INEQUALITY | Philippines has one of the highest income inequality in East Asia

INEQUALITY | Philippines has one of the highest income inequality in East Asia – World Bank

November 24, 2022 , 04:17 PM

By Clarist Zablan

(November 24, 2022) – Although the Philippines has seen some progress in cutting poverty rate, the country has one of the highest income inequality rates in the East Asia region, according to a report from the World Bank published on Thursday.

In the report “Overcoming Poverty and Inequality in the Philippines: Past, Present, and Prospects for the Future,” the World Bank said the wealthiest 1% of earners comprised 17% of national income as of 2021, while the poorest 50% only earned 14% of the country’s income.

“The Philippines has made significant progress in reducing poverty, but income inequality has only recently begun to fall,” the World Bank report read. “Thanks to high growth rates and structural transformation, between 1985 and 2018 poverty fell by two-thirds. However, income inequality did not begin to decline until 2012.”

The report cited numerous structural factors that contributed to the disparity in income in the country, such as unequal opportunities, lack of access to college-level education, inequality in returns to tertiary education, and gender inequality.

The coronavirus disease (COVID-19) pandemic also partly reversed the country’s decades-long gains in reducing poverty and inequality, as its impacts on economic activity halted economic growth and caused joblessness to shoot up, the report said.

Although the country’s economy has begun to recover, the World Bank expects that recovery will be uneven across households.

“Prolonged loss of income has taken a heavy toll on the poorest households. With food prices going up and a reliance on adverse coping strategies, among them eating less, there is a risk of serious consequences for the health and nutrition of children in vulnerable households,” the report stated.

Reacting to the report, Socioeconomic Planning Secretary Arsenio Balisacan assured the government is working towards addressing inequality in the country.

The country’s poverty incidence or the ratio of Filipinos who cannot afford to meet their basic needs, increased from 16.7% in 2018 to 18.1% in 2021 in the middle of the COVID-19 pandemic, based on data from the Philippine Statistics Authority (PSA).

Business closures due to lockdowns that were imposed to curb COVID-19 transmission caused massive job losses in the country. According to the trade department, 38% of businesses were shuttered in March to April 2020.

Last week, Balisacan expressed confidence that the government under President Ferdinand “Bongbong” Marcos Jr. can bring down poverty incidence in the country to 9% before he steps down in 2028.

The World Bank report recommended supporting employment, widening access to quality education, promoting inclusive rural development, strengthening social protection, and improving opportunities for poorer families are needed to reduce inequality.

“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,” the World Bank said.

(MM)

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