Debt-driven inclusiveness

Waiting in line for my turn at a Landbank ATM in the UP campus the other day, I started to fret at seeing the queue wasn’t moving. Two women were hogging the machine and serially withdrawing money. They shuffled what looked like a deck of plastic cards while routinely consulting a small notebook.

“Wow,” I told the person next to me, hoping the card-shufflers would overhear, “I’ve never seen anyone with so many bank accounts.”  Wryly, she said, “It’s the 30th, that’s why. They’re collectors.” Only then did I realize how terribly mired in debt our government workers are. I’ve recently learned that as many as 80 percent of them have reached the maximum (sagad na) they can take out, which means their monthly take-home pay must not fall below P5,000. But, most likely, they have also borrowed against this remaining amount, thus leaving their ATM cards with the loan sharks.

Viewed from this frame, one can appreciate the significance of the government’s decision to release, ahead of time, the last tranche of the staggered salary increase for the country’s 1.5 million government employees.  It puts much-needed cash into the hands of families that are not only without savings, but are so indebted that they must borrow for their daily needs. This final increase raises the minimum pay (salary grade 1) for government workers to P9,000, excluding allowances. This is very low compared to what businessmen and professionals in our society earn, and what government workers in prosperous countries are paid. But it compares favorably with what workers in the private sector make.

Minimum wage by itself, however, is not a good gauge of the condition of the working class. Increases in the price of food, utilities and transportation can quickly wipe out any wage increase. This makes inflation the biggest enemy of labor. More than legislated wage increases, I prefer to see social redistribution take the form of concrete improvements in the quality and accessibility of basic education, health services and mass housing.

But there is another side to the situation of the poor that interests me as a sociologist. And that is the effect of a consumerist culture on our people’s daily life. We pride ourselves in having one of the highest mobile phone penetrations in the world. Indeed we like to think of ourselves as the texting capital of the world, as if that were a measure of development. But how much real productive use do we put this amazing technology to? My guess is not much.  Yet mobile phones are now regarded as basic necessity. I’ve seen people scrimp on food just to buy phone load. They feel miserable when they cannot text or call, as if all worthy human interaction depended on the cell phone.

But the mobile phone is just the most visible emblem of our consumerist way of life. The capital of modern consumerism is the shopping mall. Whereas in developed countries, the growing popularity of Internet shopping is putting big and fully-staffed stores out of business, the opposite is taking place here. Our shopping malls are getting bigger, and their reach has become so wide they have integrated small-town grocery and sari-sari stores as their satellites. It is not surprising that the growth of the mall economy has followed the same trajectory as the instant prosperity created by overseas work. These malls would not be where they are today without OFW remittances. And where the malls are, the fast-food chains cannot be far behind. It is this democratization of consumption that fosters the illusion of inclusiveness in our otherwise highly stratified society.

One would think that a country that earns about $20 billion annually from its overseas workers would be, sooner or later, well-positioned to capitalize its own long-term growth.  But we’ve been sending out workers for nearly four decades now. The growth in income has not transformed Filipino families into savers. It has only made them consume more. As their incomes rise, so have their needs multiplied.  Sadly, it is not just their lifestyles that have changed, but also their moral intuitions about what constitutes a worthwhile life. Nowadays few think twice about leaving their young children behind in the hope of earning more abroad.

Much of the evidence for this sea change in our way of life is anecdotal. One wishes someone like Daniel Kahneman, 2002 Nobel Prize winner in the economic sciences, could do a study of how the intuitions that currently shape Filipino lives defy everything presumed by the “rational agent model”—maybe something along the lines of a psychology of stupidity, to which all of us, regardless of social class or education, are susceptible.

I have a neighbor in Bataan who has been bugging me for the longest time to help him get a job in an ocean-going liner. He hasn’t been jobless at home, but he thinks he’s not earning enough to support his growing family. I managed to set him up for a job test with a crewing company owned by an acquaintance.  A high school graduate, this man is a fine all-round carpenter, but twice he failed the oral interview in English.

From a local job that engaged him for a year, he had netted P20,000 in savings. He put in a portion as down payment for a motorbike, but the monthly amortization soon ate up all the money he had. After five months, he had to return the bike, forfeiting every cent he had paid.  He has asked me again to endorse his application for an overseas job. I strongly advised him to stay in a job which will not take him away so long from his family. I don’t think his case is unusual. Like many, he suffers from an exaggerated view of the benefits of working abroad.