Interview with Sonny Africa, Executive Director of IBON Foundation

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Alright, thank you very much again

Sonny for joining us

in the previous episode which

I think the fact that we had to cut short

that episode is emblematic of the problems

in our society including very

unreliable infrastructure

unreliable internet among

others. Even mga middle class katulad natin

were victimized by that and

it sounds like you have many options. I switch from

one conglomerate

to another conglomerate. Let's just hope

the post-paid of one conglomerate works

better. Okay, let's do this

I think nabigla kayo

natin na nagaanap ako ng PowerPoint but don't worry

we can just post your studies

and post later

and we can do properly next time hopefully when I'm

back in Manila or somewhere else

with a better internet so we can do that separately

but for the purpose of today so

just to recap our discussion kanina

I asked in very simple ways

what is the good, what is the bad, and what

is the ugly about the economic track record

of the current administration

and we had a little bit of a back and forth about

I mean ontological

almost. What is good, right?

Why should we even talk about good when there's

nothing good? And I think we agreed

that wag mo

pilitin, wag pilitin kung wala naman

talagang good. At the same time I think for

me it was important to

push back against politics or economics

of cynicism and at the same time also

look at really worst case scenarios

I mean you're looking at Argentina and Turkey

running inflation rates 80%, 100%

you know these are not

banana republics per se. I mean

Argentina and Turkey are one of the fastest growing

economies and yet inflation is horrible

in those countries. 10 times worse than the Philippines

Philippines is still the fastest growing

economy in the region. If I'm not

mistaken one reason we had this talk is because you

replied to a post of mine when I said

wow high growth, low quality

right? Which brings us really to the

bad and the ugly part. So when I say good

I was coming from that and I'm also coming from

the fact that we're growing fastest

in ASEAN in spite of

not having the best governance

you know which tells

you a lot about the resilience and

grittiness. I don't like the word resilience

in abuso ng mga trapo yan. Grittiness

and the hard work of

our kababayans abroad and in the Philippines

right? So I'm just doing a recap of

our previous episode which for

reasons that many will understand

in the Philippines was undercut

by logistical reasons. But now let's have

this conversation. Sonny

so

we were saying if you look at

three axes the Philippines is not doing

very well. One is in terms of food

which I think everyone can

agree upon including the surveys which

show that the president's having really

downward trajectory. Second one

is quality of employment. So it's one thing

for you to have an unemployment of I don't know

6-7% which is not as bad

as I don't know 40%

in other countries or 20%

in other countries. But quality matters

is this a, do you have security

of tenure? Do you have an

uncertainty that next month or next week?

Or baka purong contractualization lang yan diba?

And the third axis I was

really focused on which I think will set the tone

for really our final episode today which I think

is very important is productivity

growth and manufacturing. So

Sonny, can we go one by one?

Kamusta ang food inflation?

We are already in the bad and ugly part

obviously. Kamusta ang

employment and underemployment especially?

Quality of employment generation?

And third, kamusta ang productivity

growths? You know, let's

look at the numbers and

resibo. Maglabas tayo ng resibo

dyan.

Okay.

Siguro,

first to clarify,

it's always nice to have

headline figures

like inflation and growth and

all of that. But syempre, sometimes

what number

we're looking at matters. So alimbawa, dun sa

inflation. Of course, tama

ka naman. It's better to have lower inflation

than faster inflation.

Inflation did slow

to I think about

5.9%

from 5.9% noong

October. I'm trying to look at

my figures now. 5.3%

lamang this year. So

slower inflation. But the thing is

there was core inflation.

Headline inflation, including

mga volatile food and energy

products, slow to 4.9%

from 7.7%.

So parang okay yun. But the thing is

Wait lang. Can we make a

distinction first between headline inflation and core

inflation just for people who are not familiar with it?

Because it depends on which basket.

of goods you're looking at before you can even

make an assessment about the situation, right?

I mean, pwede umakyat yung presya. I don't know

ng Toyota Rays or BMW

but that's not as

punchy in the gut as

tumaas yung presyo ng bigas

or ganun. So there are different ways

to measure actually increase in the prices

of goods. Kung baga

inflation. Can we make a quickly distinction between

headline inflation and core inflation? Just for

people who also have technical understanding of this.

Sige.

Yung headline inflation,

has a whole basket of goods

supposedly representing lahat ng spending

ng average Filipino.

But because there are two

components that tend to be volatile sa kanyang

prices, energy prices and

food prices, so they have a separate

figure called core inflation. So alimbawa

in October,

the last data that came out, in October

2023, headline inflation

was 4.9%,

which is slower than I think

about 7.7%

the previous year.

Nag-slow down siya. Pero

if you put, if you look at core

inflation, you take away the

food inflation and

the energy price inflation, it's actually

5.3% ang core inflation,

slower than 5.9%

in the previous year.

So I think yung important lang dun is, headline

is everything we're spending on, more or less,

average Filipino. Core inflation,

you take away the volatile

products, energy,

tsaka food.

Right. And in a sense, of course,

these volatile products are not also our fault.

Let's say war in Ukraine, war in the Middle East,

it has impact on energy prices.

So may konting excuse. I mean, konti

because we can also talk about oil deregulation,

you know, subsidies, etc.

But that's why you can look

at different measures and still it

looks like the picture is not that good, right?

So kahit balibalik

ta rin natin headline core inflation, it's not

really as good as we want. But as I

mentioned, it's not as bad as Argentina,

Turkey, and other countries, right? Which are

even more developed than us in certain sense.

Again, just to give perspective.

So, Sonny, I'm not giving an excuse to the

administration. I just want to give perspective

para hindi tayo masabihin ng purong nega lang

mga to. Now, let's go to the second part.

Employment numbers,

under employment numbers, quality of

new jobs being created.

Okay.

The thing with stats,

it depends on the period you're looking

at. If you're comparing

the latest figures, which came out

for September 2023,

if you're looking at comparing

September 2023 to

September 2022,

despite the growth,

there was only an 83,000

increase in

employment. So 83,000

is well

within the statistical margin of error. It's like

statistically insignificant. So

if you look at September

2023 from the year before,

despite the claimed growth, fastest

in the region, etc., etc.,

that's clearly jobless growth.

Okay? It gets worse

if you compare the monthly

employment in September

to the previous month in August.

Kasi despite the growth,

we actually had less work

in September compared to

August. So kung compared to the

last year, lumaki ng negligible

statistically insignificant 83,000.

If you compare from the previous

month, actually we lost

407,000 jobs.

So sa amin, despite the growth,

we have less work.

So in itself,

less siya. It's like 47.7

million lang ang work compared to 48.1

million the month before.

So bumaba talaga siya.

Ngayon, that's only part of the problem.

So that's already part of the problem that

there's actually less work compared to the month

before. Virtually no additional

work compared to the year before.

But it gets worse.

Sorry, I'm a mega-fagot.

That is the quality of the work also, not only

the quantity of what's available.

If you look at the

quality of work naman, even among

those employed,

by our last estimate, if you count

people who are creating work,

hindi siya sa huran eh.

Actually, about 45%

of work in the Philippines is not

sa huran.

It's domestic

work, it's self-employment,

it's working in family

farms, family businesses, basically

informal sector. Yung mga dumidiskarte

lamang. So, anong problema

dyan? If you have about

roughly 48 million Filipinos,

working,

yung nasa informal work

is over 20 million. Informal

work, it's irregular work,

ang baba ng kita mo, you work a few

hours lamang, you're earning like really

super, super low

pay yan. So, that's problematic

sa quality of work. Second thing,

even among those sa sa huran,

did you know, roughly,

the government claims by the

figures, it's about 24 million

salaried

workers in the private sector.

Salaried, medyo

regular sila. Meaning, medyo may

regularity. There's, you know, like

13-month pay,

I don't know, some sort of healthcare, etc.

No, ayun nga eh. Yun ang pointo eh.

May hindi rin eh.

It gets by the labor force sa sa huran.

Sa huran sila,

but yung nasa formal establishments

na you have to assume, may ganyan

klaseng regular pay, may kontrata,

verbal or written, it's only

about 10 million.

Sobrang lie. Actually, about

a little bit over 9 million namang

nandun. So, even doon sa mga

sa huran, the majority,

yes, tumatagap sila

ng sahod, but without all the

protections sa labor code. And that's also

even among that roughly 10 million

na nasa formal establishments,

I mean, the DOLE has about, I think,

500 labor inspectors.

They can visit,

I think, randomly lang sa all the

establishments, maybe like 6,000 establishments

a year. So, you also

have to assume, you can't assume din

na even those regular establishments

get all their benefits, get all the

protections the labor code

produces. So, sa akin, that's so

important kasi we have a

super informal economy.

And I think that's part yung

advocacy mo. A non-industrialized

economy is never going

to be a formal economy. So, you don't have

the formal processes

involved in that, and all the whole infrastructure for

that. So, sa akin,

bottom line, in terms of the jobs,

we're not generating. In terms

of jobs, you're actually losing, may problem.

But even the jobs that are there,

there's such poor quality

jobs. It's gig economy.

It's gig economy, right? I mean,

I don't know. It's, you know, like, the posh version

is vlogging, like what we're doing, right?

There's no regularization, there's no

contract. Parang, kumaga, yun yung

konyong version, vlogging,

right? But for,

marami sa ating wabay, mayroon silang trabaho,

but, you know, the quality of the work, it's,

there's no certainty, there's no security

of tenure, there's no benefits, nothing.

And this is a condition for vast majority

of Filipino people in the workforce,

which tells you a lot about how backward the

Philippines is in terms of quality growth

generation. But, Sonny, you also mentioned

methodological

mumbo-jumbos that you can do in terms of

counting, right? Like, paano mo masabi

na isang tao may trabaho, di ba,

Sonny Africa? You can also

play a game around that, right?

The number of hours, the regularity,

you can play that to

push up the numbers of employment. So, don't

take statistics on the face value, look at the

methodology and how they measure

employment, for instance.

Okay. Actually,

super good question, yan. Since April

2005, it's been a big pet peeve of

ours sa Ibon, eh. Kasi the government

changed their definition of

who counts as unemployed.

Aroya administration, to, naalala ko to.

Yeah, di ba, antagal na nun.

Actually, even, even

si President Aquino complained about that, eh.

Pero, nung presidente na siya, hindi na

pinindigan. But, anyway,

problema, since there was

a shift in methodology na

basically, it's not enough to not have

a job to be counted as unemployed.

Kailangan, you don't have a job,

plus, you're looking

for work in the last six months,

plus, at the drop of a hat, in the next

two weeks, pwede ka pumasok.

So, that sounds innocent. But the thing is,

when they put those two qualifications

in, had to have looked for work in the

last six months, should be able

to immediately enter work.

Even in 2019,

about two and a half to three million

jobless Filipinos weren't officially

counted as unemployed.

And that's still happening today.

So, sorry, let me put it this way. Hindi lang mahirap

maghanap ng trabaho sa Pilipinas,

mahirap din ma-qualify as unemployed

sa Pilipinas. You know, like, we're kind of...

Mahirap mabila na unemployed ka.

So, even yung talk about mag-unemployment

benefits tayo. Oh my God!

Si pinag-gobedo, hindi ka ma-unemployed, eh.

Ito, hindi to,

I'm not a facetious comment.

Kinumpay niya ng IBO na able

2005. Oh my God, I've been here for so long.

Anyway, kinumpay namin April 2005.

A couple of weeks later, then NSCD

came out with a blog saying,

tama lang na people like that who haven't been

looking for work, shouldn't be counted as unemployed

kasi tamad sila. So, screenshot

ko yan. And that's, I think,

that's glaring. May problema

ko na ito. Gaslighting.

Alam ko may isang admin dyan na napakagaling

sa ganyan. Gaslighting, victim blaming.

Yeah. So, ayun. Sa amin,

that matters so much because also,

explains kung bakit, despite

the decrease in working

Filipinos in

September from the month before,

that also explains kung bakit the unemployment figure

actually fell to 4.4%.

So, sa amin, again,

you know, sabi nga nila statistics.

Medyo mambo-jambo yan, no?

But before we go to the number three, which is really

my pet peeve, which is productivity manufacturing,

let's talk about the first one because may version

din tayo ng victim blaming.

Ay, tumahas ang presyo ng bigas.

Walang problema. Bawasan natin ng rice.

See, lifestyle tayo. Yung mga ganyan.

Yung mga comments, diba?

Yung mga ganyang comments. So,

my goodness. I mean, just the

deracinated nature of some of the people

in government sometimes, the comments they make,

it's just mind-boggling.

Hindi nga kayo magaling na technocrat, gaslighter

pa kayo, victim blaming.

I mean, I have, I cut my rice,

diba? I cut my rice.

But you have to have steak. You have to have meat.

You have to have healthy alternatives

to carbohydrates. But how can you afford

mas mahal pa sa bigas yung,

you know what I'm saying? Like, just the insensitivity

of it. These people don't seem to know anything.

I don't think they even grocery

like you and I, right? Like, forget about palengke.

So, yun lang, bro. I mean, like,

just the two, we already see gaslighting

as one of their ways out. But let's

go perhaps to the most important one.

Productivity growth, manufacturing, because

the manufacturing imperative

as Danny Roderick put it, who's, by the way,

Turkish-American economist, right?

So, let's talk about this. Kamusta

ang productivity growth in

manufacturing sector and agricultural

sector?

Which my co-columnist,

Chelito Habito, also always talks about

in his column in the Philippine Dailing Corps.

And, of course, former NEDA chief. Nag-trabaho ka ba

kay Chelito? Kanino ka nag-trabaho sa NEDA noon?

At that time...

Parang ayaw mo na sabihin.

Parang ayaw mo na sabihin.

Kasi, I

left NEDA

because hindi ko gusto yung takot

sa NEDA. I mean,

I still have friends in NEDA, but

na-dissolution talaga ako. I mean, I came from university.

You want to develop and work, where do you go?

NEDA.

But after 11 months, sabi ko, oh my God,

dead-end to ah.

Malabot na malabot to. But again, for fairness,

people can check on our podcast, may interview

with Arsenio Balisakan,

Dr. Balisakan, of course, to get the other side of the

things. Fair naman ako ah, interview all sides.

Parvati Guru. Galing siya. Yeah, exactly.

Of course, ka-Ilocano ko yan, kaya

bias kami. I'm kidding.

That's speaking up naman.

Sunny, let's talk about this. Number 3,

productivity. Kamusta naman ang productivity?

Sorry.

Please.

Sorry, mamang tutupo.

I think it's so important to look at the

unemployment figures and to look

at the quality of work kasi

that explains why there are more

Filipinos declaring themselves as poor now

compared to a year ago. And that's so

important eh. You can't talk about

growth, you can't talk about foreign investment,

you can't talk about investor interest

if there are a million more

poor Filipino families compared to

say, the middle of 2022.

From 12.2 million, according to

SWS, nag-13.2 million na yan.

And that matters kasi

para saan pa yung growth e ba? Para saan pa yung

investment? Para saan pa yung pinigmamalaki na

all the competitiveness? So, I sort of wanna add that

kasi that fills in the

that's the last bit of the puzzle of

why people are suffering right

now because they don't have jobs. Pero kung sa

productivity, okay,

sa to'o lang, productivity has been

increasing sa manufacturing.

Yes, I saw that. Kaya nga, I wanted

to get your understanding.

The way productivity is measured,

value added,

over-employment.

Now, the thing is, did you know

nabawasan ng employment

in manufacturing? So, parang

You can

mathematically. Lots of signs of

de-industry. Right? Kasi the denominator

kung less. Hindi, ganun kasi nila.

Exactly. You bring that one down, tatas

yung isaya. Exactly.

So, compared to

a year before, there's almost 900,000

less jobs in manufacturing.

So, of course, productivity

is going to increase.

Then, from the year, from the month before,

nag-decline din siya. So, actually, productivity

is not the right thing to look at if you want to look at

industrialization. It's the size of the

manufacturing sector. And I think,

yung nga, yung reaction ko dun sa ano mo,

negative talaga ako eh.

Nag-react ako dun sa tweet mo

kasi it was so surprising

and I double-checked

to make sure ang tama sabihin ko eh.

Manufacturing in the third quarter

is down to 15.4%

of the economy,

which is the lowest since,

the 1940s. So,

pre-Filipino first,

it's been declining since

more or less about the late 1970s.

That's awful talaga.

And sa amin, that's what matters eh

because we don't have a healthy manufacturing

sector with all the upstream,

downstream linkages, with all the

assumptions,

the intrinsic improvements

in technology, in terms of

the capacity of managing that kind of

economy, the formality of having all

the interlinks from the raw material,

all the way down to the

putting it together and then selling it,

maybe even going abroad,

you will always have an informal economy.

There's no other way to have a formal economy

than through a healthy, grounded

industrial process.

But the thing is,

ito yung nakaka-inis sa amin.

Okay, trivia.

Ano lang sa'yo?

Trivia lang, di ba?

Hindi, more than the medium and high-technology

exports of South Korea.

In South Korea, mga 35% lamang ang

medium and high-technology exports nila.

Even the US, about 25-30% lamang.

I like the comparative, yeah, yeah.

So, according to a certain metric,

if you look at Philippine exports,

parang, wow, we're a

high-technology exporting superpower.

The problem is, it's not Filipino.

They come from export processing zones,

they come from the technology manufacturers based in

export processing zones.

They're not actually even technology-intensive.

It's mainly a bit of testing,

a bit of assembly.

And ito ang makalimutan eh,

80-90% of the inputs of all these technology exports

are actually imported.

So literally, our value added is,

we're like putting it together,

putting it into boxes if it's a final product.

Yeah.

And I think that matters so much kasi

statistics can deceive eh.

And one of the most deceiving things

about statistics now,

even the size of the manufacturing sector,

one, it doesn't reflect your industrial base.

In U.S. sa limbawa,

after like four decades of globalization,

the U.S. spread out their industrial base globally eh.

Like Apple, di ba?

Apple high-tech, baka lamang manufacturing plants sa U.S.

It's in China, it's in Taiwan.

So the thing is, if you look at

the U.S. industrial statistics,

parang de-industrialized sila.

But it's only half the story.

It just says they're not in the U.S.

because they have their super long supply chains

spread out across the world.

Pero may flip side din yon.

It also means, again,

nakakanta nag-Philippines,

manufacturing investments in our economic zones,

we're all, well not all,

about 70% of our manufacturing is,

they're foreign.

So they're TNCs.

So, nabobloat actually yung manufacturing figures natin.

Small as it is,

it's actually bloated by non-Filipino manufacturers.

And the thing is,

that's so important to grasp kasi

problematik na nga na-limit ang manufacturing sector natin

in general.

Even more problematic,

about 60-70% for manufacturing sector

is not even Filipino.

It's like disconnected from the rest of the economy.

I mean, you can easily see that in the import numbers.

Ang laki ng import natin ang mga semi-contractors,

intermediate goods,

and then malaki rin yung export na konting mas malaki.

So, you can easily see in the numbers na

konti lang in-add natin dun sa in-import natin.

So, you have to look at the entire trade linkages flow.

But again, San,

I think we're already anticipating the next episode

on industrial policy.

But I want to keep it clear.

It's funny, no?

If I could add a fourth element,

which is the favorite of performative commercial diplomacy,

yung foreign direct investment pledges, right?

So, supposedly 80 billion dollars of FDI pledges

ang nakuha ng ating Pangulo

in his first 8 months, 10 months in office.

But actually, FDI went down, right?

Over the past year.

I mean, some of the numbers are crazy.

Close to 30% drop,

depending on which quarters you're looking at

and which period.

So, even on the FDI front,

things are not looking good

because the investors,

hindi sila mapapadala sa magandang speech lang.

Hindi sila makonvince na

porke hindi na si Digong Presidente maganda ng Pilipinas.

Nag-research po sila.

Hindi sila nadadala sa mga gandang usapan lang, diba?

Performative.

Posh diplomacy.

You need to do more

than just going to the World Economic Forum.

Mukhang makulit.

You wanna say something?

Pwede mo mag-comment siya?

Super, I'm super itching kasi

we hate that FDI metric eh.

I mean, we can benefit from FDI.

But just because there's FDI,

does it mean we're benefiting?

Trivet na lang, uli.

Did you know,

Meso, there's a share of GDP.

Yung foreign direct investment

in the Philippine economy right now

is about 23 or 24 percent.

Equivalent to 23, 24 percent of GDP.

And there's a huge increase over the last four decades.

Did you know,

yung period na economic take-off

ng South Korea, Taiwan, and China,

FDI as a share of GDP sa kanila

was 1 percent, 2 percent, 3 percent, 4 percent.

Hindi yung South Korean-Taiwan by the 80s.

It was more tech transfer.

Exactly.

Than FDI-driven.

Yeah, I know what you're saying.

Yeah.

Or tech stealing.

Diba?

Oh yeah, tech espionage.

Yeah, corporate espionage.

Yeah.

Yeah, ang mabait mo,

transfer.

Para ano yan,

enforced transfer.

Mas sakin, that's so important eh.

Kasi even ako,

I have a hard time complaining about less investment.

Kasi it's not about

less investment is better,

less investment more.

It's about ano nakuha natin

with what investments there,

whether malaki or hindi.

And super good example sa amin,

how South Korea, Taiwan, China,

sa to'o lang,

the last great industrializers

in the last 30-40 years,

they had such a small reliance on FDI,

they focused on building domestic capacity.

Sa akin,

unless our economic managers,

unless the public

gets over this obsession with FDI

as a metric of success,

we're not gonna treat FDI

the way it should be treated,

which is contributing to national economy,

not just giving to them.

Last point na lang,

kasi hindi talaga ako sa kanila eh.

Intel.

Diba?

Intel was in the Philippines for about 35 years.

Their second overseas plant

was in the Philippines after Malaysia.

At its height,

$1.5 billion in investments sa Philippines,

the biggest foreign investor at that time,

exporting at their peak

about $5, almost $6 billion

worth of semiconductor exports.

When they packed up in 2009,

what semblance or what shadow

of semiconductor capacity did we have?

Nothing.

So alam mo yun,

for decades,

they had all the nice figures,

the investment coming in,

the exports going out,

even the jobs being created,

parang 3 or 4 thousand jobs sila.

But when they left,

they left nothing behind.

Sa akin,

that's so important na may lesson na tayo eh.

I'm rambling.

No, no, no.

Kaya nga parang ano lang,

I know you're excited

but let's keep it for a different episode.

In fact, there's a term for that

by Ushihara Konyo,

the Japanese economist.

He called it technology-less industrialization

because you're over-relying on FDI

and just assembling what's coming out.

We can discuss that.

So I'm keeping the ammunition dry for that.

Now, let me go to...

Sorry.

No, no, it's okay.

So I think this episode is essentially

the economic track record under Marcos.

So let's have a short episode on

what's wrong with the...

What is the role of technocrats in the Philippines?

Because we usually let them scot-free.

So I want to have a discussion on that

because I think that will perfectly set the tone

for the discussion

on what should be an industrial policy strategy

for the Philippines.

Thank you very much, Sonny.

I really appreciate that.

Thank you very much.