Philippines: Distribution of Income

This is from the Daily Tribune. These statistics are not too surprising. Politics and the economy are more or less dominated by a group of rich long established families. What is rather surprising at first is the percentage of income that the poor have to pay for their basic food. Increased costs of basic necessities such as food are negating any positive effect of absolute increase in income. The bottom 30 percent of families have less to spend on other basic goods as so much of income is spent on food.



Richest 10% Filipino families corner 36% of income — poll



01/13/2008

A supposed improvement in the economy has been barely contributing to the reduction of poverty in the country, based on a government survey on income disparity released yesterday.

The National Statistics Office (NSO) said the survey showed the richest 10 percent of Filipino families earned P1.08 trillion in 2006 that accounted for 36 percent of total family income during that year.

The share of the upper-class in the society barely changed from 36.3 percent of the total income of families three years ago.

The survey also indicated that income disparity between the poor and the rich is even widening in six regions of the country which it said was based on the Gini coefficient, which is an internationally accepted formula in determining income gaps.

The widening in the wealth disparity was most pronounced in Central Luzon, according to the NSO. “Central Luzon showed the biggest increase in the Gini coefficient to .3994 in 2006 from .3515 in 2003.






The Gini coefficient ranges from 0 to 1, with 0 indicating income equality among families, and 1 indicating absolute inequality.

The gap in family income between the richest and the poorest group narrowed slightly, according to NSO.

In 2006, the total family income of the richest group was about 19 times that of the poorest, while it was 20 times in 2003.

NSO said the total annual family income in 2006 was estimated at P 2.99 trillion, or a 22.7 percent increase from the 2003 estimate of P2.44 trillion. “Total family expenditure was approximately P2.56 trillion, an increase of 25.7 percent over the 2003 estimate of P2.04 trillion,” it added.

In 2006, the average annual income of Filipino families was estimated at P172,000, according to the survey. Across income groups, families in lowest income bracket had an average income of P32,000 a year or under P3,000 a month to P617,000 a year average or P51,400 a month for the highest income group.

The average annual income of P172,000 in 2006 was 16.2 percent higher than the 2003 average of P148,000, according to NSO.

Family spending grew by 18.5 percent during the three years covered by the survey. Average annual expenditure of families increased from P124,000 in 2003 to P147,000 in 2006, or by 18.5 percent.

The average savings per year among Filipino families also barely changed to P25,000 per family in 2006 from P24,000 in 2003. The NSO survey, however, indicated that the bulk of savings were from the richest group surveyed with an average of P156,000 in 2006.

“From 2003 to 2006, annual income among all groups increased. The average annual income of the bottom 30 percent of families increased by around P8,000 a year while that of the upper 70 percent of families, by some P31,000.

Adjusting for inflation rate in the three years covered by the survey, total family income in 2006 of P2.99 trillion would be valued at P2.5 trillion at 2003 prices, the NSO said.

It added total family expenditure in 2006 of P2.56 trillion was valued at P2.14 trillion at 2003 prices.

“In real terms, the total income of families increased slightly by 2.6 percent while the total expenditure increased by 5.1 percent between 2003 and 2006,” according to NSO.

Taking into account the inflation rate, however, the real value of the average savings of Filipino families dropped to P21,000 compared to savings of P24,000 per family in 2003.

The spending pattern of Filipino families particularly among those in the bottom 30 percent income group has changed in 2006, according to the survey.

The survey showed the bottom 30 percent of the families in the income group have increased spendings on food during the years covered.

“In 2006, 59 percent of all expenditures by the 30 percent lowest income group was on food, while it was 48 percent in 2003,” the NSO said.

This means that for every P100 spent by families in the group in 2006, P59 went to food, compared to only P48 in 2003.

“Consequently, there was a decrease in the shares of other expenditure items like house rental, from 12.7 percent to nine percent; transportation and communication, from 6.1 percent to 3.8 percent; and education, from 2.9 percent to 1.3 percent.