Poverty incidence at three-year low

Poverty incidence among Filipinos declined by 6.6 percentage points to 21 percent in the first half of 2018 from the adjusted 27.6 percent during the first half of 2015, the Philippine Statistics Authority said Wednesday.

Poverty incidence refers to the proportion of the population living below the poverty line to the total population. The figures were contained in the preliminary report of the Family Income and Expenditure Survey, or FIES, for 2018 released by the PSA.

Also, poverty incidence among Filipino families in the first semester of 2018 was estimated at 16.1 percent. This is defined as the proportion of families whose income is below the poverty line to the total number of families. This was estimated at 22.2 percent in the same period in 2015.

Socioeconomic Planning Secretary Ernesto Pernia, in a statement delivered by National Economic and Development Authority Undersecretary Adoracion Navarro, said the decline in poverty incidence could be attributed to “sustained economic growth and critical and broad-based reforms and investments that have translated to employment generation and social protection.”

“Over the course of three years, we can see that poverty decreased substantially—down by 6.6 percentage points...,” Pernia said. Pernia is currently representing the country at the IMF-World Bank Spring Meetings in Washington D.C.

“For one, growth in the construction and manufacturing sectors created more employment opportunities for Filipinos. Second, we like to highlight the increase in income of Filipino households, as well as employment shifts to the industry and service sectors from agriculture,” Pernia said.

He said while inflation rose to 8.1 percent in the period of 2015-2018 from 7.8 percent in 2012-2015, the growth of average income accelerated considerably to 21.2 percent from 15.3 percent, respectively.

Importantly, he said growth in per capita income of the bottom 30 percent of households picked up significantly to 29.2 percent in the 2015-2018 period from only 20.6 percent in the 2012-2015 period.

“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 government) and entrepreneurial activities,” Pernia said.

He said this was an indication 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 continued 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,” he said.

He said the implementation, expansion and enhancement of government’s social programs have also helped augment incomes.

One of these is the continued implementation of the Conditional Cash Transfer Program, which now includes an additional P600-rice subsidy cash grant. Moreover, the P1,000-pension increase from the Social Security System, which was released in March 2017, added to Filipinos’ incomes.

The coverage of the Social Pension program widened to over 3.1 million in 2018 from only 930,000 indigent senior beneficiaries in 2015.

Also, the roll-out of Unconditional Cash Transfers or UCT of P2,400 per household likely boosted domestic cash receipts of the poor, he said. The UCT Program was released in early 2018 to cushion vulnerable groups from the transitory effects of the tax reform law.

As a result of these social programs and policies, subsistence incidence also declined by 4.5 percentage points to 8.5 percent among individuals and declined by 3.7 percentage points to 6.2 percent among families in the first semester of 2018.

Subsistence incidence refers to Filipinos living in extreme poverty and who cannot afford basic food requirements.

Moreover, the reduction in poverty is fairly broad-based. Regional disparity eased as all regions, except the National Capital Region, saw a drop in poverty incidence. Eight regions recorded poverty incidence below the national average, four of which posted a single-digit poverty incidence.

“While these initial results are encouraging, we have yet to wait for full-year results of the FIES, as targets in the Philippine Development Plan (PDP) 2017-2022 are based on full-year estimates,” Pernia said.

But Pernia said much has to be done to sustain the decline of poverty incidence in the country. Among these are the implementation of policies that will help stabilize prices, such as the Rice Liberalization Law, while giving farmers technical support through the Rice Competitiveness Enhancement Fund or RCEF.

He said there must also be more opportunities for entrepreneurship, job creation, and sustainable livelihoods for our low-skilled labor force.

Pernia said the peace-building efforts, especially in the Bangsamoro Autonomous Region in Muslim Mindanao, must be sustained to encourage economic growth.

“Lastly, we are continuing the push for reforms that facilitate the creation of new businesses and boost the outputs of firms, which will eventually translate to high-productivity jobs,” he said.

These are the reduction of foreign investment restrictions and the package 2 of the Tax Reform Program, which will lower corporate taxes and rationalize investment incentives.

Earlier, President Rodrigo Duterte said he was eyeing to reduce the poverty rate in the country to 14 percent by the time he ends his term in 2022.

“It’s a reasonable expectation that we are on track to meet targets,” said NEDA Undersecretary Carlos Bernardo Abad Santos.

Dominguez previously said the government must lift at least 1 million Filipinos from poverty every year in order to meet the 14 percent poverty incidence target at the end of President Duterte’s term.

Viewing the latest figures as “good news,” the Palace remains convinced that the decline in poverty incidence only proves the accomplishments made under the Duterte administration.

“These figures highlight that the Duterte administration has made significant strides and reflect how it seriously deals with the long-standing national issue of poverty,” Presidential Spokesman Salvador Panelo said in a statement.

Panelo said Duterte’s initiatives have helped reduced poverty incidence by broadening access to free education, free medicine, improved healthcare facilities, and institutional school feeding program for public school children.

Higher pension for seniors and veterans, salary increases for soldiers, policemen, firemen, teachers, and government workers also played a factor.

Meanwhile, a Trade official said the price of rice should go down in May under the new liberalized setup.

The price of rice should go down to P32 per kilo from P39 while sugar prices should stay at P50 to P55 per kilo, Trade Undersecretary Ruth Castelo said.

READ: IMF expects growth to reach 6.5% in 2019

Topics: Philippine Statistics Authority , Family Income and Expenditure Survey , Ernesto Pernia
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