I work with Data Process Outsourcing, a company in the Philippines, for turning my interview recordings into transcriptions. Recently, the head of that company, Loudel Dario, informed me that her company’s rates were going up. Why? Because the Philippine peso had appreciated. Curious, I asked her to explain since I always need an education when it comes to matters concerning the global economy. Her response was so thoughtful, I’m sharing it here (with her permission), because it’s a great explanation about how even when a developing country succeeds economically, it can hurt its citizens in daily ways.
The Philippine economy is improving (a record 6.9% growth in the first quarter of 2007), the peso has appreciated by 20% since October of last year, exports have increased by 13% so far this year, foreign direct investments have been pouring in since last year, recording 26% growth last year.
Some of the reasons noted by economists for this positive economy include the record $12.8 billion sent home by overseas Filipino workers last year, comprising of 8 million Filipinos making a living abroad (they comprise 10% of the entire recorded population of the country), as well as by the sharp reduction in government deficit brought about by the implementation of new tax laws and revenue boosting measures.
The government is resting on their laurels, celebrating and proclaiming their achievements to the rest of the world, officials and the wealthy beaming with pride from side to side. Everything seems to be doing well for the country…
…except that this is not being felt by the ordinary Filipinos, numbering more than 80 million people. Prices of goods in the market have been rising together with the mercury in our thermometers as we experience the heat of summer. As the beginning of the school year approaches, increases in tuition fees (15% increases annually) are crushing wallets of households. In spite of the strong peso, fuel prices are rising, together with the prices of basic services like power and water. A stronger economy is forcing the ordinary Filipino people to experience “growth” pains. This is the reason for the record-breaking remittance of the overseas Filipino workers. They sent more dollars this year only so their families can catch up with the rising cost of living.
The sales spiel of the government in promoting the nation is that we are a source of highly-qualified, low-salaried workers. Calls by the labor sector to raise wages are denied. The Philippines is an exporting country, be it for goods or for services, and an appreciation of the peso means fewer pesos for every dollar earned. Export companies would have to decide - do we raise prices of products and services? Customers in affluent countries may understand and feel for the Philippine companies, but business is business. This would mean tougher competition in the international arena? So, the other alternative is do we pull the strings and cut down on costs? The first usually affected by cost cutting measures are the workers. Either their benefits get cut or their contracts are cut short.
Presently, we the Filipinos find ourselves in this vicious cycle. Even the National Economic Development Authority, a government agency, has stated in a paper, “In a strange way, we are being punished for our own success.”
It is time for the government to sit down for a reality-check and find out the actual situation of the more than 80 milllion people of its constituents. Now with elections just completed, and new officials are in position, let’s get down to business, think out of the box, and rally the people to a well-deserved, more than just-subsistence-level of life.