Reforming Philippine Anti-Poverty Policy

Reforming Philippine
Anti-Poverty Policy
NAPC SECRETARIAT
2017
Copyright © 2017
National Anti-Poverty Commission Secretariat
All rights reserved. Any part of this publication may be used and reproduced, provided proper acknowledgment is made.
Reforming Philippine Anti-Poverty Policy
Research and writing

Jose Enrique A. Africa, lead author
Ma. Victoria R. Raquiza
Evalyn G. Ursua
Evita L. Jimenez
Project coordination and copy editing

Jon Vincent Marin
Peter Paul Sengson
Administrative support
Raquel Valerio
Joanna Melody Lerio
Annabelle Batingan
Cover & Layout

Jennifer Padilla
Published by:
National Anti-Poverty Commission
Communications and Public Relations Committee
Water Supply Training Center, MWSS-LWUA Complex
Katipunan Avenue, Quezon City 1105
Philippines
www.napc.gov.ph
Printed in the Philippines

Foreword
Poverty is the single greatest challenge facing our country today – and our entire society,
including government and all of our citizens, should act on it accordingly.
This book attempts to answer the question that has eluded our nation for decades: how
can poverty be finally eliminated? Not, it turns out, by having centerpiece anti-poverty
programs, but by making poverty eradication the centerpiece of economic, social, and
environmental policies. The book argues for a pro-poor development policy anchored
on four main elements: 1) a human rights-based and social development approach to
poverty reduction; 2) structural transformation of the economy, built on rural development
and national industrialization; 3) a comprehensive, universal, and transformative social
policy; and 4) democratic governance based on people’s democratic participation. It is
a comprehensive and integrated approach requiring the unity of macroeconomic and
all other policies as well as the meaningful coordination of all government agencies and
instrumentalities, and, indeed, of all sectors of society.
This book is the result of over a year’s worth of work by the NAPC Secretariat, in
fulfillment of the agency’s mandate to recommend anti-poverty policies and ensure the
active participation of the basic sectors in governance. It is the product of countless
engagements with other government agencies, civil society partners, and basic sectors
both within and outside of the NAPC, including the 2016 National Anti-Poverty Sectoral
Summit. It was put together from and through the excellent work of our research
and writing team, including Mr. Jose Enrique Africa, who served as lead author and
established the framework for macroeconomic policy reform; Dr. Ma. Victoria Raquiza,
who shaped the discussion on transformative and universal social policy; Atty. Evalyn
Ursua, who elucidated the human rights-based approach to poverty reduction; and Ms.
Evita Jimenez, who contributed the sections on political participation.
We are hopeful that this book inspires discussion and debate among anti-poverty
advocates in our country, and ultimately serves to influence policymaking in pursuit of
the Duterte Administration’s long-term vision of a nation free from poverty, as stated in
AmBisyon Natin 2040.
LIZA L. MAZA
Secretary/Lead Convenor
Table of Contents
1 Introduction
2 Executive Summary
7 Current Situation: The Challenge of Philippine Poverty
8 Income poverty
11 Inequality
14 Social indicators
17 Rural issues
17 Ethnic groups
18 Worker concerns
19 Informal sector
20 Women
21 Overseas Filipinos
23 The Roots of Philippine Poverty and Underdevelopment
23 Production
40 Inequality
42 Social policy
48 Democracy
50 Ecology
52 Current Responses: Anti-Poverty Programs
52 Anti-poverty programs
53 Development plans
55 Markets and poverty
56 Capacity
58 Proposed Response: Pro-Poor Development Policy
59 Rights-based framework
61 Economic development
66 Sustainable consumption and production
67 Institutional reforms
68 Social services
69 Comprehensive, universal and transformative social protection
71 Democratic governance
74 Political Implications and Action
74 Building the constituency for change

74 Attaining development
76 References
81 List of Abbreviations
82 List of Charts and Tables
84 About the Writers
Current Situation:
The Challenge of Philippine Poverty
Current Situation: The Challenge of Philippine Poverty Reforming Philippine
Executive
Anti-Poverty
SummaryPolicy
Introduction
T he clamor for change in the country is growing.

While perhaps expressed in varied ways,
the clamor is most of all driven by unresolved
poverty eradication the centerpiece of social,
economic and environmental policies.
poverty and worsening social, economic, and A rigorously pro-poor development strategy
political inequity. It is also becoming more and can be built around a few key elements. The
more urgent to respond: public frustration is human rights-based and social development
growing and divisions are widening, and the approach enables a comprehensive
volatile global economy threatens the external understanding of poverty, acknowledges the
sources of growth that the country depends on. primacy of State obligations to the people over
market forces, and upholds greater participation
Today, many Filipinos pin their hopes on the of the poor in decision-making. There is strong
Duterte administration for the kind of changes moral basis as well as sufficient legal basis to
in governance and direction that will result in uphold social justice and human rights.
palpable improvements in their standards of
living, and allow them to live a life of dignity and Far-reaching reforms are needed in
well-being. It is a dream for themselves and the country’s anti-poverty policies
their families that has long eluded them. Many
to respond to the clamor and
Filipinos share this hope and await its fulfillment,
not in a distant future but now. While they know
urgency for change. The most basic
that real change cannot happen overnight, they modification is to shift from having
are looking for concrete steps towards this. a centerpiece anti-poverty program
to making poverty eradication the
The economy has been growing rapidly in centerpiece of social, economic, and
recent years but this has not translated into environmental policies.
inclusive and equitable development. Real
development entails not just rapid growth per
se, but correspondingly rapid improvements This approach compels reforms in two major
in the conditions of the majority as well as areas of socioeconomic policy: building
strengthening the long-term foundations of the on rural development to achieve national
economy. industrialization to create jobs and improve
incomes for the majority of Filipinos in a
Despite rapid growth, tens of millions of Filipinos sustainable manner; and a comprehensive,
remain poor and the economy is still far from the universal, and transformative social policy
advanced industrial economy that it needs to be ensuring social services and social protection
in order to improve the welfare of the majority and for all Filipinos. The extent to which these will
to have the economic basis for real independence be achieved crucially depends on the extent of
and sovereignty. The last four decades of democratic governance with participation by
increasingly market-oriented economic policies the people in the decision-making that affects
have been unable to transform and develop the their lives.
economy. There are even signs that the greater
openness and integration in the world economy This is a comprehensive and integrated approach
is premature and makes independent and self- to eradicate poverty and to combat structural
reliant progress even more difficult. obstacles in the inequitable national economic
and political order. The whole-of-government
Conventional area-based, sectoral, and targeted approach requires unity of macroeconomic, social
‘anti-poverty’ measures have not been enough services, and social protection policies as well as
to make a significant dent in the fight against meaningful coordination of all its agencies and
poverty. Far-reaching reforms are needed in instrumentalities. It is particularly crucial to reform
the country’s anti-poverty policies to respond macroeconomic policies because these have
to the clamor and urgency for change. The the farthest-reaching and longest-lasting impact
most basic modification is to shift from having on poverty in the country. They constitute the
a centerpiece anti-poverty program to making foundation of the country’s development strategy.
1
Current Situation: The Challenge of Philippine Poverty
Executive Summary
The challenge of Philippine poverty monopolies on land and other rural assets. This
situation compels landless and smallholder
Tens of millions of Filipinos remain poor with farmers, farm workers, and fisherfolk to sell their
various degrees of vulnerability labor and produce at exploitative prices and seek
various non-agricultural odd jobs. Indigenous
Despite rapid economic growth in recent years, peoples and Moro people in addition face
tens of millions of Filipinos remain poor. Some dispossession from their ancestral lands and
21.9 million Filipinos or 3.8 million families are territories as well as stereotyping, prejudice, and
officially considered income-poor, corresponding cultural discrimination.
to 21.6% of the population and 16.5% of families.
However, as much as 50-60 million Filipinos may Wage and salary workers face low wages, poor
be considered poor when other dimensions of benefits, precarious flexible work arrangements
poverty are considered. especially through contractualization, hazardous
working conditions, and constraints on the
These dimensions include: low and insecure right to organize and strike. The poor in the
incomes; lack of decent work; lack of education; heterogeneous informal sector meanwhile grapple
insufficient nutrition and poor health; poor with poor employment prospects and lack of
housing (including lack of access to clean access to productive resources. They are also
water, sanitation, and electricity); lack of generally engaged in low-productivity economic
assets and inadequate livelihood opportunities; activities, have low and insecure incomes, and are
vulnerability; exploitation; and even violence. legally unprotected. Urbanization and the growing
A broader consideration of poverty will send a concentration of the population in a few urban
strong signal of the government’s commitment to centers makes these concerns more urgent.
eradicate poverty and to improve the well-being
of Filipinos, beyond incremental reductions in The economic empowerment of women continues
poverty statistics. to be limited by lesser involvement in paid work,
less access to resources and work opportunities,
Inequality is severe and undermines and discrimination in wages and work conditions.
development This is in addition to the unpaid domestic labor
by women in households. Women also continue
Inequality still remains severe. Compared to the
to face sexual harassment in the workplace and
situation in the mid-1980s, there has been some
elsewhere.
progress in redistributing household income
from the highest two income deciles to the lower
deciles. The disparity between the richest and The domestic jobs crisis forces millions of Filipinos
poorest households, however, remains vast. This overseas to earn for themselves and their families.
has worsened recently as increases in corporate In many cases, they receive low wages, suffer
profits and in the wealth of the country’s richest abuses by their foreign employers, and work in
families have outpaced changes in real wages difficult or hazardous conditions. There are also
and incomes of the poorest households. Income serious social costs for their families.
and asset inequalities need to be remedied,
not only from a social justice perspective, but The roots of Philippine poverty and
because they hinder growth and development by underdevelopment
repressing aggregate demand, skewing policy-
making in favor of big business interests, and The economy remains trapped in a cycle of
causing social conflict. underdevelopment
Different groups of poor have specific The economy is trapped in a cycle of

vulnerabilities that need to be addressed underdevelopment. Backward agriculture and
industrial production results in weak employment
Poor Filipinos are found in different contexts with generation and low incomes, which in turn lead to
specific vulnerabilities. In rural areas, the main weak aggregate demand and surplus generation.
issue is backward rural production and persistent These conditions inhibit the expansion of domestic
2
production and keep agriculture and industry Persistent poverty, inequality, and economic
backward. Poor employment generation with underdevelopment point to how nearly four
low incomes is the biggest factor in the country’s decades of economic liberalization and market-
inability to significantly reduce poverty, and the oriented structural reforms since the 1980s have
increasing service-orientation of the economy is not created the conditions for more rapid and
making it more ill-equipped to address this problem. extensive progress. Relying on market signals
did not encourage investment in domestic
Agricultural backwardness and non- production. Agricultural and manufacturing have
industrialization have not been overcome declined rapidly and the availability of decent
work has, correspondingly, greatly decreased.
The development of domestic agriculture and The less market-oriented approach of other
industry are the material conditions for long-term countries in the region is a key factor in explaining
growth, more broad-based development, and their better socioeconomic performance.
overcoming chronic poverty. These production
sectors are the essential foundations for national Liberalization has resulted in a weaker service-
economic development and the most important oriented economy with a limited ability to get
sectors for job creation, income generation, maximum benefits from the country’s rich
capital formation, and technological progress. natural and human resources. The economy has
deindustrialized despite large foreign investments
Yet manufacturing’s share of the economy has in manufacturing and extensive manufacturing
fallen over the last four decades. It is also largely exports.
at the low value-added end of the scale, while
the few higher value-added activities are mainly Liberalization has also eroded the government’s
foreign-dominated and in closed global value ability to meet national development goals. The
chains. Filipino manufacturing consists largely government’s capacity to invest in education,
of basic consumer items – mostly food and health, housing, and infrastructure has been
beverage – at the low end of value-adding and weakened by foregone revenues from tariff cuts
technology. Foreign manufacturers, on the other and excessive fiscal incentives. The capacity to
hand, account for virtually all relatively high-end regulate and directly intervene in the economy
manufacturing-cum-assembly of electronics, when required has been eroded by the bias against
machinery, equipment, and other capital goods. the government engaging in economic activity.
The share of agriculture in the economy Policy-making overly prioritizes foreign

has meanwhile been in continuous decline. investors and organized domestic business
Employment has been shifting from agriculture to interests
services as the manufacturing sector has been
unable to absorb more work. The economy has Robust ties between political and business elites
also become a service economy more than a inhibit more aggressive policies for poverty
producing economy, and is disproportionately reduction, equity, and development. Elites still
consumption-driven. Dynamic linkages between exert a powerful influence on the electoral system
sectors and across the regions of the country are and governance structures, which, as a result,
limited. become guided by privileged interests rather
than broader social and public concerns. Short-
In effect, the economy has moved from low- term profits also tend to prevail over strategic
productivity agriculture activities to similarly long-term economic development. Clientilism
low-productivity services, with an overreliance and elite capture of economic policy-making
on overseas work and remittances. These weak hinder policies that remove imbalances in power
economic foundations are the biggest strategic relationships, democratize the distribution of
barrier to poverty eradication. resources, and make governance more inclusive.
Poor development performance is due to The tendency is for policies and laws to favor
liberalization and market-oriented reforms oligarchs or foreign capital in general and, often,
since the 1980s specific business interests at the expense of
3
Executive Summary
the poor majority, domestic capital and smaller decent work are notably lagging behind visibly
enterprises, and national development. The rising corporate profits and growing oligarch wealth.
over-determination of the country’s economic
agenda by an elite of rationally self-interested Current anti-poverty programs
stakeholders further concentrates wealth and
entrenches inequality. Anti-poverty programs are narrowly focused
and disconnected from macroeconomic
Market-oriented social policy and social policymaking
protection are insufficient or ineffective
Far-reaching reforms are needed in the country’s
anti-poverty policies. The most basic modification
The provision of social services and social
is to shift from having a centerpiece anti-
protection are possible and necessary at every
poverty program to making poverty eradication
level of development. However, relatively low
the centerpiece of social, economic, and
levels of public spending have resulted in an
environmental policies. It is particularly crucial to
inadequate public health and education system.
reform macroeconomic policies because these
The drive to commercialize and privatize social
have the farthest-reaching and longest-lasting
service provisioning undermines laws affirming
impact on the livelihoods, incomes, and welfare
the constitutional right of all Filipinos to quality
of the greatest number of Filipinos.
health care and education at all levels.
As it is, ‘anti-poverty’ efforts are conventionally
The country has a long experience with social
conceived as ‘social reform’ programs
protection measures spanning social welfare
dichotomized from macroeconomic policy-
programs and safety nets targeted at the poor and
making, and, furthermore, are distantly
vulnerable, active labor market programs, and the
secondary to this. They are narrowly focused
major contributory social insurance programs.
and micro, individualistic, or targeted in nature.
These are seen as important ‘anti-poverty’
They are in addition commonly fragmented and
measures. Notable among these measures is the
dispersed. Government anti-poverty agencies
Pantawid Pamilyang Pilipino Program conditional
and instrumentalities are moreover detached
cash transfer scheme, which is the largest social
from macroeconomic policy-making and, in
welfare program in the country’s history. The main
effect, perennially relegated to dealing with the
limitation of these measures is being ‘residual,’
effects of poverty rather than its causes.
in the sense of simply mitigating some of the
worst impacts of macroeconomic policies without
addressing the main development strategy that Development ‘plans’ defer to market
lead to job scarcity and poverty in the first place. forces more than plan strategic economic
development
The poor are worst affected by Since the 1980s, the general thrust of
environmental distress development ‘planning’ has been to apply ‘free
market’ principles across the whole range of
The poor are in greater proximity to hazards than
socioeconomic policy-making. This has resulted
higher-income groups and the most vulnerable
in the economy transforming according to market
to the impacts of environmental degradation.
signals and short-sighted profit considerations
Farmers, fisherfolk and indigenous communities
rather than the demands of inclusive and
are the ones most dependent on the natural
sustainable development.
environment and ecosystems for their homes
and livelihoods.
Comprehensive social and economic progress,
Recent rapid growth points to unsound however, requires strategic thinking about the
development fundamentals requirements for agricultural development and
national industrialization beyond the narrow and
The recent episode of rapid economic growth has short-term concerns of markets and private profits.
been stimulated by easy credit, growing debt, As the experience of virtually every developed
overseas remittances, a real estate boom and economy has shown, it is essential to actively
infrastructure spending. Local agricultural and use foreign trade and investment, monetary,
industrial activity, domestic job generation, and exchange rate, financial, fiscal, regulatory, and
4
Executive Summary
even social policies to achieve specific goals that value-added and low productivity activities to
market forces would not on their own result in. mainly high value-added and high productivity
activities. This entails deliberate and explicit
industrial policy aimed at achieving national
Pro-poor development policy and the
industrialization, or the phased development of
way forward Filipino industry towards high labor productivity
and large-scale production of goods and services
A rights-based and social development
with high technological content. This also entails
approach enables a broad understanding of
agrarian reform and rural development to release
poverty
the productive forces in the countryside, expand
Adopting a human rights-based and social the domestic market, and generate financial
development approach allows for a broader resources for reinvestment.
understanding of the poverty problem and of the
correspondingly broad solutions necessary for Macroeconomic policies need to be more
poverty eradication. Poverty may be conceived, balanced, reducing excessive reliance on
as the United Nations Committee on Economic, market forces
Social and Cultural Rights suggests, as “a human
condition characterized by sustained or chronic Nearly four decades of neoliberal market-oriented
deprivation of resources, capabilities, choices, policies have not brought about broad-based
security, and power necessary for the enjoyment development even as wealth has been generated
of an adequate standard of living and other civil, for a minority. The options of greater State
political, economic, social, and cultural rights.” intervention in the market and greater attention
to the domestic economy, rather than foreign
Such a multidimensional view of poverty entails markets, need to be revisited. This will require a
addressing structural inequalities, upholding sustained conscious effort to depart from current
people’s participation, and establishing the neoliberal policy practice and its corresponding
State’s obligations to act on poverty in all the legal and institutional infrastructures.
processes of governing. The rights-based
approach can be the basis for a package of There is a need to recover policy space and
macroeconomic and social policies that are assert independent foreign economic policy.
coherent, mutually reinforcing, and aligned International trade and investment agreements
with short- and long-term national development may be reviewed if they limit the country’s policy
goals. The 1987 Constitution already provides a space and inhibit agricultural development and
framework on addressing poverty consistent with industrialization. Foreign investment needs to
the rights-based approach. be better regulated to play its role in developing
domestic industrial, agricultural, and even service
Agrarian reform and national capacities. A large number of developed and
industrialization are necessary for poverty developing countries, including trading partners
eradication or neighbors in the region, have already started
to roll back from aggressive liberalization in
The long-term basis of Philippine development
previous decades.
lies not just in growth but in the structural
transformation of the economy, including
Other important domestic measures may also
agriculture but especially industrial production,
be considered, including greater state regulation
where the country: 1) uses its natural resources
and control of finance; more progressive taxation;
to create decent work and increase incomes for
greater investments in physical infrastructure;
the majority of Filipinos in a sustainable manner;
and more far-reaching income, wealth and asset
2) generates an economic surplus for the public
reforms.
sector’s needs, including the provision of social
and economic services, and for reinvestment in Comprehensive, universal, and transformative
the economy; and 3) distributes the benefits of social policy is needed, including the
growth under more equitable economic relations. establishment of a social protection floor
The share of domestic agriculture and Filipino Developing the productive economy, however,
industry in the economy needs to increase, is not enough, and a comprehensive, universal,
and the economy has to move from largely low and transformative social policy also has to be
5
Executive Summary
enacted. Ensuring social services and social sickness and health care benefits, maternity
protection for all Filipinos needs to be intrinsic to benefits, disability benefits, old-age benefits,
the strategy for development. These are important unemployment benefits and the like.
to directly and immediately ensure improvements
in the welfare of the people. The improved Reforms are possible with improved governance
physical and mental well-being of people also has and greater people’s participation to build
the beneficial effect of improving the workforce’s constituency for change
productivity and further boosting the economy.
The autonomy of the State from corporate and
Measures that may be considered include: particularistic influences to forge, implement, and
significantly raising the budgetary allocations for enforce a national development strategy should
education and health, including providing policy be strengthened. Areas for reform in governance
support for innovation to resolve the technical include: reforming the political party system and
issues and challenges facing these sectors; election process; reforming the justice system and
reviewing the policy of increasing reliance on its institutions; and strengthening transparency
the private sector, which makes social services and accountability.
less accessible to the poorest segments of
society without necessarily improving quality; Building consensus on reforming the direction
and ensuring the universal character of social of social and economic policy-making will
protection grounded on the notion that access to not be easy but the human cost of continued
social protection is a right, not charity. underdevelopment is simply too high. Corporate
and business elites promote policies in their
It is also important to gradually and progressively favor but which may have perverse social and
establish a social protection floor as a step to development outcomes. More active citizenship
achieving universal social protection. This set is an important countervailing force that can be
of basic social security guarantees comprises promoted by further developing mechanisms
access to essential health care and basic income for people’s participation; strengthening local
security for children, persons of working age in government capacity to undertake development
vulnerable circumstances, and older persons. initiatives; and protecting the rights of civil society
It may also include child and family benefits, groups and other non-state organizations.
6
R ecent improvement in the growth of gross

domestic product (GDP) and GDP per
capita fuels the perception that the Philippines is
Still, it is alarming that the country’s average of
just 1.4% growth in GDP per capita from 1981 to
2016 is less than half the 3.3% average rate over
developing. GDP estimates the general level of the same period for the East Asia and Pacific
economic activity in the country, while GDP per Region. As a result, GDP per capita has not only
capita, by dividing total national output by the been much lower than the regional average,
growing population, gives an approximation of this but also falling further behind with time (see
activity relative to the expanding population. chart 3).1 This is notwithstanding the apparent
improvement in the period 2001-2016 where
The Philippine economy has been generally Philippine GDP per capita grew at 4.4% versus
expanding over its entire post-war history, albeit 3.7% for the region.
slowly, with GDP per capita growing at an average
rate of 1.9% since 1950 (see charts 1 and 2). This
Yet while giving an indication of the economy
economic expansion became noticeably more
as a whole, GDP and GDP per capita say little
volatile since the 1980s, with the country’s initial
about the extent of poverty in the country. A
episodes of extended recession and stagnation only
happening in 1983-1985 and 1991-1993. The period better picture is formed by looking at household
since 2010 has meanwhile seen the fastest growth incomes, conditions according to key social and
in the country’s history. By 2016 the economy was non-economic indicators, and the specific issues
already 19 times bigger and GDP per capita nearly faced by major groupings of poor or otherwise
three-and-a-half times larger than in 1950. vulnerable Filipinos.
Chart 1. Gross Domestic Product (GDP) Per Capita Growth, 1951-2016 (%) Looking at these shows that the
Chart 1. Gross Domestic Product (GDP) Per Capita Growth, 1951-2016 (%) Philippines still exhibits many
8.0
of the symptoms of poverty
and underdevelopment: low
6.0
and insecure incomes; lack of
4.0 decent work; lack of education;
2.0 insufficient nutrition and poor
health; poor housing (including
0.0
lack of access to clean water,
1951
1955
1959
1963
1967
1971
1975
1979
1983
1987
1991
1995
1999
2007
2011
2015
2003
(2.0) GDP per capita

sanitation, and electricity); lack of
%
(4.0) assets and inadequate livelihood

(6.0)
opportunities; vulnerability;
exploitation; and even violence.
(8.0)
Improvements have been
(10.0) incremental, disproportionate to
(12.0) the increasingly rapid growth in
Source: GDP data from Philippine Statistics Authority, population data from International Monetary Fund
International Finance Statistics the last decade, and historically
even weaker than in other
Chart 2. Gross Domestic Product (GDP) Per Capita, 1950-2016 (Php)
Chart 2. Gross Domestic Product (GDP) Per Capita, 1950-2016 (Php) countries of the region. The
90,000 accumulation of wealth by an
80,000 elite few amid these conditions
70,000
only highlights the development
failure and structural nature of the
60,000
problem.
50,000
Php
40,000
The Philippine Statistics Authority
30,000
GDP per capita (PSA) estimates the country’s
20,000
10,000 1 Computations on data from

the World Bank’s World Development
0 Indicators at http://databank.worldbank.
2001
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2004
2007
2010
2013
2016
org/data/reports.aspx?source=world-
Source: GDP data from Philippine Statistics Authority, population data from International Monetary development-indicators
Fund International Finance Statistics
7
50-60 million) in varying conditions of deprivation

It can be reasonably argued that and vulnerability.
over one-fifth of the population is in
extreme poverty – or some 22 million,
Income poverty
corresponding to official poverty
estimates – and perhaps half to The number of Filipinos that the PSA counts
three-fifths (some 50-60 million) in as officially poor using income measures
varying conditions of deprivation and is a convenient starting point for estimating
vulnerability. poverty.5 Income measures are incomplete and
unidimensional but are nonetheless a practical
first approximation of poverty and initial indicator
population at 104.9 million (2017), comprising of families’ economic life. Income is strongly
some 22.7 million Filipino families (2015); the correlated with the satisfaction of basic material
average family size is 4.4 persons, with poorer needs, patterns of participation in the sphere of
families generally having more members than production and exchange, and political weight.
higher income families.2 Poverty can and needs It can also be cross-referenced with other
to be understood as having social, economic, meaningful categories such as gender, class,
ecological, and governance dimensions – and location, and the like for further analysis.
even a cultural dimension.3 4 According to these
standards, it can be reasonably argued that Official poverty. The PSA’s latest 2015 Family
over one-fifth of the population is in extreme Income and Expenditure Survey (FIES) officially
poverty – or some 22 million, corresponding to reports 16.5% of Filipino families or 21.6% of the
poverty estimates according to the official poverty population as poor – corresponding to 3.8 million
threshold – and perhaps half to three-fifths (some poor families or 21.9 million Filipinos who do
not have enough income for their
Chart 3. Gross Domestic Product (GDP) Per Capita in the Philippines and
East Asia and Pacific, 1980-2016 (constant 2010 US$) basic food and non-food needs.6
Official poverty incidence has
10,000 declined from 1991 when it was
estimated at 29.7% of families
8,000 and 34.4% of the population. The
magnitude of poor, however, is
6,000
East Asia & Pacific
slightly higher today than the 3.6
US$
Philippines
million poor families and 21.7
4,000 million poor population reported
in 1991.
2,000
Official poverty incidence was

-
generally falling between 1985
1980 1985 1990 1995 2000 2005 2010 2016
and 1997, increased between
Source: World Bank World Development Indicators Database
1997 and 2000, stayed stagnant
between 2000 and 2006, and was
2 The PSA estimated 101.0 million Filipinos and 22.7 falling incrementally between 2006 and 2015 (see
million families in its 2015 Census of Population and
then computed the 104.9 million population in 2017
chart 4). Poverty incidence is estimated using an
for the macroeconomic parameters of the Department official poverty line corresponding to the minimum
of Budget and Management’s (DBM) 2018 Budget of amount needed to meet basic food and non-food
Expenditures and Sources of Financing (BESF).
needs in any given year. In 2015, the national
3 This is already usefully articulated in Republic Act No.
8425 or the ‘Social Reform and Poverty Alleviation
Act’. The law enumerates the dimensions of poverty 5 Official poverty figures are still infrequent – the PSA’s
as the social (i.e., access to basic quality services), benchmark Family Income and Expenditure Survey
economic (i.e., asset reform and access to economic (FIES) is done only every three years while the Annual
opportunities), ecological (i.e., sustainable development Poverty Indicators Survey (APIS) has not been conducted
of productive resources) and governance (democratizing annually. There is also a lag of as much as a year
the decision-making and management processes). before initial FIES results are released.
Income can be understood as one among many means 6 The 2015 FIES results are very unusual in how the
of achieving progress along these different aspects. eventual reported full-year population poverty incidence
4 Among recognized social and economic rights in of 21.6% is much lower than the reported 26.3% in
international treaties and national legal systems are the the first semester. This indicates either a sudden drop
rights to self-determination, work, just and favorable in poverty incidence in the second semester to around
work conditions, unionize, social security, of families to 16.9% (to result in an average for the whole year of
protection and assistance, adequate standard of living, 21.6%), that the first semester figure is overstated, or
food, housing, health, and education. that the second semester figure is understated.
8
Chart 4. Population Poverty Incidence, 1985-2015 (%) poor. Sectoral poverty incidence
has generally been falling.
60
It has been pointed out that the
50 standard of living allowed by
the official poverty line is too
40 1992 low and underestimates poverty
methodology
(IBON, 2011a; Tan, 2015). Among
30 the reasons cited for this are
%
2003
methodology unrealistically low estimates of
20 the subsistence food basket (from
using ‘least cost’ and ‘revealed
10 preference’ approaches) and
the use of an outdated multiplier
Source: Philippine Statistics Authority Official Poverty Statistics to calculate the cost of the
minimum required non-food items
poverty threshold was estimated at Php59.60 per (instead of calculating a budget with updated
person per day or Php21,753 per capita annually, pricing), resulting in a poverty line that does
corresponding to Php9,064 monthly for a family of not meet decent minimum standards for food,
five (see table 1).7 shelter, transportation, utilities, health care, and
education. Among others, this means that the
The PSA estimates regional poverty lines official poverty line does not sufficiently factor in
ranging from the lowest at Php55.40 in Region and underestimates the rising costs of housing,
IV-B-MIMAROPA to the highest at Php68.50 in public transport, water, electricity, health, and
the National Capital Region (NCR). The regions schooling.
with the highest poverty incidence are ARMM
(53.7%), Caraga (39.1%), Region VIII-Eastern With a very low poverty threshold, it is not
Visayas (38.7%), while the regions with the unreasonable to consider official poverty incidence
highest poor population are Region V-Bicol (2.2 as referring only to those in extreme poverty. In
million), Region VII-Central Visayas (2.1 million) any case, it has been found that around nine
and ARMM (2.0 million). Curiously, only 3.9% of out of 10 of these extremely poor households
the population of NCR (494,630) are officially are chronically or persistently poor (Bayuden-
considered poor. Dacuycuy and Baje, 2017a).
Chart 5. Poverty Incidence Among Basic Sectors, 2006-2015 (%)
The PSA also provides poverty
incidence estimates for basic
sectors or sub-groups (see
50
chart 5). By occupation, poverty
incidence is highest among
farmers (34.3%; the PSA does 40
2006
not provide magnitudes) and
fishermen (34.0%), followed 30
2009
by self-employed and unpaid
%
family workers (25.0%) and 20

2012
migrant and formal sector
workers (13.4%). It is also
10
high among children (31.4%), 2015
women (22.5%), youth
(19.4%), and senior citizens -
(13.2%). Interestingly, only
18.0% of the employed, 16.4%
of unemployed, and 11.5% of
urban residents are considered
7 The national poverty threshold is

an average and the PSA’s actual
computations use poverty (and
food) thresholds down to the
Source: Philippine Statistics Authority Official Poverty Statistics
provincial level.
9
The PSA also provides estimates on the richest 1% of families can have monthly incomes
‘subsistence poor’, or those whose incomes of around Php161,319 or more, which is about
are not enough to meet basic food needs – two-and-a-half times the mean monthly income
who can then be considered the poorest of of the tenth decile (Virola et al, 2016). Yet this is
those in extreme poverty. The PSA reports that still only a partial indication of the extremely wide
5.7% of families and 8.1% of the population, variation in income at the uppermost decile, which
corresponding to 1.3 million families and 8.2 does not have the bounded range that the lower
million Filipinos, are food-poor. The subsistence deciles do. Household survey data for instance
threshold was set at an average of Php41.60 per do not reflect the handful of Filipino families with
person per day or Php6,329 monthly for a family monthly incomes of up to Php7-8 million, or over
of five (see table 1). a hundred times the mean monthly income at the
already highest tenth decile.
Distribution. The latest FIES reports the monthly
income of the country’s 22.7 million families Alternative measure. From a policy-making
(see table 2). The average monthly incomes of perspective, the determination of how many poor
families within the first to sixth deciles (poorest Filipinos there are is a political choice – not in the
60%) fall between Php7,167 and Php18,167, sense of arbitrariness or lack of objective basis, but
while for families within the seventh to tenth in the sense of expressing the government’s target
deciles (richest 40%), between Php21,583 and group for poverty eradication. Looked at in this way,
Php65,500. However, the FIES survey method the ‘poor’ can be considered as that portion of the
and this presentation by deciles do not capture population who are assessed to be either below,
the very small and very large incomes at either or vulnerable to easily falling below, the minimum
end of the scale.. Elsewhere, and still using FIES standards along one or more of the various core
household data, it has been estimated that the dimensions of well-being.
Table 1. Poverty indicators by region, 2015

Poverty Subsistence
Annual Families Population Annual Families Population
Region per capita Poverty Magnitude Poverty Magnitude per capita Subsistence Magnitude Subsistence Magnitude
poverty incidence incidence food incidence incidence
threshold (in %) (in %) threshold (in %) (in %)
(Php) (Php)
Philippines 21,753 16.5 3,746,513 21.6 21,927,009 15,189 5.7 1,303,549 8.1 8,225,722
NCR 25,007 2.7 80,246 3.9 494,630 17,462 0.4 12,118 0.7 82,747
CAR 21,770 14.9 59,759 19.7 351,590 15,274 4.8 19,200 7 124,763
Region I 20,488 9.6 112,233 13.1 671,087 14,124 2.2 25,636 3.4 172,095
Region II 21,860 11.7 95,367 15.8 553,616 15,118 1.8 14,770 2.6 91,001
Region III 23,200 8.9 223,684 11.2 1,242,071 16,132 2.3 57,507 3 337,562
Region IV 22,121 15,303

Region IV-A 20,224 6.7 216,461 9.1 1,287,966 14,092 1.6 51,390 2.3 330,699
Region IV-B 21,476 17.4 121,283 24.4 754,222 14,994 5.9 41,132 8.9 274,684
Region V 21,070 27.5 346,965 36 2,172,415 14,728 8.2 103,860 11.8 714,681
Region VI 21,914 16.6 281,826 22.4 1,728,397 15,357 4.8 81,365 7.3 559,183
Region VII 21,304 23.6 394,336 27.6 2,057,479 14,957 9.8 164,496 11.9 884,177
Region VIII 20,925 30.7 299,897 38.7 1,756,744 14,737 12 116,761 16.5 750,583
Region IX 22,345 26 214,011 33.9 1,274,657 15,739 9.2 75,722 13.3 498,897
Region X 22,754 30.3 311,552 36.6 1,720,472 15,860 13.8 141,640 18.1 850,858
Region XI 21,025 16.6 192,449 22 1,092,200 14,593 5.2 60,016 7.5 374,332
Region XII 22,570 30.5 321,286 37.3 1,716,649 15,720 15.5 163,869 20.4 939,476
Caraga 21,563 30.8 178,160 39.1 1,062,312 15,421 12 69,406 16.8 456,930
ARMM 21,753 48.2 296,999 53.7 1,990,503 17,462 17 104,661 21.1 783,054
Source: Philippine Statistics Authority Official Poverty Statistics of the Philippines
10
The official poverty incidence estimate can be million). Households in the ninth decile and most
used as an initial calculation of those without even of the tenth decile with monthly incomes between
the minimal income needed to attain the most Php30,834-83,333 can be considered the upper-
basic material needs – this yields a figure of some middle income group, constituting 17% of families
22% of the population as a starting point. As will (3.9 million). This ‘middle class’ of some 8.6 million
be taken up later, many families still live in poor families, however, still encompasses a wide
housing conditions in terms of size, unsafe water range of family incomes and does not necessarily
sources, and unsanitary waste disposal – covering imply that all within it have the conveniences and
around 36-49% of families. This is consistent with luxuries conventionally associated with being
self-rated poverty results from the Social Weather ‘middle class’, especially those within the seventh
Stations (SWS), which show an average 50% of and eighth deciles.
families rating themselves as poor in 2015 (an
estimated 11.0 million families) (SWS, 2017).8 The remaining uppermost fraction with monthly
incomes over Php83,334 (Php1,000,000 and
From a policy-making perspective, above annually) can be considered the high-
the determination of how many poor income group – constituting just 2.4% of families
Filipinos there are is a political choice (546,000). This includes the richest 0.12% or
27,000 families with monthly incomes over
– not in the sense of arbitrariness or
Php250,000 (Php3,000,000 and above annually).
lack of objective basis, but in the sense The handful of super-rich in the country with
of expressing the government’s target monthly incomes reaching as high as Php7-8
group for poverty eradication. million or even higher are not captured by the
household-based FIES but should be considered
Building on this, it is not unreasonable to consider among this high-income group.
the first five or even six income deciles as an
initial approximation of low income and, in effect, Table 2. Mean and Median Family Monthly Income by
comprise poor households who need to be raised Per Capita Income Decile, 2015
to more decent levels of income and welfare. In Monthly income
2015, the poorest 50% of families (11.4 million Mean Median
families) are those with monthly incomes of no
Philippines
more than Php15,000 (less than Php180,000 22,250 15,000
annually) (see chart 6).9 The poorest 60% of First decile 7,167 6,917
families (13.6 million families) meanwhile are those Second decile 9,500 9,250
with monthly incomes of no more than Php18,333
Third decile
(less than Php220,000 annually) – this cut-off 11,083 10,583
level is only a little over double the official monthly Fourth decile 13,000 12,417
poverty threshold for a family of five (Php9,064),
Fifth decile
and still just allows for a low standard of living with 15,167 14,250
continued insecurity and vulnerability. Sixth decile 18,167 17,000

Seventh decile 21,583 20,417
Households in the seventh and eighth deciles
Eighth decile
with monthly incomes between Php18,334- 26,667 25,417
30,833 can be considered the lower-middle Ninth decile 34,583 32,417
income group, constituting 21% of families (4.7 Tenth decile 65,500 54,333
Source: PSA
8 SWS’s self-rated poverty surveys also have the advantage
of being more frequent than official poverty surveys as
they are conducted two to five times annually. Their results
consistently register higher levels of poverty than official Inequality
estimates. Moreover, their results more or less followed
official poverty trends from 1985 to 2002: poverty
incidence was generally falling from 74% in 1985 until
The unequal distribution of income among the
59% in 1997 and increased after 1997 to as much as population is an important aspect of the country’s
63% in 2002. This however fell significantly to 51% in underdevelopment that cannot be dismissed as
2004, stayed around an average of about 51% between
2005 and 2014, then dropped incrementally to 50% in
natural or inevitable. Income is distributed among
2015 and then 44% in 2016. Self-rated poverty is at an the population according to economic structures
average of 47% so far in 2017 – the average of their and practices that result from an existing set of
results for March (50%, estimated 11.5 million families) policy choices, and policy choices can always be
and June (44%, estimated 10.1 million families).
changed.
9 Computation on more detailed 2015 FIES income data
provided by PSA.
11
Chart 6. Number of Families by Income Class, 2015 (‘000) For instance, those working
in agriculture, fishing, and
in household work will be
3,500,000 - 3,999,999 among the lowest groups,
1,000,000 - 1,499,999
while those working in
finance, insurance, and
950,000 - 959,999
other professional sectors
900,000 - 909,999
will likely be among the
850,000 - 859,999 higher-income groups.
800,000 - 809,999 By occupation, farmers,
750,000 - 759,999 fishermen, laborers, and
700,000 - 709,999
unskilled workers will be
among the low-income
Annual Income (Php)
650,000 - 659,999
groups, versus corporate
600,000 - 609,999
executives and government
550,000 - 559,999 officials who will be in high-
500,000 - 509,999 income groups.
450,000 - 459,999
400,000 - 409,999 There is also a specific

350,000 - 359,999 pattern within sectors or
300,000 - 309,999
industries. A rice farmer
will likely be low-income,
250,000 - 259,999
rice traders in the middle
200,000 - 209,999
class, and owners of
150,000 - 159,999 the big retailers and
100,000 - 109,999 wholesalers among the
50,000 - 59,999 rich. Most employees of
Under 10,000
any telecommunications or
power firm – which cannot
0 200 400 600 800 1,000
but be very large – will be in
Magnitude ('000) the lower or middle income
Source: Philippine Statistics Authority groups, while their CEOs
will likely be among the
Household surveys. Chart 6, which divides super-rich. Income disparities here indicate room
the population by annual household income in for redistribution within sectors or industries.
increments of mostly Php10,000, underscores
the extremely uneven distribution of income in
the country. The majority of the population (some The unequal distribution of income
50-60%) are concentrated at very low income among the population is an
levels. There is in effect a rapid narrowing of important aspect of the country’s
opportunities around the lower-middle income
group, and especially around the upper-middle-
underdevelopment that cannot be
income group, with markedly less and less dismissed as natural or inevitable.
households able to attain higher increments
of incomes. The narrowing is particularly
pronounced at the Php1-1.5 million annual The Gini coefficient (or Gini ratio) is the most
income brackets which seems to indicate entry commonly used summary measure of income
into a distinct upper class in the country (which inequality, expressed as a value between zero and
was called the high-income group above). 1 where a higher ratio indicates higher inequality.
The Philippines’ Gini ratio increased within the
The low, middle, and high income groups overlap period 1985 to 1997 and then fell until 2015 to a
with the economy’s different sectors, occupations, ratio slightly lower than in 1995, which indicates a
value chains within and across industries, and marginal improvement (see chart 7). This, however,
even specific firms. There are however specific needs to be interpreted carefully. As a measure of
patterns that point to how seeking inclusivity relative income inequality, the Gini ratio does not
means preferring certain sorts of sectors or reflect how a large portion of the population has
industries more than others as well as being low or insufficient absolute levels of income (i.e.,
conscious to distribute gains among linked are at similarly low levels of income). It is based on
economic activities and within enterprises. household surveys that under-represent the very
12
richest and very poorest, and reflects only income the estimated average monthly equivalent pay
and not wealth or assets, the accumulated unequal of a top executive of Metro Pacific Investment
distribution of which over time likely means much Corporation (Php7.9 million), Meralco (Php7.8
greater inequality. million), Ayala Corporation (Php6.9 million),
and San Miguel Corporation (Php5.9 million)
(Entrepreneur Philippines, 2017).
Chart 7. Gini Coefficient, 1985-2015
This situation of a very
0.5
wealthy few contrasts
0.4872
starkly to that of the rest of
0.49 the country’s 104.9 million
0.48
0.4822 population. The Php7.9
0.468 million monthly pay of a
0.47 0.4641
0.4605 single top executive, for
0.46 0.4605 instance, is over 1,100
0.45
0.4466 0.458 Gini coefficient
times as large as the lowest
0.4507 monthly median income of
0.44 0.4466
0.4439 Php6,900 reported by the
0.43 FIES – which, in effect, is
0.42
the same as saying that a
1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 single top executive earns
as much as 1,100 of the
Source: World Bank World Development Indicators Database country’s poorest families
Chart 8. Share of Total Income Per Decile, 1985-2015 (% of total)

The changes in income distribution 100%
summarized by the Gini coefficient can also
be seen in the distribution between income
deciles (see chart 8). Between 1985 and 90%
2015, the share of income of the poorest
half of the population increased slightly
from 20.3% to 25.2% or by 4.9 percentage 80%
points, with a corresponding decline in the
share of the richest half. The share of the
poorest 60%, meanwhile, increased from 70%
27.6% to 33.3% or by 5.7 percentage points. Tenth decile
The ratio of the income of the richest half to Ninth
the poorest half also decreased from being 60%
Eighth
almost four times (3.9 times) larger in 1985
to only three times larger in 2015. Seventh
50% Sixth
%
This can be interpreted as a slight Fifth

redistribution of income from households
Fourth
in the higher deciles to those in the lower 40%
– specifically from the highest two deciles, Third
whose share in income decreased by 7.1 Second
percentage points between 1985 and 2015, 30% First decile
to the lowest eight deciles. Nonetheless, in
2015, the top 20% of families still accounted
for 45.0% of total income while the bottom 20%
20% only accounted for 7.5%.
Other indicators. This household survey- 10%

based data can be supplemented with more
specific observations from other sources.
The mean monthly incomes of Php65,500 of 0%
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
2015
the top 10% and Php161,319 of the top 1%

mentioned above, for instance, pales beside Source: Philippine Statistics Authority Official Poverty Statistics
13
combined or as much in a month as a poor family also passively increase from market movements
does over three years. unconnected to any work-related activity of their
owners, and only the highest income groups
The dramatic inequality in the country can also benefit from this.
be seen in other ways. Although not strictly
comparable, it is striking that in 2015 the Social indicators
combined net worth of just the 15 richest Filipinos,
amounting to US$57 billion, is equivalent to the There are other aspects to consider aside from
combined income in that same year of the poorest income when assessing the extent of poverty.
76 million Filipinos (Php2.6 trillion).10 Many of them are correlated with incomes and
wealth but deserve specific attention because
The magnitudes of net worth of the richest Filipinos they are by themselves important indicators of
are in fact comparable in value to the output in welfare. Government spending on health and
an entire year of the country’s administrative education has been increasing and its social
and economic regions. In 2016, if the five richest protection program has greatly expanded in
Filipinos were compared to regions and their recent years; results, however, have been
net worth to regional GDP, Henry Sy (net worth uneven, and gaps still remain.
Php643 billion) would be the fifth biggest region,
John Gokongwei (Php319 billion) the 11th biggest, Education. Increasing government spending
and then the Aboitiz family (Php235 billion), Lucio on education aims to increase access to and
Tan (Php230 billion) and George Ty (Php216 improve the quality of education. There is steady
billion) the 17th to 19th biggest regions.11 Their improvement in standard education indicators.
respective individual net worths are even larger The mean years of schooling have improved
than the regional GDP of Region IV-B-MIMAROPA noticeably from 8.2 years in 2010 to almost 9.4
(Php211 billion), Region XIII-Caraga (Php168 years in 2015 (UNDP, 2016). Elementary and
billion) and ARMM (Php104 billion). secondary achievement rates however stayed
low – indicating the low quality of education –
The current tendency appears to be of worsening from lack of teacher competencies, high student-
inequality. In the rapid growth years between teacher ratios, lack of basic educational facilities,
2010 and 2015, the total net income of the and poor quality of classrooms (NEDA, 2017).
country’s top 100 corporations grew by 103%,
the top 1000 corporations by 41%, and all 269 Cohort survival rates improved significantly
stock exchange-listed firms by 33%. In contrast, between school year (SY) 2011-2012 and
the real value of the average daily basic pay grew SY 2016-2017: from 73.5% to 94.2% at the
by only 5.3%, and the real minimum wage in NCR elementary level, and from 78.8% to 84.6% at
by only 6.5% (IBON, 2016b). the secondary level (see chart 9). Dropout rates
likewise improved: from 6.4% to just 1.4% at the
In any case, income-based measures paint an elementary level, and from 7.8% to 5.6% at the
incomplete picture of inequality in the country. secondary level (DepEd, 2017).
The ownership of household assets and
especially the distribution of productive assets
are very relevant. These are direct indicators of
Unfortunately, the Philippines has
current welfare or material security as well as key generally been able to spend only the
indicators of the availability of opportunities and equivalent of less than 3% of GDP on
of income-generating capacity. Unfortunately, education since the 2000s, compared
asset-related data from household-based and to regional neighbors which spent the
other official surveys remains sketchy. equivalent of between 3-8% of GDP.
Nonetheless, it is very likely that inequities in
asset distribution are even much starker than in Household economic conditions are a strong
incomes. Assets are accumulated from purchases determinant of school attendance. Nevertheless,
and from savings of unspent income. The values public spending on education seems to help in
of financial and tangible assets can however improving school attendance, with trends in the
net enrolment rate at the primary level historically
10 Net worth data from Forbes.com Philippine billionaires list, following trends in the share of public expenditure in
and income data estimated from 2015 FIES. the education sector (Albert and Raymundo, 2016).
11 Net worth data from Forbes.com Philippine billionaires
list, and regional GDP data from PSA. Unfortunately, the Philippines has generally been
14
Chart 9. Primary and Secondary Education Indicators, SY 2007-2008 to also illustrate the social
SY 2015-2016 (%) determinants of nutrition
outcomes, where household
100
poverty is a major factor
90 Primary - Net
enrollment rate behind poor nutrition that,
80
Primary - Cohort say, feeding programs only
70 survival rate mitigate rather than resolve.
60 Secondary - Cohort
Rate (%)
50 survival rate
40 A 2015 Food and Nutrition
Secondary - Net
enrollment rate
30 Research Institute (FNRI)
Secondary - Dropout
20 rate survey reports that child
10 stunting remains prevalent
Primary - Dropout
rate in the Philippines. In 2015,
-
three of every 10 Filipino
children under age five, or
about 3.8 million children,
School Year
have stunted growth due
Note: Data for Secondary level beginning SY 2012-2013 refers to Junior High School. to suboptimal health and
Source: Department of Education nutritional conditions. The
income dimension is also
able to spend only the equivalent of less than 3% stark where almost half of the children (49.2%) in
of GDP on education since the 2000s, compared to the lowest wealth quintile are stunted compared
regional neighbors Malaysia, Singapore, Thailand, to 14.8% in the highest wealth quintile (see chart
and Indonesia which each spent the equivalent of 10). Stunting is higher in rural areas (38%) as
between 3-8% of GDP on education. compared to urban areas (28%) while virtually
the same between males (34%) and females
Low family income is a driver of poor conditions (33%).
among children, especially among working class
and rural households. The PSA estimates 3.8 Recent trends also show that more children and
million children and youth considered as out-of- their families are poorly nourished (NEDA, 2017).
school, consisting of 190,756 aged 6-11, 293,753 The prevalence of underweight children under five
aged 12-15, and 3.3 million aged 16-24. The most increased from 19.9% in 2013 to 21.5% in 2015.
common reasons given for not attending school The proportion of households with per capita
were marriage or family matters (42%), high cost intake below 100% of their daily requirement also
of education or financial concerns (20%), and increased from 66.9% in 2008 to 68.3% in 2013.
lack of personal interest (20%). Among females, These underpin the high prevalence of stunting
marriage or family matters was the main reason and wasting in all regions of the country.
for not attending school (59%), while males cited
lack of personal interest (37%). These likely include Infant mortality and neonatal deaths have been
many of the 1.5 million children working to augment slowly but steadily dropping since the mid-1990s.
insufficient family incomes as estimated
by the PSA, from ages 5-9 years old Chart 10. Prevalence of Malnutrition Among 0-5 year Old
Children, 1990-2015 (in %)
(84,000), 10-14 years old (394,000),
and 15-17 years old (1.03 million) (PSA, 50
2017a). They often work in hazardous
conditions and are vulnerable to abuse.
40
Stunting
Health. Some child and maternal health Underweight
Prevalence (%)
indicators were steadily improving until 30

Wasting
plateauing in the 2000s and worsening
slightly in 2013-2015 (see chart 10). That 20
this decline occurred during the years
that the Pantawid Pamilyang Pilipino
10
Program (4Ps) was greatly expanded,
of which the conditionalities included
child and maternal health, invites -
1990 1995 2000 2005 2010 2015
investigation. The severe inequities
between lower and higher income groups Source: Food and Nutrition Research Institute
15
Maternal mortality however has remained high poorly constructed with makeshift materials –
and has actually been worsening since the mid- and shanties in the countryside. (Tan, 2015). In
2000s, from 63.0 (rate per 100,000 live births) in 2010, about 1.2 million families (6.2% of total
2006 to 73.7 in 2015. (DOH, 2006 and 2015). families) lived in makeshift shanties of less
than five square meters, 2.5 million (12.9%)
Access to health services has potentially increased in makeshift shanties of between 5-9 square
with the reported expansion of Philippine Health meters, and 3.8 million (19.1%) in small shelters
Insurance Corporation (PhilHealth) coverage to of 10-19 square meters – totaling to 7.5 million
95% of the population in 2015, especially for the families (38.1%) living in poor housing (see
poor enrolled in its indigent program, and with table 3). The effect of urbanization is stark
the construction and upgrade of public health in Metro Manila where 763,400 of these 7.5
facilities. The expansion of benefit packages million families are found, and which saw a 61%
especially under the case payment scheme and growth in housing of less than 10 square meters
no-balance billing also aims to reduce out-of- between 2000 and 2010.
pocket expenses.
The 2010 CPH also finds that 35.9% of
Housing. Housing is an important aspect of households obtained their drinking water, and
human development which includes shelter as 39.4% of households their water for cooking,
well as amenities such as water and sanitation, from deep wells, shallow wells, dug wells, and
electricity, and even access to various social and natural sources (e.g. spring, lake, river, rain, etc.)
economic infrastructure. The Housing and Urban (Esquivias, 2016). Although 82% of households
Development Coordinating Council (HUDCC) had water-sealed toilet facilities, this still leaves
estimates a housing backlog of 2,017,909 units 2.5 million households (12.5%) using closed/
as of December 2016, due to unacceptable open pits and other facilities (e.g. pails), and 1.1
housing (799,780 units), doubled-up households million households with no toilet facility (5.6%).
(493,427), and for future/recurrent needs Also, 9.8 million households (48.8% of total
(724,702). Total housing needs are projected households) were still disposing of garbage in
at 6,796,910 units over the 2017-2022 period environmentally unhealthy ways (e.g. dumping in
(NEDA, 2017). pits, burning, feeding to animals).
The PSA’s 2010 Census of Population and These figures are not far from more recent survey
Housing (CPH) finds 4.9 million or one-fourth data. Access to safe water supply and sanitary
of total housing units (25.0%) constructed out toilets has been continuously improving since
of light/mixed or predominantly light materials the 2000s, albeit with large regional disparities
– light materials include wood, sawali, bamboo, (NEDA, 2017). Still, 14.5% of families do not
nipa, cogon and the like – or makeshift and have access to a safe water supply, according to
salvaged materials (Esquivias, 2016). Further, the latest 2014 Annual Poverty Indicators Survey
5,599 households were found to be living in (APIS). Some 5.9% of households do not have
caves, kariton (pushcarts), abandoned buses, access to a basic sanitary toilet facility, and only
and buildings not intended for habitation. 4.4% of households are served by sewerage
systems, according to the latest 2013 National
The 2010 CPH figures have also been interpreted Demographic and Health Survey (NDHS). This
in terms of slum housing – defined as crowded means some 1.2 million households with no
housing with no modern sanitary water and toilet access to safe water and 1.8 million households
facilities, no electrical connection, and being with no access to sanitary toilet facilities.
Table 3. Housing Units by Floor Area in square meters, 2010

Area Total <5 5-9 10-19 20-29 30-49 50-69 70-89
Philippines Total number in (1000) 19,715.7 1,225.5 2,537.6 3,757.9 3,376.6 3,450.4 2,157.7 1,075.6
Number of occupants 4.7 4.3 4.4 4.6 4.6 4.7 4.7 4.6
Percent of total housing units 6.2 12.9 19.1 17.1 17.5 10.9 5.5
Of which, in Total number in (1000) 2,634.4 157.0 215.5 390.9 492.8 535.5 318.9 1,322.0
NCR
Number of occupants 4.5 4.2 4.2 4.3 4.4 4.6 4.6 4.7
Percent of total housing units 6 8.2 14.8 18.7 20.3 12.1 50.2
Source: Tan, 2015 citing Philippine Census of Population and Housing, 2010
16
The availability of electricity has been improving rural traders, and capitalists monopolize not just
since the 2000s although, similarly, with large land but also capital, marketing, infrastructure,
regional disparities and a large number of and other opportunities in the countryside. This
households remain without access. As of July leaves the rural poor with few options than
2016, the Department of Energy (DOE) reports buying overpriced goods and services. They
also become vulnerable to usurious terms on
89.6% of households with electricity which still
production loans, high cost of inputs, land rents,
leaves some 2.4 million households without
and irrigation fees.
electricity, of which 1.3 million are in Mindanao,
714,823 in Luzon and 308,919 in the Visayas
(NEDA, 2017). This situation forces landless
and smallholder farmers, farm
Rural issues workers, and fisherfolk to sell their
labor and produce at exploitative
Over half (56%) of the Philippine population is prices. Landlords, rural traders,
still considered as rural (World Bank, 2017). and capitalists monopolize not just
Rural areas are associated with agriculture or land but also capital, marketing,
resource extractive activities rather than industrial
production or its related services. Access to basic
infrastructure, and other opportunities
social services and infrastructure in the rural in the countryside.
areas also tend to be more difficult. Of a 105
million total population, the rural population in the
The rural poor have also become more and more
Philippines can then be estimated to be up to 57
prone to economic and physical displacement.
million, including farmers, farm workers, fisherfolk,
Agricultural trade liberalization has pressed down
rural odd-jobbers, and indigenous peoples with
farm-gate prices for their produce. Insufficient
insecure livelihoods or otherwise low incomes.
support for agriculture has led to the use of
The major economic issue in rural areas is the agricultural lands for more privately profitable
backwardness of rural production and the resulting purposes – such as real estate developments,
low productivity (outside the hundreds of thousands tourism, renewable power, mining, and other
of hectares of corporate plantations). The greatest commercial projects – and the displacement
pressure on this stems from the finite agricultural of tillers and their families. Large areas of land
land – with the rural population doubling from and water resources have become controlled by
30 million in 1980 to around 57 million today, on foreign agribusiness corporations producing crops
the same 9.7 million hectares of agricultural land and other commodities for export. Some farmers
– and persistent monopolies on land and other groups have criticized government infrastructure
rural assets.12 There are also still considerable projects for bringing about land-use conversion.
landholdings in haciendas, corporate plantations,
Incidents associated with armed conflict disrupt
estates, and real estate land banking.
agricultural production, can result in lost livestock
This is despite decades of consecutive land and and crops, and can damage already scarce
agrarian reform programs since the 1950s. Land rural social and economic infrastructure. Rural
distribution accomplishments are tempered by communities can also suffer losses of painstakingly
anomalous exemptions, administrative over- built social capital in family support networks and,
reporting, and beneficiaries losing land from especially, in community-based organizations
land-grabbing, land conversion, agribusiness that are suspected of supporting insurgents and
venture arrangements (AVAs), and similar become targets of attack or harassment.
schemes. The conduct of a land inventory, as
stressed in the current Philippine Development Ethnic groups
Plan (PDP) 2017-2022, will be extremely helpful
to verify the real extent of land reform. In any The country’s indigenous peoples (IP) and
case, the government has historically given only Moro people include some 157 ethnic groups
a low priority to agriculture as a whole, and to that cumulatively accounted for 14% of the
the majority small farmers in particular who have population in 2010, or around 12.8 million
scant means to become more productive. people consisting of 7.8 million IPs (8.6%) and
5.0 million Moro (5.5%) (Reyes, 2017). Their
This situation forces landless and smallholder special concern is the dispossession from
farmers, farm workers, and fisherfolk to sell their their ancestral lands and territories – with long
labor and produce at exploitative prices and seek histories of land grabbing and displacement –
various non-agricultural odd jobs. Landlords,
and long-standing stereotyping, prejudice, and
12 Data on rural population and agricultural land from PSA. cultural discrimination. Poor IP and Moro people
17
suffer these conditions on top of the other issues those in the lowest income groups being the most
they face as part of the country’s poor majority. vulnerable: low wages, poor benefits, precarious
flexible work arrangements especially through
The IP and Moro people confront foreign and contractualization, hazardous working conditions,
corporate exploitation of natural resources in and constraints on the right to organize and strike.
their communities through mining, logging,
corporate plantations, mega-dams and the like. The real wage of the average Filipino worker
The resulting environmental degradation affects is virtually unchanged from 2001 despite
their livelihoods and welfare, as well as, in some accelerating growth in the succeeding 16 years.
cases, their socio-political and cultural life. The average daily basic pay (ADBP) of wage
Physical displacement in the course of armed and salary workers, computed by deflating the
conflict also often threatens their indigenous nominal daily basic pay by the consumer price
social organizations, culture, and traditions. index (CPI), was Php275 in 2001 and Php278
in 2016 (see chart 11). The ADBP in every year
They are also victims of cultural discrimination, was lower than in 2001 over the entire period
Christian chauvinism, and Islamophobia in the from 2002 until 2015, and only in 2016 was it
national consciousness. Especially in the last marginally higher.
decades, Moro people are vilified as terrorists
or supporters of terrorism. The establishment of Workers share essentially common
autonomous regions and certain measures to concerns, albeit to different degrees:
recognize ancestral lands and territories have low wages, poor benefits, precarious
apparently not been enough to resolve the flexible work arrangements especially
problems.
through contractualization, hazardous
The long history of oppression and discrimination
working conditions, and constraints
has resulted in IP and Moro people suffering on the right to organize and strike.
among the harshest conditions of poverty,
marginalization, and exclusion in the country.
Wage increases have generally been seen
There are significant differences in terms of
as necessary to be minimized in order to
access to education, electricity, safe water, and
avert inflation and job losses, and so as not
sanitation even among ethnic groups, with Moro
to discourage foreign investors. Although
communities apparently worst-off (ibid.).
the mandated minimum wage is periodically
increased, it is still persistently less than half of
Worker concerns the family living wage; the NCR minimum wage of
Php491 in June 2017 is just 43% of the estimated
Workers can be understood in the broad sense family living wage of Php1,130 for a family of six
of people who sell their labor for a living for a (the family wage is computed for six members
given wage or salary, whether in agriculture, to allow for generally larger family sizes at lower
industry, or services. This is more expansive than income levels) (IBON, 2017).
the stereotypical notion of workers as referring to
people who do manual labor for a living such as There are concerns that real wages will become
in manufacturing establishments. even lower with further implementation of the new
two-tier wage system. This seeks to establish the
Understood in that broad sense, there are some first tier of a mandatory ‘floor wage’, eventually
25.2 million wage and salary workers according as close to the poverty threshold as possible, and
to the PSA’s Labor Force Survey (LFS) for 2016 a second tier ‘productivity wage’ that is voluntary
– consisting of 21.9 million in the private sector on the part of the employer. In any case, nearly
and 3.3 million in the public sector. This estimate half of workers (46%) already earn below the
includes workers in both the formal and informal minimum wage and just one-fourth (25%) receive
sectors. A further refinement that can be made the minimum; less than three out of ten workers
is to exclude the 2.1 million household domestic (29%) earn above the minimum (CPBRD, 2013).
workers and other informal sector workers in
private establishments, whose situation can be A major worker issue that has become prominent
very different from being in informal arrangements. over the last three decades is the phenomenon
of labor flexibilization, where employers opt for
All these workers share essentially common short-term and unprotected work arrangements
concerns, albeit to different degrees and with to give the firm flexibility in hiring, firing, and
18
Chart 11. Nominal and Real Average Daily Basic Pay of Wage and Salary Workers, 2001-2016 (Php; real value in 2006=100)
500
400.95
400
300 275.11 278.44

Php
200 222.29 Nominal
100 Real
-
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: Philippine Statistics Authority
compensating workers. These arrangements (agriculture, industry and services); in rural and
have been promoted especially with the use of urban areas; working in enterprises, households,
third-party job or service contracting agencies. or on an individual basis; and across different
The most controversial form is contractualization classes of workers (wage and salary, own
or casualization, but they also include the abuse account, and unpaid work). In particular, it also
of project-based, probationary, casual, seasonal, includes wage and salary workers without written
and apprentice/learner/trainee workers. The contracts, which is presumed to imply vulnerable
widespread flexibilization has also had the effect employment.
of making union organizing more difficult.
The poor in the informal sector are a
The PSA reports on non-regular workers using heterogeneous group but face the same core
establishment data that, being dependent on issues. They are driven into informal sector work
employers’ disclosures, are likely underestimated. due to poor employment prospects and lack of
Nonetheless, the data shows the share of non- access to productive resources. Informal sector
regular workers increasing from around 10% of work generally means low productivity economic
rank and file workers in the early 1990s to 35% activities, low and insecure incomes, weak
in 2014, the latest year for which the data is legal protection, and vulnerability to abuse and
available. Sectors having the largest shares of exploitation.
non-regular work are construction (over 59%),
agriculture (42%), and support services (40%). A large portion of the informal sector poor
consists of the landless and smallholder farmers,
farm workers, and fisherfolk. Informal work in
Informal sector their case includes both the actual farming and
Anywhere from 39% (15.8 million) to as much fishing activities as well as various part-time or
as 77% (31.6 million) of total employed persons seasonal off-farm non-agricultural work.
in the Philippines in 2016 can be considered
as part of the informal sector – understood The remaining (and likewise substantial) portion
for current purposes as being in precarious, of the informal sector consists of individuals in
irregular, or vulnerable employment.13 This is greatly varied work in urban and semi-urban
a heterogeneous group found across sectors settings: small traders, domestic helpers, street
vendors, jeepney and tricycle drivers, construction
13 Estimated using the PSA’s labor force survey results workers, carpenters, plumbers, repairmen, street
for 2016 where informal employment can be taken as cleaners, junk collectors, and recyclers, among
consisting of: own-account workers (12.5 million) and many others; also workers in small-scale mining
unpaid family workers (3.3 million) for a total of 15.8
million; or own-account workers (12.5 million), unpaid
and manufacturing. The informal sector can also
family workers (3.3 million), and 62.7% of the 25.2 million include sections of the formal sector who were
wage and salary workers (15.8 million) for a total of 31.6 been laid off, or whose businesses failed, or
million. This “62.7%” represents the portion of wage and
salary workers with no formal contract or only a verbal
who were driven to informality by personal or
contract, as reported in the NSCB’s latest 2008 Informal catastrophic circumstances, and the like.
Sector Survey (ISS).
19
Informal sector concerns gain particular and machine operators; clerks; and special
relevance with urbanization and the growing occupations.
concentration of the population in a few urban
centers. The PSA’s latest estimate is that 45.3% This is in addition to the unpaid domestic labor
of the country’s population is urban, as of 2010. by women in households, in which they take the
The PSA also reports 33 highly urbanized cities primary responsibility for the social reproduction
in the Philippines as of 2015 – 16 of which are of the workforce, male and female, that generates
in NCR, including Manila which is already the the economic surplus and profits in the economy.
most densely populated city in the world – that This is a huge implicit subsidy to the ‘productive
cumulatively account for some 22 million of the economy’ and especially to the profits of those
country’s total population. Just four metropolitan most benefiting from it. There is also their key role
areas account for 19.6 million or nearly one- in ensuring that their working-class families and
fifth of the entire population: Metro Manila (12.9 communities are able to cope with the inevitable
million), Metro Cebu (2.9 million), Metro Davao episodes of economic distress. Domestic work is
(2.5 million), Metro Cagayan de Oro (1.4 million). a major factor in the lower labor force participation
rates of women (50% in 2015) as compared to
These are millions of urban poor and near- men (77%) (ibid.).
poor looking for livelihoods and needing social
services, as well as confronting the environmental Women also often do not have the same access as
and social stresses of congested urban sites. men to resources and similar work opportunities.
Among agrarian reform beneficiaries, for
Women instance, over the period 2000-2015, only 14%
of recipients of emancipation patents and 33%
Forty-nine percent (49%) of the country’s of certificate of land ownership awards were
population is female (PSA, 2016). The country women, compared to 86% and 67%, respectively,
has a long history of instituting formal measures who were men (ibid.).
to address gender discrimination in the economy
and other aspects of the country’s social and Some key findings of the PSA regarding women
political life. Discrimination against women, in and the economy include: female-headed
any case, remains a somewhat invisible part of households have higher average incomes than
the country’s growth story. male-headed households; poverty incidence
of women-headed households is lower than
Fewer women are part of the labor force than male-headed households; literacy rate among
men, which is an immediate limitation on the women is consistently higher than among men;
economic opportunities available to them. In elementary school completion rates are higher
2015, only half of women (50%) aged 15 years for girls than boys; and high school completion
and over were in the labor force, compared to rates are the same for women and men, but more
almost four out of five men (77%) (Albert and women attained a college-level education (ibid.).
Vizmanos 2017). Unemployment rates are also
higher among women aged 15-24 than among The economic empowerment
men. A slightly larger share of employed women
are in vulnerable employment lacking decent
of women is limited by lesser
working conditions, especially in the informal involvement in paid work – in much
sector. smaller numbers than men – and by
discrimination in terms of wages and
There is the direct greater exploitation of women work conditions.
when they are paid less for similar work by their
male counterparts. For instance, the wage rate
of women agricultural workers is persistently Women are discriminated and sexually harassed
lower than that of men, with women paid Php189 in the workplace and elsewhere. One out of five
compared to men paid Php201 in 2011 (PSA, women (20%) reported experiencing physical
2016). The gross average monthly wage of men violence since they were age 15, including
is higher than that of women in the following 5.6% reporting its occurrence as “sometimes or
occupation groups: service, shop and market often” in the past 12 months, and 4.2% having
sales workers; trades and related workers; experienced physical violence during pregnancy
laborers and unskilled workers; technicians and (ibid.). Violence against women is worst in cases
associate professionals; professionals; plant of their commodification and trafficking – reported
20
victims of trafficking and involuntary prostitution million permanent migrants, 4.2 million temporary
served by the Department of Social Welfare and workers, and 1.2 million irregular workers –
Development (DSWD) have markedly increased where the latter two categories are those usually
over the period 2006-2014. referred to as OFWs. The stock of overseas
Filipinos has grown more or less continuously
The economic empowerment of women is limited since 1997 except for slight declines in 2005,
by lesser involvement in paid work – in much 2008, and 2013, while noticeably increasing after
smaller numbers than men – and by discrimination 2010. This presumably helps to ease pressure
in terms of wages and work conditions. They on domestic unemployment which nonetheless
also face greater difficulty than men in having remains high and increasing (see chart 12).
to address multiple burdens. This has yet to be
fully addressed within the household nor by the The domestic jobs crisis forces millions of
availability of services to ease domestic tasks, Filipinos overseas to earn for themselves and
such as day care centers and laundry services, their families. Filipino migrants comprise a huge
or otherwise obliging private firms to provide part of the global migrant labor force which has
these for their workers. greatly expanded in the last three decades. In
many cases, they receive low wages (relative
Overseas Filipinos to locals), suffer abuses by their foreign
employers, and work in difficult or hazardous
Setting aside important methodological concerns conditions. The situation is worse for the
about under- and over-estimation, official data millions of undocumented workers. There are
indicates anywhere from 2.2 million to as much also serious social costs for families when one
as 5.4 million overseas Filipino workers (OFWs), or both parents are forced abroad to find work
aside from 4.9 million permanent migrants and for extended periods of time.
their families. Correspondingly, anywhere from
2.2 million to as much as 5.8 million families in The domestic jobs crisis forces
the country (around 10-27% of total families) millions of Filipinos overseas to earn
depend on overseas remittances as their main or
supplementary source of income.14
for themselves and their families.
In many cases, they receive low
This establishes OFWs and their families as wages, suffer abuses by their foreign
a significant portion of Philippine society, and employers, and work in difficult or
overseas remittances as a major determinant hazardous conditions.
of household welfare and a major source
of household consumption spending at the
aggregate level of the economy. The economy’s The material benefits for OFW households
dependence on overseas work is even more as well as the macroeconomic benefits from
pronounced when permanent Filipino migrants overseas work, however, raises a dilemma on
are also considered. how desirable the de facto labor export policy is
on balance. On one hand, it does substantially
The PSA’s 2015 Census of Population reported compensate for inadequate work in the country
2.2 million persons, or 3.2% of the household as well as generates foreign exchange to pay
population 15 years old and over, as overseas for imports and outward foreign capital flows. On
workers. The PSA’s Survey of Overseas Filipinos the other hand, its character has changed from
(SOF), using household survey data, similarly being a stop-gap measure to an institutionalized
reports 2.2 million overseas Filipino workers in feature of the Philippine economy, where it is
2016, of which a little over half (54%) are female. already normal for millions of skilled Filipinos to
contribute mainly to foreign economies rather
The latest administrative data from the than the domestic economy, for purchasing power
Department of Foreign Affairs (DFA) meanwhile to be delinked from any domestic production, and
estimates the stock of overseas Filipinos at 10.2 for millions of parents to be separated from their
million in 2013. This number is divided into 4.9 children. Migrant worker groups have also raised
concerns about the fees paid to the national
government and private recruiters in order to gain
14 Data on magnitude of OFWs from Department of access to overseas work, and on the perceived
Foreign Affairs-Commission on Overseas Filipinos
(DFA-COF) and data on remittances as source of uneven support for their rights and welfare.
income from PSA.
21
Chart 12. Number of Overseas Filipinos and of Unemployed Filipinos, 1997-201
5,000
4,000
15,000
3,000
Irregular
Number of unemplyed Filipinos (in '000)

2,000
Temporary
1,000
10,000
Permanent
-
Unemployed
(1,000)
(2,000) Unemployed-
5,000 alternative
estimates
(3,000)
(4,000)
- (5,000)
1997 2000 2005 2010 2013
Note: Author’s calculations for alternative estimates of unemployed from 2008 onwards.
Sources: Commission on Filipinos Overseas Stock Estimate of Overseas Filipinos and Philippine Statistics Authority Labor Force Survey
The SOF reports that Asian countries account for The SOF also reports the average cash
85% of OFWs’ place of work – mainly the Middle remittance by OFWs of about Php12,490 monthly.
Eastern nations of Saudi Arabia (24%), United Arab The average cash remittance of the largest
Emirates (16%), Kuwait (6.4%), and Qatar (6.2%). group in elementary occupations (by unskilled
The largest group of OFWs worked in elementary workers) was Php15,250. The lowest average
occupations (35%), followed by service and sales cash remittance was from craft and related
workers (19%), plant and machine operators and trades workers, who were able to send back
assemblers (13%), and craft and related trades just Php5,710 monthly, while professionals sent
workers (12%) – cumulatively accounting for back the most at an average of Php18,860. The
78% of OFWs. The balance is taken up mainly by 2012 FIES meanwhile reported that 5.8 million
professionals (9.1%), technicians and associate out of 21.4 million families in 2012 received cash
professionals (6.6%), clerical support workers receipts and support from abroad as their main or
(4.8%), and managers (1.5%). supplementary source of income.
22
23
The Roots of Philippine Poverty and Underdevelopment
T he economy has generally expanded with the

growing population, yet millions of Filipinos
still remain poor. This is typically attributed to
and livelihood projects ultimately depends on
the overall economic environment created by
macroeconomic policies. Similarly, while skills
growth as being too slow or, because it has training and education at best determine fitness
been relatively rapid in the last few years, to for available jobs and competition between job-
growth needing to be sustained for longer. The seekers, the availability of jobs in the first instance
persistence of widespread poverty, however, depends on macroeconomic policies.
amid prosperity for a few and worsening
inequality points to deeper defects in the nature
of growth and in how the economy distributes
Production
the benefits of this growth.
The material conditions for overcoming chronic
poverty lie in developing domestic agriculture
The persistence of widespread and industry, the production sectors of the
poverty amid prosperity for a few and economy and the essential foundations for
worsening inequality points to deeper national economic development.15 They are the
most important sectors for job creation, income
defects in the nature of growth and generation, capital formation, and technological
in how the economy distributes the progress. While such economic development is
benefits of this growth. not and should not be made a precondition for
taking measures to achieve progress along the
Poverty persists because of: 1) economic various dimensions of poverty, underdevelopment
backwardness, more specifically the limits what can be achieved over the long-term,
underdevelopment of agriculture and industry; in the same way that higher levels of economic
2) inequitably distributed income, assets, and development will expand what is possible.
opportunities; and 3) inadequate social services
and limited social protection. These result The material conditions for overcoming
from long-standing unreformed approaches chronic poverty lie in developing
to economic policy-making and from weak domestic agriculture and industry,
people’s participation in governance. Moreover, the production sectors of the economy
ecological distress already causes serious
immediate problems, and, if unsustainable
and the essential foundations for
patterns of growth are not changed, will also national economic development.
have adverse long-term consequences.
Unfortunately, overly market-oriented Philippine
These issues deserve elaboration to stress economic policy has not developed these
the gravity of the development problem and to vital sectors, and instead made the economy
underscore the need for far-reaching reforms prematurely service-oriented with an overreliance
beyond conventional ‘anti-poverty’ measures. on overseas remittances and foreign investment.
It is important to see how trade and investment Filipino agriculture and national industry have
liberalization increased international trade in the neither expanded their share of the economy
economy and increased foreign investment, but nor moved from largely low value-added and low
did not develop the national economy of which productivity activities, to high value-added and
the fundamentals continue to deteriorate. high productivity activities.
It is also important to underscore how jobs Yet such a transformation from economic
(and joblessness) are most of all created by backwardness is necessary to put the country
macroeconomic policies. Jobs on a wide scale are on the path of real and sustainable economic
not created by community or livelihood projects
nor determined by skills training or education 15 ‘Industry’ in the government statistical system includes:
manufacturing; construction; mining and quarrying;
levels, and neither are jobs lost primarily by their and electricity, gas, and water (commonly summarized
absence. The success or failure of community as ‘utilities’).
23
development. The production sectors are the domestic demand means that domestic producers
most important fundamentals that need to be face a constricted market which inhibits their
developed. expansion, and which only becomes tighter with
trade liberalization and competition from imported
Growing economy. The economy has been products.
growing but it has not been developing in its
most important and essential aspects. Measured If domestic producers cannot expand, then
by GDP, it has grown over most of its entire domestic production in general also cannot
history with the exception of brief episodes of expand. Thus, it remains backward with low
contraction in 1984-85, 1991 and 1998 (see chart value-added and low productivity – completing
13). Economic growth has also been faster than the vicious cycle of underdevelopment.
population growth resulting in a growing GDP per
capita (see charts 1 and 2). This cycle is reinforced by parallel dynamics
at play. Low productivity and low economic
Economic activity, however, has been expanding surpluses do not just mean enterprise- or firm-
only by just enough to keep the majority on the level limits on reinvestment and remuneration.
margins of subsistence or with just enough to They also mean low amounts of savings for
get by. The decades of growth have not resulted productive reinvestment elsewhere in the
in the high-value production activities needed economy, which further inhibits the expansion of
to create full employment, raise incomes, and domestic production. They also limit the amount
deliver rapid economic progress. On the contrary, of resources that the government can tap and
an inordinate amount of income now comes from mobilize for social and economic spending –
intrinsically low value-added services or artificially which means scarce financing for social services
from abroad, rather than generated domestically. and infrastructure that, again, inhibits the
expansion of domestic production.
Cycle of underdevelopment. Low value-
added and low productivity agricultural and Overseas work and remittances have been a
industrial production results in weak employment partial countervailing factor to this cycle, to the
generation and low incomes. This backward extent that they increase household purchasing
production misses out on market opportunities power and boost domestic demand. But they are
and cannot grow, while the low economic only a very partial positive influence because
surplus created limits reinvestment and potential their contribution is mainly to household income
remuneration for its workforce. and material welfare – and even then only to a
minority portion of the population – and not to
Weak employment generation and low incomes domestic production.
entail correspondingly weak household
purchasing power, which in turn leads to weak Remittances come wholly from work done in
domestic demand for goods and services. Weak other economies and thus do not correspond to
any expansion in domestic
Chart 13. Annual Gross Domestic Product growth, 1950-2016 production or capacity.
(at constant 2000 prices; in %)
Indeed, because domestic
production is backward,
15 it is also likely that a
large part of remittances
is eventually spent on
10
imported products, which
further limits their potentially
GDP growth rate (%)
5
stimulative effect on the local
economy. Overseas work
is essentially an external
- and unsustainable source
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2016 of income that cannot
substitute for real domestic
(5) production.
Backward domestic
(10)
agricultural and industrial
Source: Philippine Statistics Authority National Accounts of the Philippines
24
The Roots of Philippine Poverty and Underdevelopment 25
value-added and more domestically-grounded

Decades of growth have not resulted
Filipino agricultural and manufacturing
in the high-value production activities enterprises.
needed to create full employment,
raise incomes, and deliver rapid Backward production, high unemployment.
economic progress. On the contrary, The operation of this cycle is evident in economic
an inordinate amount of income trends since the country’s flag independence
now comes from intrinsically low in 1946. While the structure of production and
employment of the economy has changed over
value-added services or artificially the last 70 years, the essential transformation
from abroad, rather than generated necessary to break free from the vicious cycle
domestically. of underdevelopment and chronic poverty has
yet to occur.
production has further undesirable implications
beyond keeping the country trapped in a The cycle has persisted even with changing
cycle of underdevelopment. The first is that economic policies. Economic protectionism
underdeveloped domestic industry results in a and import-substitution policies were dominant
disproportionate amount of the country’s natural from the 1950s until the early 1970s. Greater
resources being used by foreign economies, economic openness and liberalization started
rather than developed by Filipino producers. slowly in the early 1970s, greatly accelerated at
This includes food commodities, agricultural raw the beginning of the 1980s, and has been more
materials, and raw metallic minerals exported and more widely implemented from the 1990s
for industrial use, as well as natural gas and oil until the present.
exploited by foreign firms locating in the country.
Abstracting from specific administrations, there
The second is that a disproportionate amount of the are two distinct periods in the country’s economic
labor force is likewise used by foreign capital and history each spanning more or less 35 years:
economies rather than mobilized for Filipino-owned the first is the period from 1946 to 1980 and
production. Labor is exported literally in the case of the second is from 1981 to the present. This
OFWs and migrants, but also virtually in the case of periodization coincides with the pronounced shift
workers for foreign firms located in enclave export- to more market-oriented policies in the 1980s
oriented special economic zones (SEZs). and the resulting marked decline in the share of
agriculture and industry upon the implementation
Domestic natural resource and labor potential of these policies.
is in effect exploited by foreign economic actors
either abroad or locating in the country. The global The Philippines seemed to have been on the
experience, however, is that domestic producers traditional path of economic development and
– meaning, in the case of the Philippines, Filipino structural change after post-war recovery from
enterprises and capital – have always served as the late 1940s until around 1980. Measured as
the base of developed economies and have had a share of the economy, production was shifting
the greatest long-term contributions to national from agriculture to manufacturing while the
progress. share of utilities and services remained stable
(see chart 14). This period correspondingly saw
The third implication is that a pattern of production generally decreasing unemployment rates – from
is created where a narrow segment of enterprises the 1950s to the mid-1970s astride the shift to
is able to grow and prosper but is disconnected manufacturing, which peaked in 1974, and despite
from the rest of the economy. This segment is the continuously declining share of agriculture in
composed of domestic big business exporting the economy (see chart 15).
agricultural and mineral resources, partnering
with foreign firms in manufacturing enclaves This trajectory started to change by the mid-
or in providing utilities and services there, and 1970s and the onset of early globalization
benefiting from overseas remittance flows. policies. Manufacturing started to decline while
agriculture continued to fall; services remained
These, however, are activities which are stable while the share of utilities started to
intrinsically low value-added, have little grow steadily. Unemployment rates noticeably
connections to the domestic economy, and stopped improving and the period also saw the
are less dynamic than potentially much higher first major deployments of overseas Filipino
25
workers (although remittances were still very agriculture, construction and mining can be
small and dwarfed by large inflows of recycled considered the economy’s main ‘production
petro-dollar loans). A short infrastructure boom sectors’; trade, finance, real estate, renting and
took place in the late 1970s until the early 1980s business activities, public sector, and other
but did nothing to improve unemployment, which, services as the ‘services’ sector; and electricity,
after flattening out for a few years in the mid- gas and water, and transport, communication,
1970s, soared after 1980. and storage as ‘public utilities’.
The year 1981 was an inflection The shares in the economy of the production
sectors combined and the varied services
point. The economy’s structural combined were each remarkably stable over the
problems intensified as globalization period 1946-1980, averaging 61.4% and 38.6%
policies were more systematically respectively (see chart 16). The major changes
implemented; the decline in that occured over this period were within the
manufacturing which started in the production sectors and the aforementioned shift
mid-1970s continued, as did the fall in from agriculture to manufacturing.
agriculture.
The marked shift in the economy
The year 1981 was an inflection point. The
economy’s structural problems intensified as
from manufacturing and agriculture
globalization policies were more systematically towards utilities and services was
implemented, marking the start of the second clearly accompanied by a marked
period continuing until today. The decline in increase in unemployment.
manufacturing which started in the mid-1970s
continued, as did the fall in agriculture. The slack
from declining manufacturing and agriculture This suddenly and dramatically changed after
was taken up by utilities and services, of which 1981 when production started to drop steadily,
the share in the economy grew at an accelerated and services, conversely, started to rise. The
pace. The share of services, in particular, grew economy reached a historic turning point in the
rapidly from the early 1980s. mid-1990s when services became a larger share
of the economy than all of production combined.
This was due to market forces at work. Local In 1981 these production sectors had a combined
manufacturing could not compete or much less share in GDP of 62.3% versus the balance of
expand in the face of growing imports, especially services at 37.7%. By 2016, the share of the
with weak government support for local industry. production sectors in GDP had drastically fallen
Agriculture meanwhile
Chart 14. Gross Domestic Product (GDP) by Industry Ahare, 1950-2016 (%; at
was fettered by the lack constant 2000 prices)
of agrarian reform and
likewise weak government
support. Utilities and 100%
services, on the other
hand, readily grew from Services
being non-tradable and, 80%
hence, far less exposed

Industry
to foreign competition
60%
since they needed to
be produced within the Manufacturing
%
country.
40%
Non-
The turn for the worse manufacturing
industry
of the economy since 20% Agriculture
1981 is stark. This is
most easily seen with a
modified presentation 0%
of the national income 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2016
accounts. Manufacturing,
26
Chart 15. Number of Unemployed Persons and Unemployment Rate, 1956-2016 (rate in %, magnitude in ‘000)
5,000 13
12
11
4,000
10
9
Unemployment rate (%)

Unemployed ('000)
3,000 8 Number of unemployed

7
Unemployment rate
6
2,000 Unemployment rate-
5 alternative estimate
4
3
1,000
2
1
- -
1956 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2016
Source: Philippine Statistics Authority Labor Force Survey
to 40.1% while that of services correspondingly turbulent final years of the Marcos administration
rose to 59.9%, an almost complete reversal. (see chart 15). Unemployment did improve
slightly afterwards and was improving until 1996.
The secular long-term decline in production Even at its best, however, the unemployment rate
transcends particular administrations and the was still more than double the rates prevailing in
usual analysis of boom-and-bust growth cycles the mid-1970s, when the manufacturing sector
corresponding to presidential terms. The only was at its peak.
consistent explanatory factor over these decades
is the steady and accumulating implementation The apparent correlation between falling
of market-oriented globalization policies, now production and unemployment is also clear when
conventionally referred to as neoliberalism. The the two trends are shown together (see chart 17).
Marcos administration stands out not so much The unemployment rate was generally falling
as causing the economy to deviate from an as production grew (albeit only slightly) in the
imagined development path with its corruption early 1970s, was generally rising as production
and cronyism but, rather, as the initiator of started to fall since the 1980s, and stayed high
globalization policies
that all subsequent Chart 16. Industry Share of Gross Domestic Product (GDP) by Production, 1946-2016
administrations have (%; at constant prices)
followed and deepened
– resulting in greater 70
and greater decline. 59.2
60
The marked shift
48.9
in the economy 50
from manufacturing 40.4 40.1
and agriculture 40
% of GDP
Services
towards utilities and Production
services was clearly 30 35.9 Manufacturing
Public utilities
accompanied by a Agriculture
marked increase 20
7.1
in unemployment. 11.0
The unemployment 10
9.2
rate climbed rapidly 4.9
beginning 1980 until -
19461950 1960 1970 1980 1990 2000 2010 2016
the mid-1980s, during
the global debt crisis
Note: Data for 1946-1997 are at constant 1985 prices and for 1998-2016 at constant 2000 prices.
and in the politically Source: Philippine Statistics Authority National Accounts of the Philippines
27
as production continued to decline from the late income poverty can be further analyzed as likely
1980s until today. This last period was when underestimating the true extent of unemployment
services became a much larger share of the and poverty in the country. Nonetheless, the
economy and also when overseas work started close correlation between these figures supports
to grow rapidly. how any anti-poverty strategy has to give central
emphasis to ensuring that macroeconomic
The number of Filipinos going overseas for work policies create decent work.
started to grow significantly in the late 1980s,
which also resulted in overseas remittances Official poverty incidence and unemployment rates
starting to have a much more significant impact on have historically more or less tracked each other.
the economy (see chart 18). These income flows Unemployment was generally falling between
from abroad started in the 1970s, accelerated in 1985 and 1996, and poverty incidence was
the late 1980s, and became very substantial by likewise falling between 1985 and 1997 (see
the late 1990s and 2000s. This is also reflected in charts 4 and 15). Unemployment, however,
how the equivalent share of remittances in GDP started rising after the 1997 Asian financial crisis
rapidly increased since the 1990s, although it has until plateauing between 2000 and 2007; poverty
apparently plateaued in the 2010s (see chart 19). incidence, in turn, also increased between 1997
In short, overseas work and remittances have and 2000, and then stayed stagnant between
substantially compensated for weak domestic job 2000 and 2006. When unemployment was falling
generation and incomes since the 1990s. incrementally between 2007 until 2016, poverty
incidence was likewise falling incrementally
Unemployment started rising again at the outset between 2006 and 2015.
of the 1997 Asian financial crisis until 2005 (see
chart 15). Unemployment has improved slightly To give a sense of scale, unemployment within
over the course of the succeeding decade, but, this entire period ranged from around 8% to
as mentioned, unemployment by 2016 was still 12%, and poverty incidence from around 22% to
worse than in 1996 and more than double that 50%. The magnitude of unemployment ranged
in the mid-1970s.16 It is notable and indicative from 2 million to 4.5 million Filipinos, while official
of deep structural problems that unemployment poverty magnitude from 22 to31 million.
remains high despite the hailed rapid economic
growth in the period 2010-2016. The main issue here is whether conventional
area-based, sectoral, and focused anti-poverty
High unemployment, chronic poverty. The programs are the most viable and effective
conditions of employment, livelihoods, and work measures for addressing such magnitudes over
have considerable impact on poverty levels. the long term. These programs have historically
The official definitions for unemployment and been very scattered and reach just a few hundreds
of thousands of beneficiaries at a time. This
16 See also discussion on unemployment below about the only changed with the recent massive Pantawid
comparability of official unemployment rates.
Pamilyang Pilipino Program
Chart 17. Industry Share of Gross Domestic Product (GDP) and Unemployment
Rate, 1970-2016 (%) (4Ps) conditional cash
transfer (CCT) program
aimed at reaching over four
70.0 25.0
million precisely identified
60.0 poor households. This
20.0
was the first time that an
Unemployment rate (%)
50.0
Production ‘anti-poverty’ program was
15.0 ambitious enough to try
% of GDP
40.0
Public utilities and and target all the officially
30.0 Services
10.0 identified ‘poor’ households,
20.0 Unemployment rate even if at considerable
5.0 administrative expense.
10.0
0.0 - Yet all these programs,

including the 4Ps, still
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
2015
address only the immediate,

Note: GDP data for 1946-1997 are at constant 1985 prices and for 1998-2016 at constant 2000 prices. Author’s
individual short-term
calculations for alternative estimates of unemployed from 2008 onwards. symptoms of poverty, and
Sources: Philippine Statistics Authority National Accounts of the Philippines and Labor Force Survey
28
Chart 18. Overseas Filipino Worker Deployments (1980-2016) and Overseas The 4Ps most of all is
Filipino Stock (1997-2013) limited in its proclaimed
‘anti-poverty’ objectives by
2,500,000 12,000,000
in effect being a short-term
welfare relief component
2,000,000
10,000,000 of an overall neoliberal
economic strategy that, to
OFW Deployment
8,000,000
1,500,000 OF Stock begin with, cannot create
OF Stock
6,000,000 OFW sufficient decent work in
1,000,000 Deployment the country and maintains
4,000,000 the conditions for chronic
500,000
2,000,000
poverty.
- Structural decline. 0
To
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
summarize, economic
growth has not developed
Sources: OF stock data from Department of Foreign Affairs Commission on Overseas Filipinos and OFW industry or agriculture
deployment data from Philippine Overseas Employment Administration
resulting in weak employment
generation, and, moreover,
not its systemic roots which result in so many employment that is largely informal and poor quality
millions of poor and unemployed to begin with. work. The formal organized sector of the economy,
which has always been a minority share, has been
eroded by the growing informalization of labor
The close correlation between markets. These domestic conditions push millions
unemployment and poverty supports of Filipinos overseas for work.
how any anti-poverty strategy has
The production sectors which accounted for more
to give central emphasis to ensuring or less a constant share of the economy from
that macroeconomic policies create the post-war years until the 1970s have been in
decent work. continuous decline since the 1980s. The structural
problem manifests in low productivity agriculture
The massive 4Ps/CCT program is far and away and industry and their largely diminishing share
the largest anti-poverty measure in the country’s in the national economy.
history, involving
hundreds of billions of Chart 19. Overseas Filipino Remittances, 1980-2016 (US$ million and % of gross
pesos. The supposed domestic product)
improvements in welfare
from marginally higher 30,000 12.0
household incomes and
from improved education
and health outcomes 25,000 10.0
may appear welcome
in themselves. These,
however, do not create 20,000 8.0
jobs at the aggregate
level which raises the
US$ million
% of GDP
concern about their 15,000 6.0

real overall impact as
well their sustainability. Overseas
Other concerns raised 10,000 4.0
Filipino
on the 4Ps include remittances
(US$ million)
needless administrative Share of GDP
expenses, overstated (%)
5,000 2.0
gains, and constraints
due to insufficient public
education and health
- -
infrastructure.
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
Sources: Remittance data from Banko Sentral ng Pilipinas and GDP data from Philippine Statistcs Authority
29
These weak economic foundations are the in manufacturing which confirms the agrarian
biggest strategic barrier to substantial poverty character of domestic production.
reduction. The economy does not create enough
jobs, incomes, and economic surplus, and there The converse of these declines is the hugely
are no dynamic linkages between sectors and increasing service-orientedness of the economy.
across the country. These are not the conditions The service sector increased from 46% of GDP in
for long-term growth and more broad-based 1960 to 57% in 2016, with its share in the workforce
development. more than proportionately increasing from 23% of
total employment in 1960 to 56% in 2016.
Within the production sectors, the share of
manufacturing in the economy grew between These trends imply that employment has been
1946 and 1974, fell between 1974 and 2010, shifting from agriculture to services, with the
then started rising slightly between 2010 and stagnant and even declining manufacturing
2016. The 23% share of manufacturing to GDP sector basically unable to absorb more work
in 2016, however, is still smaller than its historical (see chart 20). The workforce – and by extension
peak of 29% in 1974 and even the 25% share in the economy – has basically moved from low
1960 nearly six decades ago. The sector’s share productivity agriculture activities to similarly low
in employment has actually fallen more than productivity services. In the absence of dynamic
proportionately from 12% in 1960, the earliest manufacturing and agriculture, the majority of
year for which data is available, to 8.3% in 2016. employment is found in low value-added services.
The share of manufacturing in the economy has The Philippine economy is a service economy
basically fallen over the last four decades. It is rather than a producing economy (see chart
also largely at the low value-added end of the 21). Services account for a bloated 57% of
scale, with the few higher value-added activities GDP and utilities for 3.3%, while the production
mainly foreign-dominated and in closed global sectors take up the minority balance of just 39%
value chains. Filipino manufacturing consists (i.e., manufacturing at 23%, agriculture 8.7%,
largely of basic consumer items – mostly food construction 6.4%, and mining 1.0%).
and beverage – at the low end of value-adding
and technology. Foreign manufacturers on the The economy is also disproportionately
other hand account for virtually all relatively high- consumption-driven (see chart 22). Household
end manufacturing-cum-assembly of electronics, consumption boosted by overseas remittances
machinery, equipment, and other capital goods. accounts for 69% of GDP and government
consumption for 11%, while capital formation
Weak economic foundations are the (investments) – which should theoretically drive
biggest strategic barrier to substantial increased productivity – stood at just 27% despite
poverty reduction. The economy does the recent infrastructure drive. Meanwhile, net
exports (exports less imports) are a negative
not create enough jobs, incomes, and
7.6%, which is consistent with the country’s low
economic surplus, and there are no production capacity and hence chronic reliance
dynamic linkages between sectors on imported consumption, intermediate, and
and across the country. producer goods.
These observed weaknesses of domestic Table 4. GDP by industry, 1960, 1980 and 2016
manufacturing have been a point of concern even % of GDP 1960 1980 2016
among mainstream economists for some years Agriculture 21 16 8.7
now, albeit attributed to different reasons (IBON, Industry 33 42 34
2007; Beja, 2012; Usui, 2012; Aldaba, 2013; De
of/w/c manufacturing 25 27 23
Dios and Williamson, 2013).
Services 46 42 57
The share of agriculture in the economy, on the % of total employment

other hand, has been in more or less continuous Agriculture 61 51 27
decline from 21% of GDP in 1960 to 8.7% in 2016, Industry 15 16 18
while its share in employment fell substantially
of/w/c manufacturing 12 11 8.3
from 61% to 27% over the same period (see
table 4). The number of those employed in Services 23 33 56
agriculture, however, is still over three times that Source: Philippines Statistics Authority National Accounts of the Philippines
30
Continuous growth, high unemployment. average of 1.8% in 1981-1990, 2.9% in 1991-

Economic growth has not produced sufficient 2000, 4.8% in 2001-2010, and 6.1% in 2011-2016.
employment for the growing population and
labor force. The annual average GDP growth between
1951 and 2016 is 4.6%, versus annual average
The workforce – and by extension the population growth of about 2.5% over the same
economy – has basically moved from period. Since the economy has been expanding
low productivity agriculture activities at a rate almost twice as fast as the population,
to similarly low productivity services. this in principle means potentially rising incomes
for the whole population. There are however two
important qualifiers to this.
Measured by GDP, the economy grew at an
annual average of 5.8% between 1951 and The first is that the economic growth is actually
1980, including an annual average of 6.4% in not that rapid, considering the very low level of
1951-1960, 4.9% in 1961-1970, and 5.9% in development, incomes, and welfare that the
1971-1980. This excludes the exceptional 17.6% country started from, and the correspondingly
average annual growth in the post-war recovery huge expansion in the economy needed to improve
years 1947-1950 (see table 5). the conditions of the large poor population. This
is where the sources of growth matter because
In the second long globalization period identified, such an expansion can only happen with high
between 1981 and 2016, the economy grew at a value-added and high productivity agricultural
lower annual average of 3.6%, including an annual and industrial production. Low value-added and
low productivity agriculture,
Chart 20. Labor Force Distribution, 1987-2016 (%)
industry, and services
100% cannot deliver the rapid
Not elsewhere economic growth needed
classified for this.
80%
Service
The second is how the
income generated by
60% Non-manufacturing
industry economic growth is not
distributed equally and
%
Manufacturing instead concentrated

40%
in a small minority of
Agriculture the population. Again,
20% here, the sources of
Unemployed growth matter because
agricultural and industrial
0% production that is
1987 1990 1995 2000 2005 2010 2016
domestically-grounded
Year
and interlinked has the
Source: Philippine Statistics Authority Labor Force Survey
potential to distribute
Chart 21. Shares of Gross Domestic Product (GDP) by Industry, 2016 (% of total) gains to more sectors
-631,311
than enclave production
and low value-added, low
productivity services ever
Household Final Consumption can. But this is also where
Expenditure the various institutional
2,274,792
Government Final Consumption structures for distributing
Expenditure the gains of growth
Capital Formation come into play, such
as the division of farm
5,632,776 Net exports (X-M) produce, wages paid,
taxes charged, social
850,146
services delivered, social
protection provided, and
the like.
31
Chart 22. Shares of Gross Domestic Product (GDP) by Expenditure, 2016 (% of total) The disconnect between
growth and employment
Trade and Repair of Motor Vehicles,
Motorcycles, Personal and Household Goods became particularly stark
6.4 1.0
16.8
Real Estate, Renting & Business Activities upon the accelerating
8.7 economic growth since
Transportation, Storage, and Communication
2001, and especially
Financial Intermediation with the acclaimed rapid
growth since 2010. The
11.5 Public Administration & Defense:
Compulsory Social Security economy grew at an
Other Services annual average of 5.3%
23.2 over the period 2001-
Electricity, Gas and Water Supply
7.6
2016 but employment
Manufacturing creation was only at a
little over 2% annually
7.2 Agri., Hunting, Forestry and Fishing
3.3 over the same period. A
10.4 3.9
Construction generous interpretation
would be that productivity
Mining & Quarrying
is increasing with greater
economic output per
employed Filipino. More
importantly, however, it
Table 5. Growth in Gross Domestic Product, 1951-2016 means that employment
1951-1960 1961-1970 1971-1980 1981-1990 1991-2000 2001-2010 2011-2016
is lagging and that one
of the main channels for
6.4 4.9 5.9 1.8 2.9 2.9 6.1
Per decade productivity increases
Per 3 decades 5.8 3.2 6.1 to be shared among
the population is not
4.6
Entire Period functioning.
Source: Philippines Statistics Authority National Accounts of the Philippines
With these qualifiers in mind, it is important The last decades of more or less
to assess how far growth has created quality continuous growth, including the
employment. Decent work is a fundamental –
and arguably the most essential – mechanism for
exceptionally rapid growth since 2010,
growth to translate into poverty reduction. have still not resulted in a domestic
economy creating enough decent work
The last decades of more or less continuous for its expanding population.
growth, including the exceptionally rapid growth
since 2010, have still not resulted in a domestic This weak employment creation results in the
economy creating enough decent work for its chronically high unemployment which is currently
expanding population. This poor employment manifesting as the long crisis of joblessness
generation with low incomes is the biggest factor that started after 1997. The official reported
in the country’s inability to eradicate poverty. unemployment rate in 2016 is 5.4%, which is
unfortunately not comparable with figures before
2005 due to a change in the unemployment
The number of unemployed and underemployed
methodology made before the April 2005 round
Filipinos has been increasing in absolute and in
of the LFS.
relative terms (see chart 23).17 The rapid increase
in magnitudes since the 1980s is clear. In relative
terms or as a share of the labor force, the number It is however possible to generate an
of unemployed and underemployed rose steeply approximate unemployment rate for purposes
between the early 1970s and the mid-1980s, of comparison by recalculating official reported
started to moderate until the early 1990s, and then figures – doing this produces an unemployment
more or less plateaued until today. rate of around 9.0% in 2016 (see chart 15).18
This is at the low end of the 8.8-11.4% range
17 Data was incomplete for 1979. Officially reported figures of unemployment in the period 1997-2016. It
are used except for alternative estimates for the magnitude is an improvement from the peak of 11.0% in
of unemployed in the period 2008-2013 to come up with
results more comparable with previous years. Data for
2014-2016 are incomparable because of disruptions in 18 This methodology was used in, for instance, Table 2.
2014 and 2015 due to Typhoon Yolanda and from new Key Employment Indicators, Annual Average 2010, April
population projections being used starting 2016. 2010 and 2011 of IBON (2011b).
32
Chart 23. Unemployed and Underemployed, 1956-2016 (‘000, % of labor force)
45.0 8,000
40.0 7,000
35.0 Number of
6,000
underemployed
30.0
5,000
% of labour force
25.0 Number of
('000)
4,000 unemployed
20.0 (alternative
estimate)
3,000
15.0 Unemployed +
2,000 underemployed
10.0 as % of labour
force
5.0 1,000
0.0 -
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
Sources: Philippine Statistics Authority National Accounts of the Philippines and Labor Force Survey
2009 after the onset of the global financial crisis, number of OFWs reported deployed consistently
and also below the average annual rate of 10.7% outpaced domestic job generation between 2003
over the period. Even so, it is still higher than the and 2015; there was a slight reversal in 2016.
8.8% unemployment in 1997 at the time of the
Asian financial crisis and still more than double The last two decades have been
the country’s lowest historical unemployment
rate of 3.9% in 1975.
the longest period of such high
unemployment in the country’s history.
The last two decades have been the longest
period of such high unemployment in the country’s
history. This is plausibly already long enough This adverse trend still holds even if the data
to change labor market behavior. The now- from 2014 to 2016 are treated with caution
ingrained orientation to seek work abroad is one because of a number of factors. The data from
example. Another is perhaps how the difficulty of 2014 excluded the January round, and the data
finding work year after year may be increasing for 2015 excluded Leyte, because of disruptions
the number of discouraged workers, or those in the wake of Typhoon Yolanda. Meanwhile,
who stop looking for work out of the belief that the LFS since April 2015 adopted a new master
no work is available. Even if they are out of work, sample design and new population projections.
such discouraged workers are however no longer
counted as unemployed – they are considered, The quality of work also has to be considered
rather, as ‘not in the labor force’ – according to for a fuller picture of the employment situation.
current statistical methodologies which result in In this regard, there are signs that the quality
underestimated unemployment figures.
of work has been worsening at least since the
country’s high growth period for which data is
The weak ability of the economy to create readily available.
employment is underscored by the significant
numbers of Filipinos forced to find work overseas, The real ADBP (2006=100) in the Philippines
whether on a temporary or permanent basis, for has actually fallen between 2001 and 2015 from
lack of viable opportunities in the country. In Php275 to less than Php268 (see chart 11) (PSA,
the 22 years from 1981 to 2002, there were 12 2017d). While ADBP was more or less stagnant
years when the domestic employment generation at low levels in agriculture (Php137), it fell
exceeded the number of OFWs reported as significantly in industry (Php276 to Php251) and
deployed, and 10 years when it was the other way services (Php316 to Php305).
around (see chart 24). The pattern was erratic
with a wide variation in the discrepancy between Informality is another indicator of poor quality
the two. However, in the 14 years since, the work, and, depending on the methodology used,
33
Chart 24. Employment Generation and Deployment of OFWs, 1981-2016 (‘000) attributable to the
economic liberalization
2,500
and market-oriented
structural reforms
2,000 implemented aggressively
since the 1980s. It
1,500 was argued – and
Employment
continues to be argued
Generation
– that foreign trade and
1,000
investment liberalization
Deployed
drives competitiveness,
'000
OFWs
500 efficiency and
development. The
economy has become
-
1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 more integrated into global
import-export chains over
(500) three-and-a-half decades
but has not developed and
(1,000) arguably even regressed.
This is not to argue for
Sources: Philippine Statistics Authority Labor Force Survey and Philippine Overseas Employment Administration closing the economy off
but, rather, for a much
the informal sector of low pay, no benefits, and more calibrated approach in international trade
insecure work still accounts for some 39% to as and investment relations according to mutual
much as 77% of employment in the country. benefit and the evolving capacity of the economy.
These patterns of rapid growth with high The economy’s experience since the 1980s
unemployment and poor quality work show how is clear. Trade liberalization lowered average
growth can be exclusionary, so great care has nominal tariffs for all products from 41% in
to be taken in interpreting growth to also imply 1980 to 28% in 1990, 8% in 2000, 7% in 2010
development. Conversely, they also underscore and about 7% today (see chart 25). The most
how important it is to ensure that growth creates drastic lowering occurred between 1980 and
jobs and raises incomes rather than just increases 2000, particularly during the 1990s. The long-
production and profits. term impact of tariff cuts in the absence of the
economy’s capacity to respond is straightforward
These patterns of rapid growth with – production fell and economic activity shifted to
high unemployment and poor quality services (see chart 26).
work show how growth can be
Investment liberalization meanwhile began in
exclusionary, so great care has to be earnest with the Foreign Investment Act of 1991
taken in interpreting growth to also and other subsequent legislation that allowed
imply development. greater foreign equity participation in erstwhile
closed sectors. Foreign investors were given
liberal privileges and generous incentives
The large and growing stock of Filipinos
including income tax holidays, tax exemptions
unemployed or employed but in poor quality work
and credits, duty-free imports, tax-free exports,
are the stock of core poor in the country. These
simplified customs procedures, exemptions
millions of Filipinos and their families constitute
from local government charges, and other
the bottom majority of the population who are
inducements.
below reasonable income standards to overcome
poverty; they also include substantial numbers
of the poorest of the poor who have seen scant Trade liberalization markedly increased the
improvement over the decades. They are the share in the economy of trade – or combined
millions of Filipinos left behind by the country’s imports and exports – from around 36% of GDP
so-called economic progress. in 1980 to 50% in 2016 (see chart 27). This
includes the rapid expansion of exports and
especially of manufactured exports, which took
Liberalization and underdevelopment. The
up 86% of the total value of commodity exports
country’s poor economic performance is directly
over 2005-2016 (particularly electronics)
34
(PIDS, 2017). It is significant that the generally steadily increased from the equivalent of less than
negative net primary income since the 1940s 4% of GDP in 1980 to a peak of 17% in 2000, then
turned positive in 1990 and then steadily and moderated to less than 13% in 2008. It recovered
rapidly increased to become a significant share rapidly after this and is at a historic high of over
of gross national income – a shift from capital 21% as of 2016.
flight, in effect, to overreliance on overseas work
and incomes from abroad.
The country’s poor economic
Investment liberalization meanwhile markedly performance is directly attributable
increased the share of foreign investment in to the economic liberalization and
the economy. The inward flow of foreign direct market-oriented structural reforms
investment (FDI) in the Philippines has increased implemented aggressively since the
many times over from US$114.0 million in 1980 1980s.
to US$7.9 billion in 2016, and from an annual
average of just US$185.0 million in the period
1981-1985 to US$4.7 billion in 2012-2016 (see The manufacturing sector is historically among
table 6) (UNCTADStat, 2017). The inward stock the single biggest recipients of foreign investment,
of FDI has correspondingly increased many times accounting for almost a third (29%) of annual
over from US$1.3 billion in 1980 to US$64.3 foreign investment flows with identifiable sectors
billion in 2016, with its share in GDP increasing in the period 1999-2016, according to Bangko
six-fold from just 3.6% in 1980 to 21.2% in 2016. Sentral ng Pilipinas (BSP) data. As it is, Php1.39
trillion or over half (53%) of all approved foreign
The greatly increased presence of FDI after 1980 investment in the country in 2000-2015 was in
is clear (see chart 28). The inward stock of FDI manufacturing, according to data from the Board
of Investments (BOI) and the Philippine
Chart 25. Average Nominal Tariffs by Sector, 1975-2016 (%) Economic Zone Authority (PEZA). This
resulted in foreign investors accounting
80 for 70% of all approved manufacturing
70 investment in the country over that period,
60 far outstripping local investment.
Agriculture
50
Mining Yet despite such large manufacturing
40
%
Manufacturing exports and foreign investments in the

30
Overall
sector, there has been deindustrialization
20 with the manufacturing sector actually
10 becoming a smaller share of the economy,
0 from 27% of GDP in 1980 to 23% in 2016,
as discussed earlier. There has been
a virtual contraction in manufacturing
Source: Tariff Commission capacity vis-à-vis the expanding economy
Chart 26. Average Nominal Tariffs and Industry Share of Gross
and population. There has also not been
Domestic Product (GDP), 1970-2016 any real upgrading of the domestic
industrial base even if, for instance, the
70.0 50 share of capital goods in manufacturing
45 has grown markedly from 1980 to the
60.0
40 Production
present. This is because the seemingly
50.0 35
increased domestic production was
largely due to foreign investors producing
30
40.0 electronics and transport equipment for
% of GDP
Tariff (%)
Public utilities and

25 Services
export in manufacturing enclaves.19
30.0
20
20.0 15 Overall Average

Nominal Tariff
10
10.0 19 Computations on PSA data show that the
5 cumulative share of basic metal, metal, machinery,
0.0 0
electrical machinery, and transport equipment (i.e.,
understood as capital goods) rose from 15.2% of
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
the total value of manufacturing output in 1985 to

45.0% in 2010.
Sources: Tariff Commission and Philippine Statistics Authority
35
Chart 27. Shares of Gross National Income (GNI) by Expenditure, 1950-2016 (%) The market-oriented
reforms since the
100% Net Primary Income
1980s have changed
the structure of
80% incentives in the
Imports of Goods and
Non-Factor Services country in favor of
60% continued natural
Exports of Goods and
Services resource-based
% of GNI
40% exports, expansion

Gross Domestic
Capital Formation
of labor-intensive
20%
assembly operations
General Government
Consumption
in manufacturing
Expenditures enclaves for export,
0%
1946 1956 1966 1976 1986 1996 2006 2016 Household Final and eventually
Consumption
even labor export.
-20% Expenditures
Liberalization has
Source: Philippine Statistics Authority National Accounts of the Philippines seen the economy
change in accordance
The trade deficit is also more or less chronic with with static comparative advantage but without
surpluses in only 22 of the past 71 years, 12 years developing Filipino industry that is dynamic in
of which were in or around major economic crises terms of investments, production, and export.
in the mid-1980s and late 2000s (PIDS, 2017).
These deficits are the inevitable result of trade Despite such large manufacturing
openness amid weak domestic production. The exports and foreign investments in the
country is a chronic importer of manufactures for sector, there has been deindustrialization
consumption, for production for the local market,
and as inputs by foreign locators for eventual
with the manufacturing sector actually
export. becoming a smaller share of the
economy.
The large foreign capital flows, especially upon
waves of financial and investment liberalization This is because at the time of liberalization
in the 1990s, also do not seem to have stimulated there were no industries mature or developed
investment. Domestic investment measured by enough to withstand competitive pressures and
gross domestic capital formation has not grown become more efficient, much less develop inter-
– and indeed has even marginally fallen – since linkages into a national industrial ecosystem.
liberalization in the 1990s and the greatest Market signals did not encourage investment in
inflows of foreign investment into the country in domestic production sectors whether agriculture
its history (see table 7). or especially manufacturing.
Table 6. FDI indicators, selected years 1975-2016 With weak government

1975 1980 1990 2000 2010 2015 2016
support, underdeveloped
local manufacturers could not
Inward flow
compete against imports, new
US Dollars at current industries could not emerge,
prices in millions 114 114 550 2,240 1,298 4,937 7,912
and even agriculture could
% of GDP 0.7 0.3 1.1 2.8 0.7 1.7 2.6 not expand significantly. On
% of Gross Fixed the other hand, the utilities
Capital Formation 2.5 1.1 4.4 12.5 3.2 7.9 .. and services sectors grew
Inward stock from being far less exposed
US Dollars at current to foreign competition.
prices in millions .. 1,281 3,268 13,762 25,896 58,522 64,249
% of GDP .. 3.6 6.7 17 13 20 21.2 Non-industrialization. This
Memo item dynamic reflects in the profile
of the country’s oligarchs and
Gross Domestic
Capital Formation biggest capitalists as well as
(% of GDP) 19.2 17.6 14.4 8.9 10.3 11.8 12.9 its micro, small, and medium
Sources: UNCTAD, PSA
enterprises (MSMEs).
Philippine capital, big and
36
Chart 28. Foreign Direct Investment (FDI) Inward Flow and Stock, and Stock as to create value, increase
Share of Gross Domestic Product (GDP), 1980-2016 productivity, and link up
diverse sectors and regions
70,000 25.0 of the economy. The result
is that capital has made
60,000
20.0 profits – enough for a few
50,000
tycoons to be among the
Inward richest in the world – but
stock
15.0 the economy has not
US$ million
40,000
% of GDP
Inward developed.
flow
30,000
10.0 Stock % of
GDPThe situation is basically the
20,000 same at the other end of the
5.0 scale with MSMEs. In 2015,
10,000
according to the PSA, 86%
0 0.0
of MSMEs accounting for
80% of employment were
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
in services consisting of
wholesale and retail trade,
Source: Investment data from UNCTADStat repair of motor vehicles and
motorcycle, accommodation
small, reacted rationally to the risks and returns and food service, information and communication,
from the market-biased liberalized environment finance and insurance, and other service
that neoliberal economic policies created. activities. On the other hand, manufacturing
accounted for only 13% of establishments and
16% of employment; agriculture for 0.9% and
2.2%, respectively; and construction and mining
Liberalization has seen the economy combined for 0.4% and 2.0%, respectively.
change in accordance with static
comparative advantage but without The supposedly high-technology manufacturing
developing Filipino industry that is export sector is conventionally hailed as the
dynamic in terms of investments, leading edge of the modern Philippine economy.
production, and export. The country’s biggest manufacturers, however,
are not Filipino and the biggest exports by value
are not actually exports by Filipino enterprises
The Philippines’ 50 richest tycoons in 2016 are but largely exports of foreign firms located in
disproportionately concentrated in non-production SEZs. While strictly speaking counted as part of
service sectors: real estate (27 tycoons); food domestic manufacturing, these foreign firms are
and beverage, including retailing, restaurants, given so many incentives as to be privileged over
and manufacturing (21); utilities, especially power domestic firms despite being enclave operations
and water (20); financial services (19); leisure that are disconnected from the economy.
and hospitality (17); and retail (16) (Subido,
2017). While a few are involved in manufacturing, The supposedly high-technology
this is still mainly of food and beverage with
none substantially engaged in more advanced
manufacturing export sector is
consumer, intermediate, and capital goods conventionally hailed as the leading
production; a few are into infrastructure (10). edge of the modern Philippine
economy. The country’s biggest
The lack of substantial engagement or investment manufacturers, however, are not
in Filipino agriculture and manufacturing is Filipino and the biggest exports by
conspicuous. The country’s biggest oligarchs and
value are not actually exports by
capitalists went into utilities and services sectors
– where they could be profitable – while avoiding Filipino enterprises.
liberalized and hence riskier production sectors.
The profitable sectors, however, are weak job Thus, the country’s manufacturing exports are
generators and have relatively low dynamism actually a limited source of growth or development
and linkages, compared to the production because they do not stem from upgraded
sectors with greater job generation and potential Filipino production capacity. Agricultural and
37
Table 7. Capital formation, 1946-2015

1946-1950 1951-1960 1961-1970 1971-1980 1981-1990 1991-2000 2001-2010 2011-2015
Capital formation
25.7 19.3 21.8 26.1 22.1 22.5 20.2 21.4
(% of GDP)
Source: PIDS
food commodities which are potentially more the country’s geographical proximity to major
grounded in the domestic economy are a small Asian markets or other regional segments of
minority of exports. their production chains.
The experience with foreign investors engaged Philippine enterprises meanwhile are locked
in export-oriented manufacturing in SEZs is into exporting primary commodities or simple
illustrative. Foreign investors in SEZs appear manufactured products such as food, clothing, and
to be major contributors to employment and furniture. Foreign locators export more complex
revenues for the national government. Foreign manufactures like electronics but even these are
and domestic firms in SEZs employ around 1.4- in simple assembly, processing, and other labor-
1.5 million workers, according to data from PEZA. intensive operations with barely any upgrading
The national government also receives around over decades. Such upgrading by foreign locators
Php1-1.5 billion for corporate income taxes and in the country, however, would still not necessarily
other payments. contribute to national economic development if
the technologies used remain monopolized, and
In the absence of a sound industrial protected by overly deferential foreign investment
policy, the Philippines has not gained policies and by restrictive international economic
any long-term benefits from decades agreements.
of foreign investment, while foreign
The Philippine experience is consistent with
investors have been able to take the critical insight from the experience of
advantage of, among others, relatively other countries, where the import and foreign
cheap skilled Filipino labor and direct investment liberalization has guaranteed
access to mineral resources. neither strong export performance nor even
that strong exports result in industrialization
and growth (Akyuz, 2005). There is likewise
However the majority of their inputs are imported really no conclusive evidence to support the
which means that there is little stimulus given to conventional generalization that FDI makes a
local producers.20 They are given a wide range of major contribution to economic growth, capital
fiscal and other incentives which means reduced formation, technological progress, and structural
contributions to government revenues. They are change (Akyuz, 2015).
not compelled to share production technologies
and retain their technology-based monopolies, The last and lost decades of poor
which means no contribution to Filipino science development performance underscores
and technology. Nor are they obliged to invest in
how the enthusiasm for market-
the local economy, which means no contribution
to domestic financial flows or building domestic oriented openness is misplaced.
capacity.
The last and lost decades of poor development
These are all important elements of sound performance underscores how the enthusiasm
industrial policy. In the absence of this, the for market-oriented openness is misplaced.
Philippines has not gained any long-term benefits Liberalization should have been done not
from decades of foreign investment while foreign recklessly out of faith in the free market but
investors, on the other hand, have been able to gradually and selectively as part of a strategic
take advantage of relatively cheap skilled Filipino policy of national industrialization. Filipino
labor, direct access to mineral resources, and enterprises need to have reached a level of
efficiency and productivity for Filipino industry in
20 Data from the National Statistical Coordination Board (NSCB,
now the PSA) for instance estimates the import content general to develop according to dynamic, rather
of among the country’s top exports in 2010: electronic than static, comparative advantage.
data processing (85.7% import content), semiconductors
(79.7%), and ignition wiring sets (74.0%).
38
Recent growth episode. Recent favorable boost. These first- and second-order effects
macroeconomic indicators have been interpreted stimulated further economic activity and further
as indicating a major structural shift in the breakout economy hype in a limited sort of
virtuous circle.
economy. These however are only due to the
convergence of a number of recent favorable The hailed indicators of a breakout economy
conditions, rather than signs of the start of real and continued underdevelopment are not
structural transformation (IBON, 2016b). inconsistent. The major sources of growth are
externally driven – they consist prominently
Globally, these conditions include the of overseas remittances and BPO operations
exceptionally low global interest rates upon which are dependent on demand and economic
the rounds of post-crisis quantitative easing activity abroad. Low global interest rates are
in the advanced capitalist countries after the also a transitory factor that, moreover, may even
2008-09 global financial crisis. These pressed cause long-term problems if they result in undue
benchmark interest rates down as well as drove accumulation of unpayable debt.
capital to emerging markets around the world,
The internal sources of growth, meanwhile,
are still very weak. Unemployment and poverty
Remittances and BPOs have are high and household incomes low because
consequently been major drivers of of a persistently backward and inequitable
domestic economy; this restricts domestic
service sector growth. Yet the shift to demand. Agriculture remains largely of low
services of the Philippine economy is productivity aside from pockets of capitalist
premature. farms; manufacturing is still a small share of
the economy aside from being shallow for being
overly foreign-dominated and mere segments
including to the Philippines. Rapidly rising labor in one-sided global value chains. This inhibits
costs in China especially since 2009 prodded domestic production.
manufacturing firms to seek lower-cost locations
in the region, with a number of transnational Remittances and BPOs have consequently been
corporations (TNCs) setting up in or relocating to major drivers of service sector growth. Yet the shift
the Philippines. to services of the Philippine economy is premature.
This is not because services cannot eventually
Domestically, record-low interest rates financed be a large and dynamic share of the economy
consumption and business expansion. The – the category ‘services’ covers a wide range
country was favorably poised to exploit these of economic activities including potentially high
given the stable foreign exchange and household value ones. The problem in the specific context
purchasing power from massive overseas Filipino of the Philippines is that the service activities are
remittances. There was also the large stock of overwhelmingly services such as trade, BPOs, and
young, unemployed, college-educated, and tourism that are low value-added and moreover
English-speaking Filipinos with the skills, energy, have weak links to the rest of the economy.
and interest to work at globally low rates in
business process outsourcing (BPO) firms. The Desirable services with synergistic or more
Benigno Aquino administration was also able to dynamic links to manufacturing and agriculture
create a degree of political stability by effectively and a much greater contribution to national
projecting an image of good governance and economic development can be expected only
anti-corruption. at higher levels of development. This may for
instance include engineering, scientific, and
These conditions combined to spur a domestic other professional services attendant to high
economic boom. This was led by Filipino retail technology manufacturing or farming.
and real-estate firms which expanded malls,
stores, restaurants, and auto sales while building Inequality
homes and BPO offices to meet demand.
Associated industries were stimulated: power, Inequality is another cause of poverty in the
water, telecommunications, construction, and country. This is not only from a social justice
construction-related manufacturing. Growing perspective but because inequality itself hinders
manufacturing investment provided an additional growth and development by repressing demand,
39
skewing policy-making, causing social conflict, and Powerful ties between political and
others (Ravallion, 1997; Easterly, 2007; Birdsall, business elites often ensure that states
2008; UNRISD, 2010; UNICEF, 2013). The low prioritize the preferences of organized
productivity of Filipino producers with low levels business interests. In developing
of domestic science and technology is already countries, media and international
a problem of an underdeveloped economy that attention have focused to a large extent
inequality only makes worse. As with economic on corruption and crony capitalism. In
backwardness, inequality is a direct result of the practice, business power and influence
country’s market-oriented economic policies and come in many guises. The so-called
resulting patterns of growth. structural power of capital is a crucial
dimension of business influence.
Inequality appears at the level of the economy and
From the perspective of social
overall economic structures. Economic activity
development, four major constraints follow
has become over-concentrated in a few regional
from these relations. First, they favor
centers. Inter-regional distribution of economic patterns of resource allocation guided by
activity and national income is a useful first particular as opposed to public interests.
approximation of inequality in the country. Of the Second, they can reinforce macroeconomic
country’s 17 regions, economic activity is heavily policies [that] can have perverse social
concentrated in just three regions – NCR, Region and developmental implications. Third,
III-Central Luzon and Region IV (Calabarzon and they often impose major limits on the
Mimaropa) which together accounted for nearly scope for redistributive policy. And fourth,
two-thirds (64.5%) of GDP in 2016 while home social policy may be designed and rights-
to 40.3% of the population (see chart 29). This based laws enacted, but implementation
includes the highest-value industry and services and enforcement lag far behind (UNRISD,
in the country. 2010).
These regions correspondingly have the lowest The growing corporate concentration in a few
official poverty incidence in the country: 3.9% in conglomerates and of wealth in a few families
NCR, 9.1% in Region IV-A-CALABARAZON, and is then a matter of development concern. The
11.2% in Region III-Central Luzon; it is 24.4% in private sector-focused economic policy regime
the small Region IV-B-MIMAROPA (see table 1). has strengthened the dominance of large
Poverty incidence in the other 13 regions of the corporations, and especially of large foreign
country ranges from 13.1% (Region I-Ilocos) to corporations and a few families, in the economy.
53.7% (ARMM). These regional disparities point
to how government resources especially public The equivalent share of Top 1000 corporate
investment has to be spread more equitably so revenues and of the net worth of the richest 40
that lagging regions and their populations can Filipinos to GDP, while not strictly comparable,
catch up. can be used as proxies of economic power to
track trends (see chart 30). The gross revenues
of the top 50 conglomerates and corporations
Inequality is another cause of poverty increased from being equivalent to 61% of GDP
in the country, not only from a social in 2006 to 66% in 2015 – even peaking earlier at
justice perspective but because 76% of GDP in 2014 – which gives some indication
inequality itself hinders growth and of the growing concentration of economic activity
in a few corporations.21
development by, among others,
repressing demand, skewing policy- Foreign TNCs account for a disproportionately
making, and causing social conflict. large portion of domestic activity. Foreign firms
accounted for 37% of total Top 1000 revenues
and 63% of manufacturing revenues in 2015.
Undue concentrations of income, assets, and
These ownership-based figures do not capture
wealth imply undue economic and political non-ownership means of control by foreign firms
power for a few that could adversely affect through their control of production technologies,
development policy-making and cause growth to sources of inputs and users of outputs, branding,
be exclusionary. The United Nations Research and other key aspects of the global production
Institute for Social Development (UNRISD) for and value chain.
instance observes:
21 Computations on corporate revenue data from
BusinessWorld Top 1000 reports and GDP data from PSA.
40
Chart 29. Regional Gross Domestic Product (RGDP) , 2009-2016 (%) make up a large part of
these estimates of net
100%
NCR
worth. It is however
IVA a key part of the
III country’s growth story
80% VII because it is such
XI
VI
aggregate wealth – not
just narrow measures
Regional share (%)
60% X
I of household income
XII – that determines
VIII
40% IX
family well-being,
V opportunities, political
II influence, and
20% CAR many other social
IVB
XIII
phenomena with
ARMM real development
0% implications.
2009 2010 2011 2012 2013 2014 2015 2016
Inequality also
Source: Philippine Statistics Authority National Accounts of the Philippines appears at the level
of individuals and
The PSA reports that foreign investors accounted households. The biggest factor is how market-
for 43% of total approved investments – including oriented policies displaced breadwinners from
70% of approved manufacturing investment – sectors in decline without creating alternative or
over the long 2000-2015 period.22 In the recent better sources of livelihood. This is manifested
period 2011-2015, foreign investors accounted in the country’s jobs crisis of high unemployment
for the majority of approved investments in and underemployment.
many sectors: manufacturing (69%); agriculture,
forestry, and fishing (61%); transport and The jobs crisis is aggravated by other neoliberal
storage (51%); information and communication policies. The de jure and de facto deregulation
(53%); financial and insurance activities (75%); of labor markets has kept real wages down,
administrative and support service activities increased contractualization, and increased
(86%); professional, scientific and technical informality in work. More flexible labor markets
activities (74%); education (53%); and arts, touted as improving the jobs situation have
entertainment and recreation (51%) (see table ironically resulted in greater economic insecurity
for the labor force.
Increasing wealth by the richest Filipinos
is a key part of the country’s growth There is also the tendency of tax system
to become more regressive, with greater
story because it is such aggregate reliance on consumption taxes and reductions
wealth that determines family well- in direct personal and corporate income
being, opportunities, political influence, taxes. Consumption taxes are however a
and many other social phenomena with disproportionate burden on low-income families,
real development implications. while cuts in income taxes forego potentially
considerable revenues from high-income families
who can afford to give much more. Even social
8). These are only approved and not yet actual services are starting to develop on two tracks,
investments. with relatively better quality but expensive private
provision astride chronically underfunded public
The net worth of the 40 richest Filipinos meanwhile services.
doubled their equivalent share of GDP from 13%
in 2006 to 26% in 2016 (see chart 30).23 This Social policy
increase in wealth is not captured by household
income surveys and Gini coefficients, which are Social policy refers to a range of public services
not able to cover the very richest households nor geared towards promoting citizens’ welfare and
designed to measure the financial assets that uplifting their quality of life. It generally consists of
two broad and oftentimes overlapping areas: the
22 Computation on approved investment data from PSA. provision of social services such as education,
23 Computations on net worth data from Forbes.com health, water, and sanitation; and the provision
Philippine billionaires list and GDP data from PSA. of social protection. Social policy is inextricably
41
Table 8. Total Approved Investments by Industry, 2011-2015 (Php million) budgets especially since 2010
to try and address perceived
2011-2015
backlogs. These allocations,
Industry Total Total Local FDI % Share to however, remain low when
Approved Approved Approved Total Approved measured as their equivalent
Investments FDI Investments Investments shares of GDP. In 2016,
Agriculture, forestry and
28,750 17,502 11,248 60.9
education spending was just
fishing 3.1% and health spending
Mining and quarrying 79,986 2,751 77,235 3.4 0.86% of GDP.24 These are
low compared to the East Asia
Manufacturing 924,086 634,054 290,032 68.6 and Pacific average (excluding
Electricity, gas, steam,
1,138,212 163,350 974,862 14.4
high-income countries) of
and air conditioning supply 4.1% and 2.9%, respectively.25
Water supply; sewerage,
waste management and 10,649 1,806 8,843 17.0 The relatively low levels of
remediation activities
public spending are among
Construction 111,831 15,372 96,459 13.7 the most important factors
Wholesale and retail
determining the overall
trade; repair of motor 12,189 2,777 9,412 22.8 character of the country’s
vehicles and motorcycles health and education system
Transport and storage 232,563 118,490 114,073 50.9
and the quality of public
health care and schooling, on
Accommodation and food
service activities
160,085 45,616 114,469 28.5 top of the equally important
questions of how efficiently
Information and
communication
58,062 30,464 27,598 52.5 the resources are used. The
wages, benefits, and welfare
Financial and insurance
718 539 180 75.0 of educators, teachers, and
activities
non-academic personnel and
Real estate activities 735,972 103,591 632,382 14.1 of health workers also need
Professional, scientific continuous attention.
4,594 3,395 1,199 73.9
and technical activities
Administrative and Reduced levels of funding

124,052 106,588 17,464 85.9
support service activities for social services such as
education and health can be
Public administration and
defense; compulsory 410 410 … 99.9
traced to the International
social security Monetary Fund (IMF)
stabilization programs
Education 1,663 886 777 53.3
and World Bank structural
Human health and social adjustment programs (SAPs)
6,547 177 6,371 2.7
work activities imposed in the 1980s. They
Arts, entertainment and
directed the Philippine
11,068 5,604 5,464 50.6 government to implement
recreation
Othes service activities 761 593 168 78.0

austerity programs which led
to significant cuts in social
Not classified 0 0 0 …
spending, wage freezes, and
TOTAL 3,642,199 1,263,965 2,388,233 34.7 rationalization or streamlining
Note: Details may not add up to total due to rounding off.
of the government
Sources of basic data: Authority of the Freeport Area of Bataan (AFAB), Board of Investments (BOI), Board
of Investments ARMM (BOI ARMM), Clark Development Corporation (CDC), Philippine Economic Zone
bureaucracy, which affected
Authority (PEZA) and Subic Bay Metropolitan Authority (SBMA) as cited by PSA the frontline delivery of
services (IBON, 2015). The
linked with economic development by covering partial retreat of government from the provision
necessary social services, from the influence of social services paved the way for the private
on livelihoods and incomes, and in being key sector filling in the vacuum upon privatization
mechanisms for redistribution, protection, and and deregulation, for instance, in the realm of
economic transformation. education and health.
Education and health have historically taken up

significant shares of the national budget especially 24 Computations on budget data from DBM’s BESF 2016
and 2018 and GDP data from PSA.
as the population grows. The national government
25 2013 data for education and 2014 data for health retrieved
has been allocating bigger education and health from https://data.worldbank.org/ on July 22, 2017.
42
The drive to commercialize and privatize social The distribution between public and private
service provisioning has undermined laws providers is more even in the country’s hospital
affirming the constitutional right of all Filipino system but still skewed in favor of private
citizens to quality health care and education at provisioning. In 2014, bed capacity was divided
all levels. This has led to a stark lack of policy between 49% (48,384 beds) in 452 government
coherence; more substantively, it has signified hospitals and 51% (50,045) in 770 private hospitals
that many of the laws and treaties which the (see table 9) (PSA, 2017f). While bed capacity
Philippine government has pledged to uphold has improved to 9.9 per 10,000 population in 2014
in the area of social service provision remain from 14.4 in 1990, this happened mainly in the
significantly unfulfilled. 1990s and has been more or less stagnant since
2000. The number of barangay health stations
The drive to commercialize and meanwhile has almost doubled from 10,683 in
1991 to 19,622 in 2015.
privatize social service provisioning
has undermined laws affirming the Education. The school system from kinder up to
constitutional right of all Filipino citizens secondary level is rightly public sector-dominated
to quality health care and education at all given widespread poverty and low incomes. The
levels.
Table 9. Selected Indicators of Education and Health
System
Public versus private. In SY 2016-17, enrollment
Total Public Private
in preschool is divided between 88% public (1.8
million enrollees) and 12% private (216,997); SY 2016-17
in elementary school, between 92% public Enrolment
(12.9 million) and 8.5% private (1.2 million); Pre-school 1,813,751 1,596,754 216,997
and in secondary school, between 82% public Elementary 14,091,046 12,891,477 1,199,569
(6.2 million) and 18% private (1.3 million) (see
Secondary 7,519,035 6,177,876 1,341,159
table 9) (PSA, 2017f). There are 38,803 public
Number of schools
kindergarten/elementary schools versus 11,680
private schools, and 8,282 public secondary Kinder/Elementary 50,483 38,803 11,680
schools versus 5,935 private schools. In higher Secondary 14,217 8,282 5,935
education institutions (HEIs), the Commission 2014
on Higher Education and Development (CHED) Number of
reports the distribution as between 46% public hospitals
1,222 452 770
(1.6 million enrolled) in 233 HEIs and 54% private Bed capacity 98,429 48,384 50,045
(1.9 million) in 1,710 HEIs.
Source: PSA, 2017
Chart 30. Gross Revenues of Top 50 Conglomerates and Net Worth of 40 Richest Filipinos, 2006-2016 (Php billion, % of GDP)
8,000 80.0
7,000 70.0
6,000 60.0 Gross revenues of top 50

conglomerates (in Php billion)
5,000 50.0
% of GDP
Php billion
Net worth of 40 richest Filipinos

4,000 40.0 (in Php billion)
3,000 30.0 Gross revenues of top 50

conglomerates (% of GDP)
2,000 20.0
Net worth of 40 richest Filipinos
1,000 10.0 (% of GDP)
0 -
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Sources: Forbes’ List of Philippines’ Richest and Philippine Statistics Authority National Accounts of the Philippines
43
government, however, still remains conservative mainly for indigents. In practice, this has meant
in increasing its education budget to fully address increased budgetary allocations from the national
backlogs in teachers, materials, facilities, and government to PhilHealth to expand its ‘universal
school buildings and in improving the quality of health care coverage’, which reportedly already
teaching in general. There is on the other hand stands at 92% of the population as of 2015
a steady increase in the budget for Education (NEDA, 2017). The increased financing for this is
Service Contracting (ESC) where students are mainly from the incremental revenues generated
subsidized to attend private high schools. While by the tobacco and alcohol excise tax earmarked
it is possible that this started out as a mitigating for health as a result of the passage of the Sin
measure for public school congestion, its Tax Law in 2012.
continuous expansion especially in the last 20
years may be de facto loosening the commitment The adopted financing approach seeks to leverage
to direct provision of public education whose private sector health service providers and,
services have lagged through the decades. A implicitly, shift health care provision from the public
new senior high school (SHS) system has also sector to the private sector. This also explains why
been introduced upon the K to 12 curriculum shift the largest portion of health budget increases go
which compels additional investment by schools to PhilHealth rather than to significantly expanding
in teachers and infrastructure. and upgrading the public hospital and health
care system, which, moreover, is expected to
The marked skewing towards the private sector at increasingly adopt ‘user pays’ schemes and more
the higher education level is striking – it tends to efficient corporate practices.
limit access to higher education by students from
lower income families. The amount of attention The private and public health systems are quite
and substantial budget allocation for private distinct in cost as well as in perceived quality.
schools should be reviewed to ensure that lower Health care in private facilities is substantially
income families are not discriminated against. more expensive than in public facilities. The
average cost of treatment of a visit to a private
The recent passage of the law on free tuition health facility (Php2,268) is almost five times the
in state universities and colleges (SUCs) is cost of a visit to a public health facility (Php455);
a potential game-changer and can serve to the average cost of in-patient care at private
increase momentum for a stronger and larger facilities (Php25,471) is meanwhile almost three
public higher education system. It can go far times that of confinement at a public facility
in relieving the pressure on SUCs to generate (Php8,640) (PSA, 2014).
income from higher fees and charges and
donations from corporate sponsors. It is important
to ensure sufficient funding for implementation. It
also needs to be spent mainly on SUCs with little The adopted financing approach seeks
or no diversion as indirect subsidies to private to leverage private sector health service
institutions, in the manner of the ESC for high
schools. providers and, implicitly, shift health
care provision from the public sector to
The government should strengthen its public the private sector.
education system both in basic and tertiary
education. This includes increasing the budget
The way that policy choice has played out
for primary and secondary education with a view
is reflected in the PSA’s Philippine National
to improving access to and the quality of primary
and secondary education for all, without hidden Health Accounts (PHNA) (see table 10). In
costs, and particularly for children of low income 2014, the latest available year, there was total
families and children living in the rural areas. health spending of Php585.3 billion divided
into Php502.3 billion for personal health care,
Php41.4 billion for public health care, and
Health. In the health sector, the government’s
Php41.7 billion for others (general administration,
strategy to ensure that Filipinos have access
research, etc.). Only personal health care is the
to the hospital system is to approach this from
a financing perspective. The national health direct concern for the average Filipino, and this
insurance system, PhilHealth, pools member remains overwhelmingly borne by individuals
contributions and government subsidies which with private out-of-pocket spending accounting
are then dispensed to patients who use them to for Php326.8 billion or a huge 65%, with the
pay public and private health service providers balance taken up by PhilHealth (16%), national
of their choice; government subsidies are government (6.5%), local government (2.2%),
44
Table 10. Health Expenditure by Source of funds, 2014 can have two adverse effects:
1) it can impoverish the non-
All uses (personal health care,
Personal health care only poor (health spending pushed
public health, and others)
SOURCE OF FUNDS
more than 1.5 million people
(Php million) (% of total) (Php million) (% of total)
into poverty); and 2) it can
GOVERNMENT 101,137 17.3 43,671 8.7 deepen poverty among the
National Government 61,816 10.6 32,772 6.5 already-poor, with drugs and
Local Government 39,321 6.7 10,900 2.2 medicines paid in cash as the
SOCIAL INSURANCE 83,324 14.2 78,204 15.6 main drivers of out-of-pocket
National Health
spending, with a share of
Insurance Program
83,281 14.2 78,175 15.6 around 62% (of total out-of-
Employees’ pocket costs) (Bredenkamp and
43 0.0 28 0.0
Compensation Bruisman, 2016). The share of
PRIVATE SOURCES 395,343 67.5 380,405 75.7 expenditures in medicines in
Private Out-of-Pocket 326,787 55.8 326,787 65.1 total reported health spending
Private Insurance 10,111 1.7 3,525 0.7
is even higher among the poor,
with a spending share of 76%
Health Maintenance
Organizations
40,443 6.9 32,091 6.4 (or Php823) in the poorest
Private Establishments 12,819 2.2 12,819 2.6 quintile compared to 58%
Private Schools 5,183 0.9 5,183 1.0
(or Php15,070) among the
wealthiest quintile (ibid.).
REST OF THE WORLD 5,503 0.9 0 0.0
Grants 5,503 0.9 0 0.0 In any case, it has been

ALL SOURCES 585,307 100 502,280 100 reported that less than half of
Source: PSA Philippine Health National Accounts the average hospital bill is paid
by PhilHealth, partly attributed
health maintenance organizations (HMOs) to not everyone being covered (PSA, 2014).
(6.4%), private establishments (2.6%), private This is consistent with a survey of PhilHealth
schools (1.0%), and private insurance (0.7%).26 beneficiaries confined in a hospital where only
15% estimated that PhilHealth covered/will cover
Out-of-pocket spending is still four times that paid 100% of their hospital bills, while seven out of 10
by PhilHealth (Php83.3 billion) in 2014. Published (71%) said that their bills would only be partially
PHNA figures unfortunately do not distinguish the covered; around four out of 10 (37%) of sponsored
distribution of health expenditure by income level patients said that PhilHealth covered/will cover
nor for what particular purpose. between 26-50% of their bills (IBON, 2015).
Despite health insurance expansion, a PSA There is an absence of a clear mechanism

report on current health expenditure by financing for coordination in a decentralized health
scheme shows that general hospitals and system, which causes great challenges
pharmacies are the main recipients of out- for public health management.
of-pocket payments followed by providers
of preventive care (PSA, 2017e). This is
an indication that most of the resources for Trends in the education and health system are
health go to catastrophic, curative, and tertiary not inconsistent with the observation that:
level health interventions. For example, in
2012, health expenditures mainly went to the Increasing evidence … points to ways in which
following: curative/rehabilitative care (52.3%), commercialization can undermine effective
medical goods that were directly purchased by social service provision. In many cases,
households (30.4%), and preventive health care accessibility, affordability and the quality of
(9.4%) (Picazo, et.al., 2015). services – particularly those available to low-
income or marginalized groups – has fallen,
In addition, an analysis of the 2012 FIES showed while systems of provision and financing have
that out-of-pocket spending of Filipino households become fragmented among multiple providers.
Often, commercialization has eroded public
26 Computations on data from 2014 PHNA. This differs commitment to service provision for all, in the
from the published estimate of private out-of-pocket interests of private actors and profit (UNRISD,
expenses of 55.8% which was computed as a share 2010).
out of total health spending and not just out of, more
appropriately, personal health care.
45
46 The Roots of Philippine Poverty and Underdevelopment
Indeed, it is possible that another observation contributes to worsening inequities in health care
is also valid with regard to the country’s effort and overburdening of health care workers.
to expand social services: “trends towards
commercialization in the context of high In response to many of the chronic problems that
income inequalities and a large informal sector plague the country’s health care delivery system,
have resulted in polarized service provision there is now a growing clamor from various
segmented between a high-cost private sector health advocacy groups for the public health care
and lower quality public services” (ibid.). As it is, system to prioritize universal primary health care,
at least three large business groups are investing with improving access to health care regardless
in medical facilities – Manny Pangilinan’s Metro of ability to pay as its central focus.
Pacific Investments Corp. (MPIC), Ayala Land
and its partner White-Knight Holdings, and
Manny Villar’s Vista Land & Lifescapes (Villar, Social protection. The Social Development
2015). This will speed up the commercialization Committee (SDC) of the National Economic
of health as hospitals and clinics nationwide are and Development Authority (NEDA) defines
bought or built and run as business ventures. social protection as “policies and programs
that seek to reduce poverty and vulnerability to
The Coalition for Primary Care and the Universal risks and enhance the social status and rights
Health Care Study Group (2014) cited three of the marginalized by promoting and protecting
health system challenges leading to health livelihood and employment, protecting against
inequity: 1) workforce shortage; 2) administrative hazards and sudden loss of income, and
fragmentation; and 3) health policy fragmentation. improving people’s capacity to manage risks.”
The poorest seek medical care from public Understood in this way, the country has a long
facilities (public facility use is 89.6%). experience with social protection measures with
Unfortunately, for every 20,000 population there many having been seen as important ‘anti-poverty’
are only 10 health care workers, which is already measures (Manasan, 2011). There is the range of
extremely inadequate to address issues related social welfare programs and safety nets targeted
to maternal and child health alone, not to mention at the poor and vulnerable. In the past these have
the need to address the high level of incidence of included direct in-kind assistance, rice price or
both infectious and non-communicable diseases. electricity subsidies, nutrition and school feeding
programs, assistance to the elderly, and various
There is furthermore an absence of a clear care services. Safety nets are urgent stop-gap
mechanism for coordination in a decentralized measures in response to sudden shocks from
health system, which causes great challenges disasters, calamities, economic crisis, personal
for public health management. It has also been crisis situations, and the like and include relief
observed that local spending for critical health assistance, food-for-work programs, livelihood
inputs – such as health human resource – is not support, and crisis intervention.
just insufficient but has also become politicized.
This results in great discrepancies between In the last decade the biggest social welfare
national programs and local capacity to deliver, program is by far the 4Ps CCT scheme. This
especially in underserved areas. was piloted in 2007 for some 4,600 families
at a cost of around half a billion pesos. The
The Department of Health (DOH) currently has DSWD reports this as greatly expanding from
several distinct health care programs addressing 337,000 household beneficiaries with a budget of
various health problems. It has been observed, Php1.3 billion in 2008, to a projected 4.4 million
however, that these are typically donor-driven household beneficiaries with a budget of Php78.2
and motivated by commitments to the global billion in 2017 (see table 11).
community, and are developed and implemented
in a context of ever-changing health priorities. There are also active labor market programs
These programs have utilized different facilities, including training, apprenticeships, job search
financial resources, and human resources assistance, job placements, livelihood and self-
despite the similarities or interrelatedness of their employment support, and the like. The most
objectives. This approach to health care delivery institutionalized social protection schemes are
has resulted in narrowly focused health programs the major contributory social insurance programs
rather than integrated solutions, disintegrated covering pensions, sickness, disability, and death:
and cost-inefficient health care rather than a the Social Security System (SSS), Government
holistic one, and to program fragmentation which Service Insurance System (GSIS), and PhilHealth.
46
The SSS covered 34.9 million workers and development strategy that led to increased
935,000 employers as of 2016 and GSIS had 1.5 poverty in the first place. There is also often the
million members in 2015 (PSA, 2017). underlying assumption that widespread poverty
is the result of individual failings rather than the
outcome of societal structural processes, as is
The main limitation of these social
oftentimes the case. Apart from these, there
protection measures is that many of are also widespread concerns about inefficient
them are ‘residual’, in the sense that implementation, exclusion and inclusion errors,
they simply serve to mitigate some of leakages, vulnerability to clientelistic politics,
the worst impacts of macroeconomic and others. Finally, it is widely observed that
policies, without inviting interrogation of social protection programs are fragmented,
and that there is a need to build the technical
the main development strategy that led
and administrative capacities of agencies in the
to increased poverty in the first place. frontline of social protection service delivery.
Still, many of the country’s vulnerable population Democracy

remain in difficult circumstances. Despite
needing better health care and having limited The Philippines is a multi-party electoral
income opportunities, for instance, the elderly democracy with the government organized
face an expensive and inadequate health care into the executive headed by the President,
system. Yet, the majority of elderly Filipinos a bicameral legislature, and an independent
are beyond the purview of the country’s limited judiciary. The country has at the same time since
pension system. Almost 97% of the elderly, or the 1980s developed a reputation for having a
around 7.5 million, are either not covered or broad and vibrant civil society. The undemocratic
receive pensions that are small and below a economic outcomes, however, draw attention
reasonable poverty threshold (IBON, 2016). The to undemocratic governance from dysfunctional
average monthly SSS pension, for instance, politics and institutions resulting in, among others,
ranged from just Php3,689 to Php4,820 in 2015 the inability to ensure the social and economic
(PSA, 2017b). Also, four out of five (80%) of the rights of the majority of Filipinos. Controversially,
population aged 60 and above, or some 5.4 million governance is also inconsistent in upholding the
elderly, do not benefit from any retirement or old civil and political rights of all Filipinos.
age pension from SSS or GSIS, as of 2015 (ibid.).
In any case, active lobbying by organizations of The basic problem is the continuing lack of
senior citizens has already resulted in some gains meaningful participation in political life by the
in the expansion of indigent pensions for the majority of Filipinos because of elite-dominated
elderly poor. These remain incremental but are political and legal structures that marginalize the
nonetheless a productive start for further reforms. poor. The vast majority of Filipinos, especially the
The main advantage of many of these social Table 11. Pantawid Pamilyang Pilipino Program Target,
protection measures is their immediate welfare Households and Budget, 2008-2017
benefit for those who are able to avail of them. This Annual Active Annual Budget
Year
is certainly important and quantifiable to the extent Target Households (Php million)
that the reported magnitudes of beneficiaries and 2008 375,829 337,416 1,297
benefits are valid. Public investment in many 2009 700,000 777,505 8,300
social protection programs such as the 4Ps, 2010 1,050,000 1,035,431 10,000
pension for indigent senior citizens, and universal 2011 2,339,241 2,345,639 21,194
health insurance have resulted in the significant 2012 3,106,979 3,121,530 39,445
expansion of program coverage as well as
2013 3,809,769 3,935,394 44,911
improvements in the benefits provided.
2014 4,461,732 4,454,755 62,614
2015 4,436,732 4,377,762 62,323
The main limitation of these social protection
measures is that many of them are ‘residual’, in 2016 4,620,630 4,387,689 62,666
the sense that they simply serve to mitigate some 2017 4,400,000 4,353,506* 78,187
of the worst impacts of macroeconomic policies TOTAL 390,936
that have resulted in increased impoverishment, *as of 31 August 2017
without inviting interrogation of the main Source: DSWD
47
poor, have long had a limited voice in governance institutions including the business sector, mass
whether in lawmaking or policy planning and media, church, and civil society when they are
implementation. The resulting adverse effects complicit in corruption. These gravely undermine
on the poor are expansive and far-reaching. democratic values.
There are two aspects of governance that are
immediately relevant. Elite policy-making. The second is how
economic elites capture and influence policy-
Clientilism. The first is the clientilism used by making. Policies are made and laws passed to
elites to determine the nation’s political leaders favor oligarchs or foreign capital in general and,
and to conduct political life according to the terms often, specific business interests in particular
set by their network of allies, business partners, at the expense of the poor majority and
financial supporters, and relatives. Elites use national development. The over-determination
institutionalized systems of political patronage of Philippine economic policies by an elite of
to manufacture electoral support and retain their rationally self-interested stakeholders further
hold on political power, including by systematically concentrates wealth and entrenches inequality.
exploiting the poverty of the majority during and
This is a problem that has existed since the birth
The basic problem is the continuing lack of the Republic. For instance, the United States
of meaningful participation in political (US) was overwhelmingly dominant in domestic
life by the majority of Filipinos because economic policy-making in the immediate post-
colonial period from the late 1940s onwards,
of elite-dominated political and legal especially after ensuring that pro-American
structures that marginalize the poor. trade and investment policies were in place
upon flag independence in 1946 that would
after elections. The result is a system of dynastic be in effect until the early 1970s. The US was
or oligarchic politics where political power and foremost among those influencing economic
governance rests in the grips of a few elite families policy to advance the commercial interests of
who monopolize elective and appointive positions American transnational corporations, as well as
from national to the local levels. promote the free market-based economic model.
The open market policy regime both created
A few political families remain dominant: opportunities for American firms and gave rise
More than 90% of the country’s provinces are to domestic economic elites, who benefited
dominated by an average of two families in each from these policies and so became political
province, which translates to political influence stakeholders in maintaining them. Japanese,
and clientelism in municipal/city governments and to a lesser degree, European commercial
as well as barangays where parochial political relations deepened from the 1980s onwards
families also thrive. At least 70-80% of the seats which was accompanied by similar interventions
in both houses of Congress are in the hands of in domestic economic policy-making.
political families. In the House of Representatives,
the party-list system which was envisioned to be The pro-market ideology and strategy of the
reserved to the marginalized sectors is virtually in Philippine government since the 1980s has,
the hands of the elite who occupy nearly half of if anything, increased the influence of foreign
the party-list seats. The all-powerful presidency and domestic big business actors on national
has been a stronghold of old and new political economic policy and on governance in general.
dynasties since the late 1940s. This mirrors a trend observed in other developing
countries since the onset of the neoliberal era
Corruption and the use of public resources for (UNRISD, 2010). Globalization and liberalization
private and personal gain is closely linked to greatly expanded the commercial opportunities
this. The government’s already limited resources for large capital, which greatly increased their
are diminished further by disadvantageous economic and political leverage vis-à-vis the
contracts, loan agreements, kickbacks, diversion state. Regulatory mechanisms were loosened
of resources from the poor and underserved, to give way to market forces – further expanding
and the like. A culture of impunity, opaqueness, commercial opportunities – at the same time
lack of accountability, distorted ethics, and as large capital became even more involved in
general mistrust of government has set in. This economic policy-making, social programs, and
erodes the institution of government – which is poverty reduction. This is a major reason for the
so necessary and indispensable for national neoliberal and pro-business character of major
development – and to some degree even civil government economic policies.
48
Corporate interests have become increasingly in public governance, especially in addressing

prominent even in erstwhile development concerns. gut issues of poverty, job security, public health,
The most prominent is the increased use of public- and education, among others. They are vital
private partnerships (PPPs) with corresponding expressions of people-oriented participatory
changes in legal, regulatory, and fiscal structures. governance outside the realm of formal State
Business interests have been active in the society- institutions, using the modalities of active, critical,
wide privatization of social and welfare services in and even adversarial engagements with national
the sense of directly providing, on a profit-seeking as well as local agencies.
basis, these traditionally state-provided functions.
The number of private schools and hospitals The currently weak political participation by
has continued to grow. Even various disaster, these groups in governance, however, limits
livelihood, and other welfare services have come to the people’s capacity to institute real reforms to
be provided through corporate social responsibility eradicate poverty and improve democracy.
(CSR) schemes.
This points to how important the impetus
These trends worsen undemocratic governance
by eroding the autonomy and capacity of the State
for changing the system will necessarily
to form and implement national development come from the outside, which is
strategies according to the broader public welfare where greater people’s participation in
and using long-term or broad-based metrics of governance becomes relevant.
social and economic development. Profitability,
returns on investments, and returns to capital
are given excessive consideration far beyond the There is, for instance, the problem of how
legitimate concerns of efficiency of resource use unionism, which is among the most potent
and quality of goods and services. organizational forms for democracy in the
workplace and wider political struggles, is in
This clientilism and the elite capture of economic decline. This is presumably a factor in why basic
policy-making subvert real political participation, labor rights are widely violated. The union density
which entails removing imbalances in power rate, or the proportion of union membership to
relationships, democratizing the distribution of total employees in establishments employing
resources, and making governance inclusive 20 or more workers, has fallen sharply from
and primarily an instrument of public service. 31% in 1995 (692,000 members) to just 7.7%
Among others this has resulted in extremely in 2014 (340,000 members) (PSA, 2017c). The
incremental progress in terms of progressive percentage share of women union members to
legislation and programs. Only those that are total union membership rose slightly from 32%
least disruptive of the inequitable economic in 1995 to 35% in 2014. With union density in
status quo move forward and, even then, only decline, the collective bargaining coverage rate,
or the number of total employees covered by
The pro-market ideology and strategy collective bargaining agreements (CBAs) as a
of the Philippine government since the percentage share of total employees, has also
been falling from 20% in 2003 to 8.1%, or 359,745
1980s has, if anything, increased the workers, in 2014. The number of strikes and
influence of foreign and domestic big lockouts has also fallen from 94 reported cases in
business actors on national economic 1995 to only five (5) in 2015.
policy and on governance in general.
Ecology
after considerable effort from within government
and from mass-based advocacy movements There are two interrelated concerns on the
outside government. Implementation is moreover country’s ecological crisis. The first is how the
not necessarily certain. adverse effects of environmental distress through
pollution, disasters, and calamities bear down
This also points to how important the impetus most heavily on the poor. The second is how
for changing the system will necessarily come current patterns of growth and economic activity
from the outside, which is where greater people’s will not only cause more environmental distress
participation in governance becomes relevant. in the future, but will also set environmental limits
People’s organizations, non-government to economic expansion and human development.
organizations, advocacy groups, and other multi-
stakeholder formations have proliferated since the Impact on the poor. The poor are the most
1980s as a result of the limitations or exclusivity vulnerable to the impacts of environmental
49
degradation and also the main victims, because non-renewable energy resources.
they are in greater proximity to hazards than
higher-income groups. Farmers, fisherfolk, and Environmental stress. The intensity of resource
indigenous communities are the ones most use in the Philippines is lower than in developed
dependent on the natural environment and countries corresponding to its lower level of
ecosystems for their homes and livelihoods. economic development in terms of urbanization,
Hence, they are most affected by overuse infrastructure development, and material living
of chemical farm inputs, conversion of prime standards (Chiu, et al, 2017). This is likely to have
agricultural lands, siltation, mine tailings, and increased in recent years along with the rapid
other toxic wastes. Urban poor communities bear infrastructure-driven economic growth, and will
the brunt of industrial waste, household waste, only surge more with future development.
and air pollution. The precarious circumstance
of the rural and urban poor also makes them The immediate and long-term ecological threats
the worst affected by calamities and disasters, to the country and the people are stark – greatly
including those aggravated by climate change. diminished forest cover, degraded coasts,
The health, livelihoods, and security of the poor increasingly unsafe water systems, pollution,
are at stake in all of this. and congested urban areas. Watersheds, lakes,
and rivers are heavily polluted and underground
Natural resources. Although under stress, the water sources contaminated. Soil quality is
Philippines still has among the most biodiverse deteriorating. Large-scale corporate mining
environments in the world in terms of ecosystems, activities are rapidly depleting and exporting the
species, and genetic resources (DENR, 2017). country’s minerals, leaving toxic mine tailings
There are some 52,200 described species of flora and entire mountains carved out and destroyed.
and fauna, more than half of which are endemic
to the country, which makes the Philippines a
contender for harboring the most diversity of life on National and local economic policy is
a per-unit basis. The existing forest cover includes biased towards short-term profit that is
over 3,000 native tree species, and the forests concentrated in the hands of a few, with
contain vast animal and plant species including 96 insufficient attention to the environmental
medicinal trees and 70 bamboo species.
implications of economic activity.
The 9.7 million hectares of agricultural land in the
country produces nearly 90 million metric tons of
rice, corn, coconut, sugar, and various fruits and The Environmental Performance Index (EPI)
vegetables annually, and the country is among the ranks how well a country performs on priority
world’s biggest producers of many of these crops. environmental issues regarding the protection
Farms produce some 4.2 million metric tons of of human health from environmental harm and
livestock and poultry per year. The country has the protection of ecosystems.28 The Philippines
26,000 square kilometers of coral reef and some ranked 114th out of 178 countries in 2014,
680,000 square kilometers of territorial sea that, meaning that only 36% of countries are ranked
along with inland waters and aquaculture areas, below the Philippines (Sta. Romana, 2017).
produce almost five million metric tons of fish
annually. Large-scale logging, mining, and quarrying
continues to thin the forest cover which endangers
There are also large mineral reserves that, at 14.9 biological reserves, causes landslides and the
billion metric tons of metallic mineral deposits and loss of arable land, and results in flooding of
some 51 billion metric tons of non-metallic minerals, low-lying plains. The Philippines’ forest cover is
make the Philippines among the most mineral-rich now at just 17% (5.4 million hectares), with a per
countries in the world.27 The Philippines is fifth in capita forest area of just 0.081 hectares which is
the world in terms of mineral intensity, including
third in gold, fourth in copper, and fifth in nickel. 28 The EPI is a joint project of the Yale University Center
for Environmental Law and Policy and the Columbia
The country also has considerable renewable and University Center for International Earth Science
Information Network. Country performance is scored
according to 20 indicators in nine issue areas: health
27 Data from Department of Environment and Natural impacts, air quality, water and sanitation, fisheries, water
Resources (DENR) Mines and Geosciences Bureau resources, agriculture, forests, biodiversity and habitat,
(MGB). and climate and energy.
50
far below the 0.6 hectares global average in 2010 being a minor emitter of greenhouse gases (Sta.
(Chiu, et al, 2017). Over 40% of the country’s coral Romana, 2017). According to the latest World
reefs are in poor condition, with only some 1% Risk Index, the Philippines is the second most
remaining in good condition due to sedimentation, at-risk country in the world from natural hazards
pollution, over-fishing, coral mining, reclamation (i.e., earthquakes, storms, floods, droughts, and
of foreshore areas for business establishments, sea level rise), including the adverse effects of
tourism, ports, and other factors. climate change.29 According to the Coasts@
Risk Index, the Philippines is among the top 10
Metro Manila and the country’s other major urban countries in the world with the highest risk from
centers have their own specific urban-related coastal hazards (i.e., storms, floods, surges,
problems. The World Health Organization’s tsunamis, and sea-level rise).30 Four cities –
(WHO) Ambient Air Pollution Database Update Manila, San Jose, Roxas, and Cotabato – are
2014 found the level of pollution in Manila, Cebu even among the top 10 cities in the East Asia/
and Baguio to be 2.5 times higher than the WHO Pacific region most vulnerable to climate-
air quality guideline values (Sta. Romana, 2017). intensified storm surges and sea-level rise.
In Metro Manila, only 70% of the 8,000 tons of
garbage generated each day is collected, with There are many factors driving this situation. The
the rest ending up on the streets or in local rivers; main environmental pressure is fundamentally
nationwide, only half of 30,000 tons of garbage due to existing patterns of domestic production
is collected. Urban air and water pollution is and of global consumption, especially by the
at dangerous levels resulting in serious health large capitalist countries and by the fraction of
problems, especially among the urban poor. Solid higher income groups in the country. National
waste in open dumps and polluted waterways in and local economic policy is biased towards
urban centers are health hazards to urban poor short-term profit that is concentrated in the
residents. hands of a few, with insufficient attention to the
environmental implications of economic activity.
The interaction of severe poverty and climate There is also a deeply-ingrained consumerist
change has already made the country among the lifestyle that is reinforced through various cultural
most natural hazard-prone in the world, despite and ideological channels.
29 World Risk Report 2014, cited in Sta. Romana (2017).

30 Coasts at Risk: An Assessment of Coastal Risks and
the Role of Environmental Solutions (2014) cited in Sta.
Romana (2017).
51
Current Responses: Anti-Poverty Programs
T he Philippines has a rich potential for

development and rapid improvement
in the lives of the majority. This potential,
was the Lingap Para sa Mahirap (LINGAP),
which aimed to provide a broad package of
interventions to the 100 poorest families in every
however, is chronically unrealized because city and province. This was implemented by
of the development policies – covering both the National Anti-Poverty Commission (NAPC),
macroeconomic and social policies – that created by the previous Ramos government, and
have so far been implemented. The effect of local governments.
conventional anti-poverty measures has varied,
but, measured against the scale of the country’s The 2001-2010 Arroyo administration’s
underdevelopment, they have largely been centrepiece effort was the Kapit-Bisig Laban sa
limited and often merely palliative. Kahirapan-Comprehensive Integrated Delivery of
Social Services (KALAHI-CIDSS), for the delivery
Anti-poverty programs of basic services with inclusive community-driven
planning and budgeting, and the Self-Employment
The Philippine government’s anti-poverty Assistance-Kabuhayan (SEA-K). The sponsored
programs have historically included the same program for poor families under the health
basic set of measures (Reyes, 2004; Gregorio- insurance program PhilHealth was also greatly
Medel, 2013; Bayuden-Dacuycuy and Baje, expanded to cover the 4.8 million poorest families
2017b). Since at least the 1960s and 1970s, nationwide. The 4Ps CCT program was piloted
these measures cover agricultural and fisheries in 2007 and formally started in 2008. The 2010-
development; food subsidies and nutrition 2016 Aquino administration greatly expanded the
programs; livelihood and employment assistance; 4Ps to become its flagship anti-poverty program.
community water and sanitation; education and The SEA-K was continued astride the new
health services; and socialized housing. In the Payapa at Masaganang Pamayanan Program
1980s and 1990s, added to these were protection (PAMANA), which focused on 218 largely armed
of workers; institution-building and people’s conflict-affected municipalities in 43 provinces of
participation in governance; and recognition of the country.
ancestral domains. From the 2000s until today,
the major innovations are a more comprehensive What is common among these decades
disaster response; CCTs; and the framework of
of ‘anti-poverty’ efforts is that they
social protection.
are consistently conceived as ‘social
Every administration has had its own flagship reform’ programs dichotomized from
anti-poverty program with different combinations macroeconomic policy-making, and,
of these measures. Over 1965-1986, the furthermore, are distantly secondary
Marcos administration had Presidential Decree to this.
(PD) 27, Samahang Nayon, Masagana 99,
feeding programs, and BLISS mass housing. There are various permutations around the
The 1986-1992 Aquino administration aforementioned basic measures: identifying and
had the Comprehensive Agrarian Reform focusing on special sectors or specific geographic
Program (CARP), community-based resource areas; refinements in targeting, monitoring,
management, the National Livelihood Program and evaluation; expanding their scope; various
(NLP), and Tulong sa Tao Program. The 1992-1998 technical program innovations; combining them
Ramos administration had the expansive Social into integrated programs; involving different actors
Reform Agenda (SRA) with the minimum basic and mobilizing financing from diverse sources;
needs (MBN) approach, prioritizing beneficiaries and periodic reorganization of government
of the country’s 20 poorest provinces. It was also agencies concerned. Not coincidentally, anti-
during this time that local governments and civil poverty programs became more complex and
society were more aggressively brought in as expansive as the economy’s jobs crisis and
avowed stakeholders. household incomes worsened in the 2000s.
The short-lived 1998-2001 Estrada What is common, however, among these decades
administration’s flagship anti-poverty effort of ‘anti-poverty’ efforts is that they are consistently
52
53
conceived as ‘social reform’ programs and financial, fiscal, and various regulatory
dichotomized from macroeconomic policy- policies. These policies interact and cumulatively
making and, furthermore, are distantly secondary define the parameters of economic activity in
to this. The government’s macroeconomic the country. Government decisions shape the
policies meanwhile proceed separately with at economy by promoting certain activities more
best tokenistic attention paid to the impacts of than others, and by determining how the benefits
these policies on poverty, despite their having from production, exchange, and distribution are
the most far-reaching impact on the livelihoods, allocated. The state is historically and currently
incomes, and welfare of the greatest number the foremost institution of economic governance,
of Filipinos. Government anti-poverty agencies including in the era of neoliberal globalization
and instrumentalities are moreover persistently where it has operated to further the interests of
marginalized from macroeconomic policy-making, capital (Radice, 2008).
and, in effect, perennially relegated to dealing
with the effects of poverty rather than its causes. Economic policies have generally
been market-driven and in support of
This has been the case especially since the private sector interests, rather than
1980s and the onset of the neoliberal era in the
Philippines and around the world. Conventional
wielded by the State to support public
anti-poverty measures have always had limited sector enterprises.
impact from being micro, individualistic, and
targeted rather than structural in their approach. Philippine economic policy has always
The success, failure, effect, and impact of such declared the intent to address mass poverty
micro efforts are however ultimately circumscribed and unemployment afflicting the majority of
by the macro forces at play in the economy. Filipinos. The economy has also always been
private sector-driven and essentially market-
Anti-poverty measures are commonly fragmented based; private firms have always been the most
and dispersed. The fragmentation does not stem numerous economic actors, and the State has
merely from lack of coordination of projects in specific never exerted substantial command control over
areas or target groups, or lack of coordination by macroeconomic processes. Economic policies
agencies involved, nor even by being of such small have generally been market-driven and in support
scales that they do not overlap with each other. of private sector interests, rather than wielded by
The most important sense of their fragmentation the State to support public sector enterprises.
is in their being disparate efforts that are not
anchored on a coherent overall macroeconomic This was the case even during the protectionist
strategy. Thus, fragmentation is resolved most of 1950s, and even with the so-called crony
all by ensuring that all the conventional anti-poverty capitalism under the Marcos administration in the
measures support, advance, and complement 1970s and early 1980s (Lim, 2007; Ballester, et
larger macroeconomic goals, aside from providing al., 2013; Ofreneo, 2015). The Magsaysay-era
immediate welfare gains. Five-Year Economic and Social Development
Program 1957-1961, for instance, was clear
If anything, anti-poverty measures have been that the private sector had the leading role in
further undermined by increasingly being developing the economy and government had a
organized along market-based lines. In recent subordinate and supportive role at best (Jurado,
decades, they have functioned only to mitigate 2003).
the worst impacts of economic backwardness and
crisis, and, paradoxically, have had the effect of But Marcos-era development plans in the 1970s
making poverty-inducing policies more politically were the first promoters of economic liberalization.
feasible. The Four-Year Development Plan 1972-1975
explicitly argued to move away from protectionism
Development plans towards liberalization, and its measures included
wage flexibility, tariff cuts, and greater openness
The government’s main economic policies to foreign investment (Jurado, 2003). This was
cover foreign trade and investment, monetary followed by two Five-Year Development Plans
53
Current Response: Anti-Poverty Programs
over the periods 1978-1982 and 1983-1987. and shipping in 1994, airlines in 1995, oil in 1996,
The most dominant policy influences on the retail trade in 2000, and the power industry in
Third World and in the Philippines in the 1980s 2001. Over US$3.5 billion worth of government
and 1990s were the World Bank and its SAPs assets were privatized in the 1990s, including
– with the Philippines’ first SAP implemented in prime oil and water assets. Erstwhile public
1979 – and the IMF and its stabilization programs infrastructure projects were opened up to the
(Broad, 1998). private sector with the build-operate-transfer
(BOT) law in 1993. Hospitals began the process
The change in development policy and strategy of “corporatization” around 1999. PPPs were
in the 1980s was not actually a fundamental aggressively pursued across a wide range of
change but rather a deepening of market-oriented public transport, water, telecommunications,
policies, now widely termed as neoliberal ‘free social services, and other projects in the 2010s.
market’ policies of globalization. These have been
more and more applied across the whole range The 1990s also saw international economic
of socioeconomic policy-making: foreign trade deals not just pressing for greater liberalization
and investment, monetary and exchange rate but also becoming more expansive and covering
policy, financial policy, fiscal policy, regulatory even more areas of domestic economic policy,
policy, and even social policy. most notably upon the Philippines joining the
World Trade Organization (WTO) in 1995.
The Corazon Aquino administration’s Medium- Average nominal tariffs were drastically slashed
Term Philippine Development Plan (MTPDP) between 1990 and 2004: agricultural tariffs were
1987-1992 explicitly called for liberalization of cut by 85% to an average level of just 9%, and
the economic regime and a thoroughgoing free industrial tariffs cut by 92% to an average level of
market-oriented economy to alleviate poverty – just 3 percent. Import restrictions were removed.
supposedly in response to the crony capitalism of WTO agreements came on top of Association
the Marcos years. Agriculture and industry were of Southeast Asian Nations (ASEAN) free trade
to be exposed to foreign competition in order to agreements (FTAs), which continued to advance,
force these sectors to be efficient and to improve along with bilateral deals such as the Japan-
their competitiveness. Philippines Economic Partnership Agreement
(JPEPA) of 2008.
The increased emphasis on market-oriented
policies was implemented systematically and The change in development policy and
progressively over the medium-term plans of the strategy in the 1980s was not actually
succeeding administrations: Fidel Ramos’ 1993- a fundamental change but rather a
1998 MTPDP to spur global competitiveness;
Joseph Estrada’s 1999-2004 MTPDP to make
deepening of market-oriented policies,
the economy internationally competitive; Gloria now widely termed as neoliberal ‘free
Macapagal-Arroyo’s 2004-2010 MTPDP for market’ policies of globalization.
equitable growth based on free enterprise; and
Benigno Aquino III’s 2011-2016 PDP to raise Consecutive administrations all stressed market
the competitiveness of industry, services, and reforms albeit framing them according to various
agriculture. Each plan has been continuous from development themes: social reform, sustainable
and built on those that came before it. development, growth with equity, and inclusive
growth. Yet beneath these themes the Philippines
Globalization policies were given political impetus has arguably been the biggest implementer of
in the 1990s by the collapse of the Soviet Union. economic liberalization in the globalization era
In the Philippines, this meant major economic among its Southeast Asian neighbours, with the
reforms intended to reduce market distortions, possible exception of city-state Singapore.
open the economy further, and give greater play
to the private sector and foreign capital (IBON, The less market-oriented approach of other
2005). Foreign investments were liberalized countries in the region is a key factor in explaining
starting in 1991, with 100% foreign ownership the poorer socioeconomic performance of the
allowed in most sectors and complete freedom Philippines. Growth has been slower than in
to repatriate capital. Foreign exchange controls other Asian countries and many have overtaken
were dropped in 1993. the country over the last three to four decades.
The acceleration since 2010 is notable but it
Water transport was liberalized and deregulated remains to be seen if this can be sustained, aside
in 1992, telecommunications in 1993, banking from whether meaningful development outcomes
54
will be achieved. The generally lagging growth fiscal policy, social protection policy, and others.
is also reflected in how improvements in the Coordination will, by this neoliberal line of
country’s official poverty rates are slower than in reasoning, spontaneously happen as each area
the country’s neighbors (see chart 31). of the economy is driven to converge and attain
efficiency by the price mechanism and market
Markets and poverty forces.
The country’s development plans, especially The end result is policy-making of

since the 1980s, are misnamed in being overly
market-oriented rather than ‘plans’. The most
which the de facto orientation is to
important character of a development plan ensure market-based mechanisms
is its ability to guide the vast economy and and give primacy to profit-seeking in
economic forces along a particular strategic as many areas of socioeconomic life
path. The single most important entity for this as possible, including even in public
task is the government, which has the unique goods and social services.
authority to establish the legal, regulatory, and
administrative parameters for all economic
actors, aside from being an important economic This is problematic and the faith in markets
agent in its own right. is misplaced. There is already a rich body of
analysis refuting the development efficacy
The core premise of the country’s development of markets assumed by the neoliberal
plans, however, is that market-based outcomes development policy model (Chang and Grabel,
– meaning the result of profit-seeking economic 2014). Surveying 70 years of development
behavior as unimpeded by government as policies, the UN highlights how countries with
possible – will more or less lead to desired active developmental states showed stronger
development outcomes. The ‘plans’ therefore are growth, economic diversification, and large-
not about ensuring that the many and disparate scale poverty reduction compared to countries
parts of the economy operate together in an following the “market-centred policy direction of
organized and harmonious manner, but rather the Washington Consensus” (UNDESA, 2017).
about listing policy measures for each area of the
economy to approach the free market ideal. These prescriptions – so-named because they
are promoted by the Washington, D.C.-based
Trade and investment policies need only be IMF and World Bank – open up the economy
market-oriented, infrastructure development and expand market forces within the domestic
need only be market-oriented, education, health, economy. They are very familiar and have
and housing need only be market-oriented, defined Philippine economic policy-making
and likewise with monetary and financial policy, from the 1980s until today: trade liberalization;
foreign investment
Chart 31. Poverty Headcount Ratio Among Population in the Philippines and liberalization; privatization;
East Asia and Pacific, 1980-2012 (2011 PPP, in %) deregulation; avoiding large
Philippines and East Asia and Pacific, 1980-2012 (2011 PPP, in %)
fiscal deficits; broadening
100 the tax base and adopting
moderate marginal tax rates;
shifting public spending from
80
East Asia & Pacific at $3.10 a day subsidies to infrastructure,
education, and health care;
Headcount ratio (%)
60
East Asia & Pacific at $1.90 a day market-determined interest
rates; competitive exchange
Philippines at $3.10 a day
rates; and securing property
40 rights (Williamson, 1989).
Philippines at $1.90 a day
Unfortunately, that erroneous

20
judgment has taken root and
implanted deeply among
- policy-makers. As a result,
the government’s economic
credentials are seen to be
Source: World Bank World Development Indicators Database
55
determined more by the extent to which neoliberal inviting foreign investment and creating the most
policy changes are implemented rather than business-friendly environment possible.
by concrete development outcomes. Failure
to achieve meaningful social and economic Recent years have seen a particular
outcomes is routinely dismissed as being due intensification in the private sector- and profit-
to market forces still not being given full play – driven approach to development. On the pretext
which is perversely used to justify even more of leveraging private capital and expertise,
market-oriented policies. PPPs are being expanded to an ever wider
range of public utilities and even into social
The end result is policy-making of which the services. Measures are being taken to assure
de facto orientation is to ensure market-based returns of private investors, increase tax and
mechanisms and give primacy to profit-seeking in other fiscal incentives, restrict the regulatory
as many areas of socioeconomic life as possible, authority of the government and courts, reduce
including even in public goods and social transparency, and expand the range of possible
services, ostensibly for the sake of improved projects. The tendency of PPPs and the
quality and greater efficiency. This is in effect pressure for ‘commercial viability’, however, is
an orientation that responds to the demands of to increase the cost of public services whether
capital for conditions of maximum profitability. through higher fees, rates, and charges from
the public, or from direct and indirect subsidies
to private investors.
The neoliberal policy shifts since the
1980s spread the view that rapid The only modification to the basic neoliberal
economic growth over a relatively long view is the minor one of elaborating specific
period of time is more or less sufficient ‘anti-poverty’ policies and programs to
to reduce poverty, an erroneous notion supplement the high-growth approach. Yet it is
that persists until today. already well-established that poverty reduction
generally does not result from such targeted
This neoliberal premise is the critical binding anti-poverty policies per se, but rather from an
constraint to more equitably distributing the overall strategy with wider social, economic and
benefits of growth, to long-term job generation political objectives (UNRISD, 2010; UNRISD,
from developed agriculture and industry, to 2016). This has been succinctly pointed out by,
providing necessary social services, and generally among others, the UN Secretary-General:
to more systematically responding to the needs
of the majority. Perceived impingements on the Poverty and inequality cannot be
profitability of capital, the inability of socially- addressed by narrow approaches to
desirable activities to generate incomes and social protection, or faith in the by-now-
profits, or violations of textbook neoclassical discredited notion that the benefits of
economics, have commonly been enough to economic growth will sufficiently trickle
derail otherwise sensible social and economic down to the poor. The analysis points
measures that were successfully used by other instead to the need for new directions
countries (Chang and Grabel, 2014). in macroeconomic policy and structural
change to generate decent employment.
‘Anti-poverty’ interventions meanwhile are It also stresses that processes of policy
reduced to add-ons generally designed 1) and institutional change should be
to mitigate or moderate socially undesirable democratically anchored and shaped by
outcomes among the lowest income groups (i.e., active citizenship (Foreword of UNRISD,
safety nets); or 2) to selectively provide social 2010).
and welfare services especially to the poorest of
the poor (i.e., targeted social provisioning). Capacity
The neoliberal policy shifts since the 1980s Philippine economic policy especially since
spread the view that rapid economic growth over the 1980s has been mainly about widening the
a relatively long period of time is more or less scope for market forces to operate. This has
sufficient to reduce poverty, with the metaphor of a meant steadily removing barriers to trade and
rising tide lifting all boats being particularly intuitive investment, letting social services be increasingly
and convincing. This erroneous notion persists provided by private profit-seeking actors or by
until today. In effect, this justifies giving primary public entities operating on private sector terms, a
attention to achieving high growth especially by generalized reduction in regulations on business
56
operations, and the like. The country has seen The human resource aspect of capacity also needs
steady improvement in narrow business-oriented attention, with improved salaries, job security, and
metrics of economic performance, but progress skills development for the bureaucracy. These
in social indicators for the majority and notably limitations exist at the national level but are even
the very poorest is still very much lagging. more stark at the level of local governments,
which are underrated but extremely valuable
Less obvious but nonetheless a serious point centers for local development linked up to national
of concern is how the structure of the economy development strategies and objectives. Indeed, it
– particularly in terms of weakening domestic is debatable if these are favorable conditions for
production – makes achieving development further decentralization.
more difficult. An underdeveloped economy
does not create the conditions for generalized While an important short-term limitation, this
poverty eradication. This is aggravated by legal situation can immediately start to be reversed once
and economic policy regimes that have become appropriate corrections in fiscal and other areas
increasingly and systematically market-oriented of policy are made. Adjustments in foreign trade
over the last decades. and investment, monetary, financial, and other
regulatory policies can be done in a phased and
The challenge is to improve the gradual manner. The challenge is to improve the
State’s capacity and mechanisms for State’s capacity and mechanisms for development
development interventions, instead interventions, instead of abandoning them
altogether and relying on markets which cannot on
of abandoning them altogether and their account deliver development.
relying on markets which cannot on
their account deliver development. In any case, the private sector is not inherently
and always better at delivering services,
especially if ‘better’ is construed as being
The capacity of the State to build the more efficient, affordable, and accessible. With
foundations of the national economy and to the correct orientation and mechanisms for
undertake active social policy has also been performance, transparency, and accountability,
weakened by globalization. Fiscal resources, there is no reason for the public sector to not
technical expertise, and development-oriented build its technical capacity on the widest range of
bureaucracies are needed for strategic social and essential utilities and social services.
economic interventions, as well as the effective
provision of social services and public utilities. All told, it is clear that add-on or merely
supplementary ‘anti-poverty’ programs are
Market- and business-friendly policies, however, insufficient to resolve Philippine poverty. The
have eroded revenue sources for development very design and directions of macroeconomic
interventions. The disparaging view of state policy have to fully incorporate the development
intervention has also prevented the public dimension – encompassing both social
sector from getting the experience needed for development and long-term economic
the complex economic governance that poverty development. The elements of a pro-poor
eradication demands. The expansion of PPPs in development strategy can be outlined,
recent years is a particular point of concern in according to which the specifics of policies and
this regard. implementation can be worked out.
57
Proposed Response: Pro-Poor Development Policy
T he Philippine government rightly declares and

emphasizes seeking inclusive growth and
development – meaning growth that improves
the majority of Filipinos in a sustainable manner;
2) generates an economic surplus for the public
sector’s needs, including the provision of social
the conditions of all Filipinos especially those on and economic services, and for reinvestment in
the margins of existence. However, this cannot the economy; and 3) distributes the benefits of
be attained without reforms in the government’s growth under more equitable economic relations.
anti-poverty response.
Without such a transformation, jobs and incomes
Overly market-oriented economic policies have will be insufficient and the majority of Filipinos will
not developed the economy and instead resulted remain in conditions of poverty that targeted anti-
in unsound fundamentals. Agricultural production poverty interventions and social welfare programs
has not kept pace with the growing population. will ever only be able to partially alleviate. Without
The country has been hindered from developing such a transformation, there will never be enough
an advanced industrial sector. Particularly critical resources for the growing needs of an expanding
is how the share of manufacturing in GDP and population. Macroeconomic policies thus need
in employment have declined while becoming to be radically shifted, away from reckless trade
disproportionately foreign-dependent. The and investment liberalization and towards active
economy and the workforce have been pushed to government support for Filipino enterprises and
consumption-driven services which are poor drivers the workforce.
of economic development. This situation is the
fundamental reason for high unemployment, for the This is a comprehensive and integrated
overwhelming majority of jobs in the disorganized
informal economy with poor quality work, and for
approach to reducing poverty as well
the extreme dependence on overseas work. as for combating structural obstacles
in the inequitable national economic
The proposed elements of a pro-poor development order.
strategy and the critical areas for reform in current
anti-poverty policy are: 1) a firm grounding in a Developing the productive economy, however, is
human rights-based and social development not enough, and a comprehensive, universal,
approach; 2) structural transformation of the and transformative social policy also has to
national economy; 3) ensuring a just and be enacted. Ensuring social services and social
progressive social policy; and 4) real people’s protection for all Filipinos needs to be intrinsic to
participation. This is a comprehensive and the strategy for development. These are important
integrated approach to reducing poverty as to directly and immediately ensure improvements
well as for combating structural obstacles in the in the welfare of the people. The improved
inequitable national economic order. physical and mental well-being of people also has
the beneficial effect of improving the workforce’s
Adopting a human rights-based and social productivity and further boosting the economy.
development approach allows for a broader
understanding of the poverty problem, and, hence, A more productive and equitable industrialized
of the correspondingly broad solutions necessary economy, guaranteed social services, and
for poverty eradication. Going beyond narrow universal social protection will develop into a
income measures means addressing structural virtuous cycle. This already has legal basis in
inequalities, upholding people’s participation, the wisdom of the 1987 Philippine Constitution,
and establishing the State’s obligations to act on of which Article XII (National Economy and
poverty in all the processes of governing. Patrimony), Section 1 provides:
The long-term basis of Philippine development The goals of the national economy are a
lies not just in growth but in the structural more equitable distribution of opportunities,
transformation of the economy, including income, and wealth; a sustained increase
agriculture but especially industrial production, in the amount of goods and services
where the country: 1) uses its natural resources produced by the nation for the benefit of
to create decent work and increase incomes for the people; and an expanding productivity
58
as the key to raising the quality of life for alongside other features including hunger, poor
all, especially the underprivileged. education, discrimination, vulnerability, and
social exclusion. The orientational character of
The State shall promote industrialization the definition compels greater sensitivity to the
and full employment based on sound specific factors that hinder improved standards
agricultural development and agrarian of living and the attainment of rights in different
reform, through industries that make full contexts, thus avoiding a mechanical listing
and efficient use of human and natural of stock interventions and allowing priorities
resources, and which are competitive to be set according to specific contexts. Such
in both domestic and foreign markets. contexts include the particularities of the
However, the State shall protect Filipino different major groupings of poor or otherwise
enterprises against unfair foreign vulnerable Filipinos, as discussed earlier. It also
competition and trade practices. demands that attention be given to the structures
and systems that bring about widespread poverty.
In the pursuit of these goals, all sectors of the
economy and all regions of the country shall Understood in this way, low income
be given optimum opportunity to develop. certainly remains a prominent
Private enterprises, including corporations, characteristic of poverty, but alongside
cooperatives, and similar collective other features including hunger, poor
organizations, shall be encouraged to
broaden the base of their ownership.
education, discrimination, vulnerability,
and social exclusion.
These measures will not be effectively
implemented without democratic governance, The decidedly broad definition moreover
where the people genuinely participate in the underscores the gravity of the poverty problem.
political processes and decision-making that This draws attention to how the wide-ranging
affect their rights, interests, and welfare. processes, functions, and authority of the State
will be needed to address poverty, and therefore
becomes an imperative and obligation for it.
Rights-based and social development This includes ensuring people’s participation in
framework relevant decision-making processes as a matter
of right, and also as a means to claim their rights
The human rights-based approach starts with to development. All of this has significant policy
and is defined by its multidimensional definition implications.
of poverty. According to the United Nations
Committee on Economic, Social and Cultural Legal basis
Rights, poverty is:
The 1987 Constitution recognizes poverty as a
a human condition characterized by social problem and in this regard declares the
sustained or chronic deprivation of following State principles and policies:
resources, capabilities, choices, security,
and power necessary for the enjoyment The State shall promote a just and dynamic
of an adequate standard of living and social order that will ensure the prosperity
other civil, political, economic, social, and and independence of the nation and free
cultural rights. people from poverty through policies that
provide adequate social services, promote
Broadly, poverty is about the lack of basic full employment, a rising standard of living,
capabilities to live in dignity. This goes far beyond and an improved quality of life for all.31
its traditional understanding as the lack of income
to buy a minimum basket of goods and services. The State shall promote social justice in all
phases of national development.32
Understood in this way, low income certainly 31 Const., Art. II, Sec. 9. Emphasis supplied.
remains a prominent characteristic of poverty, but 32 bid Sec. 10. Emphasis supplied.
59
The Constitution also declares as State policies of all the people to human dignity, reduce
and principles: valuing human dignity and full social, economic, and political inequalities,
respect for human rights;33 the fundamental and remove cultural inequities by equitably
equality before the law of women and men;34 the diffusing wealth and political power for the
protection and promotion of the people’s right common good.
to health;35 the protection and advancement of
the people’s right to a balanced and healthful To this end, the State shall regulate the
ecology;36 the prioritization of education, science acquisition, ownership, use, and disposition
and technology, arts, culture, and sports to of property and its increments.46
promote total human liberation and development;37
the protection and promotion of workers’ rights SECTION 2. The promotion of social justice
and welfare;38 the development of a self-reliant shall include the commitment to create
and independent national economy effectively economic opportunities based on freedom
controlled by Filipinos;39 the promotion of a of initiative and self-reliance.
comprehensive rural development and agrarian
reform;40 the recognition and promotion of the Reading all of these Articles together, it is clear
rights of indigenous cultural communities;41 the that the Constitution views poverty as an issue of
prohibition of political dynasties as may be defined social justice, human dignity, and human rights.
by law, and encouragement of nongovernmental, The State policy is the promotion of “a just and
community-based, or sectoral organizations that dynamic social order” to “free the people from
promote the welfare of the nation.42 These State poverty”, not only alleviating poverty. “Social
policies and principles constitute a comprehensive justice” is the defining goal “in all phases of
sweep of elements needed in promoting a just national development”. Social justice requires
and dynamic social order. measures that protect and enhance the right of
all the people to human dignity, reduce social,
In addition, the Constitution devotes a long article economic, and political inequalities, and remove
of 19 sections to social justice and human rights cultural inequities by equitably diffusing wealth
(Article XIII), and another article, also of 19 and political power for the common good. The
sections, to education, science and technology, enactment of these measures shall be given the
culture, and sports (Article XIV).43 Such treatment “highest priority” by Congress.
of these areas shows their importance in the
entire constitutional framework of the State.44 The resulting constitutional framework on poverty
Article XIII recognizes structural inequalities and is consistent with the rights-based approach.
prescribes structural reforms, and covers the
areas of labor, agrarian and natural resources
reform, urban land reform and housing, health, It is clear that the Constitution views
women, and human rights.45 It has sections on poverty as an issue of social justice,
the role and rights of people’s organizations. The human dignity, and human rights. The
Article opens with the following provisions: State policy is the promotion of “a just
and dynamic social order” to “free
SECTION 1. The Congress shall give the people from poverty”, not only
highest priority to the enactment of
measures that protect and enhance the right
alleviating poverty.
33 ibid Sec. 11.
34 ibid Sec. 14. On the other hand, Republic Act No. 8425 or
35 ibid Sec. 15. the ‘Social Reform and Poverty Alleviation Act’,
36 ibid Sec. 16. which provides the legislative framework for the
37 ibid Sec. 17. government’s anti-poverty program, has positive
38 ibid Sec. 18.
aspects but can still be improved in places.
39 ibid Sec. 19.
Modifications to improve consistency with the
40 ibid Sec. 21.
41 ibid Sec. 22. rights-based approach include: amending its
42 Sec. 23. objective from merely alleviating poverty to
43 The first section of the Article provides that ‘the State eradicating poverty; explicitly mentioning human
shall protect and promote the right of all citizens to rights and social justice as its philosophical
quality education at all levels and shall take appropriate
steps to make such education accessible to all’.
and political foundation; and adopting the
44 The Philippine Constitution only has 18 Articles. constitutional policy of protecting and enhancing
45 The section entitled ‘Human Rights’ is about the creation
of the Commission on Human Rights. 46 Emphasis supplied.
60
the right of all the people to human dignity, the The State in particular has the obligation to
reduction of social, economic, and political respect, protect, fulfill, and promote human
inequalities, and the removal of cultural inequities. rights. The rights-based approach engenders the
responsibility to consider processes as well as
Reference must also be made to international outcomes, to give special attention to addressing
human rights law. The Philippines is a party to exclusion, disparities, and injustice, and to
almost all international human rights treaties, address the basic causes of poverty. It also
including the International Covenant on Civil usefully establishes a framework for promoting
and Political Rights (ICCPR), the International the rule of law – against impunity and corruption,
Covenant on Economic, Social and Cultural for promoting transparency and accountability,
Rights (ICESCR), the Convention on the and ensuring access to justice – as well as
Elimination of All Forms of Discrimination Against challenging inequality and power imbalances.
Women (CEDAW), the Convention on the Rights
of the Child (CRC), the International Convention Economic development
on the Protection of the Rights of All Migrant
Workers and Members of their Families (ICRMW), The leading edge of the anti-poverty effort,
and the Convention on the Rights of Persons in terms of creating the material conditions
with Disabilities (CRPD). The Philippines also to overcome poverty, has to be the structural
recognizes the Universal Declaration of Human transformation of the national economy. In the
Rights (UDHR) as providing a universal set of concrete conditions of the country, with its rich
minimum standards in human rights protection natural resources, relatively large population,
and promotion. All these provide an international and current levels of agricultural and industrial
human rights framework in addressing poverty. capacity, this means rural development and
initiating the process of national industrialization.
The rights-based approach engenders
the State responsibility to consider Especially amid current adverse global conditions,
processes as well as outcomes, to this also means a domestic demand- and
domestic income-driven approach. International
give special attention to addressing economic relations need to be recalibrated
exclusion, disparities, and injustice, and towards developing internal sources of growth,
to address the basic causes of poverty. which are also the most sustainable sources of
growth.
The ICESCR is particularly relevant, though
not exclusively so, for having a direct bearing
on poverty reduction. Under the ICESCR, the The leading edge of the anti-poverty
Philippines is obliged to undertake steps, on its
own and through international assistance and
effort, in terms of creating the material
cooperation, especially economic and technical, conditions to overcome poverty, has to
“to the maximum of its available resources,” be the structural transformation of the
with a view to “achieving progressively the full national economy.
realization” of the rights recognized in the present
Covenant by all appropriate means, including in Starting conditions. This strategy can in the
particular the adoption of legislative measures. first instance build on what exists, and then as
The rights mentioned in the Covenant include the the development process gets underway, build
right to work and other work-related rights; the on new outcomes to bring the process forward in
right to social security; to an adequate standard an accelerating manner. The natural and human
of living for oneself and one’s family, including resource potential of the Philippines is sufficient
adequate food, clothing, and housing, and to for the country and all Filipinos to achieve
the continuous improvement of living conditions; development.
to be free from hunger; to the enjoyment of the
highest attainable standard of physical and The Philippines has a sufficiently well-developed
mental health; to education; and to cultural life, bureaucracy to start the country on the path to
among others. development. The basic institutions are in place
and operating, even if sometimes imperfectly.
Having been codified in international human There is a million-and-a-half strong governmental
rights law and incorporated into domestic law, bureaucracy at the national and local levels
they now constitute a set of standards against performing the administrative and security
which duty-bearers can be held accountable. functions of the State. This structure already
61
provides a significant degree of public services have been able to procure relatively higher-end
– spanning transport, water, power, and other technologies from abroad.
economic infrastructure, as well as education,
health, housing, disaster response, and other Certain difficulties need to be acknowledged
social and welfare services – even if at levels and addressed. Domestic capacity has to
still insufficient for the country’s needs. The legal be developed amid: 1) diminished domestic
system is functioning. agricultural and industrial capacity over the last
decades; 2) a more open economy; and 3) poor
Consecutive six-year MTPDPs can be used to global growth prospects. Economic and financial
articulate and phase a strategy consisting of conditions in the world’s largest economies – US,
agrarian reform and rural development, national the European Union (EU), Japan, and China –
industrialization policy, supportive trade and prevent them from being engines of growth in
investment policies, financial policies, and social the foreseeable future. The prospects of China
policies. These are all essential elements that and developing Asia to compensate for this is
need to be coordinated well to have a combined also somewhat overstated, given how these
effect of economic development greater than the economies are ultimately affected by export-
sum of their individual impacts. This is in contrast dependence on the US, EU, and Japan.
to the long-standing approach of each plan in
effect mainly about attending to market reforms
remaining undone from previous plans.
The long-term drive for industrialization
– with manufacturing as the most
None of which is to overlook the many areas important subsector – needs to be
needing improvement. Most fundamental is the the overall framework of economic
need to build the orientation of a developmental planning, according to which all
state devoted to public service. This is the relevant aspects of the macroeconomy
necessary starting point of developing the State’s will be oriented.
capacity to responsibly intervene in the economy
and to deliver social services and public utilities
properly. There is also certainly much to be done The already market-oriented legal and policy
to address corruption and regulatory capture. All regime is also a matter of concern and will need to
these require more democratic decision-making, be adjusted for any real reorientation to take place.
greater public transparency, and much more This does not mean closing the economy. As a
social accountability than at present – especially survey of industrialization experiences in the Asia
through the much greater involvement of citizens Pacific region observed, “development through
and people’s organizations. strategic, as opposed to passive, integration into
the external economy is possible,” and, indeed,
The Philippines also has sufficient economic that “industrial policy, defined as State intervention
conditions for development despite secular to support new production activities and to build
economic decline. Much untapped agricultural domestic capabilities in specific areas, is even
potential remains from existing land resources more indispensable for countries seeking to pursue
and the still-vast rural workforce. Though their development by integrating internationally”
depleted, the country still has stocks of natural (Memiş and Montes, 2008).
resources and raw materials for industrial use.
The country has a very large skilled workforce Build Filipino industry with a program
– including active and potential workers – of national industrialization. National
especially if those who sought opportunities industrialization needs to be adopted as the central
overseas are included. The country also already strategy for Philippine economic development.
has considerable foreign exchange earnings to The long-term drive for industrialization – with
finance needed imports. manufacturing as the most important subsector
– needs to be the overall framework of economic
There are existing manufacturing enterprises planning, according to which all relevant aspects
in the country. Many are foreign-owned or of the macroeconomy will be oriented. The
otherwise foreign-controlled, especially in the regulatory and directive mechanisms of state can
most relatively high-technology and capital- combine with market-based measures.
intensive products. Still, there are substantial
numbers of Filipino micro, small, medium, and The importance of industrialization for a relatively
large firms. While many remain low-technology large country like the Philippines – among the
and labor-intensive, there are already a few that world’s largest by population and endowed with
62
rich natural resources, including raw materials that the gains from industrialization will go back
for industry – cannot be underestimated. to supporting the delivery of these outcomes.
A review of three decades of development
This is in contrast to the current situation where
experience, covering the few countries larger
whatever contribution these other areas may
than the Philippines and also a number of much
have to industrialization – or indeed whether
smaller countries, pointed out that “establishing
industrialization will happen or not at all – depends
a broad and robust domestic industrial base
on what market forces yield. From a policy
holds the key to successful development
perspective, it also means real planning where all
because of its potential for strong productivity
pertinent machinery of government are oriented
and income growth” (UNCTAD, 2012). It has
and coordinated to achieve industrialization. As it
also been observed that no country has moved
is, the neoliberal bias for decentralized behavior
from widespread rural poverty to industrial, and,
and coordination of the nation’s economic activity
for that matter, post-industrial development
through the market engenders compartmentalized
without determined industrial policy to achieve
planning by government agencies.
industrialization (ILO, 2014).
Deliberate and explicit industrial policy should be
Deliberate and explicit industrial policy able to draw, as needed and as is practical, from
should be able to draw, as needed and the whole menu of policy options for supporting
Filipino industry. These include subsidies, tax
as is practical, from the whole menu of exemptions, import duty exemptions, credit and
policy options for supporting Filipino investment incentives, government procurement
industry. contracts, tariffs, quotas, import and foreign
exchange controls, support to domestic research
and development, and similar measures. Their use
It has also been stated directly that “nations that should be determined by the need for revitalizing
have risen out of poverty have done so through the domestic industry, rather than foregone to
process of industrialization” and “the only proven follow market precepts. They are necessary to
path out of underdevelopment at the time of this achieve higher value-added economic activity of
writing... has been through industrialization,” greater processing of local raw materials, more
which was described as involving the following domestically-produced goods and services with
elements: greater local content, and higher levels of Filipino
science and technology.
i. a qualitative increase in the use of capital
and machinery in the production of goods
Nationality, moreover, matters – hence the
and services and consequent increase in
full term is national industrialization. It has
the productivity of labor; and
been pointed out that “a strong and sustained
ii. the large-scale production of goods of high investment drive by national elites [has been]
technological content, and consequently a defining feature of successful development
falling costs, and the attainment of episodes” and the creation of a domestic industrial
international competitiveness (Memiş base (UNCTAD, 2012). Late industrializers, it
and Montes, 2008). was observed, were distinguished from other
developing countries that did not industrialize by
Hence, “when development is redefined as the the “high animal spirits of their business class,
reduction of poverty, effective industrial policy reflected in exceptionally high rates of saving and
occurs when the ongoing relationship of firms and investments from profits.”
production units to the State results in risk-taking,
technical upgrading, investment, and growth that Implement real agrarian reform and
reduces poverty” (ibid.). agricultural development. The smaller share
of the agricultural sector from decades ago
This does not mean that other important areas of has not diminished its importance for long-term
the economy such as agriculture, services, social national development. Indeed, part of the reason
policy, and workers’ welfare will be subordinated, for this continuing decline in relative importance
much less sacrificed. Rather, it means that is precisely its underdeveloped character, which
these areas will be developed to deliver their makes immediately addressing its problems more
immediate expected outcomes, and at the same urgent than ever. Real agrarian reform along
time make the necessary contributions to the with rural development is needed to release the
drive for industrialization. It is moreover expected productive forces in the countryside and to create
63
a solid base for national industrialization. They It is already widely acknowledged that the market-
also expand the domestic market and generate oriented international rules and agreements of
financial resources for reinvestment. recent decades unduly restrict the policy space of
underdeveloped countries like the Philippines to
The most basic initial reform is to resolve the leverage any potential benefits and mitigate many
foundations of rural inequity with, primarily, real of the costs of international trade and investment
agrarian reform that distributes agricultural land (UNCTAD, 2016 and 2017). At the same time,
to tilling farmers for free and without any further active management by the State of how the
obligation. This, however, is not enough, and domestic economy integrates into the global
rural monopolies in other productive assets such economy has been pointed out as “indispensable
as water, farm inputs, credit, marketing channels, for modern industrialization and development”;
and the like also need to be broken. This is trade and investment liberalization are not ends
in their own right, but rather instruments for
development as part of a broader development
Real agrarian reform along with rural and growth strategy (UNCTAD, 2012).
development is needed to release the
productive forces in the countryside The government needs to develop a new foreign
and to create a solid base for national trade and investment framework supportive
industrialization. They also expand the of its anti-poverty thrust, and which allows for
domestic market and generate financial alternative deals with more progressive countries.
This is necessary to reclaim natural resources
resources for reinvestment. and strategic portions of national economy. This
framework can then be used to review provisions
necessary to ensure that the poor farming majority in existing deals. Specific attention can be given to
benefit from subsequent support programs and objectionable terms in the scope and definition of
that rising rural incomes are shared equitably ‘investments’ and ‘expropriation’, ‘most favoured
among the largest number. nation’ (MFN) treatment, ‘national treatment’,
‘fair and equitable treatment’, and investor-state
Ample public intervention and support is critical, dispute settlement (ISDS).
especially in major areas for increasing rural
productivity: free irrigation and proper water The government needs to develop
management; affordable seeds, feeds, fertilizers,
pesticides and the like; affordable farm tools,
a new foreign trade and investment
equipment and machinery; credit at interest rates framework supportive of its anti-
and with repayment terms and contingencies poverty thrust, and which allows for
appropriate for poor farmers; state research alternative deals with more progressive
and extension services promoting agricultural countries.
innovation including organic technologies; post-
harvest transport, storage, and processing
support; and marketing links to consumers as The de facto bias against Filipino firms needs
well as industrial users. Promoting sustainable to be remedied. The country has to be able to
agriculture is also important where the choose from among the widest possible range
technologies adopted to increase production of pro-Filipino measures including equity limits,
are also safe for farmers, consumers, and the technology transfer, local content requirements,
environment. Many of these are already declared tariff and non-tariff protection, subsidized credit,
priorities of the Department of Agriculture (DA). tax breaks, government procurement, state
enterprises, and public control.
Recover policy space and assert independent
foreign economic policy. Many of the Existing agreements can be treated on a case-
international trade and investment agreements to-case basis. It may be possible to merely
that the country has entered into over the last renegotiate and amend some deals. If this is
35 years limit the country’s policy space and not possible, or if the other country or countries
prevent industrialization. This includes some 38 concerned are not amenable, the process of
bilateral investment treaties and agreements, suspending or even terminating agreements can
six (6) bilateral and regional FTAs, and various be started. This can be calibrated such as starting
agreements under the multilateral WTO. with deals that are relatively inconsequential,
64
already up for review, or due to expire. Agreed- facilitate access to export markets. Important
upon mechanisms can be followed and the terms goods and services may also be provided such
of effectivity renegotiated. It is also possible, as infrastructure, utilities, and inputs for local
however, that deals may be so objectionable manufacturing to spur development. Incremental
or be with countries so hostile as to warrant jobs are generated at least in and around the
unilateral and immediate termination. enterprises concerned.
The Philippines can consult with other But their contributions to domestic economic
countries that have already taken steps to development cannot occur under a too liberal
rectify their international economic deals. Major or too open investment environment as results
underdeveloped countries such as Indonesia, from a ‘race-to-the-bottom’ with other countries to
India, and South Africa are amending or attract foreign investors. There must be caution
terminating perceived foreign-biased economic against placing too much emphasis on foreign
agreements (South Centre, 2016).47 India investors in the country’s national development
already has a new Model for Bilateral Investment strategy. Foreign investment is exclusionary by
Treaties asserting greater regulation over foreign nature. It closely guards its technologies, looks
investments, and Indonesia has reportedly also unfavorably on domestic competitors, and is
finalized its own. focused on its profitability targets – hence any
potential contribution to domestic development
The Philippines can also explore closer relations will not emerge spontaneously. The possibility
with non-traditional partners. The newly-formed that foreign capital illicitly sends resources
Asian Infrastructure Investment Bank (AIIB) and abroad through transfer pricing and other
the New Development Bank (NDB, formerly financial mechanisms can also be investigated.
referred to as the BRICS Development Bank)
give opportunities for development finance, Investment regulation and control
technical assistance, and infrastructure projects are needed. The actual benefits from
outside the neoliberal-driven World Bank, IMF, foreign investment depend on how well
and Asian Development Bank (ADB).
the profit-seeking of TNCs is reconciled
A new national development strategy can also
with the public interest of national
take advantage of emerging opportunities in the economic development.
global economy despite the protracted economic
stagnation. This includes the rise of the BRICS Investment regulation and control are needed.
(Brazil, Russia, India, China and South Africa) as The actual benefits from foreign investment
alternatives to the traditional economic powers. depend on how well the profit-seeking of TNCs
There is also potentially wide room for bilaterally is reconciled with the public interest of national
negotiated support outside the country’s economic development. To be beneficial, FDI
accustomed partners US, Japan, and EU. needs to “contribute to creating employment,
raising domestic value-added and export
Regulate foreign investment. Foreign earnings, and broadly supporting domestic
investment can play an important role in industrialization through the transfer of technology
developing domestic industrial, agricultural, and organizational skills” (UNCTAD, 2012).
and even service capacities. They are potential
sources of technology and innovation and can The instruments for this include regulating
foreign investor entry, establishment, and their
47 These include: Indonesia which has served notices of right to operate through equity and ownership
termination or actually terminated treaties with over 20 restrictions, joint ventures, requiring local content
countries including Bulgaria, Cambodia, China, France, and domestic reinvestment, requiring technology
Hungary, India, Italy, Laos, Malaysia, Netherlands,
Romania, Slovakia, Spain, Turkey, Vietnam, and others; transfer, and other performance requirements
India which has served notices of termination of bilateral as deemed necessary. These are all vital policy
investment treaties with as many as 57 countries including tools used by the successful developed countries
the UK, France, Germany, Spain and Sweden; South
Africa which has reviewed and terminated investment in their respective periods of development to
deals with Austria, Belgium, Denmark, France, Germany, create meaningful linkages and benefits for the
Luxembourg, the Netherlands, Spain, and Switzerland; domestic economy.
and Ecuador, Venezuela and Bolivia in Latin America
which have exited dozens of treaties.
65
Anti-poverty macroeconomic development. spending and more extensive provision of social

The main strategy against poverty should and economic services. This also creates the
be creating decent jobs and raising incomes space to reduce indirect consumption taxes that
through equitable and development-oriented unduly burden the majority poor. Tax collections
macroeconomic policies. This needs to be should also be increased through better tax
complemented, not supplanted, by providing administration, especially by reducing corruption,
genuinely universal social services and social stopping corporate abuse of tax exemptions and
protection through effective government loopholes, and plugging other such sources of
programs. Macroeconomic and related policies revenue leakages.
also need to be developmentally proactive and
reoriented in three ways. More or otherwise higher direct taxes
on the wealthy will generate revenues
First, the government needs to more actively
guide the process of building domestic agriculture for greater public spending and more
and Filipino industry as the foundations of a extensive provision of social and
buoyant national economy. Developing domestic economic services.
productive capacity, especially Filipino-owned
and -controlled productive capacity, is essential. Greater investments in physical infrastructure.
Growth and development will eventually be
Second, growth must take place in an inclusive constrained by inadequate rail, shipping, and
manner where the benefits of growth are spread air transport capacity, poor roads, electricity
between factors of production – with special shortages, and insufficient communication
emphasis on the working people getting their infrastructure. Flood control and drainage are also
necessary to manage the physical environment
fair share from economic activity – as well as
to preempt disruptions and disasters. Yet
across the country and the different sectors of
there needs to be balanced attention towards,
the economy.
and greater emphasis made, on other sorts
of infrastructure needed at the current state of
Third, the government needs to squarely development but are persistently neglected. This
address how to raise the considerable financing includes rural roads and free irrigation to support
necessary for all the required investments in small farmers, and social infrastructure for free
social policy, physical infrastructure, agricultural or affordable public education, health, housing,
modernization, and industrial development. water and sanitation, and electricity.
This reorientation has a number of implications. Far-reaching income, wealth, and asset reforms.
These reforms create important enabling
Greater State regulation and control of finance. conditions for positive structural change in many
It is difficult to imagine a country that has ways. They create a large mass market and
industrialized without consciously directing credit expand domestic demand as the driver of growth
towards industrialization. Internal and external and anchor of the domestic economy. By creating
financial liberalization since the 1990s has more equitable social relations, they lessen social
heightened how finance flows mainly according to divisions and foster greater national unity. Aside
the exigencies of short-term profit maximization, from progressive taxation, other mechanisms
in the absence of strategic industrial policy or a include meaningful wage hikes and greater
credible rural development program. A revival of benefits for workers, land distribution, fisheries
public or development banking will be important and aquatic reform, and the wide range of social
to remedy this. protection measures.
More progressive taxation. There is already a Sustainable consumption and

considerable stock of wealth and capital in the
country, albeit concentrated in the hands of a few.
production
Since they are in private hands they are mobilized The drive for economic progress through rural
primarily for profit according to prevailing market development and national industrialization must
circumstances, and go mainly to services, ensure the balanced use, conservation, and
speculation, or as stored wealth abroad. More development of the environment. The overly
or otherwise higher direct taxes on the wealthy foreign market-oriented and foreign capital-
(e.g. personal and corporate income, property, dependent use of the nation’s natural resources
assets) will generate revenues for greater public must be shifted in favor of national economic
66
development and the benefit of the people. But technologies or organic agriculture methods that
the use of the environment must also be strictly yield better long-term returns than conventional
regulated to protect the people and ensure chemical-intensive farming.
resources for future generations.
The Philippines is in a favorable position to take
There is already growing policy attention to steps to ensure that growth and development
addressing the effect of environmental distress is sustainable. This has become more urgent
on the poor. The various efforts to manage the with how the people and especially the
problem through greater social protection can poor are already adversely affected by the
be developed further. However, the efforts to overexploitation of natural resources and the
modify current patterns of growth and economic degradation of the environment. The economy’s
activity are much less developed. These efforts relative underdevelopment implies lower levels
have largely been around pollution control and of production and consumption patterns that,
environmental protection and rehabilitation, with being less entrenched, may be more amenable
minimal attention paid to the premises of the to be being developed in a more sustainable
production process and patterns of consumption, direction. This is not to disregard the influence of
especially by higher income groups (including unsustainable practices, but rather to underscore
those in the country’s export markets). that decisive policy choices have more potential
to get traction if taken early on.
The UN system has since 1992 recognized
sustainable consumption and production (SCP) There is a wide range of measures that can
as an overarching theme to link environmental be taken on top of current efforts at managing
and development challenges (UNEP, 2010). The environment systems. The government can
UN provides a working definition of SCP: be more active in ensuring greater resource
efficiency and environment-friendliness in
the use of services and related products, agricultural and industrial production; energy
which respond to basic needs and bring production (especially away from fossil fuels
a better quality of life while minimizing the towards renewable sources); water use; mass
use of natural resources and toxic materials transport systems; climate-smart buildings and
as well as the emissions of waste and other infrastructure; and developing domestic
pollutants over the life cycle of the service science and technology.
or product so as not to jeopardize the needs
of future generations. Institutional reforms
Putting the anti-poverty thrust at the heart of
The government can be more active in economic policy-making – and not taking this
ensuring greater resource efficiency up as a residual concern after major economic
and environment-friendliness in decisions are made – entails major reforms.
agricultural and industrial production; The overall strategic framework of poverty
energy production; water use; mass eradication through national industrialization and
transport systems; climate-smart rural development, with a just and progressive
social policy, will need to be expressed in
buildings and other infrastructure; the government’s policies, programs, laws,
and developing domestic science and bureaucracy, monitoring and evaluation systems,
technology. and orientation.
Given finite material, energy, and ecosystem An immediately doable yet symbolically
resources, and especially the disproportionate important and practically necessary measure
impacts on the poor, the main direction that the is a concise but formal policy statement by the
economy needs to take while developing and government of its adjusted priorities. This will
meeting the needs of the poor is straightforward – go far in initiating the process of adjustment
reduce the resource intensity and environmental towards all relevant government agencies and
damage relating to economic activities (UNEP, bodies becoming focused on implementing anti-
2012). Among others, this implies taking poverty development policy in a comprehensive,
advantage of technologies, modern or traditional, cohesive, and coordinated manner. Priority areas
that will allow for a more sustainable development can for instance be explicitly defined as:
trajectory. These include new renewable energy
67
• National Industrialization and Poverty regulatory capture; ii) aligning international

Eradication – covering industrial economic relations and development cooperation
and agricultural policy and ensuring with national development; iii) strengthening local
supportive foreign trade and investment, government initiatives implementing anti-poverty
financial, monetary and fiscal policies. development policy; iv) improving monitoring of
• Social Policy and Human Development key poverty-related indicators with a shift away
– covering social services and social from mainstream market-biased indicators
protection, including disaster response. towards more democratic people-based and
-biased monitoring; and v) ensuring that social
• Sustainable Development – sector-specific laws uphold economic, social,
covering environmental protection and cultural rights and that these are consistently
and rehabilitation but also ensuring applied.
sustainable production and consumption.
• Participatory Governance – covering Social services

political reforms especially towards
increasing people’s participation in The PDP 2017-2022 is categorical about the
governance. importance of “equalizing opportunities for
human development”:
• Security, Justice, and Peace – covering
the protection and promotion of civil and [The] PDP recognizes human development
political human rights, ensuring access not just as a means to an end (i.e., human
to justice for the poor, and assertion of capital as a factor of production) but also
national sovereignty. an end in itself. Thus, in the next six years,
individuals and groups will have more
The government already essentially organizes options to develop their full potential.
its work around a few priority areas around Better human development outcomes
which relevant executive departments and other will be attained by reducing inequalities
government instrumentalities are expected to in the Filipinos’ ability to stay healthy, be
coordinate, harmonize, and complement their well-nourished, and continue learning
efforts, chiefly through the Cabinet Cluster system throughout their lives. Inclusive strategies
which can be reorganized along these lines. The and other interventions will be directed
proposal is for greater prominence to be given at ensuring that all Filipinos, especially
to national industrialization, as the leading factor the poor and underserved, will have long,
in the country’s economic development, and healthy and productive lives, lifelong
to ensure that poverty eradication is the core learning opportunities; and improved
concept in each priority area that defines their income-earning ability. (NEDA, 2017)
respective frameworks and goals.
This is a strong starting point towards promoting
An immediately doable yet symbolically well-being across various human development
dimensions. Social service delivery is among
important and practically necessary
the most direct means for upholding rights to the
measure is a concise but formal policy highest attainable standard of health, education,
statement by the government of its adequate housing, and water and sanitation.
adjusted priorities. To this may be added the potentially significant
contribution to redistribution and social justice,
promoting social solidarity among classes and
Particular attention has to be given to modifying sectors, and building and strengthening society’s
the overly market-oriented tendencies in social fabric – a contribution it shares with social
macroeconomic measures. Major laws relevant protection measures and social policy in general.
to anti-poverty development policy need to
be identified and reviewed, and amended or Individuals and families have the right of access to
replaced as appropriate and necessary. quality social services to help them expand their
capabilities (Sen, 1989), which in turn affords
Other important areas of concern are: i) improving them a level of freedom to live lives with meaning
state capacity to actively regulate and intervene and dignity (Laderchi et al, 2003). In more
in the economy for developmental ends over developmental terms, social service provisioning
the long-term, while taking measures to prevent improves well-being, enhances productivity
68
and earnings, and reduces inequalities across much greater than from additional consumption
income, class, gender, ethnicit,y and location spending by the rich or keeping capital idle.
(UNRISD, 2010).
Review the policy thrust of increasing
A universal approach to social services is reliance on the private sector. The privatization
emphasized because “if the poor are provided and commercialization of social services is
with access to the same kinds of services usually justified on the basis of promoting
enjoyed by the rich, universalism may act as an efficiency, competition, and providing a choice
instrument for redistribution and social mobility” to consumers. The Philippines’ experience,
and “foster social cohesion and build coalitions however, demonstrates that this has made social
across classes, groups and generations”. services less accessible to the poorest segments
(UNRISD, 2010) of society without necessarily improving the
quality of the service. Moreover, PhilHealth and
The overview of social services earlier – in ESC have underscored how public funds go
particular of education and health – points to private educational institutions while public
to important areas for improvement towards hospitals and schools remain under-resourced,
ensuring human development. which only reinforces their substandard character.
This is validated by a study which observes that
efficiency gains of PPPs in the delivery of services
Social service delivery is among the in hospitals and schools is less likely given that:
most direct means for upholding rights
to the highest attainable standard of service quality is mainly determined by
human capital investment, and demand
health, education, adequate housing, evolves quickly over time. For instance,
and water and sanitation, to which may Joseph (2014) concludes that PPPs in
be added the potentially significant the health sector, especially involving
contribution to redistribution and social philanthropies and donors, can be
justice. characterized as ‘a double-edged sword.
Although they are able to provide large
amounts of money, they do not allow for
Significantly raise the budgetary allocations a holistic view of the health care concerns
for education and health. International faced by a country’ (Kwame Sundaram, et
benchmarks only provide a general sense of al, 2016).
what is possible and have been attained in other
countries; budgets according to the country’s As it is, the global experience has already given
needs and capacities will still have to be drawn rise to various relevant policy recommendations:
up. Nonetheless, the country’s falling far short of “cost-recovery schemes that result in unequal
these benchmarks already points to a major area financing of schools and health services and
for improvement even if only in general terms. The uneven quality should be removed”; “adequate
government is primarily responsible for ensuring public funding should minimize private sector
that enough resources go to providing essential involvement which also should be regulated to
social services. This also means providing policy ensure that premiums do not restrict access”; and
support for innovation to adequately resolve “in situations of commercialization of services,
many of the technical issues and challenges ensure effective regulation by defining and
facing these sectors. enforcing the form and limits of commercialization
appropriate to health and education objectives at
For instance, compulsory public mechanisms different levels of development and in diverse
obliging healthy upper-income groups to cross- political contexts” (UNRISD, 2010).
subsidize the sicker poor are socially just and
also economically rational. Foremost among
such mechanisms is a progressive tax system Comprehensive, universal, and
and correspondingly tax-financed public health transformative social protection
infrastructure and programs. Taxes should be used
to finance the public health system rather than, Social protection overlaps with but extends
for instance, private profit-seeking health care well beyond social services. The underlying
providers. The social and economic gains from development objective is to ensure that
additional health spending on the sicker poor are every Filipino attains a minimum standard of
69
or societal level, even the relatively better-off are

It is recommended to design, not spared from many natural and human-made
consolidate, and coordinate the calamities and therefore also need some public
disparate efforts on social protection support. It is in this context that universal social
in order to promote, as stated in protection is critical in promoting and protecting
the PDP 2017-2022, “a universal dignified living standards for all, thereby affirming
the rights-based approach. Furthermore, this has
and transformative social protection the effect of enhancing social solidarity across
program for all Filipinos.” sectors and classes and serves as an effective
policy tool for redistribution and social justice.
well-being on a daily basis and, especially, in

Finally, providing universal social protection helps
emerging situations of vulnerability or crisis due
to avoid the inherent difficulties and limitations
to low incomes, ill health, old age, disabilities,
associated with the more narrow targeting
calamities, economic dislocation, and the like.
approach. However, it is noted that targeting can
The specific concern of social protection is
also be complementary to more universal types of
“preventing, managing and overcoming situations
approaches, especially in relation to making sure
that adversely affect people’s well-being”
that those ‘not reached’ by universal measures –
and “[helping] individuals maintain their living
for instance due to identity-based discrimination
standards when confronted by contingencies”
and social exclusion based on gender, sexual
(UNRISD 2010).
orientation, age, disability, ethnicity, and the like
– are included.
The government already implements a wide
range of essentially social protection measures
Universalism is also especially appropriate in
at different scales, with different areas of focus,
the Philippine context of widespread poverty
in different areas, and at different levels. It
– whether by official or independent reports –
is recommended to design, consolidate, and
which oftentimes results in multiple dimensions of
coordinate these disparate efforts in order to
deprivation. This compels comprehensive social
promote, as stated in the PDP 2017-2022, “a
protection measures to protect living standards
universal and transformative social protection
and provide for the basic consumption of the poor
program for all Filipinos” (NEDA, 2017).
and marginalized. While the needs and welfare
of the very poorest need attention, so do that of
Ensure the universal character of social the less poor but no less deprived and vulnerable.
protection. This is grounded on the notion that Affirmative action for the socially excluded based
access to social protection is a right, not charity. on gender, sexual orientation, age, disability,
Universalism also heightens social protection’s ethnicity and other identity-based forms of
redistributive character and, by emphasizing discrimination highlights the transformative
collective responsibility for individual well-being, character of social protection.
also promotes social solidarity and social cohesion.
Ensure the transformative character of social
It is acknowledged in many social policy circles protection. Countries that have successfully
and broad-based citizens groups that the reduced income poverty and promoted equitable
Philippine poverty threshold is quite low and has development did so with comprehensive social
the effect of reducing the magnitude of poverty in protection programs embedded within a broader
the country (Raquiza, 2012). In this context, it is developmental strategy for structural change,
argued that the incidence of poverty is actually where, for instance, building and strengthening
more pervasive than is captured by official data. decent work and sustainable livelihoods play
Furthermore, it has been observed that a wide a central role. Furthermore, social protection
swath of the population comprising low-income measures can be synergistically linked to
earners are likewise extremely vulnerable to employment-generating programs according to
shocks and adverse conditions, and yet are broader rural development and industrialization
oftentimes rendered ineligible to avail of social goals rather than, as is often the case,
assistance programs because they do not belong implemented as localized stop-gap measures.
to the category of ‘the poorest of the poor’.
Review the use of market-oriented mechanisms
Furthermore, while the poorer segments of the in social protection. There is already wide global
Filipino population bear the brunt of risks and experience with social protection programs and
shocks that can take place at an individual, group, its varied measures. Countries that have adopted
70
social protection approaches emphasizing market- A universal social protection floor (USPF) defines
oriented instruments and employing complex the threshold of social security that Filipinos
mechanisms such as targeting and conditionality require in order to ensure their dignity and rights
have tended to be less effective in reducing throughout their life cycle. It must be clear that ‘the
poverty (UNRISD, 2010). floor is not the ceiling’; rather, it should be viewed
as a foundation for the expansion of social security
A universal social protection floor guarantees so that individuals are able to realize
their full human development and potential.
defines the threshold of social security
that Filipinos require in order to ensure Working on a USPF catalyzes a systematic
their dignity and rights throughout their process for building a more comprehensive,
life cycle. universal, and transformative social protection
system in the country. This must be deliberately
initiated and followed through as it will not happen
Establish a social protection floor. The PDP overnight nor on its own, naturally. The Benigno
2017-2022 states that an important step to Aquino administration conducted an Assessment-
achieving universal social protection is to “adopt Based National Dialogue to identify gaps in
and institutionalize the social protection floor. design, policies, coverage, and implementation
This guide will be anchored on the country’s issues of existing social protection programs
official definition of social protection, and will that can be updated and even enriched. This
consequently guide the identification and can be spearheaded by the relevant government
prioritization of relevant programs for vulnerable agencies in close collaboration with people’s
sectors (NEDA, 2017). organizations, civil society organizations (CSOs),
and other important stakeholders such as the
Social Protection Floors (SPFs) are a set of basic International Labor Organization (ILO).
social security guarantees to prevent or alleviate
poverty, vulnerability, and social exclusion. It Democratic governance
comprises the following:
The main challenge is to make the Philippine
i. Access to essential health care, including State and its instrumentalities more democratic so
maternity care; that they are more responsive to people’s needs,
and support the needed whole-of-government
ii. A basic income security for children approach to reforming anti-poverty policy and
that covers the minimum level for their implementing a pro-people development strategy.
nutrition, education, care, and other The concentration of economic power reinforces
goods and services; the concentration of elite-oriented political power,
combining into structurally inequitable political
iii. A basic income security that covers the and economic governance. This points to the
minimum level for persons of working need to break the vicious cycle of concentrated
age who are unable to earn sufficient economic power and undemocratic politics.
income, particularly in case of sickness,
unemployment, maternity, and disability; The Philippine experience affirms that strategic
and socioeconomic decisions cannot be left to
politicians, narrow vested interests, technocrats,
iv. A basic income security that addresses or the market. The scope of democratic decision-
the minimum needs of older persons. making should be expanded such that the most
vital policy questions affecting the greatest
These guarantees may take the form of child number of Filipinos is subject to real democratic
and family benefits, sickness and health care discussion, debate, and choice. The broadest
benefits, maternity benefits, disability benefits, range of subject matter needs to be covered –
old-age benefits, unemployment benefits and such as what industries to develop or transition
the like, some of which are already part of the from, the basic principles of agrarian reform, the
country’s social security system. These social distribution of resources between the country’s
protection guarantees can be realized gradually regions, the system for ensuring that the people
and progressively, making sure it is coherent have the social and economic services they
with national policies and reflects the country’s need, how to protect society’s most vulnerable
economic and fiscal capacities. especially in times of crisis, and the like.
71
The State, domestic big business, and foreign particularly in ensuring consistency with the rights
capital are well-established and entrenched of citizens and constituencies to governance,
decision-makers. The people, who are the majority public services, and the like.
in society, are in contrast largely marginalized
and their participation in terms of policy-making, Accountability and monitoring mechanisms are
monitoring, and supervision needs to be needed to ensure that the State is fulfilling its
improved and institutionalized. It is also clear that human rights obligations through legislation and
greater State involvement in economic activity is in practice. A mechanism is needed to ensure
crucial for national economic development, which that Congress complies with the mandates
makes it all the more imperative to ensure that it of the Constitution regarding the enactment
is democratic, transparent, and accountable. of measures that implement constitutional
policies and principles, particularly with respect
to economic, social, and cultural rights. A
It is clear that greater State involvement mechanism is also needed to ensure that the
in economic activity is crucial for national Executive is doing likewise with the policies and
economic development, which makes programs it implements.
it all the more imperative to ensure
that it is democratic, transparent, and The Judiciary is a potential mechanism for
accountable. this albeit currently hindered by the doctrine of
political question with respect to Congress, and
by the highly technical and complex nature of
There are six main areas for greater people’s trade, investment, fiscal, and other economic
political participation and more democratic issues. Reforms are needed to make human
governance: rights domestically justiciable.
Reform the political party system and Further develop mechanisms for people’s
election process. In the short term, this can participation. Existing partnership and
be done by strengthening the party-list system collaborative mechanisms for people’s
through, among others, the strict implementation engagement with government agencies
of the accreditation process against groups and and representation in governance can be
nominees belonging to or representing political developed, and new mechanisms built. People’s
dynasties or economic elites. An effective anti- organizations and civil society need to more fully
dynasty law needs to be enacted. Measures also participate in drawing up, implementing, and
need to be taken to ensure that the Commission monitoring pro-poor development policy. This
on Elections (Comelec) is insulated from upholds democracy in the economy as well as
partisanship, including reorganizing it to make it ensures transparency and accountability.
independent from influential politicians and other
vested interests. Campaign finance reforms are There are already a wide range of non-state
also needed to reduce the excessive influence of groups working on various issues, ranging from
money in political campaigns and careers. human rights, environment, anti-corruption,
socio-economic reforms, budget, procurement,
Reform the justice system and its institutions. election, health, indigenous people’s rights, and
The judiciary, police, and correctional centers the like. A high-level consultative mechanism
exist to protect the rights of the people, especially where people’s representatives can have a more
the poor, women, and minors. Measures need to systematic and active role in defining legislation
be taken to remove the influence of elite political and policy priorities, similar or parallel to the
and economic interests, weed out corruption, Legislative-Executive Development Advisory
guarantee fair and just treatment, and infuse Council (LEDAC), would greatly increase their
professionalism, meritocracy, and competence. positive contribution to good governance.
The Public Attorney’s Office (PAO) needs to be
strengthened to ensure that the poor, oppressed, Strengthen local government capacity to
and marginalized are treated fairly and justly in undertake development initiatives. The Local
the courts system. Government Code should be comprehensively
reviewed, particularly its provisions on making
Strengthen transparency and accountability. local governance the center of community
Current laws on the transparency, accountability, development and poverty reduction with active
and answerability at all levels of public people’s participation. The review should be
administration needs to be strictly enforced, participatory with proposals to revise or overhaul
72
the code if deemed necessary. A law also needs for development. These may also be coordinated
to be enacted to implement the Code’s mandate with and linked up with other local and national anti-
to have sectoral representatives in the local poverty and development efforts.
legislative councils (Holmes, 2016).
Protect the rights of civil society groups and
The formation and activation of local development other non-state organizations. Civil society
councils as mandated by law will strengthen groups including non-government organizations,
government and civil society partnerships in people’s organizations, media, and other non-
reforming anti-poverty policy and implementing state organizations perform critical roles in
pro-people development programs, and also modern democracies. To function effectively,
facilitate working alongside the business sector they should at all times be protected by the State
including small and medium enterprises in key under relevant national and international laws
industries. Greater local government engagement particularly, but not exclusively, those engaged in
builds capacity as well as creates opportunities community development and poverty reduction.
to develop area- and community-specific strategies
73
Political Implications and Action
T he current social compact governing Philippine

politics and society can be improved to
more systematically uphold the interests of the
and oligopolies, and transnational corporations as
well their subsidiaries and subcontractors. These
groups have very strong influence over key
majority of Filipinos. It can be modified with the policy-makers, elected officials, and bureacrats,
government more actively exercising its power to as well as, importantly, over the armed and
ensure the right to development for all. coercive power of the State in the military and the
police. They are also well-supported by a corps
The 1987 Philippine Constitution already of pro-market economists and intellectuals in the
establishes a framework for poverty eradication academe and private sector.
based on human rights and social justice.
Adopting a human rights-based and social The undue influence of foreign governments with
development approach can be the basis for privileged economic interests in the Philippines
pursuing structural transformation of the national also cannot be underestimated, especially with
economy to create jobs and improve incomes how they can exert influence on the government
for the majority of Filipinos in a sustainable directly as well as through the major international
manner. There is compelling evidence that this financial institutions and even the mass media.
means building on rural development to achieve This points to how it is also important to work with
national industrialization. It is also the basis for progressive social groups abroad, especially in
a comprehensive social policy ensuring social countries with governments that can potentially
services and universal social protection for all be supportive of Philippine economic sovereignty
Filipinos. The opportunities for doing this will and national development.
expand with more democratic governance and
Achieving change is urgent. Social conflict
greater people’s participation.
persists because millions of Filipinos remain
deprived of the conditions for basic and decent
Building the constituency for change living. Neoliberal policies have worsened living
conditions and material insecurity, increased
Reforming anti-poverty policies and implementing
economic and political inequities, and drive
a pro-people development strategy will face
anger, dissatisfaction, and resentment. These
opposition. The short- and long-term interests
are also the conditions for criminality and general
of the poor and marginalized will in many ways
social and political instability.
conflict with that of existing economic and
political elites seeking to preserve their privileged Attaining development
positions. In this regard, the most fundamental
element for the successful reform of anti- Opposition to positive change is well-entrenched
poverty policies will be constant pressure from but there is already much to build on. The
a continuously expanding progressive sector, proposed pro-poor approach to development
distinct from but engaging established inequitable is consistent with long-held standards of social
structures of governance. justice and, significantly, with the expressed
aspirations and daily economic and political
The most fundamental element for struggles of organized social movements in the
the successful reform of anti-poverty country (Chavez, et. al., 2015; National People’s
Summit, 2016; NDFP, 2017). They are already
policies will be constant pressure from a
wholly or partially advocated by major political
continuously expanding progressive sector, forces for progressive change. These movements
distinct from but engaging established and their networks include, or otherwise directly
inequitable structures of governance. and indirectly influence, tens of millions of Filipinos
in their communities and work places, including in
The extent of resistance to progressive advocacies policy-making institutions and across all branches
already draws attention to the sectors who form and levels of government. This is a potent force
the likely opposition. Although numerically a to mobilize on a national development project of
very small minority of the population, they wield radical and genuinely pro-people change.
considerable economic power and, often by virtue
of this, political power. This includes landlords, The extent of potential public support for reforms
agri-business corporations, domestic monopolies in the country’s anti-poverty strategy was recently
74
(Africa, 2012). These are considerable numbers
Pro-reform elements objectively even if many are presently more inclined towards
constitute the overwhelming majority conventional anti-poverty schemes -- welfare
of the population. They include tens of projects and income-generation, especially
millions of farmers, fisherfolk, workers, at local and community levels – rather than
engaged in policy advocacies or other active
urban poor, low-salaried employees,
political engagement (ibid.). Still, there is no
women, youth and students, indigenous doubt that these non-state actors have been at
peoples, overseas Filipinos, persons the forefront of demanding accountability and
with disabilities, and calamity victims. answerability from the government since at least
the end of the Marcos administration (Brillantes
confirmed at the National Anti-Poverty Sectoral and Fernandez, 2011).
Summit 2016, which convened some 600 basic
sector leaders and anti-poverty advocates in the Eradicating poverty is both a whole-of-government
spirit of meaningful representation and active and indeed a whole-of-nation effort. The country’s
participation in the government’s programs. The social and mass movements cumulatively
Summit discussions and workshops articulated represent significant levels of organization and
the clamor for State-subsidized social services, of practice with social mobilization spanning
agrarian reform and rural development, national decades and covering millions of Filipinos. This is
industrialization, addressing inequality, and a vast and invaluable stock of praxis in people-
participatory governance (NAPC, 2016). centered political engagement, reform advocacies,
organizing, and community development.
Pro-reform elements objectively constitute the
overwhelming majority of the population. They People’s participation in governance is
include tens of millions of farmers, fisherfolk, already expressed through engagement with
workers, urban poor, low-salaried employees,
government, even as the government has been
women, youth and students, indigenous peoples,
taking incremental steps to broaden the scope of
overseas Filipinos, persons with disabilities, and
this participation. Anti-poverty policy is in effect
calamity victims. Despite more difficult economic
already being reformed from the ground up,
circumstances, there also remains a substantial
and social mobilizations and continuous public
number of potential Filipino industrialists. The last
education, advocacy, and building of social
decades have also seen increasing numbers of
movements will only keep strengthening the
progressive policy-makers and elected officials,
constituency and movement for change.
aside from many government employees in the
bureaucracy.
Eradicating poverty is both a whole-
There is a potentially wide opportunity for active of-government and indeed a whole-of-
people’s participation in governance through the nation effort.
vast array of civil society and other non-state
organizations in the country. Estimates vary
due to the lack of generally accepted definitions Corresponding policy reforms by government for
and weak monitoring, but non-government greater economic and political democracy will
organization (NGO) networks and multilateral greatly accelerate this process of change towards
agencies report up to 68,000 NGOs and up real economic progress and lasting social and
to 500,000 civil society groups in the country political stability in the country.
75
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List of Abbreviations
4Ps Pantawid Pamilyang Pilipino Program

ADBP Average daily basic pay
ARMM Autonomous Region in Muslim Mindanao
BPO Business process outsourcing
CCT Conditional cash transfer
CPH Census on Population and Housing
DSWD Department of Social Welfare and Development
EU Eurpoean Union
FDI Foreign direct investment
FIES Family Income and Expenditure Survey
FTA Free trade agreement
GDP Gross Domestic Product
GSIS Government Service Insurance System
HEIs Higher education institutions
IMF International Monetary Fund
IP Indigenous peoples
LFS Labor Force Survey
MSMEs Micro, small, and medium enterprises
MTPDP Medium-Term Philippine Development Plan
NCR National Capital Region
OFWs Overseas Filipino workers
PDP Philippine Development Plan
PEZA Philippine Economic Zone Authority
PhilHealth Philippine Health Insurance Corporation
PIDS Philippine Institute for Development Studies
PNHA Philippine National Health Accounts
PPPs Public-private partnerships
PSA Philippine Statistics Authority
SAPs Structural adjustment programs
SEA-K Self-Employment Assistance-Kabuhayan
SEZs Special economic zones
SOF Survey of Overseas Filipinos
SSS Social Security System
SUCs State universities and colleges
TNCs Transnational corporations
US United States
USPF Universal Social Protection Floor
WTO World Trade Organization
81
List of Chart and Tables
Chart Title Page
Chart 1 GDP Per capita growth, 1951-2016 (%) 7

Chart 2 GDP Per capita, 1950-2016 (Php) 7
Chart 3 GDP Per capita in the Philippines, East Asia and Pacific, 1980-2016 (at 8
constant 2010 US$)
Chart 4 Population poverty incidence, 1985-2015 9
Chart 5 Poverty incidence among basic sectors, 2006-2015 (in %) 9
Chart 6 Number of families by income class, 2015 12
Chart 7 Gini coefficient, 1985-2015 13
Chart 8 Share of total income per decile, 1985-2015 (in % of total) 13
Chart 9 Primary and secondary education indicators, SY 2007-2008 to 2015-2016 (in 15
%)
Chart 10 Prevalence of malnutrition among 0-5 years old children, 1990-2015 (in %) 15
Chart 11 Nominal and real average daily basic pay of wage and salary workers, 2001- 19
2016 (real value in 2006=100; in Php)
Chart 12 Number of overseas Filipinos and unemployed Filipinos, 1997-2013 22
Chart 13 Annual Gross domestic product growth, 1950-2016 (at constant 2000 prices; 24
in %)
Chart 14 Gross domestic product by industry share, 1950-2016 (at constant 2000 26
prices; in %)
Chart 15 Number of unemployed persons and unemployment rate, 1956-2016 27
Chart 16 Gross domestic product by production, 1946-2016 (at constant prices; in %) 27
Chart 17 Industry share of Gross domestic product (GDP) and unemployment rate, 28
1970-2016
Chart 18 Overseas Filipino Workers development (1980-2016) and Overseas Filipino 29
Stock (1997-2013)
Chart 19 Overseas Filipino Remittances, 1980-2016 (US$ million and % of GDP) 29
Chart 20 Labor force distribution, 1987-2016 (in %) 31
Chart 21 Gross domestic product by industry, 2016 (% of total) 31
Chart 22 Gross domestic product by expenditure, 2016 (% of total) 32
Chart 23 Unemployed and underemployed, 1956-2016 (‘000, % of labor force) 33
Chart 24 Employment generation and deployment of OFWs, 1981-2016 34
Chart 25 Average Nominal tariffs by Sector, 1975-2016 35
Chart 26 Average Nominal tariffs and Industry share of Gross Domestic Product 35
(GDP), 1970-2016
Chart 27 Gross National Income (GNI) by Expenditure, 1950-2016 (%) 36
Chart 28 Foreign Direct Investment flow, Stock and Stock as Share of Gross Domestic 37
Product, 1980-2016
Chart 29 Regional Gross Domestic Product, 2009-2016 (in %) 41
Chart 30 Gross Revenue of Top 50 Conglomerates and Net Worth of 40 Richest 43
Filipinos, 2006-2018 (% of GDP)
Chart 31 Poverty headcount ratio among population in the Philippines, East Asia, and 55
Pacific, 1980-2012 (2011 PPP in %)
82
Table Title Page
Table 1 Poverty Indicators by Region, 2015 10

Table 2 Mean and Median Family Monthly Income by Per Capita Income Decile, 2015 11
Table 3 Housing Units by Floor Area in square meters, 2010 16
Table 4 GDP by industry, 1960, 1980 and 2016 30
Table 5 Growth in Gross Domestic Product, 1951-2016 32
Table 6 FDI indicators, selected years 1975-2016 36
Table 7 Capital formation, 1946-2015 38
Table 8 Total Approved Investments by Industry, 2011-2015 (in million Php) 42
Table 9 Selected Indicators of Education and Health System 43
Table 10 Health Expenditure by Source of funds, 2014 45
Table 11 Pantawid Pamilyang Pilipino Program Target, Households and Budget, 47
2008-2017
83
About the Writers
Jose Enrique A. Africa is Executive Director of IBON Foundation – an independent non-government

organization providing research, information, and education services to people’s movements in
the Philippines and abroad since 1978. He is also a fellow of the Center for People Empowerment in
Governance (CenPEG) and board member of Altermidya (People’s Alternative Media Network). He
previously worked as staff in the National Economic and Development Authority (NEDA), evaluator of
NGOs with Management Systems Advancement, Inc (MASAI), legislative officer in Congress, and as a rural
community organizer. He has been an active educator to people’s organizations as well as a resource
person for schools, NGOs, government and media since the 1990s. His writings on socioeconomic and
political issues have been published by IBON, international NGOs, and UNICEF. He obtained his Master’s
degree (MSc) in Development Studies and Bachelor’s degree (BSc) in Philosophy and Economics, with
upper second-class honors, from the London School of Economics and Political Science (LSE).
Ma. Victoria ‘Marivic’ R. Raquiza is a Co-Convenor of Social Watch Philippines and currently Assistant
Professor at the National College of Public Administration and Governance (NCPAG), University of the
Philippines – Diliman, where she teaches courses on poverty and economic development, social policy,
and governance. She received her MA degree in Development Studies from the Institute of Social Studies,
The Hague, Netherlands, where her thesis garnered a distinction award, and her PhD degree from the
City University of Hong Kong. Dr. Raquiza has also written extensively and campaigned for policies on
poverty, social policy, and women’s rights. She lived in North Cotabato, Mindanao for a number of years,
working with poor farmers to promote a sustainable rural development program when she was with
the Philippine Rural Reconstruction Movement (PRRM). Dr. Raquiza has been a member of the Boards
or Executive Committees of a number of national and international non-government organizations, and
has been part of official country delegations to different UN conferences particularly focused on social
development, the MDGs, and financing for development.
Evalyn G. Ursua is a human rights advocate who has worked on women and children’s rights issues since
the early 1990s both in the Philippines and in Southeast Asia. She is a litigator, trainer, researcher, and
academic. She works as consultant for the UN Women in various Southeast Asian countries in projects
involving research, development of training modules and materials, and training with justice actors.
She was a senior lecturer at the University of the Philippines College of Law and Department of Women
and Development Studies. She had also taught part-time at the St. Scholastica’s College and Adamson
University College of Law. Ms. Ursua has a Bachelor of Arts from the University of San Agustin (Summa
Cum Laude), a Bachelor of Laws from the University of the Philippines (Class Valedictorian), a Master
of Laws in Asian Legal Studies from the National University of Singapore, and a Master of Studies in
International Human Rights Law from the University of Oxford (Distinction).
Evita L. Jimenez is the Executive Director of the Center for People Empowerment in Governance
(CenPEG) and a consultant and regular resource person in Philippine Congress and various NGOs on
policy reforms that seek democratic representation and broader people participation in public affairs,
especially in elections and local governance. As a social activist for three decades, she has spearheaded
national research-based projects on the Philippines’ first automated elections system, anti-corruption
studies, training modules, and books for watchdogs, and contributes to publications on the elections,
the peace process, NGO development effectiveness work, political dynasties, maritime education, and
corruption. As a network builder, she has chaired, convened, and organized various national multi-
stakeholder conferences, alliances, and organizations, in various regions including in Mindanao, Samar-
Leyte, and Bicol promoting peace and development. She is also a social entrepreneur who supports strong
farmers’ role in the food and health industry. She participates in international conferences and is the lead
convener of the Asia for Peace and Development Today (ADePT), which promotes stronger people-to-
people connectivity among Asian countries. She has a Bachelor of Arts Degree from the University of the
Philippines – Diliman and is presently pursuing her Graduate Studies at the UP Asian Center.
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7 Current Situation: The Challenge of Philippine Poverty

23 The Roots of Philippine Poverty and Underdevelopment

52 Current Responses: Anti-Poverty Programs

58 Proposed Response: Pro-Poor Development Policy

74 Political Implications and Action

74 Building the constituency for change

T he clamor for change in the country is growing.

Different groups of poor have specific The economy is trapped in a cycle of

The share of agriculture in the economy Policy-making overly prioritizes foreign

R ecent improvement in the growth of gross

(2.0) GDP per capita

(4.0) assets and inadequate livelihood

10,000 1 Computations on data from

50-60 million) in varying conditions of deprivation

Official poverty incidence was

family workers (25.0%) and 20

7 The national poverty threshold is

Table 1. Poverty indicators by region, 2015

Region IV 22,121 15,303

Source: Philippine Statistics Authority Official Poverty Statistics of the Philippines

continued insecurity and vulnerability. Sixth decile 18,167 17,000

400,000 - 409,999 There is also a specific

Chart 8. Share of Total Income Per Decile, 1985-2015 (% of total)

This can be interpreted as a slight Fifth

Other indicators. This household survey- 10%

the top 10% and Php161,319 of the top 1%

indicators were steadily improving until 30

Table 3. Housing Units by Floor Area in square meters, 2010

300 275.11 278.44

200 222.29 Nominal

Source: Philippine Statistics Authority

Chart 12. Number of Overseas Filipinos and of Unemployed Filipinos, 1997-201

Number of unemplyed Filipinos (in '000)

The Roots of Philippine Poverty and Underdevelopment

T he economy has generally expanded with the

value-added and more domestically-grounded

hence, far less exposed

Unemployment rate (%)

3,000 8 Number of unemployed

0.0 - Yet all these programs,

address only the immediate,

concern about their 15,000 6.0

The share of agriculture in the economy, on the % of total employment

Continuous growth, high unemployment. average of 1.8% in 1981-1990, 2.9% in 1991-

Manufacturing instead concentrated

Chart 23. Unemployed and Underemployed, 1956-2016 (‘000, % of labor force)

Manufacturing exports and foreign investments in the

Public utilities and

20.0 15 Overall Average

the total value of manufacturing output in 1985 to

40% exports, expansion

Table 6. FDI indicators, selected years 1975-2016 With weak government

Table 7. Capital formation, 1946-2015

Administrative and Reduced levels of funding