POVERTY REDUCTION: LIES, DAMN LIES AND STATISTICS
[PHOTO COURTESY OF GOOGLE IMAGES - NEDA PLANNING SECRETARY CAYETANO PADERANGA]
MANILA, FEBRUARY 4, 2011 (MALAYA BUSINESS INSIGHTS) BY ANGELA LORRAINE CELIS - A new way of setting the poverty threshold approved by the National Statistical Coordination Board on Monday cuts the number of the poor to 27.4 percent of the population in 2006 and to 25.7 percent in 2003.
Under the old methodology, poverty incidence was 32.9 percent in 2006 and 30 percent in 2003.
The results of the 2009 Family Income and Expenditure Survey have yet to be released, but initial estimates placed the poverty incidence at 33 percent.
If the new methodology is used, the incidence for 2009 would also likely match 2006's 27.4 percent.
Based on the estimated population of 92 million in 2009, the old methodology would yield 30.36 million people living below the poverty line. Under the new methodology, the number drops to 25.2 million.
This results in 5 million people being lifted above the poverty line.
Among the implications of the lowered poverty threshold is the reduction in the number of families to be covered by the conditional cash transfer program of the government and a likely lowering of the minimum wage.
Planning Secretary Cayetano Paderanga said the most significant change in setting the poverty threshold is in using province-by-province data on "food bundles" instead of regional data.
"It's just a way of marking. We'll do it by province rather than by region since many factors differ within the same region," Paderanga Jr. said.
"Urbanization, for example, may be more pronounced in one province than others in the same region. The cost of living may differ, spending patterns, price levels, food sources, and so on. So a person who is considered poor in one province may not be so poor in another," Paderanga added.
The NEDA chief said poverty data in 2009, 2006, 2003, 1999, and 1991, will be revisited, using the new method.
"The refinements in methodology will better reflect the actual situation and unique conditions in the provinces. This will better help in government targeting," Paderanga added.
Romulo Virola, NSCB secretary general, said the new poverty methodology is the third revision from the original method used in 1985.
The previous revisions were in 1992 and 2003.
"It was revised to ensure that the numbers are comparable across space – region to region, province to province – over time," Virola said.
Virola said the new method will be reviewed in 10 years and will be used for at least two consecutive terms.
As for the Millennium Development Goals (MDGs), Virola said concerns were raised as to whether the revision in the 1991 poverty threshold, which was used as a baseline indicator in achieving the MDG goal of halving poverty by 2015, would make it easier for the government to achieve their target.
Under the current method, the 1991 poverty threshold was 45.3 percent, which should be reduced to 22.7 percent by 2015.
Virola said this will not be so.
"(If by using the new method,) the 1991 poverty threshold becomes 30; the 2015 target would be 15," Virola said.
He said this would even make it more difficult for government to meet the MDG target.
Virola said the biggest impact of a lower threshold is in wage-setting. "The threshold went down under the new method, so the minimum wage could go down."
He said labor groups, led by the Trade Union Congress of the Philippines, have expressed concern.
Virola said the minimum wage could be de-pegged from the poverty line.
"The minimum wage must be a certain percentage above the poverty line, para may buffer, say 110 percent or 120 percent," Virola added.
Virola said the NSCB is planning to discuss the issue with the National Wages and Productivity Commission (NWPC) after the new methodology is announced next week.
"There will be presentations to other agencies, definitely there will be bilateral meetings... The Cabinet may also want a presentation," Virola said.
Partricia Hornilla, NWPC deputy executive director for policy programs, said the commission will have to look how the new methodology will affect the setting of the minimum wage.
RELATED REPORT LAST WEEK
PHILIPPINE GDP TO GROW 7.2% IN Q4 Wednesday, 26 January 2011 12:38
The Philippines is likely to grow 6.2 percent to 7.2 percent in the fourth quarter due to the recovery of the agriculture sector, the National Economic and Development Authority (NEDA) said.
Socioeconomic Planning Secretary Cayetano Paderanga told reporters that the economy, as measured by gross domestic product (GDP), will be driven by the "mini recovery" of the agriculture sector as well as the industry sector, which is projected to grow at a "higher single digit."
GDP is the total value of final goods and services produced in the country.
"Agriculture is marginally negative for the whole year. At least it's not as bad as people are saying. So that gives us at least a little bit of bounds so that it can allow the GDP growth to be higher than what it could have been," Paderanga said.
Farm output, which accounts by a fifth of GDP grew by 6.35 percent in the fourth quarter of the year.
For the full year, farm output contracted by 0.12 percent.
The services sector, on the other hand, is expected to grow "above 5 percent," he added.
For the full year, Paderanga said the economy may grow between 7 percent to 7.4 percent.
The government expects the GDP to expand between 5 percent and 6 percent this year.
The National Statistical Coordination Board (NSCB) is set to announce the official GDP growth on Monday.
In the first nine months, the economy expanded by 7.5 percent from 0.7 percent in the same period last year.
In 2009, the economy expanded by 1.1 percent.
Paderanga added that he is hopeful that the government can achieve the 7 percent to 8 percent GDP growth this year.
"But we will try to have policies and programs to try to attain that as much as we can. But, again, as I said, given the trends, we think that it might be more achievable in 2012 than 2011 ... We will still try to hit the target," Paderanga said.
Paderanga said the government has assumed a conservative 5 percent GDP in preparation for this year's government budget.
The World Bank earlier projected that the Philippine economy will grow 5 percent this year, while the United Nations projected a 4.6 percent GDP growth. (PNA)
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