KEY FINDINGS Overcoming Poverty and Inequality in the Philippines: Past, Present, and Prospects for the Future
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- The Philippines has made significant progress in reducing poverty, but income inequality has only recently begun to fall. Thanks to high growth rates and structural transformation, between 1985 and 2018 poverty fell by two-thirds. However, income inequality did not begin to decline until 2012. It is still high: the top 1 percent of earners together capture 17 percent of national income, with only 14 percent being shared by the bottom 50 percent.
- Several structural factors contribute to the persistence of inequality. The expansion of secondary education and mobility to better-paying jobs, citizen ownership of more assets and access to basic services, and government social assistance have helped reduce inequality since the mid-2000s. However, unequal opportunities, lack of access to tertiary education and a scarcity of skills, coupled with inequality in returns to college education, gendered social norms and childcare, and spatial gaps, sustain inequality.
- Inequality of opportunity limits the potential for upward mobility. While there has been considerable progress in expanding access to basic services such as electricity, safe drinking water, and school enrollment, large disparities limit the development of human capital. Inequality of opportunity and low intergenerational mobility waste human potential, resulting in a lack of innovation and a misallocation of human capital in the economy.
- While schooling is widely accessible, its quality and attainment vary by income group. Children from poorer households are less likely to be enrolled and, if they are, to reach age-appropriate grade levels. That means they are less likely to reach tertiary education, which severely constrains their earning potential and their prospects for upward mobility. With the relatively low share of workers with tertiary education, the premium for college education has remained high. Additionally, tertiary education tends to deliver much higher returns for rich than poor households, possibly due to differences in school quality or f ields of study and employment.
- COVID-19 partly reversed decades-long gains in reducing poverty and inequality. The pandemic halted economic growth momentum in 2020, and unemployment shot up in industries that require inperson work. In 2021, poverty rose to 18.1 percent despite large government assistance. The economy has begun to rebound but signs are emerging that the recovery will be uneven. Prolonged loss of income has taken a heavy toll on the poorest households. With food prices going up and a reliance on adverse coping strategies, among them eating less, there is a risk of serious consequences for the health and nutrition of children in vulnerable households.
- The shock from the COVID-19 pandemic led to a shift in the workforce to less productive sectors and occupations. Employment in wage work has notably decreased and employment in agriculture has risen. These trends have been concentrated among youth and the least educated, which suggests an uneven recovery and widening income inequality.
- The pandemic is likely to result in long-term scarring of human capital development. Over half of households estimate that their children learned from remote learning less than half what they would have learned from face-to-face schooling. The proportion increases to 68 percent in poor households. Extended distance learning is expected to have reduced the learning-adjusted years of schooling by over a full year. Learning loss, combined with the de-skilling associated with prolonged unemployment, could lead to sizable future earnings losses.
- Job polarization could further increase as the nature of work changes. Job polarization among wage workers emerged between 2016 and 2021: employment in middle-skilled occupations went down and employment in both low-skilled and high-skilled occupations went up. This pattern may rise with the transformation of jobs post-COVID-19 and could increase prevailing disparities in incomes.
- Policy can reduce inequality by supporting employment and workers, improving education access and quality, promoting inclusive rural development, strengthening social protection mechanisms, and addressing inequality of opportunity.
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Poverty, Inequality, and Development in the Philippines: Official Statistics and Selected Life Stories
European Journal of Sustainable Development
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Much literature continues to highlight how the Philippines has emerged as a critical actor in global trading and how it has witnessed dramatic and positive structural changes. While this is true to a certain extent, such scholars have not only mistakenly overlooked these so-called “successes,” they have even glossed over more important problems. Thus, by adopting a holistic lens of the Philippines’ socioeconomic development, I am able to deduce more qualifiable conclusions for both the domestic and national levels. This has led me to explore the following questions: how has the Philippines succeeded in improving its socioeconomic sectors; who and at what levels are these successes felt; and what does this mean for its future socioeconomic growth? I argue that the Philippines has witnessed paradoxical successes. That is, many lives have been spared, gender disparities have decreased, and national poverty levels have improved; conversely, however, invisible and physical structures such as poor accountability, corruption, poverty, and vested interests continue to hamper growth at both the domestic and national levels—hence, yielding vicious and self-perpetuating cycles of inequality. It is important to remain critical of the Philippines’ socioeconomic development because it will yield more insight on their future and on more important issues, structures or agents, and factors which are—or are not—stymying their overall socioeconomic and aggregate growth.
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Decades have passed since the Philippines achieved independence against the evident tyrannical rule of foreign invaders. Thanks to the collective effort of countless Filipino revolutionists and activists since the reign of the Spaniards, the Philippines could once again emerge as one of the most prosperous country in Southeast Asia due to its rich number of natural resources– or so we thought. Despite all of our sacrifices, the Philippines that was introduced into the 21st century was filled with discontent and crises which then resulted into the nation we have today where poverty and corruption persists. What happened to the country that showed great promise to which its people so believed in?
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Printed in the Philippines. ISBN 978-971-561-857-1 Publication Stock No. RPT090621 Cataloging-In-Publication Data Asian Development Bank. Poverty in the Philippines: causes, constraints, and opportunities. Mandaluyong City, Philippines: Asian Development Bank, 2009. 1. Poverty. 2. Philippines. I. Asian Development Bank.
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poverty incidence reveals major disparities among regions and provinces. Rural poverty has proven to be particularly intractable. Poverty in the Philippines: Income, Assets, and Access examines official income poverty statistics and trends, but then takes a more multidimensional approach in exploring questions of access. The report looks at ...
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