THE PHILIPPINES’ robust economic growth has made a dent on poverty in recent years, such progress pales in comparison to those of neighbors due to low-quality jobs, inequitable access to basic services, and the country’s vulnerability to natural disasters, the World Bank said in a report.
The multilateral lender said drivers of poverty reduction include increase the increase in wage income, movement of employment out of agriculture, government cash transfers as well as remittances from domestic and foreign sources.
This led to a 0.9 percentage point annual drop in poverty rate to 21.6% in 2015 from 26.6% in 2006, but was below the 2-2.5-percentage point average annual decrease in China, Indonesia and Vietnam for the same period.
“Despite the generally good economic performance, poverty remains high and the pace of poverty reduction has been slow compared with other East Asian countries,” read the World Bank report, titled: Making Growth Work for the Poor: A Poverty Assessment for the Philippines that was published on Wednesday.
The study noted that less than 10% of the country’s population have advanced to the middle class, while more than 10% of Filipinos remain at risk of falling into poverty.
The World Bank attributed this situation to “limited progress achieved in providing economic mobility and growing the middle class.”
“High-performing East Asian countries built booming manufacturing sectors that provide large numbers of labor-intensive jobs, absorbing the surplus low-skilled labor from agriculture and providing them significantly higher wage income,” the report read.
“The Philippines has not fully developed a manufacturing base, which has placed it at a significant disadvantage. Workers moving out of agriculture generally end up in low-end service jobs, which limits the gains for labor from structural transformation.”
It also noted that the country’s agriculture sector, which employs most poor Filipinos, experienced a “minimal growth” in the past 10 years, compared to a faster pace of expansion in East Asian neighbors.
The report also pointed to challenges in basic services such a high dropout rate in schools despite adding two years in the education system, access to public utilities, and healthcare programs.
“The low level of education and skills means that the poor cannot compete for productive jobs in the formal sectors, such as high-end services or business-process outsourcing positions, which require tertiary education,” read the report.
“This constrains the total supply of skilled labor, which dampens the business environment for investors, perpetuating the cycle of inequality of opportunity and inequality of outcomes,” World Bank said.
It also said that natural disasters continually hinder vulnerable groups further into poverty and disrupt efforts of long-term human development, noting calamities have cost about $23 million since 1990.
The World Bank recommended that the Philippines to use its “solid” macroeconomic fundamentals to create more and better jobs, improve productivity in all sectors especially agriculture, equip Filipinos with skills needed for the 21st century economy, invest in health and nutrition, focus poverty reduction efforts on Mindanao; and manage disaster risks and protect the vulnerable.
“This experience gives us hope that the Philippines can overcome poverty. With a strong economy, the country is well-placed to end the vicious cycles of unequal opportunity that trap people in poverty, set in place measures to improve service delivery, and boost job opportunities,” said Mara K. Warwick, World Bank Country Director for Brunei, Malaysia, Philippines and Thailand.
Socioeconomic Planning Secretary Ernesto M. Pernia said in a statement yesterday that the government’s infrastructure program will address lingering concerns on poverty as well as lagging industries such as agriculture and fisheries sector — tasks which he said are “crucial and long overdue.”
“This administration’s Build, Build, Build program is also a way of spatially targeting the poor in different parts of the country, given that the thrust of the program is building infrastructure in the regions,” said Mr. Pernia.
The government aims to reduce poverty to 13-15% by 2022 when President Rodrigo R. Duterte ends his six-year term. — Elijah Joseph C. Tubayan