THE premium or tax that poor Filipinos pay due to their limited financial resources is a direct result of decades-worth of “low, irregular, and uncertain incomes,” according to Ibon Foundation Inc.
Ibon Foundation Executive Director Sonny Africa told BusinessMirror that the majority or around 70 to 80 percent of poor and borderline poor Filipinos had low incomes because of a “distorted pattern of economic growth.”
At the launch of the Key Indicators for Asia and the Pacific report last week, Asian Development Bank (ADB) Economic Research and Development Impact Department Statistician Arturo Martinez Jr. said the poor pay a poverty premium which makes some goods and services about 20 percent more expensive compared to the country average. (Full story here: https://businessmirror.com.ph/2023/08/25/poor-pay-poverty-premium-in-phl-aspac-adb-report/)
“This chronically poor’s capacity to pay is directly related to the pattern of economic growth over the last decades of free market economic policies,” Africa told BusinessMirror on Monday.
“The premature opening up of the economy without the corresponding domestic support has prevented agriculture from modernizing and Filipino industry from developing. If these sectors were developed then there would be much more formal work with regular pay, benefits and tenure than at present,” he added.
In a recent Pandesal Forum in Quezon City, Africa said while the Philippines is now the fastest-growing economy in the region and there was no reason to doubt the computation of the Philippine Statistics Authority (PSA), it was important to examine the economic growth.
A closer look into the country’s economic performance reveals that it has been very unequal and this has led to unemployment and rising underemployment as well as the low incomes of Filipinos.
Given this—and the high inflation being experienced in the country right now—the high economic growth rate of the Philippines does not mean anything for ordinary Filipinos, Africa said at the Kamuning Bakery forum.
“The service- and overseas Filipino work-dominated economy has instead resulted in undue self-employment and other openly informal work which now accounts for nearly half of total employment,” Africa told this newspaper.
“The balance of employment in wage and salary work isn’t even wholly formal and at least another one-fourth of employment is wage and salary work in informal establishments,” he added.
During the forum, Africa noted the rise in self-rated poverty recorded by the Social Weather Stations (SWS) which, according to Africa, saw an increase in families who consider themselves poor—to 14 million— and those who considered themselves borderline poor, 8.2 million.
This was a 1.5-million increase to 22.2 million families who considered themselves poor and borderline poor in the first year of the Marcos administration. Africa noted that this was also despite the fast economic growth recorded by the government.
In order to remedy this, Africa said the government should “revisit clearly inadequate policies to transform the economic structure to produce more and better work.”
In the near-term, the government response should be to boost household purchasing power through ayuda.
This is also part of the recommendations of the ADB to address the low incomes of many of the poor in the Philippines and the rest of Asia and the Pacific.
However, Africa said this is not the sustainable solution that the Philippines, especially poor Filipinos, need. The economy needs to transform through efforts to make utilities and social services more affordable for the poor.
This can happen by rolling back its privatization policies. Africa added that “publicly-provided services are much more amenable to making pricing and accessibility more sensitive to the poor’s current circumstances.”
Poverty ‘expensive’
Earlier, ADB said small purchases, bad roads, and low access to credit are among the factors that make poverty “expensive” in the Philippines and in other countries in the Asia and the Pacific region.
In the Philippines, poor households have a penchant for buying “tingi” or small quantities which are cheaper, but in the long run turn out to be expensive as they need to buy more to meet their needs.
More affluent households, however, have greater financial resources and are able to buy in bulk, which turns out cheaper as this prevents them from buying as frequently as poor households do.
Other examples of poverty premiums have to do with bad roads which make transportation costlier for poor households. Since many poor Filipinos live in areas with poor infrastructure facilities, they must pay more to access economic opportunities or participate in economic activities.
Martinez also said poor households do not have many of the conveniences of affluent households such as access to cheap electricity and appliances like refrigerators, which affect the products they consume and their ability to purchase goods in bulk.
He said expensive electricity prompts poor households to resort to buying coal, firewood, and other forms of biomass which often are more expensive for them. One example, he said, was kerosene, which other studies found is more expensive for poor people.
Image credits: Nonie Reyes
Decades of ‘low, irregular, uncertain incomes’ take a toll
Source: News Paper Radio
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