The gap between the country’s rich and poor is widening, with high-earning individuals enjoying significantly faster growth in incomes compared with people from the middle- and low-income classes.
This is according to data from the National Statistical Coordination Board (NSCB), which showed details of the country’s national income accounts that support the perception that the benefits of the robustly growing Philippine economy were enjoyed more by the rich than the poor.
NSCB Secretary General Jose Ramon Albert said in one of the NSCB’s latest papers that people from the high-income class, which account for between 15.1 and 15.9 percent of the country’s population, enjoyed a 10.4-percent annual growth in income in 2011.
In comparison, incomes of people in the middle-income segment grew by only 4.3 percent, and incomes of those in the low-income group by 8.2 percent.
With the incomes of the rich growing faster, income inequality is expanding as a consequence.
“We find that those from the high-income class have incomes rising much faster than those in the middle- and low-income class,” Albert said in the paper, which used data covering 2010 and 2011.
“While such an examination of income is rather simplistic, it points to issues about income inequality, and the need for government and society to address these disparities, and ensure a path toward inclusive growth,” he added.
10x poverty line
The paper defined high-income individuals as those who belong to households that earn more than 10 times the poverty line. The NSCB placed the poverty line for a family of five at P7,821 a month as of the first semester of 2012.
Middle-income individuals are defined as those belonging to households earning from twice to up to 10 times the poverty line.
Low-income individuals are members of households earning twice the poverty line or less.
Data from the NSCB also showed that the high-income households accounted for more than half, or 60 percent, of the economy’s income as measured by the gross domestic product.
The balance of 40 percent of the economy’s income was shared by the bulk, or about 84 percent, of the country’s population.
Albert said that there was basis for criticisms that economic growth in the Philippines was less meaningful for the majority of the population than it was for the few high-income people.
However, he echoed statements of other government economic officials that making the benefits of economic growth trickle down to the masses would take time.
Officials have said that the Philippines needs to sustain a robust growth rate of 6 to 7 percent, or even higher, for about a decade in order for economic growth to make a significant dent in poverty-reduction efforts.
“A number of people have noted that economic growth has not yet translated into poverty reduction…. We seem to be in a hurry to find changes, but changes take time,” Albert said.
He said poverty reduction was a challenge that both the government and the private sector should address through sustained efforts, including investments.
Last year, the Philippine economy surprised the world by growing 6.8 percent, one of the fastest growth rates in Asia during the period and beating the government’s target of 5 to 6 percent.
The expansion accelerated in the first quarter of this year to 7.8 percent, making the Philippine economy the fastest-growing in Asia.
High poverty rate
Despite this, the Philippines has one of the highest poverty rates among emerging Asian economies.
The poverty incidence stood at 27.9 percent as of the first semester of 2012, almost unchanged from the 28.6 percent in 2009.
Officials acknowledged that the goal of bringing down poverty incidence to 16.6 percent by 2015—a target committed by the Philippines under the Millennium Development Goals of member-countries of the United Nations—had become difficult to achieve. The government, nonetheless, has not yet officially given up on the goal.
Economists said that the government would have to spend more on education and that the country needed to attract more investments that would provide jobs for the poor to significantly reduce the poverty incidence.
P40B for the poor
Government officials, in response, have said that poverty-reduction efforts are being intensified. They cited the government’s allocation of P40 billion for this year alone for the conditional cash transfer program.
Under the program, selected poor families are granted subsidies in exchange for sending children to public schools and for making them undergo regular check-ups in public health centers.
Officials said that over the long term, the education benefits of the program were expected to give jobs to and lift poor people out of poverty.