Report: Wealth gap in the Philippines widens from 2012-2014

by Ian Nicolas Cigaral, Feb 9, 2018, PhilStar Global

MANILA, Philippines — Income inequality in the Philippines grew over the two years to 2014, according to a new report from Oxfam International.

According to Oxfam, the Philippines’ Gini coefficient—a standard measure of income inequality from 0 to 1, with 0 representing total income equality—rose near 0.60 level in 2014 after settling above 0.40 in 2012.

Oxfam said it employed an adjusted way of computing Gini coefficients that was developed by Washington-based nonprofit public policy organization Brookings Institution, making estimates of inequality rise “dramatically” for many countries compared to traditional surveys.

According to an analysis by Brookings, Gini coefficients are usually derived from household surveys, which do not often capture top incomes due to sampling error, and richer households’ tendency to refuse to participate in surveys.

In order to “treat” the problem, Brookings used national accounts—which record economic activities in a systematic and internationally agreed manner—as a “proxy” for missing top incomes to provide a “better” understanding of the incomes of top 1 percent.

“In other words, our methodology corrects for the exclusion of income from missing rich households but not for the unreported income from households included in the survey,” Brookings said.

Wage policies

Around the world, many countries fail to implement and enforce their wage policies, depriving workers of their legal entitlements and further reducing take-home pay, Oxfam said.

For example, in countries like India and the Philippines, at least one in every two workers in the garment sector are paid below the minimum wage, Oxfam noted in its report.

The Philippines is also among the countries that have double-digit “non-compliance rates” with minimum wage in the garment sector by gender.

Despite these setbacks Oxfam said the Philippines has passed new laws or regulations improving domestic workers’ labor and social rights since the Southeast Asian country adopted the International Labor Organization Convention.

Last year, Credit Suisse reported that Filipinos’ total wealth declined in 2017 as income inequality in the country increased.