Notes on Economic Developmnet

POVERTY /. InEQUALITY

Poverty is the state of not having enough material possessions or income for a
person’s basic nmeeds. Poverty may include social, economic and political elements.

Absolute poverty - is the complete lack of means necessary to meet basic personal
needs such food, clothing and shelter.

Inequality - refers to disparities in the ditribution of economic assets and income as

well as between the overall quality and luxury of each person’s existence within a
society.

Inequality is caused by the unequal accumulation of wealth.

The initial level of inequality affects poverty reducing capacity of growth, as a more
equitable distribution of income and assets

Poverty incidence decreased in 2018 but is expected to increase due to economic

factors related to the COVID-19 pandemic

In the Philippines, 16.6% of the population lived below the national poverty line in
2018. In the Philippines, the proportion of employed population below $1.90
purchasing power parity a day in 2019 is 2.7%. Poverty incidence declined in the first
half of President Rodrigo Duterte’s term, but experts are expecting an inevitable
increase in hunger and poverty because of the COVID-19 pandemic.

The United Nation’s World Food Programme (WFP) predicts that 200 million people
worldwide will lose access to basic food and nutrition in the coming months because
of the pandemic. This is on top of the more than 800 million people who
experienced food insecurity before the crisis.

Aside from its impact on healthcare systems, the WFP said in a June 2020 report that
a combination of a global recession and dependence on volatile import, export, and
credit markets will lead to unemployment and loss of income, and constrain
countries’ abilities to respond to needs.
The most affected, they said, will be poor and marginalized populations and even
groups that were able to meet their own needs previously.

The effects of the pandemic can be clearly seen in SWS’ most recent hunger survey.
According to their data, the percentage of Filipinos who were involuntarily hungry
in May 2020 (16.7% or 4.2 million families) almost doubled since December 2019
(8.8% or around 2.1 million families). This is the highest the number has been since
September 2014 (22.8% or 4.8 million families).
Key factors are seen as making a person more “at risk” of being in
poverty such as:

1. unemployment or having a poor quality (i.e. low paid or precarious) job as this
limits access to a decent income and cuts people off from social networks;

2. low levels of education and skills because this limits people’s ability to access
decent jobs to develop themselves and participate fully in society;

3. the size and type of family i.e. large families and lone parent families tend to be at
greater risk of poverty because they have higher costs, lower incomes and more
difficulty in gaining well paid employment;

4. gender – women are generally at higher risk of poverty than men as they are less
likely to be in paid employment, tend to have lower pensions, are more involved in
unpaid caring responsibilities and when they are in work, are frequently paid less
even for the same job ;

5. disability or ill-health because this limits ability to access employment and also
leads to increased day to day costs;

6. being a member of minority ethnic groups such as immigrants/undocumented

migrants as they suffer particularly from discrimination and racism and thus have
less chance to access employment, often are forced to live in worse physical
environments and have poorer access to essential services;

7. living in a remote or very disadvantaged community where access to services is

worse.

8. Weather/ climate change - causes drought, flood and severe storm. Recovery is
extremely difficult.

9. Lack of infrastrfucture - which includes roads, bridges, internet, transport. Some

families are isolated, they have to spend money, time and energy getting to places.
Without good roads, traveling takes forever.

10. Lack of Government support - government needs to be involved, redirecting

funds so that those in need will be a priority.

Reasons why income inequality has become an issue:

1. Technology - digital revolution creates enormous wealth for those

with the skills and preparation to take advatage, but it eliminates what
economist call “ middle skill” job.
2. Globalization - competition from rising economies like China’s
combined with reduces trade barriers. The decision to allow free
mobility of labor.
3. The rise of superstar - breakthrough firms such as Amazon and Apple
can attract revenues across the world. It widened the gap big and small
companies
4. Decline of organized labor- share of worker represented by labor
unions has dropped
5. Changing and breaking the rules -

The Philippines has one of the highest rates of income inequality in the
world and unless action is taken, the gap will continue.

The problem is not limited to personal wealth, land distribution,

educational and vocational opportunities and basic welfare programs
are also affected by the growing disparity between the Philippines
richest and poorest citizens.

The key to reducing inequality is better education, health care, social

safety nets and higher and broader economic growth especially in
agriculture.

Anna Lissa Antonio