News that poverty incidence in the Philippines has not changed substantially as of the second semester of last year was a rude awakening for the Aquino administration, which has been using a slew of good news on gross domestic product (GDP) growth, new records set by the Philippine Stock Exchange index (PSEi), and improvement in the country’s credit ratings to boost its image.
The latest data poverty incidence data was released a day after the PSEi surged past the 7,000-point mark and set its 27th record for this year, which clearly demonstrates how much the great divide is between the country’s haves and have-nots.
Reacting to the latest data on poverty incidence, Malacanang said that it is still confident that it will be able to slash poverty incidence in the next three years, and that the problem cannot be solved overnight.
For his part, Socio-Economic Planning Secretary Arsenio Balisacan said that underemployment in rural areas, security problems in provinces facing insurgencies and warlords, and the falling prices of a number of commodities such as sugar were mainly to blame.
According to the National Statistical Coordination Board (NSCB), poverty incidence stood at 27.9 percent in the first semester of 2012, with more than one in four Filipinos deemed poor. Poverty incidence is the proportion of people below the poverty line to the country’s total population.
This means that the 2012 figure did not differ with the 2006 and 2009 first semester figures, pegged at 28.8 percent and 28.6 percent, respectively. The NSCB added that the subsistence incidence, or the proportion of Filipino families in extreme poverty, was estimated at 10 percent during the first semester of 2012.
The NSCB also said that a family of five needs P5,458 to meet basic food needs every month, and P7,821 to stay above the poverty threshold.
The census agency said that food and poverty thresholds increased by 11.1 percent from the first semester of 2009 to the first half of 2012, compared to the 26-percent increase between the first semesters of 2006 and 2009. Food threshold is the minimum income required by an individual to meet his or her basic food needs, and satisfy the nutritional requirements set by the Food and Nutrition Research Institute, while remaining economically and socially productive.
Although the Aquino administration can be lauded for undertaking programs like the Conditional Cash Transfer (CCT) Program and increasing spending to modernize the country’s farming sector, the latest poverty incidence data again shows that high GDP growth is nothing if no new quality jobs are created, and if economic growth only benefits the very few who control the country’s riches.
In fact, the latest report showing that the poverty incidence has not changed dramatically should not surprise the Aquino administration at all, since the latest unemployment and underemployment figures also both show no significant improvement.
Based on latest government figures, the Philippines currently has seven million unemployed and nearly eight million underemployed people.
Job growth needed
If the Aquino administration wants to reduce poverty, it should realize that the best solution is to induce jobs growth and this requires attracting more foreign direct investment into the country, building more infrastructure to attract more investments, putting up more programs to create more or help current small to medium enterprises (SMEs), and placing more bias for rural development (so the farming sector, where millions can be employed, can grow faster).
The administration does not need a rocket scientist for it to realize that those aforementioned solutions are keys to reducing poverty in the country.
Interventions like the CCT do count in reducing poverty, but its long-term impact has yet to be felt in the case of the Philippines. Perhaps it is better to channel part of the funds for the CCT to other projects like increasing lending to SMEs.
Also worth noting is how poor peace and order, and the presence of political dynasties also contribute to poverty incidence because the Autonomous Region in Muslim Mindanao recorded the highest poverty incidence at 52.9 percent.
In this aspect, the Aquino administration gets a very poor grade because it has yet to dismantle a private army, and set an example that it is not tolerating political dynasties.
With the release of the first quarter GDP growth figures nearing again, many sectors are anticipating sterling figures that would affirm that the country’s economy would expand between six percent and seven percent this year, based on government projections.
But if no new jobs are created in the three quarters and the next two years even with impressive GDP growth figures, the Aquino administration has no one else to blame but itself if 2015 poverty incidence figures show no dramatic improvement.