Tribute to a public servant

After 21 years as Secretary General of the National Statistical Coordination Board (NSCB), Romulo “Romy” A. Virola has hung up his spurs, so to speak, having reached age 65 and therefore forced to retire, per government fiat. His retirement is not only a loss to the NSCB and the Philippine Statistical System (PSS) but also a loss to the country’s civil service — he epitomizes the best in government bureaucracy. However, it will be a gain to the international statistical community, because he will be very much in demand as a consultant, having been the main moving force behind reform of the PSS, which is now, by the way, held in the highest regard internationally.

His is the kind of service which merits the highest government award possible — Sikatuna? Lakandula? If the government can give awards to the likes of — no names shall be mentioned here, but one can certainly google the lists — then there should be absolutely no problem giving it to someone who has served the country with the greatest of competence and integrity.

He got into lot of disagreements with very powerful people, but to his credit and theirs, no one ever even thought of his being removed from his post.

What I particularly enjoyed about Romy (although it probably irritated the heck out of a lot of his colleagues) was that no detail, particularly about the PSS was too small to escape his attention. He went to great lengths, for example, to make sure that the NSCB Web site is as user-friendly and as relevant as possible. If the lay reader goes over the Web site, she no doubt will enjoy the “Statistically Speaking” column (one of Romy’s ideas) which “seeks to assist in informing those who do not know, enlightening those who may be confused, and guiding those who may have been misled, by revealing what is not known, clarifying what is vague, and rectifying what is erroneous.” That means practically all of us, at one point or another.

What’s more, it is done in about as fun a way as statistics can be presented. This is admittedly a pretty tall order, as looking at statistics has this tendency to make one’s eyes glaze over. But when the titles are as eye-catching as “The Manny Pacquiao of Statistics,” “Seniors’ Moments,” “Guilty and Not Guilty,” “What Makes Women Happy?” or even: “Now Showing: Panday, Nag-Shake, Rattle and Roll” — then the eye-glazing might be postponed, or not even take place. And lately, they have introduced a column called “Sexy Statistics!”

One of the columns Romy wrote a couple of years ago was “How Rich is Rich?”, focusing on the results of the triennial Family Income and Expenditures Survey (FIES) conducted by the National Statistics Office (NSO). So naturally, when news of the 15 Filipino billionares and the 40 richest Filipinos made the headlines recently, Romy’s column came to mind — and lo and behold, when I checked, the NSCB was already in the process of updating it (the original column was mostly based on 2006 and earlier data). JessaEncarnacion, Director of the Social Statistics Office, was kind enough to share the updates. So if you are interested in the latest on the Filipino rich (as opposed to the Filipino poor), here are some salient facts:

1. For purposes of the exercise, the NSCB divided Filipino families into three general categories: low-income, middle-income, and high-income (estimated by cluster analysis). The high — income families, comprised only three-tenths of one percent (0.3%) of the total number of Filipino families in 2009 — or 55,729 out of 18.45 million families. Low-income families, comprised 75.85% of the total number of families, which of course means that 23.9% of families were classified as middle-income.

2. And before anyone jumps to any conclusions, please to note that “low-income” and “poor” are not identical. The poverty threshold for the Philippines in 2009 was P101,000 per year for a family of six, whereas low-income families are defined as those whose annual incomes are less than P248,000.

3. What would be considered a high-income family in 2009? One whose annual income was greater than P1, 680,192 million a year. Adjusting for inflation, that would be equivalent to P1.885 million as of June 2012.

4. The high-income families identified in the 2009 FIES had annual incomes ranging from aminimum of P1.7 million to P30.4million (equivalent to P2 million and P34 million in 2012, adjusting for inflation

5. These high-income families were further divided into deciles to capture the large differences in their incomes. The “poorest” 10% of these high-income families had a mean annual incomeof P1.9 million, while the “richest” 10% had an average annual income of P7.4 million. Their 2012 equivalents would be P2.3 million and P9 million, respectively.

6. But those figures — that is, the incomes of even the highest of the high-income families of the FIES (comprising 0.03% of total families) — would be picayune compared those that are included in the Forbes list. Only consider: If we make the extremely conservative assumption that the wealth of our 40 richest Filipinos would earn them 1% a year, and the exchange rate were P40 to US$1, then the annual income of the Henry Sy family (the wealthiest Filipino) would be on the order of P3.64 billion. This is be more than 100 times that of the richest Filipino family covered by the FIES and almost 500 times the average income of the richest 5,572 Filpino families.

7. At the same time, the annual income of Edgar Sia, who, with a net worth of $140 million (or P5.6 billion)is the “poorest” of our 40 richest Filipinos, would be on the order of P56 million, equivalent to almost twice the income of the richest Filipino family covered in the FIES and almost eight times the average income of the top 0.03% of Filipino families.

What’s the bottom line? This can only mean that the inequality of income distribution in the Philippines must be (grossly) understated. Why so? Consider that the highest family income captured by the FIES was the equivalent of only P34 million in 2012 pesos. That means the FIES has failed to capture not even one of our what one could call the “filthy rich”.

Why so? Because there is those conducting the FIES would be unable to get past the guards at the gated villages where these “filthy rich” might be living, or get past those guarding their residences, period.

At the same time, consider also that the FIES, by its very definition, does not capture, and therefore overstates, the incomes of the poorest of the poor. That is because the poorest of the poor are homeless, have no households to speak of, and are thus automatically excluded from any survey (the FIES requires two visits to the respondent’s residence).

The government’s Conditional Cash Transfer Program addresses the most pressing income problems of the poor (but not yet the homeless poor, although Dinky Soliman is working on it). One has yet to hear what Kim Henares intends to do if, when comparing the Forbes list with her own list of largest taxpayers, she finds inconsistencies. But at the very least, it is comforting that Soliman and Henares are where they are. –Solita Collas-Monsod, Businessworld