OFW Money Fails to Bridge Income Gap

Actually, without remittances, the Philippines would have more than 26.5 million poor.

But thanks to remittances, the poverty headcount is lower at 24 million, Pernia’s data found.

Having remittances as a share in a household’s income “raises the likelihood (that a) household will get out of poverty,” Pernia said.

“Poverty incidence for the bottom quintile was slightly reduced by 0.1 percent, and by 13 percent for the second quintile, while that in all three upper quintiles were completely wiped out,” he added.

Aside from the FIES data, Pernia also processed information from the annual Survey on Overseas Filipinos, and the quarterly Labor Force Survey of the National Statistics Office.

He also used gross regional domestic product data from the national income accounts to see the regional development impact of remittances.

Gap

REGIONS that have more overseas workers benefit more from remittances compared to other regions that have less numbers of OFWs, Pernia said.

Remittances have brought positive and significant effects on poverty reduction in the regions –to the point that a 10 percent increase in the ratio of remittance per capita to gross regional domestic product (GRDP) per capita sees a 2.6-percent increase of households lifted out of poverty, Pernia said.

But ironically, Pernia said, these benefits of remittances to regional development “do not matter to the worst-off as much as the better-off”.

Pernia found that regional development does not benefit low-income household as much as higher income families.

Six of the country’s ten poorest provinces are in the Mindanao island group, while provinces with the lowest poverty incidence rates were in Luzon, FIES data showed.

FIES data also showed that poverty rates in the regions increased, and that provincial poverty measures also highlighted regional income disparities.

Trying a conjecture, Pernia discovered that had Filipinos stayed to work within the country’s borders, domestic remittances appeared to be “more welfare-enhancing for the poor than are international remittances”.

Remittances are good for the poor, “but even better for the less poor and better-off,” Pernia reiterated.

But Santos emphasized during the press briefing that at least the 32.9-percent poverty incidence rate in 2006 is lower than 33 percent rate in the year 2000.

The number of individual Filipinos who are poor may be lower in 2006 (26.9 million) compared to year 2000 figures (27.5 million).

Still, the number of Filipino families who are poor rose: 4.7 million in 2006 versus 4.2 million in 2000, FIES data showed.

The increase is glaring because the country posted consistent higher GDP rates, which is fueled by consumption that in turn is powered by remittances.

Santos said the country’s GDP growth and improved fiscal condition “provided us enough breathing space to spend more on social services in the years ahead”.

Santos said the rise of poverty incidence is “an income distribution issue,” even while the Philippines continues to receive billion-dollar remittances from OFWs. (OFW Journalism Consortium) (pinoypress.net)