Palace toots horn on hunger decline

HUNGER GAMES Street dwellers take their meals on the pavement along a busy road in Manila. Malacañang claimed credit for the improved numbers shown in the latest SWS survey. PHOTO RUY L. MARTINEZ

MALACAÑANG on Tuesday attributed the decline in the number of families experiencing “involuntary” hunger in the first quarter of the year to the success of its social welfare program.

“The welfare of the Filipino people has always been at the front and center of the Aquino administration,” its spokesman Edwin Lacierda said in a statement.

The Palace official made the statement in reaction to the release of a Social Weather Stations (SWS) survey showing the nation’s hunger rate for the first quarter of the year declining to 13.5 percent (around 3 million families) from 17.2 percent (3.8 million families) recorded in December 2014.

The 3.7 point decline was the lowest in 10 years, the SWS said.

The March 2015 survey showed that 11.1 percent or an estimated 2.5 million families experienced moderate hunger while 2.4 percent or 522,000 families endured severe hunger in the last three months.

The survey was conducted from March 20 to 23 among 1,200 adults nationwide.

“Moderate Hunger refers to those who experienced hunger only once or a few times in the last three months, while Severe Hunger refers to those who experienced it often or always in the last three months,” the SWS said.

The 2015 first quarter hunger survey was released just a week after the first quarter self-rated poverty among Filipino families was reported at 51 percent, a point below 2014’s fourth quarter of 52 percent.

The first three months’ self-rated food poverty also dropped to 36 percent from the previous quarter’s 41 percent.

Quality of life

Lacierda said government initiatives, such as the conditional cash transfer program and the expansion of PhilHealth coverage and reforms in basic education, among others, were among the factors that contributed to the decline.

The numbers and the rhetorics, however, did not impress 72-year-old Elena who hops from one fastfood restaurant to another in Intramuros, Manila, to ask for leftovers from diners.

Elena, who claims to have been homeless for almost 40 years, told The Manila Times she is lucky if she gets to eat at least once a day.

Totong, a scrawny 12-year old, was sitting by the entrance of a convenience store along A. Soriano Avenue, also in Intramuros, hoping that office workers and students would take pity on him and spare him some loose change or even a piece of candy.

When asked if he had eaten for the day, the boy replied, “Hindi pa po [Not yet].”

Jennifer, 28, a sidewalk vendor, said that despite her meagee resources, she and her family could still have three square meals a day.

‘Pagpag’

The moderate Trade Union Congress of the Philippines (TUCP), however, said fewer families experienced hunger because pagpag is now readily and widely accessible to poor families especially in Metro Manila.

Pagpag is Filipino slang for leftover food scavenged from garbage cans and dumps. The word itself literally means to “shake off” and refers to the act of shaking the dirt off of the edible portion of the leftovers. - by CATHERINE TALAVERA REPORTER AND JOEL M. SY EGCO SENIOR REPORTER With JING VILLAMENTE

‘Pagpag’ caused surveyed hunger to drop?

A LABOR group on Tuesday downplayed the results of a survey by the group Social Weather Stations saying the number of people experiencing hunger had declined, saying that was due to the proliferation of “pagpag” food that is accessible to poor Filipinos especially in Metro Manila.

“Pagpag” is a Filipino term for leftover food from fast-food restaurants that is scavenged from garbage sites and dumps.

“We would like to attribute this development to the proliferation of “pagpag” food— very cheap, very delicious and easily accessible to the poor,” said Trade Union Congress of the Philippines-Nagkaisa spokesman Alan Tanjusay.

The TUCP-Nagkaisa said the Aquino administration failed to make quality living for the majority of Filipinos by not meeting three benchmarks, including raising the income of the poor.

“The government failed to make power, water, telecom services affordable and the third is that the government’s enormous savings could have been dedicated to new jobs,” the TUCP said.

SWS said about three milion Filipino families experienced “involuntary hunger” at least once during the first quarter of 2015.

The First Quarter 2015 Social Weather Survey, conducted from March 20 to 23, 2015, also showed that this was 3.7 points below the 17.2 percent (estimated at 3.8 million families) in December 2014, and the lowest in 10 years since May 2005, when it was at 12.0 percent, SWS said.

The survey firm said the measure of “Hunger” refers to involuntary suffering because the respondents answer a survey question that specifies hunger due to lack of food to eat.

SWS said both “Moderate Hunger” and “Severe Hunger” likewise declined.

The 13.5 percent total Hunger in March 2015 is the sum of 11.1 percent (estimated at 2.5 million families) who experienced Moderate Hunger and 2.4 percent (estimated at 522,000 families) who experienced Severe Hunger, SWS said.

Moderate Hunger refers to those who experienced hunger “Only Once” or “A Few Times” in the last three months, while Severe Hunger refers to those who experienced it “Often” or “Always” in the last three months.

The few who did not state their frequency of hunger were classified under Moderate Hunger.

Both Moderate Hunger and Severe Hunger fell between December 2014 and March 2015.

Moderate Hunger fell by 2.1 points, from 13.2 percent (estimated at 2.9 million families) to 11.1 percent.

Severe Hunger declined by 1.7 points from 4.1 percent (est. 888,000 families) to 2.4 percent.

Hunger fell amid the decline in Self-Rated Poverty and Self-Rated Food Poverty.

There was a 3.7-point fall in Hunger, a 1-point decline in Self-Rated Poverty, and a 5-point decline in Self-Rated Food-Poverty, between December 2014 and March 2015.

Hunger fell among the Poor, the Food-Poor, the Non-Poor and the Non-Food-Poor.

Overall Hunger (i.e. Moderate plus Severe) fell among the Self-Rated Poor by 2.1 points, from 21.3 percent in December 2014 to 19.2 percent in March 2015.

It fell among the Not Poor/On the Borderline by 5.4 points, from 12.8 percent to 7.4 percent over the same period.

It fell among the Self-Rated Food-Poor by 4.9 points, from 28.8% to 23.9 percent.

It fell among the Not Food-Poor/Food-Borderline by 1.3 points, from 9.0 percent to 7.7 percent.

At any point in time, Hunger among the Self-Rated Food-Poor is always greater than Hunger among the Self-Rated Poor. - By Vito Barcelo, Sandy Araneta | Manila Standard Today

Framework for the comprehensive management of hazardous and radioactive wastes pushed

The House of Representatives is set to approve on third and final reading a bill that would formulate a framework for the comprehensive management of hazardous and radioactive wastes.

The House Committee on Ecology, chaired by Rep. Amado S. Bagatsing (5th District, Manila), endorsed and sponsored House Bill 5585, which substituted House Bills 86, 393, 826, 1059, 2585 and 3191 authored, respectively, by Reps. Ma. Lourdes Acosta-Alba (1st District, Bukidnon), Susan A. Yap (2nd District, Tarlac), Marcelino R. Teodoro (1st District, Marikina City), Neptali M. Gonzales II (Lone District, Mandaluyong City), Douglas S. Hagedorn (3rd District, Palawan), and Raymond Democrito C. Mendoza (Party List, TUCP).

"Despite all our laws scattered in different enactments and decrees, we need a comprehensive and consolidated law that will provide us with an effective hazardous and radioactive waste management framework, which would require an inter-agency coordination both in the national and local government to oversee and make inventory of hazardous waste creators and treatment, storage and disposal facilities," Yap said.

According to Yap, there are several laws on the management of hazardous and radioactive wastes. These include Presidential Decree 1152 or "The Philippine Environmental Code," which provides a basis for an integrated waste management regulation starting from waste source to methods of disposal, mandates specific guidelines to manage municipal wastes, sanitary landfill and incineration, and disposal sites in the Philippines.

Yap also cited Republic Act 6969, the "Toxic Substances, Hazardous and Nuclear Wastes Control Act," which responds to increasing problems associated with toxic chemicals and hazardous and nuclear wastes, and Presidential Decree 984 (Pollution Control Law), PD 1586 (Environmental Impact Assessment System Law), RA 8749 (Clean Air Act); and RA9003 (Ecological Solid Waste Management Act), which require hazardous waste management.

As for RA9003, Yap said while it was lauded as a landmark legislation on proper handling of solid waste, it only went as far as defining hazardous wastes and leaving the management to the Local Government Units (LGUs) without providing sufficient enough guidance for the law.

Yap said if only there was already a law on the proper management and disposal of hazardous wastes, the 1996 Marcopper mining disaster in Marinduque would not have happened. The tragedy was one of the largest mining disasters in Philippine history that made headlines around the world, she noted.

"The discharge of mining tailings into the Boac River instantly killed the 27-kilometer long river, decimated the fish and other biodiversity in the habitat, buried at least one village underneath a toxic mud, depriving tens of thousands locals of their livelihood," Yap said.

In 2004, the Department of Environment and Natural Resources ((DSWD) registered 3,801 hazardous wastes generators, which produce 226 million tons of hazardous wastes annually. Meanwhile, the World Health Organization has estimated that, based on population projections, local healthcare waste could reach as much as 69.5 tons per day by 2050.

Just last July, the EcoWaste Coalition, an environmental non-government organization, raised the alarm on the presence of hazardous wastes dumped at Pier 18 of Manila composed of used computer hardware, chip boards, and cellular phones, which contain heavy metals that are toxic to humans.

"Our experience shows that a more comprehensive hazardous and radioactive wastes management is of extreme necessity in order to avert industrial disasters that could potentially destroy our environment and ecology, and ultimately, our people's health and safety," Yap said.

House Bill 5585, to be known as the "Hazardous and Radioactive Wastes Management Act," shall apply to the generation, possession, collection, recovery, reuse, storage, transport, treatment and disposal of hazardous and radioactive wastes in the country and shall cover the entry and transit into the Philippine territory of such wastes.

After formulating the criteria for identifying and listing of hazardous and radioactive wastes, the DENR shall prepare a National Hazardous and Radioactive Wastes Management Status Report (NHRWMS) in coordination with the Department of Health (DOH), the Philippine Nuclear Research Institute (PNRI) and other concerned agencies.

The NHRWMS Report shall be the basis in the preparation and formulating a framework that would embody the policies pursuant to the proposed Act.

The framework shall be adopted as the official blueprint for hazardous and radioactive wastes management with which all relevant government agencies must comply.

The measure creates an Inter-agency Technical Advisory Council for purposes of policy integration, harmonization and coordination of functions.

Aside from provisions of rewards and incentive schemes, the measure also provides liabilities, prohibitions, fines, damages and penalties, administrative sanctions, citizen suits and Strategic Legal Action Against Public Participation.

The DENR, the DOH and the PNRI, shall promulgate the implementing rules and regulations, in consistent with other rules and regulations issued by relevant government agencies and instrumentalities relative to hazardous and radioactive wastes management.

In addition to its mandated functions, the Joint Congressional Oversight Committee created under Republic Act 9003 or the "Ecological Solid Waste Management Act of 2000" shall also monitor the implementation of this proposed Act.

Co-authors are Reps. Christopher S. Co (Party List, AKO BICOL), Rodel M. Batocabe (Party List, AKO BICOL), Agapito H. Guanlao (Party List, BUTIL), CesarV. Sarmiento (Lone District, Catanduanes), Anthony G. Del Rosario (1st District, Davao Del Norte), Victoria G. Noel (Party List, AN WARAY), Emi G. Calixto-Rubiano (Lone District, Pasay City), Belma A. Cabilao (1st District, Zamboanga Sibugay), Dan S. Fernandez (1st District, Laguna), Mel Senen S. Sarmiento (1st District, Western Samar), Eric L. Olivarez (1st District, Paranaque City), Rolando A. Uy (1st District, Cagayan de Oro City), Napoleon S. Dy (3rd District, Isabela ), Erico Aristotle C. Aumentado (2nd District, Bohol), Evelina G. Escudero (1st District, Sorsogon), Sol Aragones (3rd District, Laguna), Ansaruddin A.M. A. Adiong (1st District, Lanao Del Sur), Cheryl P. Deloso-Montalla (2nd District, Zambales), Joseller M. Guiao (1st District, Pampanga), Imelda R. Marcos (2nd District, Ilocos Norte), Alex L. Advincula (3rd District, Cavite), Dakila Carlo E. Cua (Lone District, Quirino), Isidro T. Ungab (3rd District, Davao City), Thelma Z. Almario (2nd District, Davao Oriental), Carlos M. Padilla (Lone District, Nueva Vizcaya), Frederick F. Abueg (2nd District, Palawan), Pedro B. Acharon, Jr. (1st District, South Cotabato), Nicasio M. Aliping, Jr. (Lone District, Baguio City), Magnolia Rosa C. Antonino (4th District, Nueva Ecija), Rosa Marie J. Arenas (3rd District, Pangasinan), Leopoldo N. Bataoil (2nd District, Pangasinan), Silvestre H. Bello III (Party List, 1 BAP), Anthony M. Bravo (Party List, COOP NATCCO), Lawrence Lemuel H. Fortun (1st District, Agusan Del Norte), Gwendolyn F. Garcia (3rd District, Cebu), Ana Cristina Siquian Go (2nd District, Isabela), Anthony V. Gullas Jr.(1st District, Cebu), Fernando L. Hicap (Party List, ANAKPAWIS), Mark Llandro L. Mendoza (4th District, Batangas), Victor F. Ortega (1st District, La Union), Leah S. Paquiz (Party List, ANG NARS), Mariano U. Piamonte, Jr. (Party List, A TEACHER), Terry L. Ridon (Party List, KABATAAN), Roman T. Romulo (Lone District, Pasig City), Estrella B. Suansing (1st District, Nueva Ecija), Randolph S. Ting (3rd District, Cagayan), Eulogio R. Magsaysay (Party List, AVE), Julliette T. Uy (2nd District, Misamis Oriental), Victor J. Yu (1st District, Zamboanga Del Sur), Sharon S. Garin (Party List, AAMBIS-OWA), Pablo R. Nava III (Party List, APPEND), Jonathan A. Dela Cruz (Party List, ABAKADA), Philip A. Pichay (1st District, Surigao Del Sur), Henry S. Oaminal (2nd District, Misamis Occidental), and Arthur R. Defensor, Jr. (3rd District, Iloilo).

SOURCE: Jazmin S. Camero, Media Relations Service-PRIB Media Relations Service, Public Relations and Information Bureau

Is minimum wage bad for poor?

“March of Labor in the Philippines” by Neil Doloricon, one of the 30 paintings at SiningSaysay art exhibit about Philippine history at Gallery Mall in Cubao, Quezon City. LEO M. SABANGAN II

It is one of our most enduring shibboleths: “Workers are entitled to a just wage, which is defined as no lower than a legal minimum wage (LMW). Only in this manner can we reduce poverty and achieve social justice.”

This logic seems irrefutable. However, recent Philippine studies estimating the impact of LMW on employment and household income have raised serious questions about the wisdom of this generalization.

The good intentions behind LMW may have unintended consequences that are harmful if not expressed through appropriate policies. Good intentions, in fact, may end up paving the road to perdition—in this case, persistent unemployment and underemployment, lack of investment and continuing poverty.

Case against LMW

Every year, there is a clamor for large increases in LMW. As expected, last January the Trade Union Congress of the Philippines (TUCP)-Nagkaisa and other labor groups, together with their political allies, filed a demand for a huge LMW increase: an additional P136 a day on top of the minimum wage of P466 a day for workers in Metro Manila. [The National Wages and Productivity Commission announced in March a P15 increase in the daily minimum wage in Metro Manila, raising the daily minimum pay to P481.]

The proposed increase was supposedly due to the 36-percent loss in the value of wages—an amount that, by the way, was wildly out of line with the Bangko Sentral ng Pilipinas headline inflation rate of 4.4 percent.

The reader might ask: What would be the economic impact of an increase in LMW, especially such a large one? If we consider how real employers behave in real-life markets, one might be shocked to find out that such an increase can actually be antipoor and antiemployment.

To illustrate: Consider a typical small- and medium-scale enterprise (SMSE). The owner has a limited amount of capital, with which he can hire either 20 workers at the lowest wage that he thinks they will accept, or only five workers at a higher LMW. Since he has no choice but the second scenario, he will of course hire only the five best qualified ones and send the other 15 home to join the ranks of the unemployed.

With only five workers, even if they’re the best of the lot, it is likely that our owner will also end up producing less than he would have produced with all 20. His business volume and profits are smaller, his rate of expansion slower.

If this example is multiplied across the millions of enterprises in our country, we have a situation where the 15 who were sent home, together with millions of others who like them lack skills, will remain unemployed and poor longer.

SMSEs, supposedly the engine of our economic development, are thus the big casualty of LMW policy. Unlike large enterprises, they have little, if any, monopolistic power to control their selling prices, or monopsonistic power to dictate the wages they pay. Without our SMSEs, we will not have the inclusive growth that everybody dreams of.

To add further injury, uncontrolled increases in LMW over time—at the instigation, say, of populist activists and politicians—may trigger an upward wage-price spiral. This inflation will hit hardest the poor, unskilled and unemployed, including the 15 who were sent home.

Rounding out the case against LMW is the concern that an unreasonably high LMW could undermine the country’s international competitiveness. This in turn affects its ability to attract foreign investment in labor-intensive tradable commodities.

In a draft report dated September 2013, the World Bank disclosed that the Philippine minimum wage (expressed in dollars for comparability) was higher than most of its Asean neighbors as well as India and China. (See Table 2.)

More importantly, the same report revealed that the Philippine minimum wage, as a percentage of value added per worker, lies at the high end of a wide range of comparable countries. (See Figure 1.) This is especially true in Metro Manila, or NCR, where the average worker is legally entitled to keep nearly 70 centavos out of every peso he adds in value. This is even higher than the United States’ and is exceeded only by Guatemala’s.

Monopsony

Notwithstanding the general case described above, it is possible under certain circumstances for the LMW to enhance overall welfare. In the special case of monopsony, a given labor market may be dominated by one or a few influential firms, which can set the wages they pay instead of having to match the wages offered by many competing firms.

A labor monopsonist, thus, has the ability to pay its workers below the market, thereby generating excess profits. An LMW forces the firm to share those excess profits with its workers, either through higher wages or more employment.

However, this is possible only up to a point—specifically, when the wage of the newest worker is equal to his expected marginal contribution to revenue. Beyond that point, a higher LMW would incur losses. This forces the firm to stop hiring or even reduce workforce.

There are three important implications from the special case of monopsony:

Labor might be better protected by getting rid of the laws, regulations and other privileges that confer firms with monopsonistic as well as monopolistic powers. This, in fact, is an anchor principle of the Foundation for Economic Freedom (FEF) as a free-market advocacy.

Even when the LMW might be welfare-enhancing in certain types of labor market, this is possible only up to a certain point. Excessive LMW increases are a problem no matter what the market situation is.

The Philippine economy, like many others, is best described as a collection of firms in different types of labor market, ranging from highly competitive to highly monopsonistic. Thus, when evaluating the wisdom of a legal minimum wage, whether for a specific industry or for the entire country, we need to rely, first of all, on what the evidence tells us.

Impact

International studies reviewed by the World Bank (2013) found that the impact of LMW on employment is mixed. A similar conclusion was reported by Canales (2014), who however noted, in addition, that the LMW employment effects were generally negative in developing countries.

What’s the story in the Philippines? By way of an answer, we summarize below the findings from available Philippine studies. There are only a few of them but they cover different LMW outcomes and they all use accepted tools of good impact evaluation.

The results are as follows:

Hours of work significantly declined and the probability of gaining and retaining employment fell by about 8 to 22 percentage points, following an increase in LMW (Canales 2014). These adverse employment effects are inconsistent with the predictions of monopsony, leading Canales to conclude that the Philippine labor market as a whole is better described as competitive rather than monopsonistic.

The LMW had a “significant” negative impact on labor force participation by all individuals, notably among the young, inexperienced, less educated and women. These groups presumably showed lower productivity relative to their older, more educated, experienced and male competitors for jobs (Lanzona 2014).

This is evident in Table 1, which shows long-term “elasticities”—the estimated percentage change in the labor participation rate of a person in a given group for each unit percentage change in the minimum wage.

Using the fixed effects model alone, an increase in LMW of 10 percent would lead to declines in labor participation rate (negative elasticities) by -6.36 percent (for all workers), by -5.97 percent and -3.64 percent (among teenagers and young adults, respectively, relative to 50 years old and over) and by -2.36 percent (no schooling relative to college educated).

The average real income of households would have grown faster by about 20 percent—and household poverty would have been lower—if the LMW had increased more slowly over time (Paqueo, Orbeta, Lanzona and Dulay 2014).

The total income of a household with just one minimum-wage earner is likely to be smaller than a household where the wife, and perhaps the older children too, can also work but at lower, market-determined wages. Interestingly, the study finds that a faster rise in LMW significantly increases poverty incidence by 1.7 to 3.0 percentage points.

The LMW had a “significant” adverse impact on employment by smaller firms, those with average assets below P1.1 billion (Lanzona 2014). (See Table 1.) In contrast, larger companies (asset size above P1.1 billion) showed much smaller negative and even some positive, elasticities. These might be monopsonists that enjoy greater hiring leeway because of their size and market presence (Lanzona 2014).

Recommendations

FEF shares the rest of the country’s commitment to protect a minimum standard of living, strive for full employment and provide equal employment opportunities to all. But theory and evidence both show that a legal minimum wage is not a good way to get there and may even work against these laudable objectives. Instead, we offer the following suggestions:

Exempt SMSEs from the legal minimum wage requirement. However, they will continue to support the social protection provided by institutions like the Social Security System and PhilHealth, whose actuarial health critically depends on the laws of large numbers.

Amend LMW laws to allow firms to hire low-skilled workers who voluntarily opt out of the minimum wage.

Minimize labor regulations and practices that discriminate against the poor and low-skilled.

Require future LMW increases not to exceed the official inflation rate and to prove that they will not adversely affect the overall employment prospects of the low-skilled.

Learn from the 4 Ps (cash transfer) program by providing time-bound direct assistance to the eligible poor and near-poor families based on number of days spent working and training by firms. Employers should not have to carry all the burden of putting up with, or improving low-worker productivity. This burden is properly shared by taxpayers at large.

These suggestions should be accompanied by a larger package of supporting reforms. Improvement in agricultural productivity (not land reform) and rice import liberalization will help bring down the cost of rice and other food staples and the resulting need for high nominal wages.

Foreign investment liberalization will increase competition for labor and reduce the monopsony enjoyed by the largest local firms. More and better infrastructure will help improve labor productivity.

Vicente B. Paqueo Ph.D., recently retired after 25 years with the World Bank in Washington. Gary Olivar is a banking and political consultant. Both are fellows of the Foundation for Economic Freedom, an advocacy for free-market reforms supported by good governance) - Vicente B. Paqueo and Gary B. Olivar @inquirerdotnet Philippine Daily Inquirer