Proem
President P-Noy vetoed the Bill passed by Congress to give P2,000 across the board increase to Social Security System (SSS) pensioners. The reason given by the President is that the SSS funds will be depleted and the pension system will collapse.
I don’t think it will collapse because the SSS Law provides that the government will guaranty that funds will be appropriated in case of deficits in the funds. In my opinion, the advisers of the President are afraid that the economic measure using the Gross Domestic Product (GDP) will be exposed to be defective.
Economic Measures
There are two measures for the state of the economy. One is the Gross Domestic Product (GDP) and the other is the Gross National Product (GNP).
The GDP measures the earnings of all Filipinos in the Philippines and throughout the world. It includes the earnings of the OFWs.
The GNP measures the earnings of everybody within the Philippines only, including the foreigners but excluding the OFWs. Today they call it “inclusive growthâ€. During the time of President Garcia the economy was measured in GNP and it was second only to Japan.
The measure using the GDP was started by the United States of America (USA). It was because the US Dollar has become the basis of monetary currencies in the world. About one-half of the total dollars issued is not circulating in the USA but in foreign countries. In order to account for the dollars abroad, the Americans decided to include it in the measure of the economy, thus the GDP was created. However, the USA also measures its GNP and can show it anytime.
The GNP in the Philippines wad devastated during the Martial Law years. Since there were no employment opportunities within the Philippines, the Filipinos begun to seek employment abroad. At first the money of the OFWs were sent home through returning friends. Later on it was formalized through bank-to-bank transactions and the government created an agency that regulated the OFW deployment.
Our economist saw an opportunity to portray that our economy was growing by imitating the GDP measure used by the USA.
In year 2015 we are told that our GDP grew by 6%. Upon close scrutiny, 4% of the growth was caused by the remittances of our 10 million OFWs and 2% was caused by the earnings from Call Centers. Nobody told us what was the GNP or the earnings within the Philippines. Nobody told us because there was nothing to tell. The GNP was practically zero. The earnings in the agricultural sector where 30% of Filipino workers are employed had a negative growth.
GSIS and SSS
The Government Service Insurance System (GSIS) is in charge of the pensions of retired government employees. When something goes wrong in the GSIS management of funds, the government will allocated from government funds to correct the situation.
The same concept also is provided by law but the government is reluctant or unwilling to allocate government funds for the SSS. So the GSIS can afford to give a monthly retirement pension of 90% of the average salary for the last three (3) years in service. In the SSS the highest pension is only P12,000 per month even if you were earning P500,000 per month while in service.
The Defect
The earning in the private sector covered by the SSS is low compared to the public sector covered by the GSIS.
To alleviate their situation, the workers in the private sector went abroad and became OFWs. There are now 10 million OFWs out of the 100 million Filipinos. They earn 5 to 10 times abroad compared to a comparable employment within the Philippines.
The drawback is, the OFWs with their high earnings are no longer contributing to the SSS funds. So the SSS is dealing with the low earning private sector workers in the Philippines. The SSS has no access to the high earning OFWs. The SSS could not earn more from the private sector workers because the GNP has nothing to show.
Veto the Bill
Congress had pass a Bill granting P2,000 across the board increase to all SSS pensioners. If it will be granted, it is computed by the SSS management that in 11 years the whole SSS funds will become zero. The truth is it will not become zero if the GNP will grow or there is internal growth.
President P-Noy is not willing to admit or expose that there is no GNP growth. He is not also willing to appropriate government funds for the SSS.
To hide the defect in measuring only the GDP and neglecting the GNP, President P-Noy must veto the Congressional Bill. Never mind the political fallout it will give to his chosen candidates. He must preserve the charade that the Philippines economy grew during his administration. Actually President P-Noy did not contribute to the growth. It came from the OFWs who sent home money to be spent by their family members.
If it was another president occupying the office it will still grow at the same rate. So the SSS pensioners will continue to suffer the inadequacy of their pension because the government failed to focus on the more important GNP measure of the economy.
Instead the government became an opportunist by riding on the backs of the OFWs and presented their earnings through the GDP measurement and claim the growth. (By Jes B. Tirol)