National statistics Alberto A. Lim Philippine Daily Inquirer
July 04, 2009
When the National Statistics Office came out with the unemployment figures for April 2009, I was pleasantly surprised. Unemployment had actually decreased from 8 percent in April 2008 to 7.5 percent in April 2009. This at a time when our (gross domestic product GDP) grew by a mere 0.4 percent in the first quarter of this year over the same quarter last year, compared to 3.9 percent growth in the first quarter of 2008 (relative to the same quarter in 2007). This is referred to as a year-on-year comparison of quarters.
This is even more surprising as National Statistical Coordination Board Secretary General Romulo Virola proclaimed we are teetering on the brink of a recession. The convention to determine a recession is to compare the current quarter’s growth with the previous quarter’s growth or a quarter-on-quarter comparison. Using that method, we had negative growth (-2.3 percent) for the first time in the Arroyo administration. If it turns out that the second quarter of 2009 (which just ended) was also negative, then we would officially join the ranks of countries in recession.
But as economist Cielito Habito asks, why quibble over whether or not we are in recession when the difference between the positive and negative growth rates are statistically insignificant? The real meaningful measure is the general well-being of the population.
Which brings us back to the unemployment statistics. Every year, due to population growth alone, more than a million new workers enter the job market. In 2007, the economy grew 7.1 percent, yet only 924,000 jobs were created. Notwithstanding this year’s first-quarter slump in growth, around 1.5 million jobs were created net of jobs lost due to layoffs and plant closures.
Habito examined the new jobs recently created and found out that 604,000 are self-employed workers (like market vendors) and 400,000 are unpaid family labor usually found in the agriculture sector. These are not the stable and secure jobs that give quality to the employment statistics and contribute to general well-being.
Socioeconomic Planning Secretary Ralph Recto attributed the improvement in unemployment figures, despite the low growth rate, to the “implementation of the Economic Resiliency Plan.” Belying this explanation was his own deputy director general at the National Economic Development Authority (NEDA), Augusto Santos, who expressed pessimism about fast-tracking new infrastructure projects due to lack of financing. Former Budget Secretary Ben Diokno also says that “rent-seeking has gone up so much that good contractors have avoided working with government.” He questions whether government has a stimulus plan at all due to the apparent lack of “shovel-ready” projects.
In a TV talk show last Tuesday, deputy presidential spokesperson Anthony Golez defended the many official foreign visits of the President by offering certain statistics to prove that the trips were worth the expenditures. He claimed that in 2008 foreign direct investments were rising quarter after quarter. And to make his point appear more credible, he even threw out some investment numbers that seemed pitifully small to me. But then, I may not be the average viewer.
Well, so what if foreign direct investments rise quarter-on-quarter within one year? What is more significant is the whole year’s result compared to that of the previous year. And the answer is: our FDIs in 2008 were only half that of 2007. Worse, we will be lucky if we end this year with FDIs reaching half of 2008. That is one-fourth of 2007! In this light, the spokesman’s statistics of rising investments quarter-on-quarter in 2008 bears false witness that the foreign trips of the President are giving rise to increased foreign direct investments.
There is a right way to use quarter-on-quarter statistics on one hand and year-on-year statistics on the other. Mark Twain said, “There are three kinds of lies: lies, damned lies, and statistics.” This is not to say that the NSO or the NSCB are lying. They are bean counters who call it as they see it. It is those spinmeisters in Malacañang who cannot help themselves because they either lack strong arguments or good news.
Speaking of good news, a headline last Tuesday was “RP Governance Score Improves.” This was a story about the latest World Bank report of its Worldwide Governance Indicators 1996-2008, one of the most comprehensive cross-country sets of governance indicators. Out of six broad dimensions of governance, the Philippines improved in its absolute scores in the areas of government effectiveness, regulatory quality, rule of law, and control of corruption.
I expected Malacañang to make hay while this sun shone. Especially since control of corruption is the key indicator used by the Millennium Challenge Corporation in qualifying countries for larger grant assistance by the United States. Last year, we failed to qualify for “Compact” status because we failed in one category: control of corruption. So this news should have been a big deal. Yet Press Secretary Cerge Remonde was atypically subdued in his comment when he said “we have been making progress.”
The explanation is simple: While we did improve in percentile rank from 22.2 percent in 2007 to 26.1 percent in 2008, the average for the region was 45.1 percent. That is the hurdle rate, and that is a statistic that cannot be spun.
(Alberto A. Lim is the executive director of the Makati Business Club. Reactions to makatibusinessclub@mbc.com.ph)
