poverty in the Philippines

[OPINION] Are you poor?

Edilberto De Jesus
[OPINION] Are you poor?
'According to the Bangko Sentral’s Consumer Expectations Survey, at P30,000 a month, you would join the 34% of Filipinos considered High Income'

The question is deeply personal. A thoughtful response would take into account what the individual needs and values. Money? Family? Love? Leisure? 

Social Weather Stations (SWS) surveys on self-rated poverty simplifies the issue. Respondents only need to mark their answer on a card with a horizontal line in the middle dividing the binary choice between “Poor” and “Not Poor,” without having to justify their decision. Those who place themselves on the line are counted in the survey as “Borderline Poor.”  

The Marcos Jr. administration inherited a largely impoverished population, with only 23% in the SWS April 2022 survey denying that they were poor, in whatever terms they defined poverty. Six months into the new government, the December 2022 survey the numbers pronouncing themselves Not Poor had dropped to 18%. The number of those declaring themselves to be Poor increased from 43% to 51%. While the Borderline Poor numbers dipped from 34% to 31%, their combined numbers rose between April and December from 77% to 82%.  

Although people’s perception of their poverty cannot be fully explained exclusively in economic terms, research on poverty rates cannot dispense and often begins with income calculations. The SWS self-rated poverty survey includes two follow-up questions: 1) the Poverty Threshold (PT) or the monthly amount necessary to cover household expenses for the family not to feel poor; and 2) the Poverty Gap (PG) between this amount and what the family can provide. The December 2022 survey reported a PT of P15,000 and a PG of P5,000.

Other authoritative sources of data complicate the task of understanding the Philippine poverty picture.  If you make less than P10,000/mo., the Bangko Sentral’s Consumer Expectations Survey (CES) would locate you among the Low Income (LI) class that covers about 26% of the population. An income between P10,000 to P29,000 would include you among the 40% in the Middle-Income bracket. At P30,000 a month, you would join the 34% of Filipinos CES considered High Income (HI). After the pandemic and probably even earlier, someone supporting a family of five would probably consider an annual income of P360,000 low. By 2021, the NEDA poverty line (PL) of P12,030/mo. had already breached the CES LI boundary.

Setting the CES High Income mark at only three times the amount earned by the Low-Income class minimized and masked the income inequality prevailing in the country. Not that these definitions deceived the people. In a 1999 SWS survey, 54% of respondents judged Philippine society as elitist. By 2019, the perception of inequality had risen to 73%. The percentage of those who saw a more egalitarian country had dropped from 32% to 16%.  

Dr. Jose Ramon Albert, formerly head of the country’s statistics authority, proposed in 2018 a more realistic cluster of income classes that the Family Income and Expenditure Survey (FIES) adopted. The official poverty line, then at P10,727/mo., attributed to 22% of the population, set the base (Poor) of his six-level classification. Multiples of the PL pegged the boundaries of the higher income levels: from 2xPL for the 26% at Lower Income; 4xPL for 27% at Lower Middle; 10xPL for 10% at Middle Middle; 15xPL for the 3.6% at Upper Middle; and from 20xPL for the 1% at Upper Income. All those earning at 20xPL and beyond comprised the .4% of the Rich perched at the top of the income totem pole.  

While efforts to raise government salaries continue, the current concern for inclusive growth must address the glaring gap in income levels that the pandemic aggravated. The Philippine Standardization Law now pays a base rate of P156,000 a year. COA reported that BSP Governor Ben Diokno more than doubled his income between 2020 and 2021 from P19.8 million to P41.8 million.

Differences in scope of work and responsibility make disparity in earnings necessary and unavoidable. In the United States, the embrace of meritocracy and vigorous capitalist competition as articles of faith has justified tolerance of a higher level of income inequality. Bloomberg and IMF data in 2019 showed that American CEOs received compensation 265 times higher than the median pay of employees, compared to 201 times in the UK, 136 times in Germany, and 58 times in Japan. 

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Over 5.6 million Filipino families living in poverty – DSWD

Over 5.6 million Filipino families living in poverty – DSWD

But even in the US, the widening disparity in income levels between the wealthy 1% and the rest of the population triggered the Occupy Wall St. Movement and the rise of a populist backlash against the elite. Between 2020-2022, American industries raised average corporate CEO salaries from 160 to 235 times over the pay that median-level workers received. 

More alarming, a Brookings survey last April showed that one-third of 22 companies employing more than 7 million frontline workers did not pay a living wage to more than half of their employees.  It is not simply differences in compensation levels that arouse anger. Resentment is higher among those who experience a decline in their living standards because their earnings fail to keep pace with rising costs — and this group is expanding to include more people from the middle- and upper-income classes. 

Dr. Albert’s more finely-tuned income classification may already need updating to distinguish income gradations among the roughly half-a-million people collectively recognized as belonging to the .4% Rich. It would be instructive to subject to closer scrutiny, as the US Occupy Wall Street Movement eventually did, on the composition, character and behavior of the .1% ultra-rich.  

In the US, the focus tends to center on the wealth accumulated by executives in the private business sectors; hence, Wall St. as the target. In our case, the balance of political power has already shifted from the private corporate sector to government officials. It would not be surprising to see economic power and wealth flowing in the same direction. Especially when members of political dynasties also begin to acquire business interests. – Rappler.com

Edilberto de Jesus is a senior research fellow at the Ateneo School of Government.

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