The IATF needs new blood

THE CORNER ORACLE - Andrew J. Masigan (The Philippine Star) - August 26, 2020 - 12:00am

In a survey conducted last July, the Social Weather Station announced that 27.3 million adult Filipinos, representing 45.5 percent of the workforce, are currently unemployed. Last December, the number of jobless Filipinos stood at only at 7.9 million. This means that 19.4 million have lost their jobs since the onset of the pandemic. The reduction in workforce tells us that productivity of Philippine enterprises have been slashed by a third.

People are going hungry and corporate Philippines, especially micro, small and medium sized enterprises (MSMEs), are hemorrhaging. While there are no official numbers as to how many businesses have fallen into insolvency, a mathematical estimate suggests that a whopping 72 percent of all MSMEs have either closed permanently or significantly downsized.Between 250,000 to 450,000 MSMEs have already gone belly-up. This explains the alarming unemployment rate.

Unfortunately, the anti-virus response of the Duterte administration has wrought more damage to the economy than need be. Our leaders should have known better than to impose a militaristic quarantine on an economy that is 72 percent dependent on consumer spending. They should have been more sparing in extending the ECQ and MECQ .

Our leaders clearly underestimated the effects of its militaristic tactics. I was told by a Cabinet member, no less, that even our economic managers were shocked by the 16.5 percent economic contraction in the second quarter. They expected a drop of 10 percent , maximum. This only means that they never had a firm grasp of the damage they were causing when they imposed the ECQ. I expected the Finance Department and NEDA to know better.

Government’s 2020 projection of a 3.4 percent contraction is now a pipe dream. British banking giant, HSBC, provides a more credible forecast at -9.6 percent.

Meanwhile, our COVID situation is dire. Infection rates have been increasing by 2.2X every month since April. At this rate, infections will reach 650,000 by October and 1.4 million by November. The healthcare system is in desperate need of additional capacity.

What stings bitterly is that despite government’s militaristic tactics and the devastation on the economy, it has failed to curb infection rates. Clearly, something must change.

The IATF and the entire Cabinet have done their best. They are tired too. But they must accept that its current strategies are pulverizing both the economy and our state of health, in equal measure. It must acknowledge that a shift in strategy is needed to arrest the situation. As a citizen, I implore our leaders to please add an epidemiologist and a team of economists to the IATF. Better yet, accept the offer of the Philippine Chamber of Commerce and Industry to sit in the IATF table. I am aware that the composition of the IATF is mandated by Executive Order 168. Still, the IATF must recognize that it needs professional insights and fresh points of view to come out with better strategies.

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As mentioned earlier, hundreds of thousands of businesses have already closed permanently while those still operating are fighting for their lives. Given the desperate situation, you would think that government would make their plight easier.

I recently reviewed the Covid guidelines of the DOLE and DTI which local businesses must follow. Going through the 22-page circular, it was obvious that these agencies are completely oblivious to the plight of our entrepreneurs. Imbedded in the guidelines are mandatory requirements that put frivolous financial burden on private firms or stand in the way of their productivity. Here are some examples.

One of the requirements is that firms must facilitate quarterly COVID (RT-PCR) tests for their employees. The guidelines state that that employees must not be made to foot the bill. Neither will government. In other words, the employer must absorb the cost. The cheapest test cost P4,300 from a reputable hospital. Multiply this by the number of employees and this results to a heavy financial burden that eats up on working capital.

Another unreasonable requirement is for companies to provide psychological support for their employees and a good work-life balance. The geniuses behind DOLE and DTI forget that we are at war – a war that threatens our very existence. Struggling entrepreneurs are cutting cost at every turn and simply do not have the resources to retain a psychologist, let alone absorb the cost to cushion their employee’s from stress. Everyone is under stress. Having a psychologist is a luxury only a handful can afford. This provision was clearly written by someone in an ivory tower.

The DTI and DOLE further require employers to provide medical insurance  or HMOs for their employees, as if it were affordable for all. They also require free shuttle services for and a dedicated isolation room within the office or factory premises. Again, the DTI and DOLE leave it to the businesses to foot the bill.

But the most preposterous provision is that whole buildings must close for disinfection for 48 hours should there be a single person confirmed with COVID. Most buildings house hundreds of enterprises. The lost productivity, lost sales and lost business opportunities of a 48-hour closure is enormous. This provision is a shotgun approach that does not consider economic consequences. Why can’t we simply follow the world standard of office isolation, disinfection and contact tracing?

The above examples exemplify how detached the bureaucrats of DTI and DOLE are from reality. In their minds, businesses can still afford frivolous expenses. Reality Check – MSMEs are in the midst of a bloodbath and every peso saved means another day of survival. The DTI and DOLE should support Filipino enterprisers, not add to their burden.

It is not as if government provides generous subsidies like they do in other countries. Despite the press release that billions have been allotted to help MSMEs in distress, the reality is that MSMEs must still go through the banking system to access these loans. Problem is, banks shy away from MSMEs and industries deemed high-risk. As a result, most MSMEs end up with nothing.

Since the start of the pandemic, government has always said that they prioritize lives over livelihood – health over the economy. But we have reached a point wherein the very backbone of the economy (the MSMEs) has cracked. Millions are unemployed and facing hunger, desperation and anguish. Health should no longer have precedence over the economy. Both require equal care. All these underscores the need for new blood at the IATF.

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