What the latest poverty data tell us

The Duterte administration must be congratulated.  The latest poverty estimates, based on the 2018 Family Income and Expenditures Survey , show that the percentage of families who fall below the poverty threshold fell from 17.9 percent to 12.1 percent, an almost 6-percentage point (5.8 if precision is required) drop; while the percentage of the population who are poor fell from 23.3 percent to 16.6 percent—a decrease of 6.7 percent.  That translates to 5.9 million people and 1.1 million families getting out of poverty.

Not since the Ramos administration has the war on poverty been so effectively pursued; it managed to reduce family and population poverty incidence by 8.8 and 8.3 percentage points respectively between 1994 and 1997.

It must be said, though,  after that spectacular performance,  family and population poverty increased (1997-2000), then decreased ever so slightly by 0.3 percentage points (2000-2003), then increased again between 2003 and 2006.  This, by way of reminding the government not to rest on its laurels too soon.

My colleague Cielito Habito, in his column last week, forwarded reasons for this decrease in poverty.  I agree in particular with his observation that the growth of the manufacturing sector has a lot to do with it. Recall, Reader, Joe Studwell’s “How Asia Works,” which posits that the key to the success of Korea, Taiwan, China and Japan was agrarian (reform), then emphasis on manufacturing with export discipline, and finally a financial system that supported both.

There are some puzzles, though, that have to be resolved.  The absolute number of employed increased by 1.8 million from 2015 to 2016 (October), but then steadily declined since then—from 41.7 million in 2016 to 41.6 million in 2017 to 41.3 million in 2018, even as our labor force continued to grow. Perhaps the increase in the quality of employment, as seen through the wage and salaried jobs, more than made up for the decrease in its quantity.  Development economics always emphasizes that it is not just quantity of resources that should grow, their quality is at least as important.

The 2018 poverty data give us some interesting insights: For example, the National Capital Region has the highest poverty line/threshold of P11,958 per month, for a family of five (the Philippines’ threshold is P10,727).  It is closely followed by Calabarzon (region IV-A) with P11,604.  One would think that Region III (Central Luzon) would be next, and you would be surprised to find out that it is Caraga that has the next highest poverty line, P11,482.  Even Region I (Ilocos) has a higher poverty line, P11,237, than Region III at P11,161.  In other words, a family in Caraga or a family in Ilocos  would need more money not to be considered poor than a family in Central Luzon.

On the other hand, Mimaropa (Southwest Tagalog) has the lowest poverty threshold among the regions—P9,679.  Everything else remaining the same, it is easiest not to be poor if one’s family lives in Mimaropa.

Another interesting insight: The region which showed the largest percentage point decrease in poverty was Region X, Northern Mindanao, which includes Bukidnon and Cagayan de Oro.   Its family poverty incidence decreased from 32 percent in 2015 to 17.2 percent.  In  President Duterte’s region (XI), the decrease was only 4.3 percentage points. That is a pleasant surprise, in the sense that a president’s region is usually the most favored.  But maybe the President is more interested in accommodating his business friends than the poor in his area.  Maybe.

On the other hand, the Vice President’s region (V) had the second largest decrease in family poverty incidence, which fell from 39.5 percent to 26.8 percent—a decrease of 12.7 percentage points.  Since Vice President Leni Robredo has minimal resources, one may surmise that the region is blessed with good governance.

Anyway, congratulations again, Mr. President.  May I just remind you that in the Philippine Development Plan 2017-2022, you target the decrease of rural poverty, not just total poverty. May we know how rural poverty fared? And since poverty is a mostly agricultural/rural phenomenon, as shown among others by the very low poverty incidence in the highly urbanized cities, tell us how the war on poverty has also fared in the agriculture sector. Hopefully then, we can rejoice even more.

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