Poverty incidence

NEDA DIRECTOR General Arsi Balisacan and the Philippine Statistical System, particularly the National Statistical Coordination Board (NSCB) and the National Statistics Office (NSO), are to be congratulated for a more timely release of the country’s poverty statistics.

That is no mean feat, to have the 2012 poverty statistics available within the first four months of 2013. Just to compare: the 2009 poverty statistics were released only in February of 2011 — a turnaround time of 14 months. True, the current data cover only the first half of 2012. But at least the government will have an idea of what the lay of the land is and can react sooner to improve the situation — the recognition (of the problem) lag is reduced. And more important, given the availability of provincial data (which still have to be improved), it provides voters a timely and concrete measure by which to judge the performance of their provincial executives, and vote accordingly. One expects that given this performance by the NSO/NSCB, PNoy’s SONA in July will include a report on how the war against poverty fared for the whole of 2012.

I am given to understand that Balisacan, who is one of, if not the country’s foremost poverty expert, has asked for, and been promised, funds to be able to collect annual (no longer triennial) poverty data on a national and regional basis, and more accurate provincial data every three years. That is indicative of the priority that the PNoy administration is giving to the war against poverty, and is a huge step forward.

Having said all that, the data show that obviously, we aren’t exactly winning the war against poverty. Not much change in poverty incidence — not statistically significant anyway (meaning to say that the changes in the figures are not significantly different from zero) — between the first semester of 2009 and the first semester of 2012. One year of that three year period was under Gloria Arroyo, and two years was under PNoy. And there is no way to tell who is responsible for what — which is why the move to obtain annual national data is an excellent one.

But as the saying goes, “sila ang bahala, tayo ang kawawa” — i.e., it is the Filipino people who suffer, in the final analysis, never mind at this point who is to blame. Interestingly enough, Secretary Balisacan, in July last year, was quoted by Xinhua as saying “I would be surprised if we don’t see poverty reduction [in 2012].” His statement was based, as he is further quoted, on two things: our economic growth which was “respectable” — at 7.6% in 2010, 3.9% in 2011, and an expected 5-6% (we grew at 6.6%) for 2012; plus low inflation. Balisacan was sanguine enough to say that we may have finally put a lost decade of poverty reduction behind us, referring to the period where poverty incidence increased.

So, what went wrong? Or rather, why didn’t the country’s growth produce (at least until the first semester of 2012), the expected decrease in poverty incidence?

One explanation forwarded was that the growth was “jobless” — it didn’t produce enough additional jobs. The employment data for October 2012 showed a reduction of almost one million jobs from October 2011. But it has since been explained (at least to my satisfaction) that the definitions used in Oct. 2011 differ from those used in 2010 and 2012. And if one compares the employment situation between 2010 and 2012 (to compare apples and apples), we find that roughly two million net new jobs were created. Ergo, cancel jobless growth. Besides, the poor cannot afford to be unemployed. What happens is that either they are not very productive, or that they are grossly underemployed.

Was the growth of the economy “ruthless,” i.e., it benefitted mostly the rich? If one looks at the income distribution data, it appears that there has not been any increase in inequality. On the other hand, it is well known that the income distribution data that we have understates the inequality, because the surveys do not include the very, very rich (they are not accessible) and the very, very poor (they have no housing — and to be part of a survey, one must have a permanent address). My vote therefore is for this explanation.

The explanation that makes the most sense (and is related to inequality) is that agriculture didn’t do well in the first half of 2012. And since most of our poor are in the agricultural sector, it stands to reason that they didn’t feel the benefits of the overall growth. The message is clear: concentrate on agriculture, concentrate on increasing productivity and reducing underemployment. Which means, among other things, get the Agrarian Reform Program finished, and provide the necessary credit facilities for the beneficiaries.

At this point, one can only expect the political opposition sharpening their knives and proclaiming that the country’s poor showing in the war against poverty only goes to prove that the Conditional Cash Transfer Program (CCT) is useless and it should be scrapped. They would be dead wrong.

WHY?

Because per the 2012 estimated income gap (roughly the amount of money that would have to be given to the poor to get them out of poverty), a five-member poor family would on the average need a monthly additional income of 2,292 to move out of poverty. Well, the poor on the average have 5.9 members, and the very poor have 6.4 members, so they would need more than that amount. At the same time the maximum amount that can be received by a family in the CCT is 15,000 a year or P1,250 a month. No contest.

What the latest poverty figures imply, therefore, insofar as the CCT is concerned, is that, firstly, the targeting system of the DSWD must be working well, in that it is reaching only the poorest of the poor, who are far below the poverty line, or far enough below so that the maximum amount of cash transfer will not get them out of poverty. The CCT is thinking long term — get the children healthy and educated, to break the intergenerational transfer of poverty.

Secondly, the CCT must not be discontinued. It must not only be continued, but it must be continued to ensure that the children finish at least high school. At present, more than 2/3 of our poor families are those where the head of household has at most an elementary school education.

Oh. Congratulations are also in order to the PNoy administration, and to the Philippine Statistical System: They tell it like it is, even if it doesn’t make them look good. This bodes very well for transparency and ultimately for good governance.
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