THE NUMBER of people just above the poverty line remains high, putting that demographic at risk if economic growth should stall, the World Bank (WB) said in a briefing yesterday.

In the annual “Prospects for the Philippines” conference hosted by the Foreign Correspondents Association of the Philippines (FOCAP) yesterday, Mara K. Warwick, the country director for Brunei, Malaysia, the Philippines and Thailand, noted that the region served as “the biggest poverty reduction machine” in recent years because governments pursued “export-oriented” and “labor-intensive” growth strategies, as well as high investment levels in education and health.

She warned, however, that these strategies “that worked so well in the past might not work going forward” due to the slowing growth of global trade, the declining demand of labor brought by technological innovations and the region’s high income inequality: “Concentration of wealth has grown faster than in other regions of the world,” she said.

Another set of risks, Ms. Warwick said, are specific trends “that are turning opportunities into challenges.”

“First, is urbanization. Urbanization promises a better life, better jobs, and better services. But if urbanization is not properly managed, living conditions in cities can be very difficult, especially for the poor and the most vulnerable,” she said.

“Second, and this is certainly true for the Philippines, a huge number of young people are bursting into the work place and there are not enough good jobs on offer. Many of these young people need better education and skills to work in twenty-first century jobs.”

In the case of the Philippines, she noted the strides made in decreasing poverty as those living below the international poverty line accounted for just less than 7% of the population compared to 13.3% two decades ago.

“In addition, the percentage of economically secure and middle class has grown in the last 20 years with almost 35% of the population now economically secure, and a middle class that has grown from 7% in 2002 to almost 10% today.”

On the other hand, she cautioned the continued high percentage of those just above the poverty – or those “who are not yet economically secure and still at risk of slipping back into poverty.”

“These groups have not changed very much in the Philippines in the last 20 years: the total for the moderate poor and economically vulnerable combined has remained constant at 50% of the population,” she said.

According to the World Bank, the people who are classified as moderately poor and economically vulnerable are those living on $1.90-$3.10 a day and $3.10-$5.50 a day, respectively.

The World Bank advised the Philippines to promote inclusive growth by increasing “economic mobility.”

“For the Philippines, the best strategy is to meet those different needs by fostering economic mobility – which in layman’s terms is essentially the ability to improve one’s lot in life… At the core of economic mobility are jobs and livelihoods,” Ms. Warwick said.

Specifically, these include increasing the quality of jobs, addressing disparities in education, providing job opportunities for the poor as well as greater access to financial services.

“The country should maintain its social assistance programs for the poor and social insurance should be extended to cover all workers, not only those in the formal sector. Resilience to shocks, including natural disasters, is also a priority. This requires a broad range of interventions, including resilient infrastructure, social safety nets, and insurance to deal with these shocks,” Ms. Warwick said.

“Not surprisingly, there also needs to be stronger revenue mobilization so that the tax system can raise more resources to support these measures.”

Late last year, the World Bank released a report, “Riding the Wave: An East Asian Miracle for the 21st Century,” where the Philippines, together with Indonesia and Cambodia were classified as “out-of-extreme-poverty” countries, characterized as those where extreme poverty levels are low, but where the middle class remains small.

In that report, over 5% of Filipinos were found to be “extremely poor” or living on less than $1.90, accounting for around 13.8% of the extreme poor in East Asia and the Pacific. — Jochebed B. Gonzales

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