The 2 million Filipinos who may be bound to lose their jobs would cost the economy some P200 billion, as the pandemic would drastically cut their consumption this year, according to local economists.
University of Asia and the Pacific (UA&P) School of Economics Dean Cid L. Terosa said each worker would lose an income of around P100,000 this year due to Covid-19.
ING Bank Manila Senior Economist Nicholas T. Mapa said the estimate made by Terosa was not far from their own estimate of around P193 billion.
“For the 2 million who lost their jobs, about P200 billion in consumption for the year will be lost, or P100,000 per person who lost their jobs,” Terosa said. “[This covers] anything we consume daily.”
Terosa said the amount, which could also increase to around P210 billion, or P105,000 per person, would have been spent on various consumer goods such as food, clothing, water and other needs.
De La Salle University economist Maria Ella C. Oplas told the BusinessMirror that the spending of the 2 million workers would likely decline to only 30 percent of what they were used to spending.
Oplas said the reason she does not think a 100-percent decline in consumption among those who lost their jobs is because many of them may have found other ways to earn, and consequently spend.
She added that among those who lost their jobs such as professional makeup artists and photographers were able to band together and find other ways to use their skills, or adapt to the present needs of their communities.
“The 2 million [workers] are still spending but [at a] lesser volume. My estimate is maybe they spend only 30 percent of their previous spending,” Oplas said. “People are creative and resilient. They find ways to survive.”
However, Oplas said, she is not discounting the fact that workers may find it hard to get other options to earn while the enhanced community quarantine (ECQ) is in place, not only because of the restrictions but also the limited opportunities during ECQ.
She added that there will also be those who may not find any other source of income and, therefore, would not be able to spend. These people are the ones that would require the most help, Oplas said.
Help from the government will be good for the economy and boosting consumption is key to growing the economy simply because the Philippine economy is driven by spending, she added.
Ateneo de Manila University School of Social Sciences Dean Fernando T. Aldaba told the BusinessMirror that on the average, workers in Metro Manila earn P13,200 per month, while in Luzon, around P9,700 per month.
Around 75 percent of these wages are spent by workers. But if they receive assistance from the government, they would tend to spend it all.
Aldaba said based on the 2018 Family Income and Expenditure Survey (FIES), the Marginal Propensity to Consume of Filipinos is 95 to 99 percent.
This means that for every peso increase in their income, they spend P0.95 to P0.99 on various goods and services.
“If they get a subsidy they would probably spend it almost 100 percent,” Aldaba said, which is why government subsidies are crucial, especially this year.
Based on the latest gross domestic product data, Household Final Consumption slowed to 0.2 percent, the lowest in the latest 2018-based series.
Alcohol and tobacco products consumption contracted the most at 16.4 percent followed by spending for restaurants and hotels, which contracted 15.4 percent.
This was followed by transportation, which contracted 8.9 percent and furnishings, household equipment, and routine household maintenance at 7.4 percent.
With Samuel P. Medenilla
Image credits: CNNPhilippines
1 comment