Poverty remains the most critical social problem that needs to be addressed. Philippines’ poverty line marks a per capita income of 16,841 pesos a year. According to the data from the National Statistical Coordination Board, more than one-quarter (27.9%) of the population fell below the poverty line the first semester of 2012, an approximate 1 per cent increase since 2009. This figure is a much lower figure as compared to the 33.1% in 1991.
The decline in poverty has been slow and uneven, much slower than neighboring countries who experienced broadly similar numbers in the 1980s, such as People’s Republic of China (PRC), Thailand, Indonesia (where the poverty level lies at 8.5%) or Vietnam (13.5%). This shows that the incidence of poverty has remained significantly high as compared to other countries for almost a decade. The unevenness of the decline has been attributed to a large range of income brackets across regions and sectors, and unmanaged population growth. The Philippines poverty rate is roughly the same level as Haiti.
The government planned to eradicate poverty as stated in the Philippines Development Plan 2011-2016 (PDP). The PDP for those six years are an annual economic growth of 7-8% and the achievement of the Millennium Development Goals (MDGs). Under the MDGs, Philippines committed itself to having extreme poverty from a 33.1% in 1991 to 16.6% by 2015.
Rapid population growth
Given that the population of the Philippines is increasing at a rapid rate of 2.36% per year, this can be translated as an increase of more than 5,000 people daily in a country that already has an increase of more than four million poor people since 1985. In 1985, the absolute number of people living in poverty was 26.5 million. This increased to 30.4 million in 2000 and from 2006 to 2009, increased by almost 970,000 Filipinos from 22.2 million to 23.1 million.
As the Philippines has financially limited resources and a high poverty rate, the rapid increase in population has become a problem because there is insufficient resources to support the population, which leaves much fewer resources to improve the economy. From 2003 to 2006, even though the Philippines experienced above-average economic growth, the poverty incidence increased as a result of its population growth rate.
Poverty reduction has not kept up with GDP growth rates, largely due to the high unemployment rate, high inflation rate and wide income inequality. The official rate of unemployment for 2012 in the Philippines was 6.8 per cent. This was an increase of joblessness even though in 2012, the GDP grew at 6.6 percent. From 2000 to 2009, the economy of Philippines grew by 3.2% on average annually, which was on par with the economic performance of its neighbors. However, this recent growth did not translate into more jobs. Unemployment in the Philippines has been high in comparison to its neighbors, at around 7.5% to 8.0% since 2006.
The Philippines has faced difficulty in job creation due to its inability to attract more foreign, direct investments. Diwa Guinigundo, who is the Central Bank Deputy Governor, mentioned that while capital flows are turning to the emerging markets, foreign, direct investments to the Philippines remain relatively low due to the weak investment climate. The Philippines has hefty business procedures, poor tax and customs administration, weak protection against expropriation and high-energy cost. Therefore, the poverty rate remains constant over the years.
Primary resource: Asian Development Bank, 2010