2019News

Poverty rate down to 21% on higher income–Neda

By Cai Ordinario, April 11 2019; Business Mirror

https://businessmirror.com.ph/2019/04/11/poverty-rate-down-to-21-on-higher-income-neda/

Image Credit to Business Mirror

POVERTY worsened in 17 provinces and cities, including districts in Metro Manila in the first half of 2018, according to the latest data on poverty incidence released by the Philippine Statistics Authority (PSA) on Wednesday.

Despite this, the results of the Family Income and Expenditure Survey (FIES) for 2018 showed that the huge cuts in poverty incidence in other areas caused the overall rate to improve to 21 percent, from 27.6 percent in the same period in 2015.

Using PSA data, the BusinessMirror computed that the highest increases in poverty incidence were recorded in Basilan and Isabela City, where it worsened to 65.3 percent and 52.6 percent, respectively. The rate rose by 36.5 percentage points from 28.8 percent in Basilan and by 31.97 percentage points in Isabela City compared to the first half of 2015.

Other provinces and cities that recorded increases in poverty incidence were Tawi-Tawi which recorded an increase of 6.34 percentage points; Bataan, 5.79 percentage points; Davao Oriental, 4.68 percentage points; Batanes, 3.26 percentage points; Zamboanga del Sur, 2.02 percentage points; Biliran, 1.96 percentage points; and Zambales, 1.91 percentage points.

The list also included the Third District of Metro Manila (Caloocan, Malabon, Navotas and Valenzuela), which recorded a poverty rate of 8.1 percent, or 1.57 percentage points higher than the figure recorded in 2015; and the First District of Metro Manila (Manila, the capital city) which saw poverty incidence go up by 0.91 percentage points to 5.7 percent.

The provinces of Benguet, Maguindanao, Eastern Samar and Misamis Oriental; and Metro Manila’s Fourth District (Las Piñas, Makati, Muntinlupa, Parañaque, Pasay, Pateros  and Taguig), are other areas that posted a slight increase in poverty incidence.

“The latest poverty data appear to be consistent with the idea that economic adversity affects relatively poorer or less affluent places more than those characterized by higher standards of living or more equitable distribution of income,” University of Asia and the Pacific School of Economics Dean Cid Terosa told the BusinessMirror via SMS.

“Last year’s economic growth slowed down while inflation went up. These adverse events may help explain the latest poverty data,” Terosa added.

Lower rates elsewhere

Data from the PSA also showed that 10 provinces saw huge cuts in poverty incidence in the first half of 2018. Siquijor topped the list, with the rate falling by 39.71 percentage points to 10 percent, followed by Ifugao, falling by 28.38 percentage points to 15.5 percent; Northern Samar, 23.78 percentage points to 30 percent; and Apayao, 23.56 percentage points to 23.2 percent.

Other areas where poverty incidence declined are Sorsogon, down by 22.22 percentage points to 24.5 percent; Bukidnon, 22.08 percentage points to 32.1 percent; Lanao del Norte, 18.53 percentage points to 23.6 percent; Catanduanes, 17.93 percentage points to 19.4 percent; Mt. Province, 17.35 percentage points to 24.4 percent; and North Cotabato, 16.75 percentage points to 25.6 percent.

These cuts caused overall poverty incidence to improve to 21 percent in the first half of last year, from 27.6 percent in 2015. The National Economic and Development Authority (Neda) attributed this to the rise in incomes, particularly among the poorest Filipinos.

“We note that the top contributor to the strong income growth for the poorest 30 percent of households was an increase in wage and salary incomes. A far second and third were domestic cash receipts/support [including from the  government] and entrepreneurial activities,” Neda Officer in Charge Adoracion M. Navarro said on Wednesday.

“These indicate that the pace [average of 6.5 percent GDP growth in 2012-2018], the quality and consistency of economic growth over the past seven years continue to benefit the poor. In particular, the growing contribution of industry, particularly construction and manufacturing, to output and employment, are creating more income-earning opportunities that are accessible to the poor,” she added.

While inflation accelerated to 8.1 percent between 2015 and 2018—from 7.8 percent in 2012 to 2015—Navarro said average income grew 21.2 percent from 15.3 percent.

Furthermore, she said, the income of the bottom 30 percent of households increased to 29.2 percent in the 2015-2018 period, from only 20.6 percent in the 2012-2015 period. This, Navarro said, implied that the real incomes of the poor went up.

“This could be partly an effect of rising inequality resulting from growth driven by Industry 4.0. Those likely to benefit from Industry 4.0-led growth are semi- and skilled workers. The locational differences may be due to the concentration of families in areas that do not have the capacity/skills for the modern world,” Philippine Institute of Development Studies [PIDS] Vice President Marife Ballesteros told the BusinessMirror.

Thresholds

The PSA reported that the poverty threshold per family per month rose by 10.9 percent to P10,481 in 2018, from P9,453 in 2015. The PSA explained that this was needed to meet both basic food and nonfood needs of a family of five in a month.

In terms of food or subsistence thresholds per family per month, the PSA said it increased by 11.2 percent to P7,337 in 2018, from P6,600 in 2017. The food threshold is the amount needed to meet the family’s basic food needs for a month.

“Poverty threshold is the minimum income required to meet the basic food and nonfood needs, such as clothing, fuel, light and water, housing, rental of occupied dwelling units, transportation and communication, health and education expenses, nondurable furnishing, household operations and personal care and effects,” the PSA said.

“Food threshold is the minimum income required to meet the basic food needs, satisfying the nutritional requirements set by the Food and Nutrition Research Institute [FNRI] to ensure that one remains economically and socially productive,” it added.

In terms of families, the poverty incidence rate declined to 16.1 percent in 2018, from 22.2 percent in 2015.

This translated to 23.1 million poor Filipinos, a reduction of 5.7 million from the 28.8 million recorded in the first semester of 2015. The PSA also said a million households were lifted out of poverty in 2018.

In terms of subsistence incidence per population, the PSA said 8.5 percent of the population were considered “food poor,” lower than the 13 percent posted in 2015. In terms of families, data showed that 6.2 percent of households were food poor, a decline from the 9.9 percent in 2015.

PSA data showed that by magnitude, there were 1.5 million food-poor Filipino families, a decline from the 2.2 million recorded in 2015. This translated to 9.3 million food-poor Filipinos in 2018, from 13.6 million in 2015.

“The lower reported official poverty estimates for the first semester of 2018 unfortunately do not necessarily mean that the country’s poverty situation is improving. The standard of living allowed by the official poverty line is very low and grossly underestimates the real number of poor Filipinos,” Ibon Foundation Executive Director Sonny Africa said.

Targets

Despite the uneven progress when it comes to poverty reduction, and questions on the computation of poverty and food thresholds, the Neda remains confident that the Philippines is on track to meeting its poverty target of 14 percent by 2022.

In terms of income gap nationwide, the PSA data showed this is 26.9 percent. This means households need 26.9 percent of the threshold to escape poverty.

The highest gap was noted in Basilan and Lanao del Sur where the income gap was at 36.8 percent and 35.2 percent, respectively. The poor in Bacolod City saw the least income gap at 16.7 percent.

“It is not about inequality. A hypothetical example of the average income gap: if P100,000 is poverty threshold for the year, an income gap of 25 percent means that on average the poor are earning P75,000 and hence need another P25,000  in order to reach threshold,” Action for Economic Reform Coordinator Filomeno S. Sta. Ana III told the BusinessMirror.

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