93% of Pinoys suffer income loss during pandemic – survey

Published April 14, 2021, 7:00 AM

by Bernie Cahiles-Magkilat

Ninety-three percent of Filipinos have seen their household income negatively impacted by the COVID-19 pandemic with one in every household either lost his job or experienced a pay cut, according to a new survey.

New research from TransUnion (NYSE: TRU) found that 93 percent of Filipinos surveyed have seen their household income negatively impacted by the COVID-19 pandemic. 

Photographer: Geric Cruz/Bloomberg

This breaks down to almost two-thirds (65%) of consumers who said their household income is currently being negatively impacted by the pandemic, and a further 28 percent who said it had been negatively impacted but not currently. Additionally, almost half (49%) of the respondents said they expected that their household income will be negatively impacted by the pandemic in the future.

TransUnion initiated its Consumer Pulse study, a survey of adults in the Philippines and abroad, to better understand the financial impact of COVID-19 on consumers. The initial Philippine survey (conducted from March 5–22, 2021) of 865 adults marked the first by TransUnion in the country and is part of what is planned to be a series of ongoing research.

“Whether it’s their financial health, financial wellbeing, or changes in day-to-day living, the lives of millions of people in the Philippines and abroad have changed dramatically because of COVID-19. The Philippines, like many other countries, has had extended periods under lockdown, and we continue to manage the ongoing impact as the number of cases remains high. The aim of our regular Consumer Pulse research is to better understand the financial impacts of the pandemic and better inform consumers, businesses, and government decisions during these unprecedented times,” said Pia Arellano, TransUnion Philippines president and CEO.

Pia Arellano, TransUnion Philippines president and CEO

Among the respondents whose household income is currently negatively impacted, 45 percent said they or someone in their household had lost their job, 42 percent said they or someone in their household had had their work hours reduced. 

The research also showed that 24 percent of respondents said someone in their household owned a small business that closed or had orders that dried up. As a result, it has become even more challenging to manage household budgets.

Of those whose income is currently negatively impacted, 88 percent said they are concerned about their ability to pay their current bills and loans in full, with 48 percent reporting they will not be able to pay their bills in less than four weeks. Among those whose household income is currently decreased and has these bills and loans, 47 percent said they would be unable to pay their mortgage, 41 percent auto lease, 36 percent house/rental insurance and 35 percent credit card.

In addition, consumers whose household income is currently negatively impacted have made changes in their approach to savings or debts. 

Almost half (47%) reported they had cut back on discretionary spending, while 31 percent cancelled/reduced digital services, among other budget changes. 

Meanwhile, 48 percent said they had saved more in emergency funds; 26 percent had paid down their debt faster; and 19% had saved more for retirement.

TransUnion’s research also found that fraudsters are adding to the pressure, taking advantage of consumers’ move to the digital space in the conduct of their lives during the pandemic. Forty-four percent of respondents claim they have recently been targeted by digital fraud related to COVID-19, with 4 percent having acted on a fraud scheme and are now a victim. 

Gen X respondents (born 1965–1979) have been most susceptible to falling for digital fraud related to COVID-19 with 9 percent of this generation indicating they had acted on attempts and become a victim. 

The top pandemic-themed digital scam for those targeted with COVID-19-related digital fraud is phishing at 40 percent, followed by third-party seller scams on legitimate retail websites at 31 percent.

In response to the financial challenges posed by COVID-19, Filipino consumers surveyed cited several ways they plan to address their obligations. 

Forty-nine percent of those who reported their household income currently negatively impacted said they planned to use their savings to pay current bills, and 44 percent said they would borrow money from a friend or family member. 

Meanwhile, 45 percent said they would pay a partial amount, and 17 percent plan to take out a personal loan to pay their current bills or loans. For context, nearly one-third (31%) of Filipinos are in the medium risk credit range (those who say their credit score is 750–789 – i.e. EE-FF)*, and nearly a third (31%) do not know their credit score.

Among all survey respondents, more than a quarter (28%) said they have received a financial accommodation such as deferral, forbearance, payment holiday or eviction prevention in the past year. Among those with these bills, 21 percent have gotten an accommodation for life insurance or a personal loan, and 18 percent for either an auto lease, credit card bills or medical bills (all at 18%).

On a positive note, only 6 percent of those with accommodation said they weren’t prepared at all for when their financial accommodation period ends, with almost half (49%) saying they were very well or completely prepared.

Some respondents did acknowledge expected changes in household spending over the next three months, with 48 percent of all respondents saying they planned on decreasing discretionary personal spending e.g., eating out, travel, entertainment; 45 percent will decrease large purchases e.g., appliances, cars; and 43 percent will increase spending on bills and loans e.g., housing, utilities, insurance, credit cards.

“Financial hardship due to the pandemic is broadly felt across all markets that TransUnion surveyed. At this time of prolonged uncertainty, it is important that there is a dialogue between credit institutions and their customers. To help consumers, lenders are now incorporating alternative and trended data into their lending strategies. Leveraging such information can result in more informed decisions and trustworthy relationships between consumers and lenders, which is especially important as uncertainty has reigned over the credit landscape during much of last year,” Arellano concluded.