TOPIC 3 History of Poverty in The Philippines Development Efforts 1

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HISTORY OF POVERTY IN THE PHILIPPINES AND DEVELOPMENT EFFORTS

The map above shows the poverty incidence in the country. This is the number of households
living below the poverty threshold. As of 2015, it was 21.6%.

The poverty line for 2014 marked a per capita income of 100,534 pesos a year. According to the
data from the National Statistical Coordination Board, more than one-quarter of the
population fell below the poverty line the first semester of 2014, an approximate 78 percent
increase since 2013.
HISTORY OF POVERTY IN THE PHILIPPINES AND DEVELOPMENT EFFORTS

The country’s poverty incidence for the whole of 2015 declined to 21.6 percent from 25.2 percent
in 2012 and 26.3 percent in 2009, the Philippine Statistics Authority (PSA) reported.

The rate of declination in poverty has been slower, compared with other East Asian Countries,
such as People's Republic of China (PRC), Thailand, Indonesia, or Vietnam. National
Economic and Development Authority (NEDA) deputy director general Rosemarie Edillon
attributed this to a generally low and stable inflation, improved incomes and higher
employment rates during the period.[5][needs update]

The government planned to eradicate poverty as stated in the Philippines Development Plan 2011–
2016 (PDP). The PDP for those six years are an annual economic growth of 7–8% and the
achievement of the Millennium Development Goals (MDGs). Under the MDGs, Philippines
committed itself to halving extreme poverty from a level of 33.1% in 1991 to 16.6% by 2015.[6]

Background

As of 2018, a quarter of the 105 million Philippine population live in poverty, that is, over 26
million people.[7] Through various anti-poverty programs, such as the Comprehensive Agrarian
Reform, Lingap Para sa Mahirap, and the Social Reform Agenda, the Philippines has been
through a long battle to ameliorate that statistic. Despite these governmental efforts, the
Millennium Development Goal milestone of reduction in poverty has been a slow process.[8] The
poor in the Philippines are most likely self-employed farmers, fishermen, or other agricultural
workers. Three-quarters of these people live in severe disaster-risk areas that are highly rural.
In 2015, about 58 percent of poor households have more that six members. Education overall
has improved over time; from the ages of 15–24, over 75 percent have completed secondary
education or above in 2015.[2] Specifically in poor households, however, over 60 percent of
families have education only up to elementary school.[9] Of those who live in poverty, in 2012,
18.4 million people account for extreme poverty, living with about $1.25 per day. The challenges
that these people face are vulnerability to natural disasters, weak governance, inadequate
health services, lack of natural resources and more. The poor face an expensive process of
recovering from vulnerability, just to face another conflict which then restarts the cycle.[10]

Causes of Poverty

Poverty occurs for many reasons, but in the Philippines specifically, there are reoccurring factors
that have slowed down the development progress. Economic growth is low compared to
neighboring countries. GDP growth is comparable, however, GDP per capita in relation to the
increase of population is much slower.[2] Poverty directly impacts economic growth due to
constraints in credit and the underdevelopment of the financial market and inequality in
income and assets. Another cause of poverty in the Philippines is the rise of unmanaged
HISTORY OF POVERTY IN THE PHILIPPINES AND DEVELOPMENT EFFORTS

population growth. Because the poor tend to have bigger families, they are unable to access
health services or sex education, which leads to more children and the continuation of that
cycle.[3] The pattern of growth is common in rural areas, but there has been a rise in poverty in
urban areas. Cities in the Philippines have been faced with an increase in poverty due to lack
of well-paid employment.[10] One of the main causes of poverty in the Philippines is the
vulnerability to natural disasters. Natural disasters in the Philippines have caused US$23 billion
in damages since 1990, which continues to delay the development process.[9] According to the
DW, the Philippines is the most vulnerable country to typhoons, earthquakes and volcanic
eruptions in the world.[11] The frequent occurrences cost the country lives, illness, malnutrition,
and denial of education and health services. Filipino farmers are some of the most vulnerable,
because floods and landslides severely affect their crops and income.[12] Another cause of
poverty is the lack of research on poverty and the effective policies to implement in order to
prevent further damage. This lack of research has caused deficient targeting in poverty
programs, and unsuccessful current processes. Until more research is done as to how exactly
tackle the poverty trap, programs will not be effective.[3]

Comparison to Other East Asian Countries

The Philippines has a slow poverty declination rate in comparison to countries such as China,
Vietnam and Indonesia. While China is declining at a rate of 2.4 percent per year, the
Philippines is declining at 0.9 percent per year. Impacts of natural disasters, the gap of income
and wealth, and slow growth and pace are just some of the factors that have contributed to
that statistic. Declination of poverty is slower in the Philippines because urbanization and
industrialization is progressing faster elsewhere. This advancement allows people to leave
their agricultural-based work to a factory job with a higher paying income. The country has
made movement out of the labor-intensive work in populous regions, such as Manila, however the
country as a whole has made slower improvements. In addition to slow progress, natural disasters
in the Philippines, like stated previously, is one of the biggest conductors of poverty. While other
countries are able to develop without consistent disturbances, the Philippines is forced to start from
the ground up after every single occurrence.[9] The Economist, state that low growth of annual
GDP is one of the main reasons for persistent poverty compared to Vietnam, China, and
Thailand. Because the growth is concentrated in Manila, other provinces in the country are
forgotten and hardly progress.[13]

Poverty Rate Declines

According to the World Bank, poverty rates have declined from 26.6 percent in 2006 to 21.6
percent in 2015. Although 1 in 5 of the Filipino population still live below the poverty line, the
HISTORY OF POVERTY IN THE PHILIPPINES AND DEVELOPMENT EFFORTS

country has attempted to increase income and opportunities and reverse impacts of occurring
natural disasters. The Philippine Development Plan of 2017–2022 and the AmBisyon 2040 are
proposals for the nation to suppress poverty and improve the lives of the poorest population.
These policies include creating more and better jobs, improving productivity, investing in
health and nutrition, managing disaster risks, protecting the vulnerable, and more.[2] These
documents help set the overall goal of reducing poverty to 13–15 percent by 2022 and having
the nation thrive at similar levels as surrounding countries. The strategic plans that the Philippine
government has created are intended to work towards a middle-class society where poverty is
reduced and living conditions are improved.[9]

Drivers of Poverty Reduction

The main drivers between 2006 and 2015 were an increase in wage income and movement of
employment out of agriculture, government transfers, and remittance from domestic and
foreign sources according to the World Bank publication, Making Growth Work for the Poor.
Movement from agricultural jobs to lower-end industry jobs led to increase of wages and
accounted for 50 percent of the reduction in poverty. Due to the Pantawid Pamilya, the
government was able to use the social assistance which resulted in the contribution of 25 percent
reduction of poverty as well as influence behavior change. Remittances from domestic and foreign
sources accounted for 12 percent of the reduction in poverty. In addition, a factor of the
declination of poverty is the growth of population. With a 1.7 percent increase of population
a year has resulted in a 3.8 percent increase in per capita GDP growth. An additional factor is
an increase of school enrollment and decrease of dropout rates. Despite a lack of distribution, the
water, sanitation and electricity of the Philippines have also improved. Other socioeconomic
indicators such as social safety nets and health insurance has also been beneficial factors.[9] In
addition, drivers of reduction also include the influx of economic expansion that has grown the
economy.[3]

Opportunities

Poverty will decline with the continuation of three actions. First is acquiring Filipinos to get jobs
outside of agriculture and increase the wages of farmers. Second, is using the Government's
Pantawid Pamilyang Pilipino Program (4Ps), a primary social program, to reduce poverty.
This expansion, will allow children access to education and health services. Lastly, the
continuation of remittances from sources of domestic and foreign.[14] There are current
programs that have helped poverty rates decline. In 1981, Opportunity International began their
operation through loans and savings in Manila. Through rural expansion, the bank wants to
implement a program that will provide electricity to about 10,000 families. To contend to the
natural disasters, Opportunity International also has provided insurance programs that help those
who have been impacted in Typhoon Helen.[14] With the help of social protection programs from
the Government of the Philippines, there are cash assistances to families living in extreme poverty.
Child immunizations, school enrollment, and health programs are some of the specific actions
HISTORY OF POVERTY IN THE PHILIPPINES AND DEVELOPMENT EFFORTS

that the programs have consented. Also USAID, or the U.S. Philippines Partnership for Growth
specifically, have implemented regulations and policies to promote development within the
country. USAID is also initiating programs that help those who were affected from natural
disasters, and contributing to environmental resilient methods for the future.[10]

Statistics

The Annual Poverty Indicator Survey, or APIS, is a survey held nationwide, administered by
the National Statistics Office, World Bank Mission, and the United Nations Development
Programme. It provides data on the different non-income indicators related to poverty and is
held every year except for years when the Family Income and Expenditure Survey, or FIES, is
being administered.[14] The survey provides data on the socio-economic profile and the living
conditions of families in 78 provinces and all cities and municipalities of Metro Manila. The
Family Income and Expenditure Survey, on the other hand, provides the same major and
specified details of expenditures but over a larger sample area extending to provinces and
municipalities across the Philippines.[10]

Poverty and food threshold

The poverty threshold, also known as the poverty line, is the minimum income required to meet
basic food needs and other non-food requirements such as clothing, housing, transportation,
health, and education expenses.[15] The food threshold is the minimum income required to meet
basic food needs and satisfy the nutritional requirements set by the Food and Nutrition
Research Institute (FNRI) to ensure that one remains economically and socially productive.[15]
Recent estimates for the poverty and food thresholds has been consistently increasing. The food
threshold, being the estimate for minimum food expenditures, consistently comprises around
70% of the minimum income requirement or poverty threshold.

Compiled average annual per capita poverty and food threshold in the Philippines based on the
results of the Family Income and Expenditure Survey[2] released by the Philippine Statistics
Authority. The survey covered 51,000 samples.

Poverty incidence and subsistence

Given the poverty thresholds mentioned above, poverty and subsistence incidences are computed
by determining the proportion of the population and the families whose per capita income
are below the poverty and food thresholds. Poverty incidence is the proportion of the
population with per capita income less than the per capita poverty threshold.[15] Subsistence
HISTORY OF POVERTY IN THE PHILIPPINES AND DEVELOPMENT EFFORTS

incidence, on the other hand, is the proportion of the population with per capita income less than
the per capita food threshold.[15] Poverty and subsistence incidences for 2013 significantly
decreased, indicating an improvement in the proportion of the population that are below the
poverty line.

Poverty and subsistence incidence based on the Family Income and Expenditure Survey (FIES)[10]
and the Annual Poverty Indicator Survey (APIS).[14]

2014 data released by Philippine Statistics Authority, however, estimated a 25.8% poverty
incidence for the first semester (January to June 2014). This was an increase in poverty level from
2013. Subsistence incidence for the first semester of 2014, on the other hand, showed an
improvement, with a 10.5% estimate.[2]

Depth of poverty

Income Gap

Income gap measures the average income required by the poor in order to get out of poverty
(expressed relative to the poverty threshold).[15] Income gap is a measure of depth of poverty. In
2013, on average, families below the poverty line needed 27.4% the poverty threshold, or an
additional monthly income of Php 2,638, to get out of poverty.[2] This was a slight decrease from
2012's income gap which requires an income of Php 2740 in order to overtake the poverty line.

Income gap in the Philippines for 2006, 2009, 2012, and 2013 based on the results from the Annual
Poverty Indicator Survey

Poverty Gap

Poverty gap is the total income shortfall (expressed relative to the poverty line) of families with
income below the poverty threshold, divided by the total number of families. It is also a
measure of depth of poverty. The poverty gap for the first semester of 2014 was 5.4%, a 0.2 unit
increase from 2013, which was 5.2%.[2][2]

Poverty gap in the Philippines for 2006, 2009, 2012, and 2013, based on the Annual Poverty
Indicator Survey

According to the Asian Development Bank, in 2016 it was estimated that 60% of the Philippine
population aged 15 years and above were employed.[16][failed verification]
HISTORY OF POVERTY IN THE PHILIPPINES AND DEVELOPMENT EFFORTS

Gini index

The Gini index, also known as the Gini ratio or Gini coefficient, measures the degree of
inequality in the distribution of family income in a country.[17] A Gini index of 0 represents
perfect equality, while an index of 100 implies perfect inequality. For the Philippines, the Gini
index is measured every three years during the Family Income and Expenditure Survey. In
2009, the Gini index was 46.41. It decreased 0.36 units to 46.05 in 2012. These indices were both
higher than the average of 38.8.

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