Poverty in the Philippines: An Assessment

image from worldbank.org

I recently attended a presentation on the latest World Bank study entitled, “Making Growth Work for the Poor: A Poverty Assessment for the Philippines.”   Dr. Xubei Luo, Senior Economist of the World Bank, presented the findings of the main study.  

Dr. Luo identified the three key messages of the study: the Philippines can overcome poverty; the Philippines needs to do more to overcome poverty, and it requires concrete actions by all concerned to do it.  Poverty had declined by 5 percentage points from 26.6% in 2006 to 21.6% in 2015.  The factors that contributed to this decline include the increase in wage income and movement of employment out of agriculture, which contributed 2/3 of poverty reduction.  Another driver of poverty reduction is government transfers which accounted for ¼ of the reduction.   Remittances also accounted for 1/5 to the decrease of poverty, with some 2/3 of Filipino households receiving domestic and foreign remittances annually.  

Luo noted that in spite of these developments, the Philippines continues to lag behind its peers in terms of poverty reduction.  Less than 1 in 10 Filipinos joined the global middle class while 1 in 10 remains vulnerable to getting poor.  The study showed that this is due to several factors including the limited growth in agricultural productivity in the past decade and the limited manufacturing base which can absorb low skilled workers from agriculture, most of whom end up in low-end service jobs.  High inequality also contributes to poverty in the country with only 1% owns half of the nation’s wealth.  Natural disasters and conflict further add to poverty, with more than a million people pushed into poverty each year due to disasters, while protracted conflicts in some areas exact a significant toll on the local economy and trap people into poverty.  Luo stressed that poor people start their lives at a disadvantage: they have limited access to good health, limited access to good education and thus lack the necessary skills to land good jobs.  This vicious cycle trap people in poverty for generations.

The report identified six concrete actions to end poverty in the Philippines.  Create more and better jobs, focusing on quality.  To do this, we must improve the business environment to attract more investments, upgrade the value chains, strengthen the backward linkages to create jobs for both skilled and unskilled workers.  Since 60% of the poor work in agriculture, improving productivity in all sectors, especially in agriculture, is crucial in poverty reduction.  This includes increasing productivity in agriculture and supporting agribusiness development.  Another action is to equip Filipinos with the skills needed for the 21st-century economy.  

Luo said education is essential, and people living in a household headed by someone with limited education will be more likely poor than someone who lives in a household headed by someone with a good education.  To improve education, we need to boost quality in basic education, increase secondary completion rate especially among the poor, and develop socioeconomical skills in people.  

Investing in health and nutrition is also crucial.  Stunting rate is very high with 1/3 of children under 5 years are stunted, and half of the children in poor households are stunted.  One out of 10 teenage girls are either pregnant or already had a child.  It is crucial to improve health care quality and equity, reduce child stunting and fully implement the Responsible Parenthood and Reproductive Health Law.  

There is also a need to focus on poverty reduction efforts on Mindanao Two out of 5 poor people live in Mindanao, and more than 50% of the ARMM population are poor.  It is vital to increase public investment and resolve conflict and promote peace in Mindanao.  

Lastly, we must manage risks and protect the vulnerable.  Every year, 1 million people are impoverished due to natural calamities.  Improving natural disaster risk management systems and strengthening social protection systems are crucial to support the poor and protect the vulnerable.  

Luo also provided updates on the implications of recent economic developments to poverty.  Inflation, particularly food inflation, has increased very rapidly and remained very high. Economic growth outlook remains positive and is projected at 6.5% in 2018.  If we look at the composition of income and expenditure by income quintile, poor people spend more on food.  The poverty rate is seen to continue to decline, but with the uncertainty and high inflation, poverty reduction may slow down.  This means that everyone must act together to fight poverty.  

Identifying the Near Poor in the Philippines

Policymakers tend to lump poor people into one homogeneous group – the poor, At the most, poor people are classified into two groups: the poor and the extremely poor. Now, the Department of Social Welfare and Development (DSWD) wants to add another classification: the near-poor.

In a forum I attended just this morning, the DSWD in cooperation with the Asian Development Bank (ADB) presented a study by Dr. Vic Paqueo entitled “Analysis of the Near-Poor Challenge and Strategy Development Ideas." It identifies near-poor families as those "who live at a knife-edge with little or no buffer against the economic shocks such that they can easily become poor when faced with crisis."

So how do we know who the near-poor families are?  Dr. Paqueo explained that near-poor families are those with incomes that are just above the total poverty threshold.  Given that at present the national poverty threshold is at PhP9,686, the near-poor threshold will be at PhP12.400.

The near-poor, added Pacqueo, are those who have per-capita income higher than the poverty threshold, with small family size, the family head is educated, mostly non-agricultural workers, more of them are unemployed, have access to electricity, and live in houses made of strong materials.

In spite of having jobs and earning or having some savings, these families can easily become poor when faced with crises such as loss of job, loss of financial assistance or sources of income due to calamities, and sickness that incur big amounts for their medicines and hospitalization costs.

He said that many near-poor families may be considered as "balik-balik" or those that are in and out of poverty at certain points in time. By classifying these households as a separate sector based on their poverty risk, government programs can make better and target-driven programs for them.

Pacqueo recommended that the government should take steps because near-poor households are more prevalent.  This may have been due to some policy and program failures, such as the minimum wage law. Also, it is easier to prevent them from becoming poor and therefore should be part of comprehensive and sustainable anti-poverty programs.

This is not an entirely new idea as this has already been proposed by Dr. Celia Reyes of the Philippine Institute for Development Studies.  In a study, she identified what she called then as transient poor – families that go in and out of poverty due to shocks they experienced.  Dr. Reyes even pointed out that there are more of these families than those covered by the Conditional Cash Transfer program of the DSWD.

Perhaps this near-poor idea is also an indication of what most of us have been thinking all along: the CCT is not effectively addressing poverty and is just creating a new culture of dependency and mendicancy.

Infographic: What Will It Take to Achieve Learning For All?

Hi everyone. I came across this very informative infographic from the World Bank and I want to share it with you.  One of the powerful tools to combat poverty is to educate the people.  Education equips poor people with the necessary skills they need to participate in economic activity.

This infographic shows what has been achieved so far with regards to providing education and learning to everyone.  

The State of Food Insecurity in the World

I came across some hunger facts recently and I want to share them with you.  Most of these came from the report titled, The State of Food Insecurity in the World published by the Food and Agriculture Organization (FAO) of the United Nations in 2012.

The significant findings of the study are: 

from fao.org

• About 870 million people are estimated to have been undernourished in the period 2010–12. This represents 12.5 percent of the global population, or one in eight people. The vast majority of these – 852 million – live in developing countries, where the prevalence of undernourishment is now estimated at 14.9 percent of the population. Undernourishment in the world is unacceptably high. 

• The global number of hungry people declined by 132 million between 1990-92 and 2010-12, or from 18.6 percent to 12.5 percent of the world's population, and from 23.2 percent to 14.9 percent in developing countries - putting the MDG target within reach if adequate, appropriate actions are taken.

• Asia and the Pacific have the largest share of the world's hungry people at 563 million but the numbers have been going down for decades due to regional economic growth.  Undernourishment decreased by 30% in the past two decades and despite population growth in the region, the prevalence of undernourishment decreased from 23.7% to 13.9%.

• Developed regions also saw the number of hungry rise, from 13 million in 2004-2006 to 16 million in 2010-2012, reversing a steady decrease in previous years from 20 million in 1990-1992.

The report also noted that strong economic growth is important in the fight to reduce hunger. Regions that experienced growth in the past decades also rapidly reduced hunger incidence.  However, economic growth must reach and involve the poor through increased employment and other income-generating opportunities.

from fao.org

One of the areas the report pointed out is agricultural growth which is particularly effective in reducing hunger and malnutrition in poor countries since most of the poor depend on agriculture and related activities for at least part of their livelihoods.  Women should also be involved in these development, the report said, since they have more control over household income and more money tends to be spent on items that improve nutrition and health.

The report further suggested that social protection systems are needed to ensure that the most vulnerable are not left behind and can also contribute to and benefit from economic growth.  Programs such as cash transfers, food vouchers or health insurance are needed for the most vulnerable who often cannot take immediate advantage of growth opportunities. Social protection can improve nutrition for young children - an investment that will pay off in the future with better educated, stronger and healthier adults. With effective social protection complementing inclusive economic growth, hunger and malnutrition can be eliminated. 

You may download the full report from the FAO website here.

How to Meet our MDG Commitments

I recently attended a presentation called Pulong Saliksikan on MDGs at the Philippine Institute for Development Studies (PIDS).  The presenter, Dr. Roehlano Briones,  said that initial results of their study showed that the country will not achieve its MDG commitments for education and maternal health, and will only achieve minimal reductions in poverty under the present scenario.  To close the gaps, government must increase public spending in these sectors. 

He added that the country failed to achieve the first MDG on fighting extreme poverty.   Simulations showed that per capita income growth will not reduce poverty since the economy will not able to create higher paying jobs up to 2015. 

Poverty reduction will be faster if government spending is directed towards closing MDG gaps, although this will not contribute significantly to the attainment of MDG 1. However, we cannot depend on foreign assistance funds to finance this effort since we already have a limited access due to our low absorptive capacity for such.  Aside from this, there is 

The study recommends that government to close the MDG gaps through tax financing. This is feasible if there is an increase in efficiency in government tax collecting efforts. The proponents argue that this has been achieved before so there is no problem in doing it again.  They also recommended introducing new tax policies such as the rationalization of fiscal incentives and imposition of sin taxes on tobacco and alcohol.  Other sources of funds may come from increasing the charges for road users, especially trucks that inflict most damage to our roads.  Excise taxes on petroleum products may also be increased.

To learn more how the Philippines is faring with achieving the MDGs, click here.

Why I Don't Believe Everything That's on the Internet

This picture circulated in almost all social networks on the Internet this afternoon. It's supposed to be a sign at an entrance of an upscale mall at the central business district in Makati, Metro Manila.  It clearly said that no poor people are allowed inside the mall, perhaps to protect their patrons from having a not so pleasant stay in their mall because of the visible "disturbing realities."

It was also a bad joke. A prank by someone or a group of people who have so much time in their hands.  A dead give away was the name of the "Corporation".  There is no such entity as "Ayala Land Corporation". It is "Ayala Land Inc" or ALI. Also, the one managing the malls is Ayala Malls and not ALI.

What surprised me was the swiftness some people online passed judgement on the mall.  Without even verifying from authorities whether the poster was true or not, some Filipino netizens posted angry words on sites like Twitter and Facebook.  Some celebrities even joined in the fray, tweeting how they were offended by the poster.

I called the people I know who work with ALI and told them about the photo.  An explanation from the company came out later and also posted in the Internet.

This incident should be a lesson for many of us.  Although the Internet is a rich source of information, we should not believe everything we find there.  We should always be discerning of whatever we pick up from the web.

Heroes in Debt

A friend of mine recently sent me a link to a story on the Emirates 24/7 website which said that among expatriates in the United Arab Emirates (UAE), Filipinos are the most indebted. Our countrymen account for 27 percent of personal loans in that country, followed by the Indians and Pakistanis.

For years, we have credited them for propping up our economy through their remittances even in the midst of the global financial crisis.  We could only guess that one of the reasons our kababayans (countrymen) had to take personal loans was to send the money to their relatives here.  The sad truth is, many of them go abroad to do just that, send money to the family they left behind here.

It is also sad to note that even before they leave for their work abroad, many of our overseas workers are already heavily in debt.  We have read and heard a lot of stories about families borrowing money even with usurious interest rates just to send the father or mother abroad.  Some even go to the extent of using their properties as collateral for a loan to raise the amount needed for various fees just to get an overseas job for a family member.  

We could only hope that their relatives and our government realize the sacrifice these workers had to go through just to send those precious dollars here. 

Maintenance of Parents

Senator Manuel Lapid recently filed a bill that will enable poor parents to ask the court to require their children to financially support them.  The measure named "Maintenance of Parents Act of 2010" mandates the government to provide legal assistance to the elderly who wants to demand assistance from their relatives.  They will be assisted by the Department of Social Welfare and Development in filing the petition and will be provided with legal assistance and representation in court by the Public Attorneys Office.

In the bill's explanatory note, Lapid said that the onset of rapid urbanization and commercialization have brought about factors that contributed to the erosion of Filipino family values.  Incidence of parents being neglected and abandoned by their children have also become common.  

The bill provides that the petition should show that the elderly member is aged, sickly or disable, and incapable of taking care of himself.  In ruling on the petition, the court should also take into account the financial capability of the children and their obligation to maintain their own family.

But seriously, do we really need a bill for this?  Respect for the elderly member of the family is deeply ingrained in the Filipino mind.  

A visiting Irish priest once observed how we treat our elderly.  Old parents are welcomed in every home.  They have special places in the dining table,  Even young kids are trained early to give respect to lolo and lola, and treat them with the way they would treat mommy and daddy.  How he wished that other nations could do the same to their elderly.

Last time I looked, these traits are still being practiced by Filipino families, at least those I know of.  Or  maybe the elderly people Senator Lapid is referring to are those who come from really poor families or those from the rural areas where poverty is prevalent.  But still these families continue to support each other and make adjustments to make their ends meet.

I have observed however that while we Filipinos truly love and respect our older members of our family, many of us do not spread this to those who are not our relatives.  How many times have I seen older men and women standing in public utility vehicles while younger and able-bodied people occupy the seats allotted to them.  I admit that I also tend to be impatient with older people who take a long time in using an ATM or other electronic device.  

Hopefully we as people will continue to respect the elderly and that we will not need a law that would mandate us to be more respectful of older people.

The Amazing Peso

This morning, I have 2000 pesos in my wallet. By this evening, I only have 1200 pesos. In less than 12 hours, the amount of cash I have in hand was reduced to almost half. I spent it on only two things, food and water.

Our money is so amazing. It is so easy to spend. I am so impressed at how easy my 500 peso bill was reduced to coins. I bought food stuff for lunch and some bananas, it was down to just 350 pesos. The house help told me that we had to buy rice. I told her to get 5 kilos so it will last until the weekend, the remaining amount went down to 150 pesos. We also had to restock our drinking water and the money left in my hand amounted to 30 pesos, in 10 peso coins.

This whole scenario happened in less than an hour. That means, in less than an hour I spent 470 pesos for my upkeep.

The story of the amazing peso does not end here. By afternoon, we had to buy food for dinner and breakfast tomorrow. Total cost for everything: 300 pesos.

If you think that I buy expensive foodstuff, you're wrong. Most of the food I asked the house helper to buy were vegetables and fish. The only fruits I bought were the bananas I mentioned earlier on.

My friends and I would sometimes joke among ourselves that the 100 peso bill is the new 10 pesos. One could hardly buy anything substantial for 100 pesos. I use to spend less than 50 pesos per day for my lunch. Now I pay more than 100 pesos per day. I still eat the same kind of food, nothing fancy just the regular food we Filipinos eat.

Our 100 pesos is not enough for even the value meals of fastfood chains. It used to be enough for two persons, but now it is only enough for one value meal.

What's even more amazing with our money is that it is so easy to disappear but very hard to find and earn. Right now the average minimum wage is 275 pesos. So imagine how a minimum wage earner can balance his pay with his expenses. Go figure!

Books for every Filipino

Our President has finally acted on the controversial import duty imposed on books by the Department of Finance and the Bureau of Customs. Yesterday, she ordered the department to to scrap the taxes imposed on imported books and reading materials. (I have a post on this here)

According to her spokesperson, "The President wants books to be within reach of the common man. She believes reading as an important value for intellectual formation, which is the foundation of a healthy public opinion necessary for a vibrant democracy.” (The Philippine Star)

Thank you Mrs. President for your concern for the Filipino people. Unlike your subordinates in the finance department who have limited or narrow appreciation of the importance of books in learning, you have shown your desire to make books within our reach. Still, many of us think twice before even buying a copy of a book we desire.

Even without the added tax the DOF wanted to impose, books are presently beyond reach of the common man. Most paperback books cost more than 300 pesos, hardbounds cost more. Even local publications are priced not lower than 200 pesos, a princely sum for many Filipinos who earn just 275 pesos a day. That is why in many cases, books are not even in the list of essential things to buy for many Filipinos. I for one has to save just to buy a book and pray that when I have enough money to get it, the book will still be there. Indeed, there is still a lot to do if you really want books to be "within reach of the common man."

One of the things you could do is to provide for public libraries. Local governments may set up libraries in their areas that could provide reading materials for their constituents. They do not necessarily need to buy new books since there are hundreds of ways to get stocks for their libraries.

I remember when I was small, this was at the height of the Martial Law years, our community has a small public library where one can come and freely read books. I don't know when this library was erected but before I got to college, it was gone. The old structure was torn down and in its place now stand a carwash,

While some communities continue to have public libraries, these are through efforts of private citizens who probably share the President's belief in the importance of reading in intellectual formation. These libraries receive little, if any at all, support from local governments.

Many of my fellow book lovers have come up of ingenious ways to spread the joy of reading, There's bookmooching where one gets credit for giving someone else his book. He could use this credit to ask for a book from other people who will in turn get credit for giving him the book.

Why can't government apply something like this and give individual book donors credit that they could use to buy new books for themselves? This will encourage many people to give away books they have read to those who cannot afford them and they could buy new books which they could donate again in the future.

It's the People Again Who Should Make Sacrifices

The TV newscasts are filled with it. People lining in the streets, wet markets and other places to buy rice. Rice that are within their means. It all happened after the country's agriculture secretary announced that we better cut down on our rice consumption or we will end up with out rice! All hell broke loose as soon as after he said those words.

I thought at that time how stupid it was that instead of government doing something about the impending rice shortage, the secretary himself would ask the people to eat less rice. What's even weird is that he even asked food centers to offer half cup of rice instead of one cup per meal (we serve rice by cups). It's almost as if he's asking Filipinos to go on a force diet!!!

It was almost a joke until I saw the news stories and find my countrymen falling in line for hours on end just to get three kilos of rice a day at a price they could afford. Of course there were available rice but these were priced at no less than 30 pesos per kg. for the cheaper kind and 45 pesos for the more fancy kind such as Jasmine rice.

Why not buy the 30 pesos kind, you ask them? Well, minimum daily wage in the country is 300 pesos something or some 7 US dollars. That is, if the company one is in gives the minimum wage. But most companies in the country are small and medium enterprises so they end up exempted from paying the minimum wage.

With so many filipinos classified by the World Bank as earning less than a dollar a day, buying those readily available rice is out of the question. So they endure the heat (it's summer here) and the lack of a proper system of distribution by the food authority just to get rice that they could afford and don't go hungry for the day. So bad was the situation that at one time, those who were not able to get rice started weeping and begging like we were back in the dark ages!

Speaking of hunger, a few months ago there was report that some 70 percent of Filipinos go to sleep hungry because they don't have the means to buy food. And what did our president say about this? Well, she said that sometimes when she's too busy at work she forgets to eat too and stay hungry. I think that there's a vast difference between being hungry because you don't have money to buy food and forgetting to eat because you're busy making money.

Now here's even worse. A report came out saying that we do not have enough rice because there's so many of us! So we must all make sacrifices and stop making children who will compete for food in the future.

It's always the people who are the source of our woes!

Can't we stop and look if distribution of our resources as well as governance have in any way contributed to this problem and not just too many Filipinos?