Lower minimum wage seen on new poverty data

THE Philippines’ minimum wage is likely to contract as a result of the government’s new way of measuring poverty, according to the National Statistical Coordination Board (NSCB).

“The poverty threshold went down under the new method so the minimum wage could go down,” Romulo A. Virola, NSCB secretary general told reporters.

Under the new official poverty estimation methodology approved by the NSCB Board, the Philippine poverty line would drop an average of 4 to 5 percentage points.

Virola said the poverty threshold is one of the factors that determine the minimum wage.

He however said that the minimum wage should not be pegged to the poverty
line.

“There must be some buffer … The minimum wage must be a certain percentage above the poverty line, let’s say 120 percent,” he said.

At present, the minimum wage is P404 for non-agriculture workers and P367 for agriculture sector workers.

Under the new poverty estimating methodology, the NSCB will use “provincial food bundles” instead of “regional food bundles.”

According to the NSCB, the use of a national menu or regional menus would not produce a threshold that equals or approximates the minimum income needed to satisfy the nutritional requirements, and therefore, would lead to invalid food thresholds and incorrect measures of poverty incidence.

The provincial food bundles, meanwhile, will “capture province-specific characteristics in the estimation of provincial poverty statistics.”

NSCB said that items for the food bundles of each province will depend on what is more appropriate to the province of interest.

“In theory, the number of the poor will be reduced as a result of the new methodology,” Virola said.

Under the new methodology, the poverty incidence in the country would be 27.4 percent in 2006. This is lower than the previous methodology’s 32.9 percent.

For 2003, the country’s poverty incidence would be 25.7 percent under the new methodology and 30 percent under the old one.

The annual per capita poverty threshold would be P13,635 in 2006 under the new methodology compared with P15,057 under the old one.

The annual per capita food threshold would be P9,625 in 2006 under the new methodology, or lower than the P10,025 under the old method. –DARWIN G. AMOJELAR SENIOR REPORTER, Manila Times

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