Periodically blind to poverty

Think of the government’s economic managers as pilots guided by instruments that periodically flash important figures on a panel in front of them. Some figures appear daily, like the stock price index and the foreign exchange rate. Some are monthly, like the unemployment rate and the consumer price index. Some are quarterly, like the value of production in various sectors of the national income accounts.

But the official reading of poverty comes along only once every three years. For the two years in-between its reference years, the government is officially blind to the state of poverty. As of now, March 2023, the government’s latest poverty rate is 13.2 percent of families. Its criterion is a threshold income of P12,030 per month, for a family of five, in 2021. The 13.2 percent is based on the 2021 Family Income and Expenditure Survey (FIES), publicly released in August 2022.

If the next FIES happens in 2024, per traditional schedule, its numbers will be ready in August 2025, over two years from now, and only then will the government open its eyes to this uncomfortable topic again.

Although the FIES started as early as the 1950s, the 1985 FIES was the first one to which an official poverty line was applied. The second one was the 1988 FIES, followed by those of 1991, 1994, and so on every three years. From 1985 to 2021, there have been only 13 official poverty data points; they allow exactly 12 successive CHANGES in poverty to be officially observed. The previous official poverty rate was 12.1 percent, in 2018; thus, the latest change was +1.1 percentage points, from pre-pandemic 2018 to mid-pandemic 2021. To reach its declared target of single-digit poverty by 2028, the poverty change should be turned around from positive to negative.

The three-year spacing between its points gives the appearance of poverty falling smoothly over time. There was only one other period, namely 2003-2006, when official poverty went up.

Apparently, the official poverty rate was not dropping fast enough to suit the government, because in 2011 it radically reduced the poverty line, applied it to the 2009 FIES, and back adjusted its earlier poverty rates up to 1991. It wasn’t the first time that it lowered the poverty line; it had already removed provision for alcohol, tobacco, and entertainment, years earlier.

In 2011, it further limited the ulam to fish, limited the cooking to boiling, and deleted milk for children. (See my columns, “The lowering of the official poverty line,” “No meat allowed for the poor,” and “Reject the lowering of the poverty line,” of 2/12/11, 10/7/11, and 12/2/11 respectively.)

Bottom-up monitoring of poverty has provided ten times more data about poverty. In stark contrast to the official series of only 13 poverty numbers over 1985-2021, the Self-Rated Poverty series now consists of 138 data points, over 1983-2022 (see “Fourth Quarter 2022 Social Weather Survey: 51% of Filipino families feel Poor; 31% feel Borderline, 19% feel Not Poor,” www.sws.org.ph, 1/12/2023).

These 138 successive surveys permit study of 137 successive CHANGES in poverty. Of these 137 changes, 60 were significant drops, 41 were significant rises, and 36 were insignificant (using plus/minus 3 percentage points, the surveys’ error margin, to define “significant”). Of the drops, 20 were large; of the rises, 22 were large (using 6+ points to define “large”).

In other words, as felt by the people themselves, poverty has moved in a rocky manner, both upwards and downwards—though, to be sure, the downs have been more frequent than the ups. Thus, I agree with the official picture that poverty has generally fallen, but I disagree that its movements have been smooth.

Self-Rated Poverty (SRP) allows tracking in quarterly steps. During the four quarters of 2021, the year of the last official poverty reading, SRP fell successively from 49 to 48 to 45 to 43. Then, in 2022, SRP changed direction and rose successively from 43 to 48 to 49 to 51 (as of last December).

Yes, I would say that the inflation in consumer prices has been the main culprit, and therefore suppressing it fast, by removing controls on food imports in particular, is urgently called for.

Poverty is not static, but dynamic: The government should try to open its eyes to movements in poverty within 2023, 2024, and so forth. It should not complacently wait until late 2025 to belatedly discover what has happened, from the FIES.

As for the current craze for mobilizing and centralizing government funds, I think it is more urgent to apply them to targeted direct assistance to the hungry than to place them in “high-yielding” or “growth oriented” investments.

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Contact: mahar.mangahas@sws.org.ph.