Poverty unchanged

Core
Business World, 10 December 2013

Big gains have been made in at least half of the eight Millennium Development Goals (MDGs), a United Nations report said. The MDGs were adopted by UN member-countries as a result of the UN Millennium Summit in 2000. The agreement seeks to eradicate extreme poverty and hunger, achieve universal primary education, promote gender equality and empower women, reduce child mortality, improve maternal health, combat HIV/AIDS, malaria and other diseases, ensure environmental sustainability, and develop a global partnership for development.

The anatomy of poverty in the Philippines, various years

Where does the Philippines stand vis-a-vis the rest of the world on the goal of halving extreme poverty by 2015?

On the first target (halve, between the 1990s and 2015, the proportion of people whose income is less than one dollar a day), the Philippines has extremely poor likelihood of meeting it. In 1991, the national poverty threshold was 34.4%. The target is 17.2% by 2015. The poverty rate was 26.6% in 2006, 26.3% in 2009 and it was estimated at 25.2% in the 2012.

The Philippines’ ASEAN-5 peers (Indonesia, Malaysia, Thailand and Vietnam) have left us biting the dust. They met the poverty reduction target a few years back.

The poverty headcount ratios at the national poverty line, in percent of population, for our ASEAN-5 neighbors show how much progress they’ve made. For Indonesia, it was 12.0% (2012), for Malaysia it was 1.7% (2012), for Thailand, it was 13.2% (2011) and for Vietnam, it was 20.7% (2010). For the Philippines, as announced this week, it was 25.2% (2012).

The 6.8% GDP growth in 2012 didn’t make a lot of difference. What is needed is sustained, strong, and inclusive growth.

From 2006 to 2009, poverty incidence was reduced by 0.3 percentage point, while poverty incidence edged down by 1.1 percentage points from 2009 to 2012. There’s progress but it’s agonizingly slow.

The challenge for policymakers is to reduce the proportion of Filipinos who live below the poverty line from 25.2% to 17.2% within three years. It won’t happen but that’s not a reason for giving up.

The difficulty in meeting the MDG poverty reduction goal is compounded by rising population, high unemployment, income inequality, and the country’s susceptibility to calamities and tragedies.

Whatever happened to the Reproduction Health (RH) law? After years of long, acrimonious debates on the desirability of giving people a choice on the size of their families, the RH law is regretfully stuck at the Supreme Court.

In order to reduce poverty, more and relatively decent jobs have to be created. It would come with strong and sustained growth and changes in the composition of the economy. Agriculture remains the biggest source of employment, accounting for about one-third of total jobs. But with an inefficient agricultural sector comes a lot of low-paying, low-productive jobs.

Income inequality has not improved. In 2012, the share of the poorest 10% of the population was 2.9% while the share of the richest 10$ of the population was 31%. The share of the first three deciles (the poorest third) was 11.4%, while the share of the richest third was 59%. That has been the pattern since 2006.

The Philippines is one of the most calamity-prone countries in the world. Since the poor are the most vulnerable people during calamities, they tend to suffer the most whenever there are earthquakes, typhoons, storm surges, landslides, volcano eruptions, and so on.

The more severe the tragedy, the more difficult it is for the poor to recover. The impact of the super typhoon Yolanda (international name: Haiyan) on the poor defies description. Yet it hit one of the poorest regions in the country — Region VIII. The region has a poverty incidence among families of 37.4%, the second worst next only to the Autonomous Region of Muslim Mindanao.

Region VIII includes the provinces of Leyte, Southern Leyte, Eastern Samar, North Samar, Western Samar, and Biliran. Because of the massive destruction of public infrastructure and personal wealth, the road to recovery will be long and difficult. And for many victims, things will get worse before they get better.

The solution to poverty is a complex one. More and better jobs have to be created. But that would come only with better infrastructure and a better and more predictable policy environment.

Personal tragedies owing to natural calamities have to be minimized, especially for the poor. But that would come only if the government is better prepared for natural calamities and is willing to build stronger, safer and sustainable communities.