Four in every 10 Filipino households have remained or slipped into poverty at least once in a period of three years, according to a study released by state think tank Philippine Institute for Development Studies (PIDS).

PIDS Supervising Research Specialist Christian Mina and Senior Research Fellow Celia Reyes assessed Filipinos’ vulnerability to poverty, or the probability of being poor in the future, using data from the Family Income and Expenditure Survey (FIES) for the period 2003-2009.

Their findings showed that even those who have not experienced poverty or the nonpoor may still become poor in the future.  According to the authors, natural disasters, together with other shocks, were believed to have largely contributed to the vulnerability of Filipino households to poverty.

Mina and Reyes disclosed that vulnerable households, regardless of whether poor or not, were more susceptible to unobservable idiosyncratic (e.g., birth, injury or accident, serious illness, death, and job loss of a household head or member) than covariate shocks (e.g., natural disasters, human or animal epidemic, economic crises, high unemployment rate, stock market collapse, etc.). 

The study also revealed that eight in every 10 (77.4%) poor households were classified as vulnerable.  A household is considered vulnerable if its estimated vulnerability to poverty is below the vulnerability threshold, explained the authors. 

Based on the data, majority of nonpoor but vulnerable households were predicted to be poor only in at most two periods from 2010 to 2012, thus tagged as relatively vulnerable, and were more susceptible to idiosyncratic shocks. 

“Many of the households were more vulnerable to idiosyncratic shocks probably because of the latter’s direct and more specific impacts,” the PIDS researchers said.

In terms of profile, Mina and Reyes found that vulnerable households, even the nonpoor, most likely reside in rural areas and have less-educated heads. 

The vulnerable and chronic poor (i.e., persistently poor from 2003 to 2009) households “tend to have younger and less-educated heads, higher dependency ratio, live in rural areas, and lack access to irrigation.”

Meanwhile, the vulnerable but not chronic poor households, lack access to major transport infrastructure and employment security.  Thus, even if households were initially nonpoor, they can fall into poverty for lack of access to transport infrastructure and/or irrigation facilities.

According to Mina and Reyes, Caraga and Zamboanga Peninsula had the highest proportion of vulnerable households while the never poor households were concentrated in the neighboring regions of the National Capital Region, Central Luzon and CALABARZON (Cavite, Laguna, Batangas, Rizal, and Quezon).

To address poverty issues, the authors urged government to invest more in education. Some key strategies include stronger implementation of the grants-in-aid program of the Unified Student Financial Assistance System for Tertiary Education law (an option to the Free Higher Education for All bill) and systematic monitoring and regular evaluation of the Pantawid Pamilyang Pilipino Program.

Mina and Reyes also proposed for the improvement of the agricultural sector by developing agri-based industries to increase employment, providing support to high-value commodities, enhancing small farmers’ access to format credit, protecting farmers against market risks, refining the design and implementation of the agricultural insurance programs, and improving infrastructure, especially in rural agricultural areas.  

They also advised government to help Filipinos build resiliency in coping with shocks and to devise comprehensive strategies related to disaster risk reduction, mitigation, and management, including strengthening of early warning and forecasting systems.

Likewise, the authors recommended for a stronger implementation of laws promoting entrepreneurship (e.g., Go Negosyo Act) and the provision of technical and financial assistance to potential entrepreneurs, as well as financial management education of Filipino households. ### 

If you want to know more about this study, you may download the policy note from the PIDS website.

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