Get real
Philippine Daily Inquirer, 9 August 2011


When we discuss the face of Philippine poverty in my classes, no one is really surprised at this characterization: A poor Filipino household will more than likely be living in a rural area, is engaged in farming or fishing, with a larger than average family size, and headed by one who is self-employed or an own-account worker, with schooling that at best did not go beyond the sixth grade. This is the picture that is drawn by the results of the triennial Family Income and Expenditures Surveys (FIES) conducted by the National Census and Statistics Office.

What surprises my students is when I state, based again on the FIES, that the unemployed generally are less poor than their employed counterparts (or, stated differently, the poor cannot afford to be unemployed), and that government employees are not among the poor.

Let me take the case of the government employees first, because of the recent activities of the latter in protest at the taxes being imposed on their perks—allowances, bonuses, etc. Why the protest seems so widespread is puzzling. I understand that the executive branch (except for some government corporations—the Metropolitan Waterworks and Sewerage System being a case in point, and even the board of the Government Service and Insurance System) has been imposing the tax on its employees since the National Internal Revenue Code (1997) was passed (date of effectivity: Jan. 1, 1998). Also, private-sector employees are paying the tax, so why shouldn’t government employees?

As an aside, it was during the Corona impeachment trial that the Bureau of Internal Revenue was alerted to the fact that the judiciary seemed not to be obeying that law. Upon further investigation, BIR Commissioner Kim Henares found out that the legislative branch—which should know better, since it passed the law—was also not withholding the tax on perks.

In other words, there is no new tax being imposed by that she-devil Henares. That’s been in the books since 1998, and most of the executive-branch employees have been paying it. And private-sector employees. She just wants to make sure that everyone else, including the legislature and judiciary employees, does. What is so bad about that? And, of course, another question arises: How could the legislature and judiciary employees have gotten away with it for so long?

But it is their crying poor (heartless Henares taking away part of their bonuses and leaving them bereft) that I take exception to. That may have been the case a long time ago, but certainly not now. What is the basis of this assertion?

A solid one.

In 2006, the family poverty incidence (percentage of families who live below the official poverty line) of those whose heads of household worked for the government/government corporations, was a mere 7.3 percent. This went up to 8.5 percent in 2008, and back to 7.5 percent in 2012. Compare that with the national family poverty incidence of 21.0, 21.5, and 19.7, respectively, for those years, or better still, with the poverty incidence of those who worked for private establishments (20.1, 21.6, 21.6, respectively), and it becomes obvious that government employees can no longer be considered the downtrodden, the oppressed, the left behind. That no longer washes. Even the senior government officials, considering the allowances and perks they seem to be receiving, are no longer to be pitied.

What explains this phenomenon? On the one hand, this may be explained by the fact that around 70 percent of civil servants, namely those at the second and third levels of the service, are required to have college degrees.

Further, while base wages of civil servants are, on average, lower than those of private-sector counterparts, civil servants without high school degrees (about 40 percent of first-level civil servants) have base wages that are higher, on average, than their private-sector counterparts.

What is the policy implication? Even though the government is the largest employer in the country, across-the-board increases in salaries and benefits for government employees cannot be justified or represented as an instrument to relieve poverty. Certainly, performance-based bonuses, which have been introduced by this administration, are by far the better alternative: At least the good ones will be recognized, and incentivized. The mediocre ones and the 15-30s will get no rewards.

Now for the other poverty eye-opener: The website of the National Statistical Coordination Board has 11 tables on Official Poverty Statistics for the Basic Sectors, and its Table 11 is on Poverty Incidence for the Unemployed Population, by Region, 2006, 2009, 2012 (based on FIES and the Basic Sectors Survey). What it shows is that the population (not household) poverty incidence in 2012 of the unemployed is 18.7 percent; farmers, 38.3 percent; self-employed and unpaid family workers, 29.0 percent; fisherfolk, 39.2 percent; and all the employed population, 21.9 percent. This is true also, with some exceptions, for the regions. See how much lower the poverty incidence of the unemployed is?

Using just the FIES, the household (not population) data show that the poverty incidence for households where the household head is unemployed is 11.3 percent, compared to the national average of 19.7 percent.

I think the reason people are surprised—shocked even—by the statement that the unemployed are less poor than the employed is that they forget that our employment is both waged and salaried (about 55 percent) and own-account (45 percent). But there is policy implication also: Government priority must be on the quality of jobs, not just the number of jobs.