Rich-poor income gap narrows in 2018

Makati skyline 092719 - Rich-poor income gap narrows in 2018

THE INCOME GAP between the richest and poorest Filipino families narrowed in 2018 but remained substantial even amid significant increases in family income and savings, the Philippine Statistics Authority (PSA) said.

PSA also said the proportion of Filipinos whose incomes fell below the poverty threshold in 2015 was larger than initially estimated.

Results of the latest Family Income and Expenditure Survey (FIES) released yesterday put the Filipino family’s average income and spending in 2018 at around P313,348 and P238,641 a year, respectively.

These totals translate to average annual family savings of P74,707 in 2018.

FIES is conducted every three years, the results of which provide information on levels of living, income disparities, and spending patterns.

Adjusted for 2012 price levels, the average 2018 annual family income was P267,134, compared to P250,491 for 2015. Family expenditure, meanwhile, adjusts to P203,445 in 2018 and P201,693 in 2015.

In an e-mail, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the data reflect “continuing economic growth and average family income.”

“Simply put, the higher and more consistent economic growth is, the higher the incomes the economic players become,” he added.

ING Bank NV Manila Senior Economist Nicholas Antonio T. Mapa said: “The Philippines has enjoyed an impressive growth run in those particular years with low inflation and accommodative monetary policy working together with robust government spending. This has resulted in higher incomes even after adjusting for inflation highlighting the growth of the economy,” he said in an e-mail.

Gross domestic product (GDP) growth averaged 6.5% from 2015 to 2018, according to PSA data. Meanwhile, GDP per capita grew 4.7% on average in those four years.

FIES data showed the average annual family income ranging from P113,453 for the lowest 10% income group (first decile) to P867,461 for the highest 10% income group (tenth decile).

The income gap between the richest and poorest decile groups was 7.6 times in 2018. Those in the top 10% were earning 7.6 times more than those in the poorest 10% that year.

In 2015, the results were P86,195 for the lowest income group and P788,211 for the highest — 9.1 times higher.

The Gini coefficient, a measure of income inequality, gives a ratio of 0.4267 for 2018, slightly lower than 2015’s 0.4438. Gini scores range from zero to one, with zero indicating total income equality and one indicating total income inequality.

“The lower Gini coefficient indicates that the strides of the economy have accrued to Filipinos in other income brackets as well,” ING Bank’s Mr. Mapa said.

“We hope to continue seeing strong growth in the Philippines but more importantly, we hope to see the fruits of our recent growth spurt enjoyed by as many as possible. The road to sustainable growth is always paved with inclusivity,” he added.

Security Bank Corp. Chief Economist Robert Dan J. Roces concurred: “The slight decline of the Gini coefficient… is suggesting falling income inequality and a narrowing of opportunity gaps and should be welcome news. However, there is still a very long way to go,” he told BusinessWorld in an e-mail.

UnionBank’s Mr. Asuncion noted that the narrowed income gap “should be looked into further if indeed that more and more people are enjoying the benefits of higher economic growth.”

“The quality of economic growth should further be investigated if economic growth has indeed made the lives of Filipinos better in 2018 compared to 2015,” he said.

Meanwhile Filipinos living under the poverty threshold in 2015 were more numerous than initially estimated, the PSA noted in a separate report.

Poverty incidence — or the proportion of Filipinos whose incomes fell below the minimum required to meet basic food and non-food requirements — was revised to 23.3% in 2015. This was higher than the 21.6% previously reported on Oct. 27, 2016. The new percentage is equivalent to 23.5 million individuals living under the poverty threshold compared to 21.9 million in the earlier report. — Mark T. Amoguis, Marissa Mae M. Ramos

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