Income inequality in the Philippines

Income inequality in the Philippines refers to the unequal distribution of income among individuals or households in the Philippines. This means that some people in the country have much more money than others.

When income is unevenly shared, it can affect many areas of life, such as education, health, and opportunities for work. People with less money may find it harder to access good schools or healthcare.

Understanding income inequality helps us see why some communities thrive while others struggle. It is an important topic because it influences how fair and balanced a society feels to everyone.

Overview

The Philippines has been growing, with its economy increasing by 6.8% each year. Even though the country is doing well, the richest families have taken most of the benefits. In one year, the richest families took 76.5% of all the extra money made by the country. This means that many people are still poor and hungry, even as the country grows.

The poorest 20% of people in the Philippines only earn a small part of the country’s total income. They make about 14,022 pesos, while the richest 20% make much more, around 176,863 pesos. This shows that money and opportunities are not shared fairly in the Philippines.

_{Source:Philippines GDP-Real Growth Rate-Economy(www.indexmundi.com)}

Measurement

The Gini coefficient, also called the Gini index, helps us understand how income is shared among families in a country. A Lorenz curve shows how income is spread out, and the Gini index tells us how far actual income sharing is from perfect equality. In the Philippines in 2015, the Gini Coefficient was about 0.4439, which means wealth was a bit more evenly shared than in 2012, when it was 0.4605.

The Palma ratio is another way to measure inequality. It looks at how much income the top 10% of people have compared to the bottom 40%. This helps show the difference between the very rich and the poorer part of the population.

Historical background

Second World War (1942–1945)

When Japanese occupied the Philippines, some people became powerful by working with the Japanese. Many others lost their jobs, homes, and belongings because of the fighting. This made poverty widespread.

The Japanese introduced a new kind of money called "Mickey Mouse" Money, which caused prices to rise sharply. By the end of the war, farms were damaged, and there was not enough food. Some families tried to get more food by pretending to have more members, which caused prices to go even higher. Because of these problems, many people went hungry or got sick, while a few made money by selling goods.

Republic of the Philippines (1946–1972)

After the Philippines became independent in 1946, the gap between rich and poor stayed wide. Landlords had much more money than their workers, leading to unrest. President Ramon Magsaysay tried to help, but many people still depended on him for support.

When Diosdado Macapagal became president, he promised to help poor families earn more money. However, his plans were not followed by many wealthy people, so his efforts did not change much.

Martial Law (1972–1991)

In 1972, President Ferdinand Marcos declared Martial Law, promising to help the poor. He ordered large farms to be shared with workers and encouraged companies to sell shares to the public. These changes helped some people, but Marcos and his allies kept much of the money for themselves. As a result, many people remained poor while a few lived in luxury.

EDSA Revolution to the present (1986– )

After the EDSA Revolution, Corazon Aquino became president and restored democratic rights. However, she faced challenges from military coups and could not fully solve economic problems. Her successor, Fidel Ramos, worked to make the economy fairer and planned to help poor families live better lives.

In 2005, President Gloria Arroyo changed the tax system, which ended up hurting poor families more because they had to spend more on everyday costs.

By region

Overview

The National Capital Region has the highest income, while the ARMM has the lowest. In 2018, ARMM had the lowest average income at just 0.5% of the country's total.

Regional analysis

Luzon outside Metro Manila has seen steady growth. The Cordillera Administrative Region has had stable growth with help from government funds and business services. Region I, or the Ilocos Region, focuses on farming, infrastructure, and tourism. Region II, the Cagayan Valley, has shown mixed results but has potential in farming and tourism. Central Luzon is a major contributor to the national economy, focusing on farming and transportation. CALABARZON has grown through farming, industry, and small businesses, with recent development in towns and industrial areas. MIMAROPA has grown quickly but faced slower growth later. The Bicol Region saw fast growth in mining but still has many families in need because of unemployment linked to education and job skills.

In Visayas, Western Visayas has grown faster than the country overall, mainly due to manufacturing and mining. Central Visayas aims to become a top tourist and business spot. Eastern Visayas grew more slowly than planned, partly because of bad weather and pests affecting crops. Farming and fishing are key to this area.

In Mindanao outside ARMM, unemployment went down, and new jobs were created. However, many workers still lack full-time jobs. Family incomes have risen, but savings are growing more slowly than hoped.

The ARMM has the lowest income because of poor roads, transportation issues, and ongoing conflicts that move families from their homes. Most of its money still comes from the national government.

The National Capital Region has the highest income because it is the country's center for business, culture, and government. More than half of its income comes from local taxes, and it spends a lot on education. However, it also borrows more and has the highest debt.

Compared to other countries, the Philippines ranks around 60th out of 149 in terms of wealth inequality, similar to Indonesia and Micronesia. Ukraine and Iceland are the most equal, while South Africa has the largest gap.

Connection with corruption

Main article: Corruption in the Philippines

One big reason for income inequality in the Philippines is the way politics works there. The system is based on strong relationships between political leaders and wealthy local families. This means a few powerful families control the government. They fill important jobs with their friends and allies, leaving out people who might be better but aren't connected. This makes it hard for everyone to have fair chances.

Because of this system, there is often misuse of money meant for public projects. For example, in 2017, the government started looking into claims that money from tobacco taxes in one area was used incorrectly. Because of these unfair practices, money meant to help poor families often goes to those who have connections instead, making it harder for everyone to share in the country's wealth equally.

Connection with education

Main article: Education in the Philippines

One big reason why some people in the Philippines have more money than others is linked to how education is shared. Studies show that when education is not equal, income inequality grows. Data from the country's 2010 Census shows differences in education levels between boys and girls aged 5 and older.

Out-of-school youth

In a 2013 survey of 36 million young people aged 6 to 24, about 19.2 percent said they could not go to school because their families did not have enough money.

Taxation and income inequality

Main article: Taxation in the Philippines

The way taxes are collected in the Philippines can affect how fair money is shared among people. Many taxes are based on what people buy, not how much money they make. This means that people with less money end up paying a bigger share of these taxes because they need to spend most of their money on everyday things like food and clothes.

Taxes on income also play a role. Workers in the Philippines pay more in income taxes compared to workers in other nearby countries. An average worker pays tax on about 32% of their earnings if they make more than the minimum wage. Only people earning the minimum wage don’t pay this tax. Companies, on the other hand, pay less in taxes, around 30%, which can make things unfair for workers.