Overcoming
Poverty and
Inequality in the
Philippines
Past, Present, and Perspectives
for the Future
Manila | November 24, 2022
Outline
01
02
The Past: 30 years progress
The Present: Structural
in poverty and inequality
reduction
causes of inequality
03
04
Prospects for the
Future: The path of
What policy can do
recovery from COVID-19
01
30 years progress in
poverty and
inequality reduction
The Philippines achieved three decades of
sustained decline in poverty and a decade of
reduction in inequality
Important progress was made in
living conditions
•
Inequality started a fast decline in
2012
•
COVID-19 may reverse part of the
gains
50
50
49.2
40
45
42.3
30
42.4
18.1
20
Gini (%)
•
Poverty fell by two-thirds in 19852018
Poverty rate (%)
•
60
40
16.7
10
0
35
1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018 2021
National poverty rate
Source: FIES 2018 and PSA
statistics.
GINI coefficient
Progress in Human Development and Structural
Transformation
52
39
● Share of workers with elementary
education or less declined by half
29
25
23
17
10
Elementary or less
High School
1988
●Transition to productive jobs was
more pronounced among poorer
groups since 2000
72
2002
College & above
2020
67
57
61
53
47
36 36
46
52
29
19
Agriculture
Wage work
Agriculture
B40
Sources: FIES 1985-2018 and LFS 1988-2020
18
13
Wage work
Total
1985
2000
2018
Expanded Social Assistance
50
•
37
Expanded coverage and
progressive distribution of social
assistance….
35
23
14
3
Poorest quintile
5
4
Richest quintile
Poorest quintile
Coverage
Richest quintile
Benefit incidence
2009
2018
0
•
…helped to keep poverty
incidence 10% lower and depth
of poverty 15% lower
-0.2
-0.8
-1.4
-2.7
-5
-10
-10.2
-15
-15.2
-20
2009
Source: FIES 2009-18
2018
Poverty Headcount
2009
2018
Poverty Gap
2009
2018
Gini
Sources of Poverty and Inequality Reduction in 1985-2018
•
The gradual shift of workers to more productive sectors, with higher
reliance on wage income, drove most of the reduction in poverty
•
Increased access to services and assets contributed 80% to the
reduction of inequality
17.4
5.8
0.9
-3.2
Farm enterprise
Source: FIES 1985-2018
Pension
2.4
2.6
2.7
Agriculture wage
Remittances
Other income
3.9
Nonfarm
enterprise
Domestic transfers Non-agriculture
wage
02
Structural causes
of inequality
Income inequality remains high
• Despite this progress, inequality remains high:
• With an income Gini of 42.3 percent in 2018, the Philippines
ranks as the 15th most unequal out 63 countries*, second only to
Thailand in East Asia
• Over half of workers with only elementary education or less are
employed in agriculture
• The average per capita income of households whose head was
a college graduate was about 4 times higher than for
households whose head had no more than elementary
education
* 63 countries where income Gini coefficients are available
Inequality starts early in life and perpetuates
over the life cycle
Childhood
Before
Beforebirth
Birth
•
•
Skilled antenatal care
(ANC) and postnatal
care (PNC) are lower
among poorer families
and mothers with less
education
In BARMM, ANC use is
69% vs 94% nationally
& newborn PNC is 51%
vs 86% nationally
Source: APIS 2020, FIES 2018, NDHS 2017
•
•
Rates of stunting (42%),
underweight (27%) and
wasting (8%) are much
higher among poor
households than the
richest (11%, 7% and 4%,
respectively)
Age-appropriate
vaccinations are 35
points higher when the
mother has a college
degree and 17 points
higher in the richest
quintile
In school
•
Children from households
in the lowest income
deciles less likely to be
enrolled and be in an
age-appropriate grade
•
Students from wealthier
households invest more
in education: average per
capita expenditure on
education is more than
22x higher among
households in the richest
decile than the poorest
Outcomes
•
Influences employment
opportunities, income
levels and ability to
invest in human capital
development of their
children
•
Leads to
intergenerational
transmission of poverty
Spatial inequalities contributed 13% to income inequality in 2018
Source: FIES 2018 and forthcoming
Indigenous People report
Lower concentration of health centers and schools in high poverty
areas
Parts of Luzon
Parts of BARMM
Source: FIES 2018 and forthcoming
Indigenous People report
Drivers of Structural Inequality
Occupation: Around 20%
Education: Over 30%
•
Returns to college education are much larger
among richer quantiles
Source: FIES 1985-2018
•
Returns to employment in high-skilled
occupations are much larger among top quantiles
The slow expansion of tertiary education and shortage of skills kept the
scarcity value of skills high
College/HS Log Weekly Wage Ratio,
2002-2021
140%
110%
Source: LFS 2002-2021
College/High-School Log Relative Supply,
2002–2021
Gender Gaps in the Labor Market
•
The Philippines ranks 1st in gender equality among Asian countries and 17th
globally; women have higher education levels than men
•
Despite this, women's labor force participation has remained persistently low
over the past three decades :
• At the 25-29 age group, only 42% of married women are in the labor force
• When they work, women tend to cluster either in low-profile/low-pay
occupations or high-profile/high-paying occupations
• At the bottom of the pay distribution, the daily wage of men is 50% higher
than women’s
• At the top of the distribution, the daily wage is about 20% higher for women
than for men due to higher education levels
03
The path of
recovery from
COVID-19
Middle income groups suffered the most from
income declines
●
●
Construction, accommodation and
transport were the sectors most
affected by job losses at the onset of
pandemic
Households who tend to
concentrate in these sectors
experienced the largest decline in
income between Q1 and Q2 of 2020
0
-2
-4
-6
-8
-10
-12
-14
-16
-18
●
Poorest households suffered
important reductions in food
expenditures
-20
Poorest
Q2
Q3
Q4
Richest
Rural
Quintiles
p.c. income change Q1-Q2, 2020
Source: APIS 2020
Urban
Area
Philippines
•
Employment in agriculture
increased while employment in
low-end services declined
66
40
65
35
Employment by sector (%)
The labor market shifted to less
productive sectors and jobs:
45
64
30
63
25
62
20
61
15
60
10
59
5
•
Self-employment rose while
the share employed in wage
work declined
0
58
2019-Q4 2020-Q1 2020-Q2 2020-Q3 2020-Q4 Jan-21 Feb-21 Mar-21 Apr-21
Low-end services
Agriculture
Self employed/Fam. Business
Wage work
Source: LFS 2019- 2021
Employment in wage work (%)
The COVID-19 crisis may
aggravate gaps in employment
Low educated workers increasingly
transitioned to low productivity jobs
8
6
4
2
0
•
Employment of low low-educated
workers in agriculture increased 7
points in 2020 and declined only 1
point in 2021
-2
-4
-6
2019-2020
2020-2021
Elementary & less
Low-end services
•
Employment of low low-educated
workers in low-skilled occupations
increased 7 points in 2020 and
declined only 1 point in 2021
2019-2020
2020-2021
College & above
High-end services
Industry
Agriculture
4
3
2
1
0
-1
-2
-3
-4
2019-2020
2020-2021
Elementary & less
High skilled
Middle skilled routine
Source: LFS 2019 - 2021
2019-2020
2020-2021
College & above
Middle skilled non-routine
Low skilled
Increased engagement of youth in
low productivity sectors may have
long lasting implications on the
economy
10
8
6
4
2
0
● Unemployment & underemployment
increased disproportionately among
youth and remained higher than national
levels in 2021
● Engagement in agriculture, selfemployment, and low-skilled
occupations increased at higher pace
than older groups
-2
-4
-6
2019-2020
2020-2021
2019-2020
Youth (15-24)
Low-end services
2020-2021
Older (35-44)
High-end services
Manufacturing
Agriculture
6
4
2
0
-2
● Employment in wage work also
declined at a higher pace among
youth
-4
-6
2019-2020
2020-2021
2019-2020
Youth (15-24)
Self-employment/Family business
Source: LFS 2019 -2021
2020-2021
Older (35-44)
Wage work
Signs of polarization are appearing in wage employment
And may aggravate with digital transformation
Source: LFS 2002-2021
Some signs of recovery, though uneven
Flexible work
arrangements
helped women work
•
LFP rebounded quickly
for women beginning Q4
2020, reaching levels
higher than pandemic
•
However, unemployment
rates persisted at a higher
level than men
•
17% of women who
recovered jobs in January
2021 used HBW but
women continue to be
affected by care duties
Source: PHL HFS Rounds 1 and 4
Full immunization is
lower among the
poor
The poor continue to
lag in income
recovery
•
In May 2022, 40% of
households in the poorest
quintile reported income
loss compared to 19% in
the highest quintile
•
While 51% of the richest
quintile report being
fully immunized (with
booster), this drops to
12% among the poorest
quintile
Social assistance helped buffer the aggravation of
poverty and inequality
Bayanihan
Act
4.1
Million
COVID-19 emergency transfers largely covered the
most vulnerable population
The transfers helped avoid adding 4.1 million people
and 1.44 million children in poverty
However, transfers remain low to fully compensate for the
income lost during the pandemic
The prolonged suspension of face-to-face classes could have
long-term effects on education and human capital
Remote
vs
face-to-face
About half of households
consider that their children
learned less than 50% of
what they would have
learned from face-to-face
schooling
Learning
Loss
Extended distance
learning estimated to have
reduced learning-adjusted
years of schooling by
over a full year
This proportion reaches
68% among poor
households
Source: PHL HFS; World Bank 2021. Philippine Basic Education System: Strengthening Effective
Learning During the COVID-19 Pandemic and Beyond
Economic
Potential &
Productivity
Estimates show that
learning loss could lower
the average annual
earnings of each student
by $893-1,137 (in 2017
PPP$)
04
What policy can do
Heal the Pandemic’s Scars and Build Resilience
Promote uptake of
booster vaccination
Support schools in
assessing student
learning and providing
learning recovery
programs
Develop fiscally viable
unemployment
insurance program to
reduce vulnerability of
informal workers
Strengthen social
protection programs
and provide welltargeted assistance
Closely monitor
inflation to minimize
impact on poor
households
Leverage technologies
to improve targeting
and make assistance
more efficient
Contain debt without
compromising
economic recovery
Set the Stage for a Vibrant and Inclusive Recovery
Support reskilling and
resilience of workers
disproportionately
affected by pandemic
•
•
•
Support skills
development programs
to reskill and upskill
temporarily displaced
workers
Dynamic mapping of
opportunities could
help with job recovery
and transition
Apprenticeship
programs could support
youth employment
Boost skills to
transition to a more
productive and
innovative economy
•
Enhance foundational
skills and development of
noncognitive skills in
basic education
•
Increase access and close
quality gap in tertiary
education
•
Strengthen technical
vocational education to
meet the demands of
high productivity jobs
Close the gender gap
in the labor markets
•
Support more flexible
work arrangements
•
Help women in poorer
groups cope with
pandemic impacts on
jobs and earnings
•
Strengthen support for
women entrepreneurs
Inclusive strategy for
rural development
•
Raise agricultural
productivity by raising
rural investments
•
Encourage shift of
agricultural production
from subsistence
farming to cash crops
•
Investments to
mitigate impacts of
climate change should
be a priority
Reduce Inequality of Opportunity
Increase equality
of opportunity in
education
Increase access to
quality care
•
Expand education
infrastructure and
number of teachers to
support equalizing
opportunities
Ensure that healthcare
is affordable
•
Use multisectoral
approach to address
malnutrition
Increase incentives to
enroll children in
preschool
•
Collect standardized data
on transition from
secondary to tertiary to
better understand who is
left behind
•
Improve the quality of
service delivery and
increase access to
quality care facilities
•
•
Enhance social
assistance
Improve access to
quality housing
•
Improving access to
quality housing can help
improve quality of life
and opportunity
•
The increase in value of
4Ps benefits through
Pantawid Act in 2019 a
welcome step
•
Improvements in quality
and resilience of
housing materials can
bring gains for health
and education
•
Efforts need to continue
to adjust the benefit value
to help poor households
cope with rising cost of
living
•
Adaptation of existing
and new housing to
climate threats
Thank you !