Monday, March 5, 2007

Lifestyle Check

According to the National Statistical Coordination Board, a little over P8,000 a month will place a family of five above the poverty threshold.

It doesn't seem like an unreasonable amount to raise, but, is P8,000 a month really enough to maintain an economically decent lifestyle? (Whatever that means...)


Family of five needs over P8,000 a month to live decently
By Doris Dumlao
Inquirer - 03/05/2007

MANILA, Philippines -- It's becoming more challenging for Filipinos to maintain an “economically decent” lifestyle -- or stay out of the poverty line.

A family of five in Metro Manila needs to earn at least P8,061 a month to meet the most basic needs for this year, the latest report from the National Statistical Coordination Board shows.

NSCB, the agency mandated to generate report on the country's official poverty statistics, said the poverty threshold for the National Capital Region or NCR for 2007 had gone up compared to P7,945 in 2006 and P7,859 in 2005.

“A sole breadwinner in a five-member family residing at the NCR is expected to find an arduous task in bringing the entire family above the poverty line if he/she only earns at most P265 per day,” said NSCB Officer-in-Charge Estrella Domingo.

The daily poverty threshold in the NCR for this year translates to P266, up from P262 last year and P259 in 2005.

Of the estimated minimum earnings of P8,061 a month to stay out of poverty, some P4,804 or P159 a day would be needed to meet the most basic food needs, the NSCB reported.

Astro del Castillo, managing director at investment management firm First Grade Holdings, said the country would have to post a consistent higher growth in its domestic economy or gross domestic product of about 6-7 percent for two to three years for the poor to benefit more.

Despite the 25 quarters of consecutive economic growth posted by the country, Del Castillo said the growth must accelerate at a faster pace to create more employment and uplift more people.

“Look at Vietnam and China, which have been consistently growing by 8 to 10 percent. We have to do more but it's not solely the responsibility of the government or the business sector,” he said.

The cost of maintaining an economically decent lifestyle is highest in NCR, where the poverty threshold for this year is 30 percent higher than the national average of P6,195 per month or P204 a day.

But the national poverty line has likewise increased from P6,003 a month or P198 a day in 2006 and from P5,916 a month or P195 a day in 2005.

On an annual per capita basis, the poverty threshold for 2007 is at P14,866, of which P9,987 was estimated for basic food needs.

The annual per capita threshold for the NCR is higher than any other region at P19,345. It has risen from P19,067 in 2006 and P18,859 in 2005.

Among other provinces excluding NCR, the amount of an “economically decent” lifestyle is highest in Abra as it posted P18,058 annual per capita poverty threshold. Of the 10 provinces with the highest poverty threshold, nine are in Luzon and one in Mindanao.

The poverty threshold, on the other hand, is lowest in Siquijor, at P11,663, followed by Negros Oriental at P12,012 and Cagayan at P12,479.

Of the 10 provinces with the lowest poverty thresholds in 2007, three are in Luzon, six in the Visayas, and one in Mindanao.

“Generally, families residing in urban areas need to earn 20 percent more than the income of families falling within the ridge of the poverty threshold in rural areas. Also, to meet their basic food needs for the year, residents of urban areas are expected to spend 20 percent higher than their rural counterparts,” Domingo said.

The current minimum wage for those employed in non-agriculture sectors in the NCR is P350 per day.

Recently, both houses of Congress passed bills to grant across-the-board minimum wage hikes. But despite the obvious benefits notwithstanding, economists warned that a legislated wage hike would end up costing more in terms of higher production costs, higher inflation, and higher unemployment.

Jose Leo Lemuel Caparas Jr, an economist at the University of Asia and the Pacific, said in a recent study: “The minimum wage hike bills approved by Congress are like bikinis. What they reveal is suggestive, but what they conceal is vital. Often highlighted are the benefits, but the costs remain in the background.”

Usually, he said an increase in minimum wage should be cause for celebration. After all, a legislated wage hike is not market driven and would allow people to get more money without doing much.

Caparas said studies conducted by UA&P on rank-and-file employees had these key findings:

• Workers at the lower wage levels are the new entrants to firms and are predominantly single. Their incomes are likely to supplement only the earnings of the heads of their families. Among the workers in this group, it is hard to find cases of workers earning less than what is required for their basic needs; and,

• Workers at the higher income categories are usually those who have been in the company for some time. Despite their higher salaries, however, a significant number of them earn less than they require for a decent family life because their needs have risen. They have a bigger family to support. The changes in their salaries have failed to keep pace with the changes in their family situation.

“These findings suggest firms must turn to instruments other than the minimum wage to guarantee a decent life for their workers. The problems they urgently need to solve are those faced by non-minimum wage workers whose incomes cannot support their families,” Caparas said.

“The existing minimum wage is more than sufficient to cover the basic needs of minimum wage earners,” Caparas said.

Further citing UA&P's own studies as of January 2007, he said a single individual in Metro Manila would need only about P190 to P270 a day to satisfy his basic needs.

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