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Monday, March 4, 2024

Income inequality

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“All this is well and good, but beyond budgetary support for social services, what the poor really need is sustained assistance from the government to really make them stand on their own two feet”

First, the good news.

According to the World Bank, the Philippines was able to bring down poverty incidence from 49.2 percent in 1985 to 16.7 percent in 2018.

That’s definitely a big reduction in poverty incidence in this country from half of the population living in squalor in 1985 to less than one-fifth of Filipinos having been lifted out of misery within more than three decades.

We recall that the previous administration targeted a poverty incidence rate of 16 percent by the end of its term on June 30 this year. But the COVID-19 pandemic set back anti-poverty efforts for more than two years.

Now, the Marcos administration wants to cut the poverty rate to just 9 percent by the end of its term in 2028.

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That will be possible with its economic targets set at 6.5 to 8 percent real gross domestic product growth annually between 2023 to 2028.

The bad news, however, is that the problem of inequality still persists.

Last month, the World Bank reported that the Philippines ranked 15th out of 63 countries in terms of income inequality.

The report said the top 1 percent of Philippine earners captured 17 percent of the total national income, with 14 percent of the income being shared by the bottom 50 percent.

That’s not just a big gap but a yawning abyss between the rich and the poor in Philippine society

“With an income Gini coefficient of 42.3 percent in 2018, the Philippines ranks 15th of 63 countries for which data on income inequality is available. Of [East Asia and the Pacific] countries for which data are available for 2014-19, only in Thailand is income inequality greater than in the Philippines,” the World Bank observed.

And what accounts for this gross inequality?

The international finance institution attributes the inequality to, among others, “unequal opportunities, slow access to tertiary education among low-income households, inequality in returns to college education, and social norms putting the heavier burden of childcare on women”.

Ndiamé Diop, the World Bank Country Director for Brunei, Malaysia, Philippines, and Thailand, believes that “inequality of opportunity and low mobility across generations wastes human potential and slows down innovation, which is crucial for building a competitive and prosperous economy that will, in turn, improve the well-being and quality of life of all Filipinos.”

We fully agree with these observations and hope that the new administration will be able to follow through on its pledge to reduce poverty in the country to single-digit level by the time it leaves office in 2028.

We believe that for this administration to deliver on its promise to reduce poverty, then it must adopt a whole-of-society approach, by involving government, the private sector, and civil society groups in a common effort to help the poor in identified priority areas through job and livelihood generation.

The national government should accelerate its infrastructure program to include the building of more roads and bridges and an extensive railway system to connect the regions and islands.

This will give ample employment opportunities to the poor.

The Pantawid Pamilyang Pilipino Program or 4Ps implemented by the Department of Social Work and Development should be continued to help the poorest of the poor and indigent families to cope with high process of good and services.

But the program should be assessed to plug loopholes in implementation at the local level.

We’ve heard of too many horror stories of 4Ps funds not reaching their intended beneficiaries and ending up instead in the pockets of the corrupt and unscrupulous.

At the same time, the administration should adopt a zero-tolerance for corruption at all levels of government, from the national down to the local levels.

We’re glad that as part of the over-all economic development program for next year, the proposed national budget for next year contains P77 billion in additional appropriations for education, health, transportation and other vital social services.

The Department of Social Welfare and Development will get an additional P12.5 billion for assistance to individuals in crisis situations and 5 billion for increasing the pensions of senior citizens.

The Department of Transportation will get P2.5-billion for its fuel subsidy program for drivers and operators of public transportation and P2 billion for its Libreng Sakay for daily commuters.

The Department of Labor and Employment will have at its disposal P5 billion for the Tulong Panghanapbuhay sa Ating Disadvantaged/ Displaced Workers (TUPAD) program as well as for livelihood generation.

The Department of Health will also get P20.25 billion more for various programs, such as medical assistance for indigent patients (P13B), and benefits for healthcare and non-healthcare workers and frontliners (P5B).

Meanwhile, the Technical Education Skills and Development Authority will be given an additional P5 billion for its training and scholarship programs.

All this is well and good, but beyond budgetary support for social services, what the poor really need is sustained assistance from the government to really make them stand on their own two feet.


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