5 Reasons Why Manila’s Official Poverty Rate of 2.6% is Absurd

The National Statistical Co-ordination Board (NSCB) conducts a vast survey every three years (FIES) which, among other things, shows the poverty rates for each area. Here’s the link for the latest FIES: http://www.nscb.gov.ph/secstat/d_income.asp

The headline from the latest FIES (Family Income and Expenditure Survey) is that the NSCB are saying that 2.6% of families in the NCR region are living in poverty. The immediate response is… WTF??? For comparison, the NSCB are saying that Manila has a lower poverty rate than France (6.2%), Holland (10.5%), Russia (13.1%), China (13.4%), the United Kingdom (14%) and the USA (15.1%) (Source: CIA World Factbook).

Naturally with anything this complex there’s more to it, but the huge discrepancies should be suspicious. So to explain it properly, and why these stats are really messsed up (read ‘these stats are hiding poverty’) here’s 5 reasons why the NSCB’s Poverty Rate is absurd.

1) For the 2012 survey the NSCB used a lower income level than 2008.

In 2008 the Inquirer ran with a story saying that the new minimum level of income needed for a family in Manila to stay out of poverty was at least P10,000. The source? The NSCB. Fast forward four years and somehow this dropped to P8,477/month just before their 2012 study.

Now it’s worth mentioning that P10,000 a month was the provisional estimate for 2008. It wasn’t used in the 2009 FIES and I wonder how much pressure was put on them to revise that figure given the massive increase in poverty it would have measured. And that’s the important point; the media, government agencies, and voters usually only get so far as the headline: did poverty increase or decrease? And reducing this income threshold, i.e. reducing the minimum amount a family must earn to not live in poverty, was the only way to produce the headline that poverty decreased.

2) NSCB Poverty Line Much Lower Than the Rate of Inflation

That the NSCB reduced this threshold is puzzling. That they did so in the face of huge economic growth and inflation is ridiculous. Per capita, the 2012 figure to measure poverty was P20,344/per year (P101,720 for a family of five), an increase of just 5% total compared to the 2009 figures. Despite inflation rates of 3.8%, 4.8%, and 3.2% in those years. Given this is compound, that total 5% increase counts for roughly 1/3 of the inflation. Compare this to the National average income increase of 12% during this time, or that the previous FIES had increased the threshold by 23% between 2006 and 2009 – more in line with the high inflation of those years. It’s clearly suspicious. For the most recent FIES (at the time of writing) the NSCB has counted for roughly half of inflation during that time. In other words they’re saying you need the same household income to buy the same things – even though those things are much more expensive! Nevermind any of the particular increased costs of living in poverty and that the price of necessities usually increases at a faster rather than average. This, again, is the difference between the headline of whether poverty increased or decreased.

3) The NCR was the 2nd most expensive place to live in the Philippines in the NSCB study

The first? ARMM. The per capita annual threshold in ARMM jumped from P16,683 to P20,517. In other words in 2009 the NSCB estimated the ARMM was the 7th cheapest area to live in. Three years later it’s the most expensive. The reason? Well if poverty in the ARMM increased from 39.9% to 48.7% of course it would be much higher if they hadn’t increased the threshold. In other words, increase the poverty threshold and you reduce the number of people you call poor – even if nothing has changed for them.

By comparison the lowest per capita poverty threshold in the study was P18,029 per person, P90,145 for a family of five. So effectively living in the NCR was equated to needing at most P400/month extra per person than the provinces. Consider the higher prices of rent, food, travel and more, and this is more than highly suspicious. Again this discrepancy is the difference between the headline of poverty went up to poverty went down.

4) Populations in poor, urban communities are hugely underestimated

For this I’ll just use the example of Payatas as I live here and have the available research. Payatas is a very poor, urban community surrounding the largest open dumpsite in the country. Officially the government census says there are 120,000 people here. Unofficially there are half a million according to the academics.

That’s because the people here are officially squatters. They were relocated to live there and given no right to land, so that they would mostly be forced to scavenge for a livelihood. This saves Manila billions of pesos every year (message me if you want the research on that). That there are no land titles is still a contentious issue over 50 years on from the first relocations to Payatas. No matter how much money you have, you cannot buy the land. The government own that, which makes it easy for them to relocate you whenever convenient.

The relevance? Well, if 75% of the population aren’t counted, then there’s not counted in the poverty rate either. Given the majority of people live in poverty, roughly half, then the poor of Payatas account for 10% of QC’s entire population. Compare this to the paltry estimate of the NSCB, who say District II has a poverty rate of 1.9% of families and, in technical terms, there’s something really messed up here. District II btw also includes Mandaluyong, Marikina, Pasig and San Juan, and numerous other slums with populations similarly hidden away. QC accounts for the majority of the population of District II. Again this is the difference the headline that poverty rose to poverty fell.

5) Poverty Rates Dropped by a Third from the First Version to the Second

The first half of the NSCB study, released in April 2013, found that the NCR had a poverty rate of 3.8% (District II for comparison was at 3.1%). By the end of the year this dropped to 2.6% and 1.9%, a reduction of 32% and 39% respectively. Again, this is the difference between the headline that poverty (insert synonym of going up) to poverty (insert synonym of going down).

Summary

Astute readers will have realised by now that each of these reasons is the difference between the headline of poverty rising to poverty falling. This difference, however, has huge repercussions. First, budgets for particular areas will reflect the fantasy that only 2.6% of families live in poverty. Less money goes to poverty reduction, and the poor are further left behind. This continues to increase inequality, unrest, crime, and other problems which keep the poverty cycle turning. 

So why hide poverty? Well some people think this improves the national image. It’s the same reason why every country hosting the Olympics or World Cup round up street kids and other “undesirables” and forcibly hide them away. Think how the Philippines did that during the Pope’s visit and imagine it on a National scale for a month or two. Now imagine pretending that those people sleeping under the bridges and on the streets aren’t actually poor and we have some grasp of what these statistics are doing.

Why do that? Well you tell the world that your country has a low poverty rate and that Manila is a modern city and a great place to be. ‘Hey look, there’s no poor people here’. As we found out when Claire Danes complained about how Manila looked, most Filipinos don’t take too kindly to people putting down the Philippines. She was declared persona non grata in Manila for that btw. It’s the reason why the government spend a lot of money to put together ‘It’s More Fun in the Philippines’ tourism promotion. Of course if the slogan is really ‘It’s More Fun in the Philippines If You’re Rich’, then it’s not quite so appealing (if a little more honest). 

Aside from tourism, the brand of the capital is important. As the business hub of the country, Manila needs to attract Foreign Direct Investment (FDI), A low poverty rate suggests the area is developing. Some companies may buy it, and set up businesses, but if they get past the bureaucracy and corruption they quickly realise that the situation isn’t exactly how they pictured it. More people in poverty means less potential customers, less able employees, and more social problems to deal with. In the short-run you can say you attracted a bit more FDI this year but in the long-run almost all of those will leave or will shift towards the high end areas. This is part of the reason why the Philippine growth rate is impressive, but most it is in the richer areas of town. The poor get poorer, and this undermines sustainable development. 

To recognise and reduce poverty is a big risk politically though. To do so would need someone to give a realistic estimate, to say that poverty is 20x higher than the official estimate. People would jump on their administration to say poverty increased and shame them for it. Even though all they did was give a more accurate estimate. And so they’d get voted out before they could enact any reforms. Likewise this is no particular administration’s fault. Ever since the FIES started the NCR has been woefully underestimated (given it’s the most densely populated area and reducing poverty here means reducing the National rate). There’s a lot of pressure to continue doing so as the headlines will say your administration increased poverty otherwise.

But that’s the trouble in many ways; when it’s all about face, substance is always lacking. I offer no solution here, I offer the problem. I hope others can build on this (or maybe I will in a Part 2) to provide the solution.

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6 thoughts on “5 Reasons Why Manila’s Official Poverty Rate of 2.6% is Absurd

  1. ivangeoffrey December 10, 2013 / 00:13

    Good job with dissecting their numbers. Paints a better picture once you compare it with the European ones.

    Its a bit sad that this Administration (which I voted) has been obsessed with printing feel good numbers to improve their standing with the people. But I bet the older administrations did so much of this as well before.

    Just to give you an idea on the poverty incidence in this country, the farthest provinces from the “capitals” (Manila, Cebu, Davao, Zamboanga,Baguio) are the poorest. Some examples would be Samar/Leyte, North-East Mindanao, etc. In the previous decades, poverty incidence is directly proportional to the number of NPA Rebels. (But thats another story..).

  2. ivangeoffrey December 10, 2013 / 00:20

    To give credit to this administration, I think they have laid a foundation to reduce the poverty incidence in this country. Image alone helped change the perception of this country internationally. If I relate it to Philippine football, It would be like the resurgence of the Azkals. I always thought that it would take at least 50 years to improve grassroots football in this country, but because of the Azkals (image of this Administration), it might just be fourty.

    • Roy December 10, 2013 / 14:08

      Hi ivangeoffrey,

      Thanks for your comment. You’re right the previous administrations did the same thing. If you track the poverty rates from the last couple of decades of NSCB studies the trend is the same. This isn’t down to any administration, the NSCB has done this under every administration it seems. I think I’ll add a bit in to make that clear. Thanks again!

      • ivangeoffrey December 10, 2013 / 16:10

        No worries mate.

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