Profile of the Philippine Public Sector

1.2. Profile of the Philippine Public Sector

As set out in the 1987 Philippine Constitution, the Philippine public sector exists and functions within the context of a “democratic and republic State.” The Government of the Philippines has three branches: executive, legislative and judiciary. The Constitution vests executive power to the President of the Philippines, who functions as the Head of State, Head of Government, and Commander-in-Chief of the Armed Forces. The legislative power is vested in the Congress of the Philippines, which consists of the Senate and the

House of Representatives. 1 The judicial power rests with the Supreme Court and the lower courts [3].

As Chief Executive, the President of the Philippines 2 exercises control over all executive departments, bureaus, and offices. At the national level, there are 22 major departments, 3

37 other executive offices and about 124 government-owned and controlled corporations. At the subnational level, there is the regional government for the Autonomous Region in Muslim Mindanao and the local government units, numbering to about 1,630 provincial,

city, and municipal governments. At the local level, officials consist of those elected―the local chief executives and members of the legislative council―and appointed officers.

Productivity improvement is important in the Philippine public sector for three reasons. First, the Philippine public sector is one of the major employers in the country. Second, it is a key provider of basic social services and public infrastructure to support the economy. Third, despite being a moderate spender, it is the main consumer of tax resources.

According to the Bureau of Labor and Employment Statistics, from around 2.3 million in 2000, nearly 3 million civil servants 4 worked in the public sector by the end of fiscal year 2012. The total figure includes all those working in the public sector such as national and local governments, public schools, public hospitals, and government-owned and controlled corporations. As can be gleaned from Figure 1, public sector employment accounts for about 8% of the total domestic employment, a figure which is well within the range or

even lower than the level of public sector employment in neighboring Asian countries. 5

Of the total public sector employment though, data from the Department of Budget and Management shows that less than half or only about 1.2 million are working for the

Philippines

national government (refer to Annex Table 1).

In terms of expenditure, the Philippine government may be considered a moderate spender. As can be seen in Figure 2, the national government expenditure stays close to about 17.0% of the gross domestic product. This expenditure level is generally below the

average government spending of some of its counterparts in Asia. 6 Out of total government expenditure, as can be gleaned from multi-year DBM data, the proportion that goes to personal services averages to 5.5% of the Gross Domestic Product (GDP).

Public Sector Employee

Total Employed Persons

Figure 1. Public Sector Employment to Total Employment

Source: Bureau of Labor and Employment Statistics

The rest of the expenditures are for maintenance and other operating expenses and capital outlay (refer to Annex Table 2).

Measuring Public-sector Productivity in Selected Asian Countries

In recent years, the bigger fiscal space owing to robust economic growth 7 and vigorous tax collection afforded the Philippine government with the means to expand and sustain greater spending in social services, such as basic education, universal health care, and social protection via conditional cash transfers and in the construction of vital physical infrastructure [4]. The strong performance of the Philippine economy, amidst record slow

growth in Asia and the rest of the world, is considered remarkable [5]. 8 The National Economic Development Authority asserts that, “the conditions favoring a departure from the country’s perennial situation of poverty, inequity, and lagging development have continued to hold, if not gotten better,” in recent past is due to renewed business confi- dence and heightened public trust in the Philippine government, among others. As enunciated in its Social Contract with the Filipino People and the Philippine Development Plan 2011–2016, the Philippine government is steadfast in levelling up the performance and effectiveness of the public sector in order to “sustain growth momentum and reduce poverty in multiple dimensions.” No less than the President of the Philippines chairs the Good Governance and Anti-Corruption Cluster of the Cabinet which sets policies to improve the delivery of public services and public sector performance, enhance the policy environment, and strengthen transparency, accountability, and citizen participation.

Government Expenditures Gross Domestic Product

Figure 2. GDP vs Government Expenditures (in million pesos)

Source: Department of Budget and Management

Philippines