Poverty fell in 2011 Q4

Poverty definitely fell in the last quarter of 2011, as household heads rating their families as mahirap (poor) were only 45 percent in the Dec. 3-7, 2011 Social Weather Survey, a significant 7-point drop from the 52 percent recorded in the previous quarterly SWS survey done on  Sept. 4-7, 2011.

The periodic occurrence of substantial poverty changes in the short term, i.e. quarterly,  is an important finding of the self-rated poverty series, now numbering  97 national observations (95 surveys in 1986-2011 by SWS itself, plus precursors in 1983 and 1985).  It contrasts with the seemingly smooth decline in 1985-2003, and the flatness in 2003-2009, depicted by the official, triennial, poverty statistics, with only nine observations since 1985.

The largest-ever decline in self-rated poverty was 12 points:  from 58 percent in March 2004 to 46 percent in June 2004.  The largest-ever increase over two successive surveys was 15 points:  from 51 percent in October 1987 to 66 percent in September 1988 (the series became quarterly only in 1992).

Thus poverty, in historical experience, does not move smoothly.  It moves both downwards and upwards.  Such changes should be carefully studied in relation to movements in the cost of living, unemployment, and other key factors.  So far, growth in Gross Domestic Product has had no impact, i.e. has been “non-inclusive,” in current devspeak.

Poverty does not change evenly everywhere. The 7-point decline in 2011 Q4 was due to a large 19-point drop in Mindanao (to 38 percent), a smaller but meaningful 8-point fall in the Balance of Luzon (to 45 percent), and a negligible 1-point fall in the Visayas (to 52 percent), combined with an 8-point increase in Metro Manila (to 47 percent).

Rural poverty fell by 13 points (to 49 percent), while urban poverty fell by only 2 points (to 41 percent).  The experts in regional development should analyze the latest movements, as well as past movements, in area-based poverty, for lessons to apply in anti-poverty programs.

So now the poverty data series for the full year 2011 is complete.  With poverty having been 51 percent in 2011 Q1 and 49 percent in 2011 Q2, the average poverty rate in 2011 is 49 percent.  It follows annualized poverty rates of 48 percent in 2010, and 49 percent in 2009.  Note that the relatively high GDP growth in 2010, and the supposedly disappointing GDP growth in 2011, were immaterial to poverty.

Thus, in the past three years, the annualized self-rated poverty rate has been in the high forties, with no clear trend.  In the previous five years, the annualized poverty percentages were 51 in 2004, 53 in 2005, 54 in 2006, 50 in 2007, and 53 in 2008, i.e. all in the low fifties, with no clear trend.

Prior to that, the annualized poverty rates were 63 in 1995, 61 in 1996, 59 in 1997, 61 in 1998, 61 again in 1999, 57 in 2000, 62 in 2001, 63 in 2002, and 60 in 2003, i.e. all close to 60 percent, with no clear trend.  These down-shifts in the annualized rate, from about 60, to the low fifties, to the high forties, are what I have called “Terraces of poverty.” (Inquirer, 11/19/2011)

Could the newest poverty rate of 45 percent in 2011 Q4 be the start of a new, lower, terrace?  Well, let us see if it persists for at least two more quarters.  Actually, if the quarterly poverty rates of 2012 all turn out to be in the forties, it would be unprecedented.

Even if the 45 percent score persists, we would still be far off from meeting the Millennium Development Goal (MDG) of halving poverty from its level in 1990, however measured, after 25 years.  By the self-rating metric, poverty in 1990 was 68 percent, putting the corresponding MDG for 2015 at 34 percent.  Although 2015 is only three years away, self-rated poverty has not yet broken the 40-percent barrier.

The people’s poverty thresholds in 2011. Another indicator produced by the SWS poverty surveys is the minimum monthly budget for home expenses (i.e. not including transport to work and similar items) that the household head says is needed so as not to consider the family poor.

Since it is based on a question asked after the household head has already rated the family as poor, this minimum home budget is purely a description of the family’s needs, and not a definition of the family as poor.  Unlike a top-down poverty threshold, it cannot be manipulated to change the poverty incidence rate.

Like self-rated poverty itself, this minimum home budget varies across households, areas, and points in time. The annual SWS survey review last Jan. 18 included the medians of these self-rated poverty thresholds as stated by the poor, from a pooling of all the four quarterly surveys last year.

These medians, per month per household, for 2011, are: P12,000 in the National Capital Region, P7,700 in the Balance of Luzon, P8,000 in the Visayas, and P6,000 in Mindanao.

SWS also reported the median thresholds of the poor for their food needs, from a separate survey item.  These are as follows, per month per household for 2011: P6,000 in NCR, P4,000 in the Balance of Luzon, P4,000 in the Visayas, and P3,000 in Mindanao. Non-food needs are derivable by subtraction from total needs.

Being grassroots-based, these thresholds provide realistic data on the money values of the people’s minimum needs.  Note that a median is conservative, since it satisfies only half of the poor, not all of them.

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Contact SWS: www.sws.org.ph or [email protected]. To obtain the SWS Annual Survey Reviews, write <[email protected]>.