Read this in The Manila Times digital edition.
WHY does the Philippines, circa July 2026, and after the upgrade to upper-middle-income country (UMIC) status, feel like Ireland in 2016? Easy to answer.
In 2016, Ireland posted an impossible 26-percent growth in its nominal gross domestic product (GDP), a year in which most Organization for Economic Co-operation and Development countries posted 2- to 3-percent growth rates. There was neither national celebration nor glowing commentaries in the mass media that came with that over-the-top growth surge that was also the world’s best growth output that year.
In lieu of celebration, many in the country felt it was a hollow, meaningless feat. The reason? Because it was truly a meaningless, hollow GDP growth.
Ireland has a low tax base and low registration rules for foreign enterprises. So, when giant tech and pharma corporations, for example, want to base their businesses in low-tax countries to protect their jumbo profits, they look for countries with a tax and business registration structure such as Ireland’s. These corporate giants then inflate the economic output of those countries on paper, just like the case in 2016 when the jumbo profits reported out of Ireland led to a 26-percent surge in its GDP. But that was all a mirage. The jumbo profits eventually moved somewhere else, without creating quality jobs in massive numbers, without creating robust manufacturing and services sectors. Without elevating Ireland into a truly dynamic economy.
The general feeling in Ireland in 2016 after achieving that historic 26-percent GDP growth, the feeling that nothing had changed in the lives and economy of the people there despite the impossible level of growth, is similar to what Filipinos feel right now, after the World Bank upgraded the Philippines from low-middle-class-income status to upper-middle-income class category.
The lives of the Filipinos before the upgrade is similar to the lives of Filipinos post-upgrade. Nasty and brutish. Rodante Marcoleta and Robinhood Padilla remain senators of the realm, despite the alleged acts of nastiness that they bring to that supposedly sacrosanct job. The impeachment of the vice president for high crimes and betrayal of the law and the Constitution remains the biggest political story of the day.
To his cult-like followers, former president Rodrigo Duterte, who is now at The Hague awaiting trial for alleged “crimes against humanity” is still a sainted figure.
Harsh economic realities that are the depressing backdrop for the struggles of millions of Filipinos add to the general feeling that the UMIC upgrade is a scam and totally detached from reality. Sonny Africa, the economist with the Ibon Foundation, posted that in an environment of low wages, untamed underemployment numbers, and the great economic divide that no impressive growth numbers can rein in, the joyless feeling is totally expected.
On the income divide, the World Bank, the same multilateral that announced the UMIC upgrade, has a vivid picture on how vast the income chasm is. The World Bank said that the richest Filipinos led by the 50 wealthiest families whose wealth is assiduously tracked by Forbes magazine vacuum up 17 percent of the yearly national income. The bottom 50? Just 14 percent. Very much like in the United States, where 19 households have enough wealth to buy 14 percent of all goods in that country every year. Just like in the United Kingdom, where 200 families own 20 percent of the yearly GDP.
Poverty tracker Oxfam Pilipinas has a grimmer indictment of wealth inequality in the Philippines. A paper from the organization, titled “Inequality at a Breaking Point: A Call to Embed Equality in the Philippine Economic Agenda,” said that the Philippines is the “15th most unequal country in the world with the starkest divide in Southeast Asia.” Other inequality trackers say that Thailand tops the region in wealth inequality.
A “handful of families” in the Philippines control more wealth than 55 million Filipinos, or half of the entire population, said Oxfam Pilipinas. The corrupt politics of the country abets the extreme economic divide.
Other analysis of the economic divide said that the top 10 percent has 20 times more wealth than the poorest 10 percent.
Progressive taxation is the tool most often used by governments in reining in extreme economic divides just like the extreme rich-poor divide in our country. But instead of moving into that policy direction, a Duterte-era law instead cut the corporate income tax (CIT) rate in phases, until it is down to a rock-bottom 20 percent. The Marcos government fast-tracked the implementation of that 20-percent CIT rate.
A slew of Duterte-era liberalization laws also gutted the very little equity provision in the Constitution and liberalized retail trade.
The pro-business, pro-investment policies of the government also weakened the collective bargaining leverage of Filipino workers. To the point that less than 1 million Filipino workers have decent collective bargaining agreement with their employers. The upgrade is a “total sham,” said Ibon’s Africa.