HOTSPOT
Tonyo Cruz
Up to now, there are those who believe that laziness is what’s behind the poverty and difficult life of many Filipinos. Jose Rizal already answered this charge in his time, but the fable still exists, infecting minds about the real reasons behind destitution.
Enter the World Bank which, this week, presented its report “Overcoming Poverty and Inequality in the Philippines,” headlined by the following findings:
1. Income inequality remains high — meaning, people don’t get a fair share of the wealth they create through their hard work. As per the WB report, “the top one percent of earners together capture 17 percent of national income, with only 14 percent being shared by the bottom 50 percent.”
2. “Unequal opportunities, lack of access to tertiary education and a scarcity of skills, coupled with inequality in returns to college education, gendered social norms and childcare, and spatial gaps, sustain inequality.”
3. “While there has been considerable progress in expanding access to basic services such as electricity, safe drinking water, and school enrollment, large disparities limit the development of human capital. Inequality of opportunity and low intergenerational mobility waste human potential, resulting in a lack of innovation and a misallocation of human capital in the economy.”
4. “Unemployment shot up in industries that require inperson work. In 2021, poverty rose to 18.1 percent despite large government assistance. The economy has begun to rebound but signs are emerging that the recovery will be uneven. Prolonged loss of income has taken a heavy toll on the poorest households.”
5. “Employment in wage work has notably decreased and employment in agriculture has risen. These trends have been concentrated among youth and the least educated, which suggests an uneven recovery and widening income inequality.”
6. “The pandemic is likely to result in long-term scarring of human capital development. Over half of households estimate that their children learned from remote learning less than half what they would have learned from face-to-face schooling. The proportion increases to 68 percent in poor households... Learning loss, combined with the de-skilling associated with prolonged unemployment, could lead to sizable future earnings losses.”
7. “Job polarization among wage workers emerged between 2016 and 2021: employment in middle-skilled occupations went down and employment in both low-skilled and high-skilled occupations went up. This pattern may rise with the transformation of jobs post-Covid-19 and could increase prevailing disparities in incomes.”
Other economists would argue that the WB barely scratched the surface of the issue. There are many other factors, structural and institutional, that perpetuate poverty and inequality.
Denied of genuine agrarian reform, our farmers continue to be burdened by rent and usury, as well as by inadequate state support for selling, storing, and transporting their harvests. We must try to understand and grapple with the reality that the government buys palay at only ₱19 (oftentimes lower if sold to private hands), but the rice costs twice, thrice or four times that price. Meanwhile, imported rice swamp the market, with traders and smugglers the only ones getting wealthier.
Minimum-wage earners meanwhile have seen the value of their wages go down, rapidly and in a big way — no thanks to inflation. We could say Metro Manila workers are luckier than most workers, because the state and industries can only agree to ₱570 daily wage at most, and as low as ₱306 in BARMM. Not only could these amounts give workers’ families decent living, but these are tiny amounts if considered as a share of the wealth they create.
Labor centers have long argued that this regional minimum wage system has not lifted people out of poverty.
There’s also the tax system whose recent reforms expanded indirect taxes that affect everyone, and unfairly weighs down on the poor. Excise taxes on petroleum products and the expanded VAT are perhaps the most (un)popular. The majority who are poor, middle class, and entrepreneurs are made to pay more in taxes as a percentage of their incomes. Meanwhile, the TRAIN Law reduced income, estate and donor’s taxes on the rich.
The previous government prioritized handsome salary hikes for the police and the military. No such plans is in the horizon for public health workers, public school teachers and other public sector workers.
OFWs are living reminders of the shortage of livelihood and employment opportunities in our country. More continue to flee the country, while those already abroad have to work twice or thrice harder to keep pace with escalating costs of living back here at home.
Those who say we just need to work harder are grossly mistaken. As an economist once said, the problem is not the philosophy of poverty. It is the poverty of philosophy. The people are not the problem. It is in how wealth is distributed in the first place.
Tonyo Cruz
Up to now, there are those who believe that laziness is what’s behind the poverty and difficult life of many Filipinos. Jose Rizal already answered this charge in his time, but the fable still exists, infecting minds about the real reasons behind destitution.
Enter the World Bank which, this week, presented its report “Overcoming Poverty and Inequality in the Philippines,” headlined by the following findings:
1. Income inequality remains high — meaning, people don’t get a fair share of the wealth they create through their hard work. As per the WB report, “the top one percent of earners together capture 17 percent of national income, with only 14 percent being shared by the bottom 50 percent.”
2. “Unequal opportunities, lack of access to tertiary education and a scarcity of skills, coupled with inequality in returns to college education, gendered social norms and childcare, and spatial gaps, sustain inequality.”
3. “While there has been considerable progress in expanding access to basic services such as electricity, safe drinking water, and school enrollment, large disparities limit the development of human capital. Inequality of opportunity and low intergenerational mobility waste human potential, resulting in a lack of innovation and a misallocation of human capital in the economy.”
4. “Unemployment shot up in industries that require inperson work. In 2021, poverty rose to 18.1 percent despite large government assistance. The economy has begun to rebound but signs are emerging that the recovery will be uneven. Prolonged loss of income has taken a heavy toll on the poorest households.”
5. “Employment in wage work has notably decreased and employment in agriculture has risen. These trends have been concentrated among youth and the least educated, which suggests an uneven recovery and widening income inequality.”
6. “The pandemic is likely to result in long-term scarring of human capital development. Over half of households estimate that their children learned from remote learning less than half what they would have learned from face-to-face schooling. The proportion increases to 68 percent in poor households... Learning loss, combined with the de-skilling associated with prolonged unemployment, could lead to sizable future earnings losses.”
7. “Job polarization among wage workers emerged between 2016 and 2021: employment in middle-skilled occupations went down and employment in both low-skilled and high-skilled occupations went up. This pattern may rise with the transformation of jobs post-Covid-19 and could increase prevailing disparities in incomes.”
Other economists would argue that the WB barely scratched the surface of the issue. There are many other factors, structural and institutional, that perpetuate poverty and inequality.
Denied of genuine agrarian reform, our farmers continue to be burdened by rent and usury, as well as by inadequate state support for selling, storing, and transporting their harvests. We must try to understand and grapple with the reality that the government buys palay at only ₱19 (oftentimes lower if sold to private hands), but the rice costs twice, thrice or four times that price. Meanwhile, imported rice swamp the market, with traders and smugglers the only ones getting wealthier.
Minimum-wage earners meanwhile have seen the value of their wages go down, rapidly and in a big way — no thanks to inflation. We could say Metro Manila workers are luckier than most workers, because the state and industries can only agree to ₱570 daily wage at most, and as low as ₱306 in BARMM. Not only could these amounts give workers’ families decent living, but these are tiny amounts if considered as a share of the wealth they create.
Labor centers have long argued that this regional minimum wage system has not lifted people out of poverty.
There’s also the tax system whose recent reforms expanded indirect taxes that affect everyone, and unfairly weighs down on the poor. Excise taxes on petroleum products and the expanded VAT are perhaps the most (un)popular. The majority who are poor, middle class, and entrepreneurs are made to pay more in taxes as a percentage of their incomes. Meanwhile, the TRAIN Law reduced income, estate and donor’s taxes on the rich.
The previous government prioritized handsome salary hikes for the police and the military. No such plans is in the horizon for public health workers, public school teachers and other public sector workers.
OFWs are living reminders of the shortage of livelihood and employment opportunities in our country. More continue to flee the country, while those already abroad have to work twice or thrice harder to keep pace with escalating costs of living back here at home.
Those who say we just need to work harder are grossly mistaken. As an economist once said, the problem is not the philosophy of poverty. It is the poverty of philosophy. The people are not the problem. It is in how wealth is distributed in the first place.