Poverty still a growing problem in the Philippines

By Joseph Yu, IBON Features, #43, 5 July 2002

Despite her promise to alleviate the condition of the poor, President Arroyo seems to be losing the battle against poverty

Poverty is one of the most serious social problems in the country today. This was highlighted by the results of a recent Pulse Asia survey, which showed that one out of five Filipinos would rather leave the country if only they had the opportunity.

Estimates of poverty incidence in the country relesaed by the National Statistical Coordination Board (NCSB) show that 40% of the population, or some 31 million Filipinos, are poor. But IBON Foundation's alternative estimates of poverty incidence show that nearly 88% of the country's households are poor.

Low Wages

Comparing IBON's estimates of the daily cost of living with the daily minimum wage demonstrates that most Filipino families do not earn enough to make ends meet (Table 1). But even comparing government's low daily poverty threshold with the minimum wage reveals that wages are inadequate compared with what a family needs just to survive.

This is because government is dead-set on keeping living standards, and wages, down in order to keep the country competitive and attract foreign investors.

Table 1. Minimum Wage vs Daily Cost of Living & Daily Poverty Threshold (in pesos)

Region Daily Poverty Threshold Daily Cost of Living /a Minimum Wage /b Philippines 228.76 434.67 209.24 NCR 295.91 530.01 280.00 /c Areas outside NCR 217.63 416.25 168.47

Sources of basic data: NSO, DOLE, NSCB

/a - as of April 2002

/b - based on 2000 wage orders

/c - including P30 emergency cost of living allowance

Low Purchasing Power

To make things worse for the ordinary Filipino worker, their hard-earned peso can buy fewer goods and services. Table 2 shows that the purchasing power of the peso in the country fell to P0.603 in May from P0.625 last year.

Notably, the buying power of the fuel, light and water group fell in May to P0.564 from P0.622 lat year, due to increasing costs of fuel and electricity.

Table 2. Peso Purchasing Power by Region and Commodity Group
(as of May 2002; in pesos)

	2002	2001	2000
REGION Philippines	0.603	0.625	0.665
NCR	0.590	0.620	0.666
Outside NCR	0.608	0.626	0.665
COMMODITY GROUP All items	0.603	0.625	0.665
Food, Beverages & Tobacco	0.651	0.666	0.691
Clothing	0.671	0.689	0.716
Housing & Repairs	0.514	0.541	0.577
Fuel, Light & Water	0.564	0.622	0.700
Services	0.475	0.499	0.570
Miscellaneous	0.760	0.775	0.833

Source: NSO

Although 2001 was marked by a series of oil price rollbacks, oil price hikes this year have brough pump prices back to January 2001 levels.

Meanwhile, the National Statistics Office (NSO) April Labor Force Survey revealed that the unemployment rate grew to 13.9% from 13.3% in April last year (See Table 3). The underemployment rate also increased to 19.26% from 17.5% in the same period last year.

This means that more Filipinos were not earning enough to meet their needs and thus, are seeking more work, or a second job.

Table 3. Labor Force Indicators, April 2002

Preliminary Results

Philippines April 2002 January 2002 April 2001

Labor Force (in '000)

Participation Rate (%) 35,052

69.9 33,098

66.4 33,621

69.0

Employment (in '000)

Rate (%) 30,186

86.1 29,705

89.7 29,160

86.7

Unemployment (in '000)

Rate (%) 4,866

13.9 3,393

10.3 4,461

13.3

Underemployment (in '000)

Rate (%) 5,922

19.6 4,724

15.9 5,092

17.5

The NSO also reported an increase in own account workers, most of them in the service sector, to 11.4 million from 10.9 million a year earlier. These self-employed workers are considered employed by the government even if they do not engage in productive work. Many of these are forced to fend for themselves due to the lack of economic opportunities in the country.

There was also an increase in the number of unpaid family workers, to 4.096 miliion from 4.056 million a year earlier. These are workers who help in the families' business or work, yet are not paid. This increase also points out the lack of employment opportunities, since these workers would probably prefer to look for jobs to better help their families - if only there were jobs available.

Retrenchment

Most people also lost their jobs due to an increase in closures in the first two months of the year. The department of Labor and Employment (DOLE) reported that some 152 firms closed and 671 reduced their workforce. A total of 20,962 workers were affected, a 79% increase from last year (Table 4).

Table 4. Establishments Resorting to Permanent Closures/Retrenchment Due to Economic Reasons and Workers Displaced

More closures should be expected as firms fail to compete with the influx of cheap exports brought about by the government's globalization thrust.

No wonder so many Filipinos choose to seek their fortunes abroad. According to the DOLE, some 2,500 Filipinos leave the country dialy to seek employment of migrate elsewhere.