The beginning of 2019, economic growth slowed due to lack of public spending and an overall weaker economy, caused by the deceleration in investment growth. According to data from the World Bank, the Poverty rate decreased from 21.6% in 2015 to 16.6% in 2018, and is expected to decline further in the following years. This shows that even though the economy has recently slowed, the Philippines is still making progress in poverty reduction. The rate of decline of poverty has been slower compared with other East Asian Countries, such as People's Republic of China, Thailand, Indonesia, or Vietnam. National Economic and Development Authority deputy director general Rosemarie Edillon attributed this to a generally low and stable inflation, improved incomes and higher employment rates during the period. The government planned to eradicate poverty as stated in the Philippines Development Plan 2011–2016. The PDP for those six years are an annual economic growth of 7–8% and the achievement of the Millennium Development Goals. Under the MDGs, Philippines committed itself to halving extreme poverty from a level of 33.1% in 1991 to 16.6% by 2015.
Poverty
Background
, a quarter of the 105 million Philippine population lived in poverty, that is, over 26 million people. Through various anti-poverty programs, such as the Comprehensive Agrarian Reform, Lingap Para sa Mahirap, and the Social Reform Agenda, the Philippines has been through a long battle to ameliorate that statistic. Despite these governmental efforts, the Millennium Development Goal milestone of reduction in poverty has been a slow process. The poor in the Philippines are most likely self-employed farmers, fishermen, or other agricultural workers. Three-quarters of these people live in severe disaster-risk areas that are highly rural. In 2015, about 58 percent of poor households have more that six members. Education overall has improved over time; from the ages of 15–24, over 75 percent have completed secondary education or above in 2015. Specifically in poor households, however, over 60 percent of families have education only up to elementary school. Of those who live in poverty, in 2012, 18.4 million people accounted for extreme poverty, living with about $1.25 per day. The challenges that such people face are vulnerability to natural disasters, weak governance, inadequate health services, lack of natural resources and more. The poor face an expensive process of recovering from vulnerability, just to face another conflict which then restarts the cycle.
Causes of Poverty
As of 2015, with one fifth of the population living below the poverty line the desire to reduce poverty was a priority.The poorest populations work in agriculture and live in areas prone to natural disasters compared to the wealthier population. There is an inadequate number of available good jobs, and a lack of investment in education that leads to such a high inequality of income. However, the government has plans focused on reducing poverty with objectives of improving the lives of the poorest segments of the population. Poverty occurs for many reasons, but in the Philippines there are recurring factors that have slowed the development progress. Economic growth is low compared to neighboring countries. GDP growth is comparable, however, GDP per capita in relation to the increase of population is much slower. Poverty directly impacts economic growth due to constraints in credit and the underdevelopment of the financial market and inequality in income and assets. Another cause of poverty in the Philippines is the rise of unmanaged population growth. Because the poor tend to have bigger families, they are unable to access health services or sex education, which leads to more children and the continuation of that cycle. The pattern of growth is common in rural areas, but there has been a rise in poverty in urban areas. Cities in the Philippines have been faced with an increase in poverty due to lack of well-paid employment. One of the main causes of poverty in the Philippines is the vulnerability to natural disasters. Natural disasters in the Philippines have caused US$23 billion in damages since 1990, which continues to delay the development process. According to the DW, the Philippines is the most vulnerable country to typhoons, earthquakes and volcanic eruptions in the world. The frequent occurrences cost the country lives, illness, malnutrition, and denial of education and health services. Filipino farmers are some of the most vulnerable, because floods and landslides severely affect their crops and income. Another cause of poverty is the lack of research on poverty and the effective policies to implement in order to prevent further damage. This lack of research has caused deficient targeting in poverty programs, and unsuccessful current processes. Until more research is done as to how exactly tackle the poverty trap, programs will not be effective.
Comparison to Other Southeast Asian Countries
According to data provided by the Asian Development Bank, economic growth in the Philippines competes sufficiently with the GDP per capita percent growth of neighboring countries. The GDP per capita percent growth of the Philippines is 4.8% compared to 5% in Laos People's Democratic Republic, and 4.4% in Cambodia. In 2020, the GDP per capita growth rate of the Philippines is expected to grow to 6.2%. Declination of poverty is slower in the Philippines because urbanization and industrialization is progressing faster elsewhere. This advancement allows people to leave their agricultural-based work to a factory job with a higher paying income. The country has made movement out of the labor-intensive work in populous regions, such as Manila, however the country as a whole has made slower improvements. In addition to slow progress, natural disasters in the Philippines, like stated previously, is one of the biggest conductors of poverty. While other countries are able to develop without consistent disturbances, the Philippines is forced to start from the ground up after every single occurrence. The Economist, state that low growth of annual GDP is one of the main reasons for persistent poverty compared to Vietnam, China, and Thailand. Because the growth is concentrated in Manila, other provinces in the country are forgotten and hardly progress.
Poverty Rate Declines
According to the World Bank, poverty rates declined from 26.6 percent in 2006 to 21.6 percent in 2015. Although 1 in 5 of the Filipino population still live below the poverty line, the country has attempted to increase income and opportunities and reverse impacts of occurring natural disasters. The Philippine Development Plan of 2017–2022 and the AmBisyon 2040 are proposals for the nation to suppress poverty and improve the lives of the poorest population. These policies include creating more and better jobs, improving productivity, investing in health and nutrition, managing disaster risks, protecting the vulnerable, and more. These documents help set the overall goal of reducing poverty to 13–15 percent by 2022 and having the nation thrive at similar levels as surrounding countries. The strategic plans that the Philippine government has created are intended to work towards a middle-class society where poverty is reduced and living conditions are improved.
The main drivers between 2006 and 2015 were an increase in wage income and movement of employment out of agriculture, government transfers, and remittance from domestic and foreign sources according to the World Bank publication, Making Growth Work for the Poor. Movement from agricultural jobs to lower-end industry jobs led to increase of wages and accounted for 50 percent of the reduction in poverty. Due to the Pantawid Pamilya, the government was able to use the social assistance which resulted in the contribution of 25 percent reduction of poverty as well as influence behavior change. Remittances from domestic and foreign sources accounted for 12 percent of the reduction in poverty. In addition, a factor of the declination of poverty is the growth of population. With a 1.7 percent increase of population a year has resulted in a 3.8 percent increase in per capita GDP growth. An additional factor is an increase of school enrollment and decrease of dropout rates. Despite a lack of distribution, the water, sanitation and electricity of the Philippines have also improved. Other socioeconomic indicators such as social safety nets and health insurance has also been beneficial factors. In addition, drivers of reduction also include the influx of economic expansion that has grown the economy.
Opportunities
Poverty will decline with the continuation of three actions. First is enabling Filipinos to get jobs outside of agriculture and increase the income of farmers. Second, is using the Government's Pantawid Pamilyang Pilipino Program, a primary social program, to reduce poverty to allow children access to education and health services. Lastly, the continuation of remittances from sources of domestic and foreign. There are current programs that have helped poverty rates decline. In 1981, Opportunity International began their operation through loans and savings in Manila. Through rural expansion, the bank wants to implement a program that will provide electricity to about 10,000 families. To contend to the natural disasters, Opportunity International also has provided insurance programs that help those who have been impacted in Typhoon Helen. With the help of social protection programs from the Government of the Philippines, there are cash assistances to families living in extreme poverty. Child immunizations, school enrollment, and health programs are some of the specific actions that the programs have assisted. Also USAID, or the U.S. Philippines Partnership for Growth specifically, have implemented regulations and policies to promote development within the country. USAID is also initiating programs that help those who were impacted by natural disasters and contributing to environmental resilient methods for the future.
