Chapter 9 POVERTY IN THE PHILIPPINES INTRODUCTION The 1997 Poverty Statistics showed that 4.5 million families and 27 million individuals are wallowing in poverty. And 20.0 percent of the Philippine population was below the food threshold of P7,710 per annum per capita (Highlights of the 1994 and 1997 Poverty Statistics: 9) Prior to 1965, the Philippines has a headstart in economic development compared to Indonesia, Thailand and South Korea but in the subsequent years up to the present, the Philippines has registered a very slow economic growth among the Asian countries. The Philippine Assistance Program, loans from the Asian Development Bank and foreign aid, hardly created an impact on the alleviation of the poor. It is rather a paradox that the Philippines which is blessed with rich natural resources, a big educated labor force (334 million), a high literacy rate (93.9 percent) and a high employment rate (88.2%) should suffer extreme poverty. DEFINITON OF POVERTY There are two ways of defining poverty: the absolute and the relative, The absolute poverty definition defines poverty in terms of cash income or expenditures 120in food, clothing and shelter. It determines the Poverty thres| The poverty line is the minimum poverty income level), 7 he p level of income which can provide the family with adequate food, clothing and other needs, Felipe Miranda, a social scientist defines poverty in absolute and he states that poverty is absolute and poverty is a situation in which, hold in a population, poverty threshold is the 1, The family cannot buy enough recommended food requirements 2. The family cannot afford at least two changes of garments 3, The family cannot afford 6" grade schooling for their children, 4. The family cannot cover minimal cost of medical care; and 5. The family cannot cover rent and necessary fuel, The relative definition defines poverty in terms of median family income According to the National Economic Development Authority (NEDA), the median family income can be determined by arranging the different income ranges by increasing or decreasing order; then determining the middle income level. Any family earning lower than the median family income may be considered poor. On the other hand the Bureau of Census and Statistics determines the poverty line-by- taking the bottom thirty (30) percent of the income bracket. Those within this range belong to the category of the poor. THEORIES OF POVERTY There are four theories that explain poverty. These are the Culture of Poverty Theory, the Social Darwinist Theory, the Theory of Capitalism and the Dependency Theory. Culture of Poverty Theory, Poverty is the by-product of cash economy, wage ‘labor and production for profit, a persistently high rate of unemployment and underemployment of unskilled labor, low wages and lack of social, economic organizations to scrve the low income population. In response to these economic realities, the poor develop a way of life, values, beliefs, gspirations and knowledge considered by the bigger socicty as deviant. Lewis, a sociologist, noted that the Poor are Iess permissive in socializing their children, less verbal, more fatalistic, less interested in formal education and are pleasure-oriented. Their way of life is reinforced and rewarded by poor people and handed down from generation to «gencration making it difficult for their children to escape from this way of life, The Social Darwinist Theory. The Social Darwinist theorisfs assert that economic survival is for the best fitted. The intelligent and the white color are characteristics of qualities best fitted to survive. The poor people are most likely to tbe stupid and are most likely than not to have inferior intellectual capacity. §ntelligence Ieads to the development of intellectual castes in a society. Social stratification is the result of inborn differences since mental ability is inherited and success (based on the prestige of the job and carning) depends on mental ability. People of the same mental abilitics tend to marry each other and reproduce among 121themselves, thereby making an intellectual caste. In another related study, Jensy found that the Blacks tended to have lower intelligence than the White people, i asserted that intelligence quotient (IQ) is 80 percent hereditary and 20 Percon, environmentally related, Using these findings, many people reason out that 4, Black people are poor because they have innate low intelligence. Both these studies were refuted by many social scientists. Eitzen asserted th,, intelligence quotient is a product of class membership. IQ test tend to favor th, white middle class environment and experiences and it tends to discriminate againg the language of the poor. In the Philippines, the result of the NCEE test and UPCay test showed that these tests favor the urban graduates of exclusive schools ar, universities, The test also showed that the upper and middle class students wt, can speak and understand the English language better have higher chances ¢ passing. The Theory of Capitalism. Capitalism is the ‘root cause of pove perpetuates the exploitation of the majority of the people. The capitalistic structure, the private and corporate power and the sclf-distinctive tendency of the tich people perpetuate poverty. The poor are always sacrificed for the bene! technological progress. Harrington states that although capitalistic socicty provide social reforms, these reforms are but a palliative to the solutions of poverty. Hefe that it is only through socialism that poverty can be eradicated. The Dependency Theory. Poverty in underdeveloped socicty is the resultcf a colonial socio-economic structure. This socio-economic structure is basically determined by the cconomic requirements of the highly developed countries. Th: growing poverty of the underdeveloped country is duc to the forced incorporation of the economy of the underdeveloped country. Developed countries need the dependent countries’ cheap labor, abundant resources and locally available capital.’ The big transnational corporations (TNC) represent the interests of the highly developed countries. Owners of these corporations work with the local elite to facilitate the recruitment, of cheap labor and control of the labor force, the organization and management of the extraction of local resources, and the establishment of the necessary infrastructures that will make the TNC’s operation easier through the use of public funds and resources. Unabated capital accumulation of the transnational corporations and theit) partner local counterparts plus the process of structural underdevelopment havt led to the closure of many local industrics. Since most transnational corporations, are technology-oriented they can hardly absorb the displaced workers. Unemployment and underemployment and migration to the urban centers whert most TNC’s arc located have led to the oversupply of cheap labor. These situations + of dependency have led to the increasing impoverishment of the dependent count) (David, 1980: 443-445). 122—_—_— pFFECTS OF POVERTY The effects of poverty are devastating for the individual and for the socicty The effects of poverty on the individual are terrible. Poor persons usually view sremselves as failures. They lack self-esteem and are gencrally alienated from society. The poor views the government and society with contempt and cynicism, fitzen stated that the poor person develops three coping mechanisms to adjust: first he tries his best to be accommodated in society by conforming to middle class values; second, he withdraws from society by committing suicide, by drug abuse ot by insanity; and third, he tries to reform society or change society by joining reform or revolutionary movements. gross national product, low tax collections and high capital investments in social amelioration, This economic situation can lead to serious political problems like q | The presence of so many poor people in society is devastating. It means low | the spread of political and civil disturbances. According to the Population Commission Report of 1992, the growing unemployment and increasing urban poverty have led to the mushrooming of shanty towns and slums in the urban areas, The report indicated that in Metro Manila there are about 3 to 4 million poor people. This overcrowding has aggravated unhealthy conditions leading to the presence of contagious diseases, as well as a high mortality rate among infants and children (Commission on Population 1992: 19). POVERTY IN THE PHILIPPINES Poverty Threshold Poverty threshold is defined by National Statistics Office (NSO) as the basic food and non-food requirements. “It is the minimum income needed to mect the food requirements and non basic needs.” The annual income of the average Filipino in 1997 was P11,319. This annual income has increased in the past twelve ycars. The urbanites received a higher income than the ruralites and that has not changed forthe past years. The highest poverty threshold is registered in the National Capital Region (NCR) at P14,299 per person, much higher than the national average of P11,319 per person per annum. The lowest poverty threshold was recorded in Central Visayas (8,718), Eastern Visayas (P8,727) and Western Visayas (P9,732) (Highlights of the 1994 and 1997 Poverty Statistics). Poverty Incidence Poverty incidence is the number of families/individuals per capita annual income less than the per capita poverty threshold. Data shows that poverty has declined for the past 12 years from 44.2% in 1985 to 31.8% in 1997. 123Poverty incidence reduction is more evident in the urban families than in the , families. The difference is attributed to the different levels and paces of developn, and the differences in the amount of income-gencrating opportunities (Highligh, the 1994 and 1997 Poverty Statistics), f The poverty incidence of the Philippines improved {rom 40.6 percent inv, to 36.8 percent in 1997, Poverty incidence is higher in the rural than in the yp, areas. The number of poor population in the rural areas increased from 65.4 per, in 1994 to 72.1 percent in 1997, High poverty incidence is registered in g, Northern and Central Visayas, CAR and ARMM. Lowest poverty incider, registered by NCR (1998 Annual Poverty Indicators Survey), Income Gap The income gap between the Philippine population has not improved ¢,. 1994 (31.6%) to 1997 (1.6%). The lowest income gap is registered in the NCR. the ha income gap is in Region XII and CAR (Highlights of the 1994 and t Poverty Statistics). Luzon The highost number of the poor lives in Luzon Island (excluding NCR). 7. population of the poor grew from 10 million in 1985 to 11 million in 1997. Luz: showed the lowest reduction in poverty incidence. The income of the poor familis in Luzon is nearer P11,319 per annum, higher than the poor families in Visayasar: Mindanao in 1997. Visayas The Visayas registered the smallest number of poor people form 1985 to 1% The number of poor in the Visayas declined from 29 percent (1985) to 25 percent? 1997. The Visayas also reported the second lowest income gap. Governmenteffat to improve the income of the poor was felt most in the Visayas than in other mi islands in the Philippines. Mindanao Mindanao reported the highest poverty incidence among the island grou It registered the highest income gap for 1985 to 1997. The government effor? help the poor actually benefited the non poor as shown by the fact that the incot of the Mindanao poor is quite far from the poverty threshold (Highlights of the! and the 1997 Poverty Statistics). 14———OO— i i i i Balisacan observed that changes in the poverty conditions in the Philippines are directly related to the growth or stagnation of real mean consumption and distribution of living standards. He also noted that high inflation during a period of low economic growth iner \ggregate poverty, An increase in the prices of commodities will affect the numerically large small agricultural producers and landless workers, He believes that the poor performance of Philippine economy is due to the relative differences in the access to infrastructures and social services between the major urban centers and rural areas and spatial variations in the measures of development (Balisacan, 1998:11), In conclusion, Balisacan be poverty is responsive to growth when consumption is stagnant during a inflation, the redistribution component was positive and accounted for the increase in poverty. High poverty in the Philippines is due to short duration and slowness of growth. He believes that for faster poverty alleviation, there should be development of rural infrastructure, human capital formation, agricultural research, small and medium scale industrial development and improvement of access to land in the impoverished regions. (Ibid, 18) Studies showed that many Filipino families faced financial crisis because of the following factors: (1998 Annual Poverty Indicators Survey). 1. Increased price of food and other basic commodities; 2. Loss of job within the country; 3. Loss of job due to retrenchment of migrant workers; 4. Reduced wages; and 5. Drought or “El Nifio Faced with financial problems, the poor responds by: 1. Changing the eating pattern of the family; 2. Taking the children out of school; 3. Family members migrated to the city or other country; 4. Receiving assistance from friends and families; 5. Receiving assistance from the government; and; 6. Increasing working hours and others YHE POOR PEOPLE OF THE PHILIPPINES Philippines studies showed that: 1, Poverty is highest among the farmers, laborers, hunters, loggers, and elated workers followed by manual workers not classified; 2. Poverty is highest among families engaged in farming, fishing, forestry, hunting and wage and salary workers; 125—_——_—_———— rw, 2. Poverty is highest among families engaged in agricultural and depondeny on rice and com farming; 4, Poverty is highest among the least educated; 5, Poverty is highest among families headed by young males; and 6, Poverty is higher in the rural areas than in the urban areas, SOME CORRELATES OF POVERTY Studies have wn that poverty is highly correlated to criminality, breakdown of morals, and socially unaccepted behavior, to fire incidence, low Property value and poor life chances. Poverty and Criminality. Statistics show that poverty-stricken areas Tike Tondo, Pandacan, Paco and Leveriza registered the highest incidence of crimes against poverty, persons and morals. Tondo, which houses 57.8 per cent of Manila squatters, has registered the highest crime rate. Poverty and Fire Incidence. The most costly and biggest fires to hit Metro Manila are those that took place in Binondo and Pasay where most of the squatter, live, Poverty and Health, People living in the slum and squatter areas tend to have shorter life expectancy and high incidence of morbidity. They tend to be afflicted with communicable diseases like pneumonia, tuberculosis and measles and I. telated diseases like avitaminosis, protein calorie malnutrition, iron. deficiency and iodine deficiency. Poverty and Life Chances, Life chances refer to life opportunities available to individuals born to a given social class. Studies show that the poor have less chances of finishing college, are less able to land high paying and prestigious jobs. Poverty and Poverty Values. Low property values and low income are closely associated in slum and squatter areas. Deterioration of public facilities and high incidence of crimes contributed to a low assessment appraisal of properties in the poverty-stricken arcas. Poverty and Location CAR, ARMM, Central Mindanao, Western Mindanao, and Northern Mindanao, Eastern Visayas and Bicol have registered the highest incidence of poverty. Southern Tagalog, Western Visayas and Luzon except NCR recorded the highest concentration of poor people. Poverty and Family Size A World Bank study reported that the larger the family size, the higher is the probability of the family getting poorer. Low income families tend to be larger because of a high degree of dependency on the number of family members employed. 126| _— ue Poverty and The Main Source of Family Income Poorer families engaged in rural manufacturing and trading activities tend to derive their income from wages and salaries Poverty and Educational Attainment People in the slum and squatter arcas, although found to be literate, have low educational attainment. Studies show that Jow educational attainment is due to the fact that classroom performance is adversely affected by the failure of the poor to meet the normal requirements of classroom and school work. Children of the poor have a set of values different from those expected by the school-thereby the low achievement ratings. Children of the poor cannot cope with the demands of school life. DSW PROGRAMS TO ALLEVIATE POVERTY IN THE PHILIPPINES (DSW ANNUAL REPORT 1999) Comprehensive and Integrated Delivery Service Program. This program integrated delivery of social services through people empowerment, development management and local governance. “Lingap para sa Mahihirap”. This program provides protection services for children and youth. The program provides day-care services, child/youth crisis service, other protective/intervention for children and youth. Its target is the 100 poorest families and critical barangays. Self-employment Assistance Kaunlaran Integrated Program. This program provides social preparation, capital assistance, savings mobilization and access to other social services through community-based micro-financing projects. In addition, it provides seed capital and loans for livelihood projects, micro-enterprise expansion, home improvement and basic shelters, Early Childhood Development Program. This program improves and builds existing health nutrition and early services for disadvantage (0-6 years old) children. Protective Service Program. This program aims to protect disadvantaged thildren, women, youth, persons with disabilities and the elderly against abuse, exploitation discrimination and ignorance. The national government with the local government, the non-government organizations and people's organization work {a} legislative agenda; (b) social and legal intervention; (c) placement and rdianship; (d) counseling and guidance rehabilitation services; ()educational/ t services, livelihood practical skills development and immersion outreach ram; (f) internship program to disadvantaged in-school youth; and (g) fund “gmentation,The Philippines Institute for Developmental Studies (PIDS) Report o jy, ‘blamed failure of economic growth and income inequality as the main culpri” Philippine poverty Farlure of Poonomie Growth, The PIDS report stated that the principal rea, tor poverty is the failure of the economy to grow rapidly cnough, sustain that gr, fate employment and gen The study pointed out that countries that were successful in alleviatingaby, poverty ate those countries which have managed to sustain a rapid growth, average income, Rapid and sustained growth results in higher earning from the poor already own, to the extent that they are able to save out of improved incom asse te s; and they also begin to accumulate a higher level of asses, work implements, animals, land financial assets). The failure of economic grow leads to joblessness whether manifested in underemployment ot of unemployment, The absence of employment opportunities leads the majority the labor force to jobs with low productivity and low pay. Inequality of Income. The highly inequitable income distribution is one res, for poverty. Studies show that in countries where income is more or less equita distributed, the elimination of absolute poverty is more rapid. Historical a; theoretical explanations show that past economic growth enforced more inequiy than reduced it if there was initially inequality of income. The PIDS paper assert: that growth and equity must be regarded as complementary. The PIDS report of 1992 proposed that the Philippines should restructurete Philippine economy away from its decade-long dependence on protection ai toward competitiveness, both at homé and in the export market. This means tz the government should stimulate competition through freer market for final, | goods and inputs, funds and foreign exchange. To bring income inequality to a hall, it is necessary to speed up the progr and adequacy of the Agrarian Reform program in the Philippines. In another paper read at the Philippine Social Science Convention, Philippi? Poverty was attributed to neocolonial economy, to dependence on foreign capi! to the gross insensitivity of foreign capital and its allies to the welfare of the Filipi* People and also to graft and corruption of high government officials. 1. Neocolonial Economy. The Philippine economy is characterized by its! integration in the international world community. It provides cheap labor, abunds! natural resources, and limited capital to the international economic order. addition, it assures the international economy of profits and return of cap? investment, The economic structure of the Philippines makes it dependent * 128ee ransnational corporations. The process of capitalistic accumulation and expansion jastwo bases which are: a. The total dispossession of the masses of people in the countryside from their means of production. This condition has created a surplus of landless agricultural workers and urban residents who are willing to scl thet labor for low wages; and b. The further fragmentation of the means of livelihood of the masses which keads to direct integration to the commodity economy at the same time preserving their matcrial/ reproduction outside their economy, 2. Dependence on Foreign Capital. The Philippine economy is heavily dependent on foreign capital. NEDA reported that forcign investments will be promoted particularly through encouragement of joint ventures between Filipino rationals and foreign nationals in high technology areas, NEDA reported in 1988 that foreign investment should encouraged principally to complement domestic investment in arcas where the latter is inadequate, particularly in high-value, export- oriented and employment-generating activities, to maximize contribution to the economy. (1988 Economic and Social Indicators, 1990:40). Studies in the Third World countries show that foreign capital investments do not increase the reserve of these countries. Foreign capital investments take more than the amount they invest in the Third World countries leading to indebtedness tointernational capital This pattern of preferential treatment for the TNCS encourages inefficiency and import dependence; it discourages innovations and condones monopoly of power. The PIDS stated that “the pattern of protection penalizes the poor, since it discriminated against agriculture, the use of labor, the rural areas and medium saleindustries. Asa result it failed to, ‘expanding opportunitisforcither employment or entrepreneurship” Chilppine Institute of Development Studies, 192:22), 3. Gross Insensitivity of the Foreign Capital and their Allies to the Welfare ofthe Filipinos. Foreign capital is insensitive. The World Bankand the International Monetary Fund have shown insensitivity to the welfare of the debtor countries. The latest report on Venezuela's political unrest was linked to heavy foreign debt. President Carlos Andres Perez acgused the foreign banks of inflexibility by demanding payment of billions in foreign debts without regard tothe nation’s ability to pay. j The past and the present Philippine government and friends continue to provide tax exemptions and incentives to foreign capital, These groups insure the ‘eign capitals of protection from labor laws and tolerate harassment of poot sborers in the Bataan Trade Zone, In addition, the government assures the World Sunk and the International Monetary Fund that it will abide by the rule to pay its *uge debts and loans at all cost.lM. The local elite, on the other hand, in partnership with foreign capital, help provide effective and efficient operation for the foreign capitalistic corporations, {y has recruited a cheap and disciplined labor force and has helped organize extraction of local resources and the binding of necessary infrastructure. In additi it helps the foreign capital to utilize public funds and resources for its « interests, 4, Graft and Corruption of High Government Official high government officials drains the Philippine economy me of the lower and middle level civil service workers do, 1 the amount involved. Alarilla pointed out that there is a direct relationship between position and magnitude of moncy involved. Graft and corruption in the Department of Agrarian Reform had led to the buying of barren land and the misappropriation of funds that otherwise could be used to save landless farmers from poverty. nthe corruption THE POOR’S ADAPTIVE WAYS OF SOLVING FINANCIAL PROBLEMS The poor, according to Alfredo Hernandez, have adopted different ways of solving financial problems (Manila Standard, April, 1989), These are: 1. Do-it yourself activity. The poor paints their own houses, repair their own clothes, raise their own food; . Outright crime. Smuggling, trafficking of drugs, fake recruitment, faking of documents, and prostituting themselves, their children or wives and relatives. s Tax evasion. Activities that evade taxes or avoid registration and whose existence is ignored or tolerated by the government such as tax evasion by street and sidewalk vendors, by owners of sari-sari stores and smuggling. SOLUTIONS, PROGRAMS AND PROJECTS AIMED TO MINIMIZE POVERTY To combat poverty, the Asian Development Bank proposed that the government seek a balanced development of the country to reduce the wide disparities between income and quality life among the different regions of the Philippines. In implementing this strategy, the Asian Development Bank cited three important considerations: (Manila Chronicle, April 20, 1992). 1. Increased attention should be given to policy-based programs and sector lending to facilities discussion within the government on policy issucs and sectoral reforms and to support balanced payments; 130ee 2, Greater effort should be made to rehabilitate and improve the efficiency of existing infrastructure; 3. Increased commitment to develop the social sectors under medium term development plans. More support to be given to upgrading social infrastructure, particularly health, education, water supply and sanitation The World Bank, on the other hand, proposed that to solve poverty, the government should distribute land, provide family planning facilities and focus on pending directly on poor people. It also proposed a regressive taxation system and the promotion of job-oriented patterns of growth. The Philippine Institute of Development Studies stated that an open and market oriented economy can help solve the problem of poverty because it will provide jobs, increase incomes and wipe out rural poverty. Jeremias Montemayor offered a more comprehensive solution to the problem of poverty. He believed that the government should come up with a program that would encourage just distribution and diffusion of wealth, income, political power and socio-cultural benefits and developmental opportunities, He further believed that an infrastructure program (a system of drainage, pipe, faucet) be done in a rational scheme of distribution. He believed that a proper distribution system based on justice and solidarity should be put in place in order that economic production would benefit all. In’addition, he Proposed an economic program that would diffuse the ownership of the means and the fruits of production and, at the same time, maintain and bolster economic production (Montemayor, “Poverty in the Philippines” 199212), PROGRAMS AIMED TO ALLEVIATE POVERTY IN THE PHILIPPINES The government came out with five basic Programs to improve the quality of life of the poor. These are human resource development, the social insurance program, the income-in-kind program, the anti-mendicancy program and the capital loans to the poor. Human Resource Development. This program is aimed to increase the ‘employment ability of the poor by providing them with skills and training. The program's targets are the out-of-school youths and the unemployed adults. In addition to the upgrading of skills, the Department of Social Services inculcates Positiveattitudes toward work and nationhood, The Sulong Dunong para sa Kabataan, Government Internship Program. 131a _11"0_—_] Social Insurance Program. The Government Service Insurance System (GSIs) and the Social Security Service System (S55) assure the disabled, retired and the temporarily unemployed a cash income that will provide some basic need requirements, They provide monthly pensions, disability benefits, salary loans and sickness benefits to needy members. Income-in-kind Program. The government through the Department of Social Welfare and Services provides food supplement in the form of commodity distribution to disaster victims, The intensive rehabilitation program is made through the food-for-work and the food-for-growth program. All the citizens who are 60 years and above are entitled to a 20% discount in medicine, food and transportation. Anti-Medicancy Program. The Department of Social Welfare and Services in cooperation with other government and private agencies came out with anti- mendicancy program to minimize and prevent the alarming increase of beggars in Metro Manila. The mendicants, young and old (beggars and vagrants), are provided homes and given training for useful occupation. The very old who are destitute are sent to the home for the aged to be taken care of away from the streets. Senior Citizens Centers are built to mect the needs of the old people. The Senior Citizens as Volunteer Resources aims to train and mobilize senior citizens for social welfare and commodity services. Poverty Seen Rising: WB, IMF Look to Avert Crisis (PDI, November 30, 2001) Concerned that the economic fall-out from September 11, 2001 terror attack in the United States, had hit the poorest countries, the World Bank (WB) and the International Monetary Fund (IMF) officials met at Ottawa, Canada to discuss debt relief and means to reduce poverty in the developing world The meeting was held a day after finance ministers from 19 countries and the European Union pledged to help countries at risk, including war-scarred Afghanistan and developing nations affected by the global economic slowdown While officials called the meeting of the WB and IMF policy-makers a success, it provided no new steps to specifically address problems caused by economic stagnation worsened by the terrorist attacks. Argentina is facing a possible debt default and Mexico is considering an IMF line of credit to prevent an economic emergency. The IMF and WB policy makers said they would review existing programs to meet the challenge of a changed world 132,WB President James Wolfe ge world is poverty and distress “ohn said that; “Poverty and distress in one part of in another,” SUMMARY Poverty is a situation where the head of a family cannot afford to provide his amily with the basic nutrients, changes of clothing, education beyond grade 6 for children, and cannot cover payments for basic rent and fuel. Several studies showed the effects of poverty and the causes of poverty. The Philippine government is not remiss in trying to alleviate poverty by instituting different programs. The latest is the senior citizenship card giving 20% discount to medicine and other social services. The problem of poverty is so complex and universal that solutions are not easy. STUDY GUIDE 1, Explain why the rich and the powerful are benefited by the existence of poverty. 2. Make a case study of a poor family. Explain your findings. 3, Explain why poverty exists. Is this inevitable? Why? t i 4. List different ways to eradicate or minimize poverty. i | Proposed Activity Compute the amount of family income spend for food, clothing and shelter. Would you consider the family expenditures adequate for quality life? ‘