income… more than half of these households with remittances were either from lower middle-income (37.2 percent) or low income, but not poor (27.0 percent).”

But even here, those who are in the lowest socio-economic segment of our society are not able to benefit from overseas work probably due to lack of skills.

“Only one in 20 households with remittances were from the poor (5.7 percent). Lower middle-income families received an average of P80,000, double the levels of the low income, but not poor, and four times the average remittance levels received by poor households…”

So, that’s an urgent concern that the new administration must deal with, hopefully with the active cooperation of our society’s richest families. Filipino billionaires may not realize it, but their own survival is at stake in this social powder keg environment.

 

 

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

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