Philippines Reduces Poverty, Retains High Income Inequality!!

Whilst the Philippines has seen a decline in poverty, the South East Asian nation has one of the highest rankings for income inequality in Asia, a new report by The World Bank claims.

The report, “Overcoming Poverty and Inequality in the Philippines: Past, Present, and Prospects for the Future”, released yesterday, suggests that the Philippines is rated 15th out of 63 nations for income equality, with the top one percent of income earners accounting for 17 percent of the nation’s total national income and earners in the lower 50 percent only receiving 14 percent of the share.

Ndiamé Diop, World Bank Country Director for the Philippines, Malaysia, Thailand and Brunei, suggests the nation’s high rate can be attributed to areas such as inequality in opportunities and low mobility across generations, wasting human potential.

“Unequal opportunities, slow access to tertiary education among low-income households, inequality in returns to college education, and social norms putting the heavier burden of childcare on women has slowed down the narrowing of inequality in the Philippines,” Mr. Diop said.

The World Bank, however, praised the Philippines for it’s efforts in reducing poverty throughout the last three decades, noting that poverty had fallen by a third, from 49.2 percent in 1985 to 16.7 percent in 2018.

Furthermore, in that time, the middle class of the Philippines has risen to 12 million people and the economically secure population had risen to 44 million people.

Mr. Diop attributes the reduction in poverty to the increase of employment outside agriculture and high economic growth rates.

The decades long reduction of poverty comes despite a partial reversal in recent years, due to the Covid-19 pandemic, with growth momentum stalling in 2020 and unemployment rates rising, particularly in industries that require in-person work.

“Recovery in the Philippines is uneven across the income distribution and the poorest who suffered the most from Covid have yet to fully recover their incomes. With food prices going up, many families coped by reducing their consumption, including eating less,” suggests Mr. Diop.

“These coping strategies can have serious consequences on the health and nutrition of children in these vulnerable households,” Mr. Diop warned.

Mr Diop suggests that the Philippines can eliminate poverty, whilst admitting it faces challenges in doing so, with inequality rates remaining so high.

“The Philippines aims to become a middle-class society free of poverty by 2040, but we know from global experience that no country has managed to make this transition while maintaining high levels of inequality,” said Mr. Diop.