[OPINION] The real score about NEDA’s P10,000 budget ‘challenge’

 

 

Furor erupted over a seemingly callous and insensitive piece of economic analysis made by the National Economic and Development Authority (NEDA) during their latest press conference.

According to one report, NEDA purportedly said that, “Ten thousand pesos is enough for a family of five to live a decent life.”

Naturally, this statement did not sit well with many people. Labor groups slammed it as “preposterous”, “insulting”, and “out of touch.” Netizens came up with #NEDA10KChallenge and dared government officials to live off P10,000 a month.

Four senators even joined the bandwagon and also excoriated NEDA for its “unrealistic” numbers. One went the extra mile by saying he and his family “can survive with P10 a month as long as we all stop breathing.”

But in this article I argue that all this brouhaha is rather overblown: it’s a public relations nightmare stemming from an unfortunate (and avoidable) economic misunderstanding.

On the one hand, some reporters (including government’s PTV) did misquote NEDA officials: if you review the transcript, they never said P10,000 made for a “decent” living.

On the other hand, NEDA officials also miscalculated the usefulness of this numerical exercise; they, in fact, could have done away with it entirely.

Misreporting

The main purpose of the June 5 press conference was to report the latest official inflation rate, which measures how fast prices are rising.

In May, inflation clocked in at 4.6%, another 5-year high. Many people blame TRAIN (President Duterte’s tax reform law) but, as I said in a previous piece, this is but one of the factors at play. (READ: Higher inflation: Is TRAIN to blame? [Part 1])

But how does one explain 4.6% inflation to a wider audience?

NEDA thought it useful to examine a hypothetical family of 5 with a monthly income of P10,000. In doing so, they could express inflation in terms of pesos rather than percentages.

NEDA even discussed how such a family might split P10,000 into different spending items: based on data, P3,834 might go to food items (rice, alcoholic beverages, etc.) while P6,008 might go to non-food items (clothing, transport, etc.).

All in all, NEDA claimed that, with an inflation rate of 4.6%, such a family will need an extra P460 to cope. Thus, the analysis was made for one and only one purpose: to illustrate the effect of inflation.

But, unfortunately, the core message of this analysis got lost in the media: some reporters took it to mean that P10,000 would already make for a “decent” life.

One widely-shared report read that: “Ten thousand pesos is enough for a family of five to live a decent life, the National Economic [and] Development Authority has said.” Over and over, reporters would put emphasis on the word “decent.”

As a result, many people felt NEDA was challenging them to live off P10,000 in a month, thus sparking anger and spawning #NEDA10KChallenge. One activist group also came up with #MagkanoBuhayMo.

But, if you review the transcripts, NEDA officials never said P10,000 made for a “decent” living. There’s a great chasm between merely using a P10,000 budget for illustration and claiming it’s “decent” – a chasm that some reporters dared cross.

Misunderstanding

No one would claim that P10,000 is a “decent” income: whether you look at the data or not, it obviously teeters on the edge of poverty.

Back in 2015, any family of 5 with a monthly income on or below P9,064 was considered poor.

This poverty line may seem a ridiculously small amount to live on. It’s even lower than NEDA’s P10,000 sample income.

But, believe it or not, a depressingly large number of Filipinos still live on this amount or less: a total of 3.75 million families (16.5% of all families) and 21.9 million individuals (21.6% of all Filipinos) as of 2015.

To be sure, poverty is abating. Figure 1 shows that the proportion of poor families has gone down by a fifth from 2006 to 2015, translating to 62,770 families (or 716,970 persons) lifted out of poverty.

Still, this is an excruciatingly slow pace of poverty reduction, and we could do more. (READ: New poverty data: Is poverty falling fast enough?)

In sum, living just above the poverty line with P10,000 a month is obviously far from “decent,” and NEDA staff made no such claim. Only later would the NEDA chief issue a statement saying, “roughly P42,000 a month would be a more decent income.”

Journalists, moving forward, will do well to avoid reading too much into the economic statistics.

Figure 1.

Miscalculation

To be fair, NEDA is not off the hook, too.

First, there are better benchmark figures than a P10,000-income. Back in 2015 (the latest year of the Family Income and Expenditure Survey) the average monthly income was P22,250 (or P15,750 when inflation is accounted for). Perhaps NEDA preferred P10,000 because it’s a nicer, rounder figure.

But recall that the original purpose was to simply illustrate how a typical family might cope with 4.6% inflation. NEDA could just have easily said that, for every P1,000 of income, a typical worker would need P46 more to cope with May’s inflation rate. Plain and simple.

Second, breaking down the P10,000 budget into its components was quite needless. Besides, people are likely to be interested about inflation’s impact on their total income, not on individual items in their budget.

Third, when asked if a family of P10,000 monthly income is considered poor, NEDA could have stressed that – although they are technically not poor by 2015 standards – they are “near poor”. In fact, in 2018, P10,000 might well be on or below the poverty line, so those earning it now are definitely poor.

Fourth and last, by juxtaposing higher inflation on the one hand, and the P10,000 budget on the other, people can’t be faulted for thinking that, perhaps, the purpose of NEDA’s analysis is to justify higher inflation or make light of it.

Remember that this latest press conference comes on the heels of previous ones where the economic managers uttered astonishingly callous and insensitive remarks. One said that, amid unusually high inflation, “let’s just tighten our belts”; another said, “we should be less of a crybaby.”

Far from endearing people and winning them over, the economic managers are only alienating and turning them off.

With still many projects in the pipeline, Duterte’s economic managers (and their respective staff) will do well to shun any air of callousness or insensitivity – especially now that more and more people (especially netizens) are watching their every move.

Eye-opener

At the end of the day, this really was just an economic PR nightmare. Rather than inform and clarify, the June 5 press conference sowed confusion and anger.

Journalists should be more careful in reporting economic statistics. Government staff must also adopt better PR strategies and avoid overanalyzing stuff: the simpler the analysis, the less prone it is to misinterpretation.

Politicians, too, must avoid fanning the flames needlessly. In doing so, not only do they betray their opportunism, they also unwittingly serve as purveyors of economic disinformation.

One must admit, however, that all this uproar could have one silver lining: many people – especially the youth – are now closer to understanding what it really means to be “poor” in the Philippines in this day and age.

Realizing how many people have been left behind – and knowing how much help they need – could help expedite the country’s fight against poverty, even by just a bit. – Rappler.com

The author is a PhD candidate and teaching fellow at the UP School of Economics. His views are independent of the views of his affiliations. Follow JC on Twitter: @jcpunongbayan.

JC Punongbayan

JC Punongbayan is a PhD candidate and teaching fellow at the UP School of Economics. His views are independent of the views of his affiliations.

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