Benjamin R. Punongbayan
IN THIS modern time of general abundance in the world and, particularly, in our part of the world, we find our country with an incongruous incidence of widespread poverty. It appears inconceivable given that we were not in that bad situation when we gained independence from America 77 years ago.
A great number of our citizens presently live with inadequate access to food and are susceptible to diseases, destining them to have a comparatively shorter life. But more than this, this deplorable condition destroys their feeling of self-esteem that holds them back and, as a result, they live in desperation. The obvious lack of strong resolve and vigor in providing effective solutions to this huge problem is akin to being inhumane.
This condition of widespread poverty currently existing in the country is the most important problem that our government, present and future, must focus on, day-in and day-out, and strongly endeavor to reduce such a situation very substantially within a reasonable period of time.
A recent nationwide poll of self-rated poverty indicates that 13.2 million Filipino families describe themselves as poor or 48% of total families. Using the average number of 4.4 individuals forming one family implicit in related government statistics, it means that about 58 million Filipinos describe themselves as living in poverty. While that total may appear somewhat overstated, it does indicate the huge size of the problem.
On the other hand, the latest officially published poverty incidence rate among Filipino citizens is 23.7%, as estimated in the first semester of 2021, using an annual per capita income threshold of ₱28,996 or ₱127,582 per average family of 4.4 individuals as defined above. This official poverty incidence rate translates to 27.5 million Filipino citizens living in poverty (using the estimate of 116 million Filipino population as of November 16, 2023). This time, the income threshold appears low, and so does the resulting estimate of the total number of Filipinos living in poverty.
There is therefore a wide divergence between those two statistics. It may be reasonable to say that the true level is between 30% and 35% of the individual poverty incidence rate, or between 35 million and 41 million Filipino citizens. That’s a lot!
How did this happen? A thorough historical analysis of such a very unfavorable development may provide very interesting and illuminating information. However, it will require a scholarly, thorough, and objective study, assuming that there are sufficient pertinent statistical records available. But engaging in that difficult task may no longer serve any useful purpose.
Instead, it may be more practical to analyze why the current cycle of Philippine poverty persists and does not go down to a reasonable level, say to less than 10% of the poverty incidence rate.
Let’s put to mind a family of 5 that is within the poverty incidence threshold. Almost certainly, neither of the parents had attended or finished college, and may not even have graduated from high school. As such, the father may be an agricultural worker or a low-skilled trade or industrial worker, working intermittently, not by desire, but by the varying availability of job opportunities commensurate to his skill. The mother may or may not be employed. In raising their three children, they have to send them to school. While primary and secondary education are free, they need to provide the children with meal and transportation allowances.
Government subsidies for these school expenses are not widely provided in the Philippine school system, unlike in most other countries whose economies are within the level of the Philippine per capita GDP. The parents also need to pay for the costs of school projects and required school field trips.
Certainly, considering the family’s meager income, the children may not even finish high school, or if they do, there is a very high probability that their parents cannot afford to enroll them in college.
For those children who are able to finish high school, there is an opportunity for them to enroll in vocational training at TESDA. However, TESDA training is not entirely free, especially for those whose homes are not near the training centers. They have to incur transportation and meal expenses. But more than these, generally, the cost of vocational training materials and protective gear has to be borne by the trainees, like cloth materials for the dressmaking course and protective clothing for the welding course. In addition, the trainee has to pay for the cost of a drug test upon entry and a proficiency assessment fee upon course completion, both of which are not cheap. As a result, most high school graduates who are not able to enter college also cannot enroll in TESDA vocational training because the cost of doing so is unaffordable.
Clearly, when these children grow up to adulthood and marry and have their own children, they unavoidably get into a similar economic situation as that of their parents. It is much worse for the children who get stunted because of poor nutrition in the early years of life, resulting in detrimental mental development that can no longer be reversed.
As a result, the poverty cycle continues to persist on and on and seemingly cannot be broken.
Under such circumstances, it is clear and obvious that external intervention is needed to break that ever-continuing poverty cycle. Private party intervention helps, but just to a bare minuscule degree considering the very large size of the problem. Only a whole-scale government intervention can produce an effective and enduring result.
Of all possible government intervention programs, getting the children living in poverty to finish higher education to enable them to obtain high-skilled work and therefore receive a higher wage is key. I realize that there are and have been continuing strong criticisms of the poor quality of the current Philippine education system. But that is a separate issue. We cannot wait for the education system to improve; we need to work under present conditions.
There are two schemes that, taken together, will be very effective. One is to provide entirely free primary and high school education and vocational training. This means giving free meals, and transportation, and subsidizing additional education and training costs. This scheme has been adopted by many countries.
But that scheme by itself will not reduce poverty substantially in the near term. It must be twinned by a provision for a minimum family income that must be measured by taking into consideration the education and training subsidies mentioned earlier. Or, the two schemes may be combined to provide one minimum basic family income. Whether separate or combined, these schemes will replace existing ones that are aimed to serve the same purposes, but with ineffective results. I have written previously about providing a minimum basic income to families living in poverty, and I would no longer dwell on that important government assistance scheme in this present one.
I strongly believe the country can afford the costs of these interventions. We just need to have the political will to reorder our national budget priorities.
On two past occasions in public forums, I raised a question to the economist guest speaker to clarify how the often-repeated statement “if the economy grows enough, it will reduce poverty” works. On both occasions, I did not get an answer that was clear enough for me.
What I now think is that a continuous, deliberate, and substantial government intervention in poverty reduction is absolutely necessary. Such intervention immediately results in increased income for Filipinos living in poverty, which drives increased people consumption which, in turn, unleashes a virtuous economic cycle of increasing economic factors resulting in higher economic growth….and further reduction of poverty.
Obviously, the Philippine government, if it really wants to solve this huge problem, must do a wholesale intervention to reduce substantially this existing inhumane, widespread Philippine poverty.
Starting now. I believe.
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Ben Punongbayan (ben.punongbayan@ph.gt.com) is the Founder of Punongbayan & Araullo.
