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A DILEMMA of development or a failure of policy?
Despite 28 quarters of successive growth, poverty has worsened in
the Philippines
According to the National
Statistical Coordination Board, the number of poor Filipino
households has increased and poverty overall has worsened during the
administration of President Arroyo.
The statistical board defines
“poor” as those who cannot afford basic needs for food, health,
education, housing and other social amenities.
Poverty threshold refers to the
cost of basic minimum needs, food and nonfood. In 2006, a family of
five needed a monthly income of P6,274 or P75,288 annually, to stay
out of poverty. A family of the same size in metro Manila needed
P102,830 a year.
The board’s Family Income and
Expenditure Survey released Wednesday said poverty grew 26.9 percent
for families in 2006, compared to 24.4 percent in 2004. The latest
figure is lower than the 27.5 percent rate in 2000, said Romulo
Virola, the board’s secretary general.
The number of poor families
increased to 4.7 million, 16 percent compared to the four million
poor families in 2003. Overall, poor Filipinos in 2006 totaled 27.6
million, 16 percent more from the 23.8 million recorded in 2003.
Higher prices narrowed access to
food and nonfood needs and pushed “some” down the poverty line.
Higher oil prices and a big population growth worsened destitution.
The VAT coverage was extended in November 2005 and higher rates took
effect February 26, two moves aimed at easing the fiscal deficit.
Family formation meanwhile rose
faster than family income, “negating the benefits of higher
economic growth,” an annual average growth of 5.4 percent between
2003 and 2006. Total population in 2006 rose to 86.9 million, from
only 71 million three years earlier.
What was the good news? The
economy grew 7.3 percent in 2007. Improvement in the fiscal
condition enabled the government to spend more on social programs.
The board offered several reasons
for increased poverty: the implementation of the value-added tax
(VAT), insufficient rise in personal income, high oil prices and
population growth. National Economic and Development Authority
acting director general Augusto Santos confirmed the board
explanation.
Secretary Domingo Panganiban,
head of the National Antipoverty Commission, said the statistical
board study was flawed because it used old data. The 2007 statistics
were more reliable and should have been considered, he said.
The Arroyo administration, while
taking credit for economic expansion in the last 28 quarters, has
conceded that growth has not seeped down to the level of the poor,
whether employed, unemployed or underemployed. The
“trickle-down” effect has not worked.
It was also the National
Statistical Coordination Board that warned us several weeks ago that
the middle class has shrunk, threatening this economic sector and
the rest of the economy.
The NEDA warned that the
government could only meet its target to reduce poverty from 28
percent in 2004 to between 17 percent and 19 percent in 2010, with
higher spending, particularly for social services.
Worse, widespread poverty also
does not bode well for peace and stability. The larger the
population of poor families and individuals, the more brittle social
cohesion gets. Poverty, not the scandals consuming the senators or
the million-dollar contracts those in power covet, is our most
critical problem.
Looking for an answer
THE textbook reply to poverty is
to increase full-time jobs, reduce unemployment, improve incomes and
raise standards of living. Growth with jobs is the essential
national policy.
These solutions, like moderating
population growth, take time and concerted action. Divisive factors
like partisan politics, sectoral schisms and cancerous insurgencies
also distract attention and slow down focus and action.
There will never be a shortage of
blame, such as globalization and the neglect of industrialization
and of agriculture, coming from the Left. A World Bank report
released Thursday blames rampant corruption, political instability
and poor tax collection.
What could the government and
private business do to ease the pain of rising prices amid declining
wages?
In the long term, former World
Bank president James Wolfensohn said investing more on education and
health would help ease poverty and improve the economy.
In the short term, Sen. Mar Roxas
seeks a suspension on the value-added tax on oil products.
Suspension could provide relief to the people by reducing costs in
the consumption of oil products, he said. He has introduced Senate
Bill No. 1962 that would remove P4 of VAT per liter of diesel and
P65 of each LPG tank.
He also wants minimum wage
earners in the private and government sectors exempted from paying
income tax. Roxas’s bill is being deliberated at the Senate
Committee on Ways and Means. Cavite Rep. Joseph Emilio Abaya has
introduced a counterpart bill in the House
“Let’s push for real and
relevant solutions to aid Filipinos and boost their weakened
spending power,” the Liberal Party president, who has been called
a populist by his critics, said.
Long-term policy measures and
short-term practical solutions ought to be considered to address
widening poverty and its consequences.
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