2006 Official Poverty Stats: Worse Than It Looks

By JOSEPH YU | Ibon Features |

With the recent release of 2006 poverty statistics, the Arroyo administration was finally forced to admit that its much-hyped “28 quarters of continuous growth” has failed to benefit the ordinary Filipino.

According to the official figures by the National Statistical Coordination Board (NSCB), some 32.9% of the population, or 27.6 million Filipinos are poor. This was a reversal of the trend experienced in 2003, when the poverty incidence fell to 30% from 33% in 2000. It should also be noted that there were actually more Filipinos in 2006 than in 2000 (when some 25.5 million Filipinos were poor).

But despite the admission that poverty has risen despite high economic growth, the official poverty figures may actually be understated and obscure how widespread poverty is in the Philippines. This is because of the low poverty threshold the NSCB uses to estimate the extent of poverty.

For 2006, the NSCB pegged the per capita annual poverty threshold at P15,057, or P75,285 for a family of five members. The poverty threshold is defined as the minimum income/expenditure required for an individual to meet its basic food and non-food requirements. The poor are thus considered as those individuals or families whose incomes fall below the official poverty threshold and cannot afford to provide in a sustained manner for their minimum basic needs for food, health, education, housing and other social amenities of life.

The use of the term minimum basic needs highlights the limitations of the government’s definition of poverty. The government considers only minimum survival standards to measure poverty, thus capturing only those who are desperately poor and cannot meet even their most basic needs. But those individuals and families who fail to meet decent living standards should also be considered poor. For example, a family with one or two minimum wage earners whose incomes fail to meet their needs are also poor, even if their income is above government’s poverty line.

In fact, the government’s own National Wages and Productivity Commission (NWPC) accepts this reasoning. Thus, the NWPC releases regular estimates of family living wages; such figures measure what is needed for a decent standard of living plus a 10% allowance of total expenses for savings or investments.

As of 2005 (to ensure compatibility with the 2006 poverty threshold since the next estimate was as of December 2006), a family of five needs P16,218 for decent living, or 258% of the P6,274 that the NSCB claims that a Filipino family needs to stay out of poverty in 2006. If only the NWPC’s food and non-food expenses estimates are considered, then the poverty incidence is 42.5% of NWPC’s estimates.

Thus, it is clear that the actual extent of poverty in the country is grossly understated. In IBON’s January 2008 nationwide survey, 7 out of 10 Filipinos rated themselves as poor.

Poverty Despite Growth

The increased poverty incidence also raises the question of why the number of poor increased even as government figures showed increasing economic growth. Gross domestic product (GDP) grew an average of 4.6% from 2001 to 2006, while gross national product (GNP) grew by 5.1% over the same period. From 2004 to 2006, when the poverty increase was recorded, GDP and GNP grew by 5.5% and 6.1%, respectively; this was substantially higher than the 3.7% and 4.1% recorded from 2001 to 2003.

The NSCB attributed the higher poverty incidence to the insufficient rise in personal incomes coupled with higher prices, thus making it difficult for poor Filipinos to meet their basic needs. NSCB also admitted that the implementation of the reformed value-added tax (RVAT) increased prices.