"Can we conclude then that poverty reduction is not about economic growth?"
"Can we conclude then that poverty reduction is not about economic growth?"
The biggest news of 2019 and perhaps also Rodrigo Roa Duterte’s biggest achievement as president so far is the sharp reduction in poverty between 2015, the year before his presidency, and 2018, two-and-a-half years into his presidency.
The drop is from 23.3 percent of the total population in 2015 to 16.6 percent of the population in 2018, a deep plunge of 6.7 percentage points.
There were 100,981,437 Filipinos in 2015. Multiply that by 23.3 percent and you get 23.52—the number of poor in 2015. There were 106-million Filipinos in 2018. Get 16.6 percent of 106 million and you have 17.6 million—the number of poor Filipinos in 2018. Deduct 17.6 million from 23.52 million and you get 5.9 million—the number of Filipinos rescued by Duterte from poverty—in just two and a half years or 30 months of his presidency.
In terms of absolute number of Filipinos, the 5.9-million is the largest ever social mobilization effort achieved by any Philippine president. Over 5.9-million Filipinos crossed the poverty line between 2015 and 2018.
“This is actually the steepest drop I can remember our poverty rate has seen in a three-year period (the Family Income and Expenditures Survey that tracks it is done only every three years). Back in 2015, I was already impressed at the 3.6-percentage- point drop reported then, to 21.6 percent from 25.2 percent in 2012,” gushed economist Cielito Habito, the former chief of NEDA and the economic planning secretary during the presidency of Fidel V. Ramos (July 1992-June 1998).
Habito has the gravitas to validate the Philippine Statistics Authority data. “I’m sure there are skeptics out there who doubt the veracity of these data, especially among those who are not too enamored with the current leadership,” the economist wrote in his Inquirer column of Dec. 10.
“But politics aside,” he assured, “I see no reason to doubt the professionalism of our government statistical bodies and the statisticians therein. They were, after all, under my administrative supervision once upon a time, being attached agencies to the National Economic and Development Authority, which I led for eight years.”
“This reported big drop in poverty incidence cannot be fake news,” Habito insisted.
Habito explains the impressive reduction in poverty: “Foremost is the relatively rapid growth since 2010 in our manufacturing sector, the source of the best quality wage and salary jobs in our economy, especially for lower-skilled workers. This manufacturing surge came about since Asean import tariffs went down to zero in 2010, and the rise of regional cross-border value chains spurred greater manufacturing activity in electronics, chemicals and other export manufactures.”
“The manufacturing surge may also explain another recent dramatic phenomenon under Duterte: The sharp drop in unemployment—to 4.5 percent, a record low. It happened in just four months, from 5.40 percent unemployment in July 2019 to 4.5 percent in October 2019. Also, the 13 percent underemployment is way below the 18-20 percent we persistently had for many years,” notes Habito, adding “wage and salary jobs now make up two thirds of the jobs in the economy, while unpaid family workers and those who are individually self-employed (like vendors, pedicabs drivers, etc.) have been accounting for falling shares of total jobs.”
How were the jobs created? Thank the double-digit growth rates inoverall investment in the economy since 2010, according to Habito,“especially private domestic investments that create more jobs and livelihoods for Filipinos.”
Another factor: The government has been giving away money to the poor under the so-called Conditional Cash Transfer Program, now on its tenth year. The CCT amounts to P80 billion a year, which costs the DSWD P20 billion to funnel to the very poor.
Personally, what amazes me about the poverty nosedive is that it happened while the economy was growing below its average in the past. Average GDP growth rate during 2016-2018 was 6.6 percent. Poverty incidence was a high double-digit 25 percent in 2012 and 2013, the years when the economy was growing at 6.7 percent and 7.1 percent, respectively.
Can we conclude then that poverty reduction is not about economic growth, 60 percent of which benefits mainly the highest 10 percent of Filipinos? Having fewer poor could be a simple matter of ordinary Filipinos having cash in their pockets and rice on their dining tables.