Salceda proposes ‘new deal for new economy’ vs. K-shape recovery after Covid-19 pandemic

Albay Rep. Joey Sarte Salceda, chair of the House Ways and Means, proposes a set of “bold economic policies” to avert what he termed as “K-shaped recovery” from the impact of the pandemic, where the educated middle class and above recover but the under skilled and underemployed are left behind to suffer a decline in socioeconomic status.

In an aide memoire to the House’s new leadership, Salceda introduces a strategy titled “New Deal for the New Economy” that embodies aggressive intermediate responses in legislation to prevent the risk of an uneven socioeconomic recovery in the country when the pandemic ends.

Unless policy makers move fast, the country will still see underemployment in the 25 percent level, and unemployment at eight percent (8%) by the end of 2021, said Salceda, a known economist and chair of the House’s Economic Stimulus and Recovery Cluster for the Defeat Covid-19 Committee.

“Without bold policymaking by the House, we expose ourselves to the dangers of a K-shaped recovery, where the educated middle class and above reap the benefits of the country’s sheer demographic competitiveness, while the poor and working classes are unable to find jobs that meet their skill sets, and are thus unable to accumulate their fair share of the national wealth,” said Salceda in his memorandum.

He said this has “serious implications on health, social order, industrial peace, and socioeconomic and political stability. We are in an evolve-or-die situation. We have to be quick and nimble as we adapt to the new economy,” Salceda said adding that Covid-19 was a stress test, and the Philippines needs to be future-proofed.

“We can see that now. Mid-level professionals get to work from home. Service sector workers, especially in retail and janitorial services, were terminated. As we go digital, these sectors will probably rebound more slowly if at all,” Salceda added.

Under the “New Deal for the New Economy,” regime, comprehensive reforms will be made in the areas of sustainable energy; infrastructure for inclusive development; countryside investments; fiscal standing or the road to “A” Credit Rating; modern national governance, which includes fighting red tape; green economy to build a climate-resilient economy; modern, efficient and dynamic agriculture; local governance modernization; reliable health-care system; comprehensive education reform; financial sector modernization; and digital economy competitiveness.

“We will resume session on November 16. That will be the first full session of Speaker [Lord Allan] Velasco. We will strive to pass all of these within 100 days,” Salceda vowed.

The lawmaker noted there are at least 56 bills in the aide memoire, which he said will likely expand, as “the Speaker wants a House that studies and works 24/7, as we did during the budget hearings.”

“The new House leadership faces the daunting task of confronting a once-in-a-generation crisis, where the curative economic and financial tools have yet to be invented or tried,” he said.

“Covid-19 has also accelerated the shift towards a new global economic order, where information and communications technology are the most highly prized commodity and channel, and where low-skilled, strictly-onsite work is nearing obsolescence,” he added.

Salceda said Covid-19 has also emphasized the need for a highly diversified, highly adaptable industrial base. “The Philippine economy’s largely consumption-based structure has suffered severely under the strain of depressed consumer confidence. We have also seen the weaknesses of our services-based labor force, comprised primarily by either low-skilled work, or managerial and lower-order entrepreneurial activities,” he said.

“This representation thus believes that the edifice of the nation-state will have to be buttressed by four pillars: solid fiscal standing to finance modern governance, a dynamic and resilient real economy, with pro-people and pro-countryside policies,” he stressed.

After Covid-19, Salceda said there is no turning back to the old economic order, pointing out that the country and the rest of the world will adopt new processes to account for restrictions in mobility, and emphasize the most critical needs of the new economy, while sidelining conventional manners of doing business.

“Covid-19 has pushed the then-emerging trends towards the front and center of economic activity. Unless this transition can be handled properly, we can expect to see damaging consequences to unskilled labor, to lower-order jobs, to lower-value-added in global trade, and to brick-and-mortar industries such as conventional retail,” he explained. 

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