Celia M. ReyesSenior Research FellowPhilippine Institute for
Development Studies
Regional Forum: Journey to and From the Middle Income Status-
The Challenges for Public Sector ManagersApril 22-25, 2015,
Shanghai, PRC
Challenges in achieving inclusive growth: The Philippine
Case1Avoiding middle income trapAchieving inclusive growth all
benefit from and participate in the growth processChallenges for
middle income countriesRelatively higher economic growth in recent
yearsSlow reduction in poverty Lower inequality in urban areas but
small increase in inequality in the rural areas Jobless growth
Track record of the PhilippinesRecent economic growth has been
remarkable Source of basic data: NIA, NSCB2011 Slowdown The
European debt crisis and the fragile recovery of trading partners,
however, caused slowdowns in other sectors.
First quarter growth 7.8%
Industry sector grew by 10.9%, services sector by 7% and agri
sector by 3.3%. Industry sector construction 32.5%; manufacturing
by 9.7%, while mining contracted by 17%
Services financial intermediation 13.9%
4Source: NSCB
Yet slow progress in poverty reductionPoverty incidence
increased further in 2009 due to the lingering effects of the food
and fuel price hikes, global financial crisis and natural
calamities such as typhoons Ondoy and Pepeng in the latter half of
2009 and El Nino 5GINI Coefficient, Philippines, by Areas,
1985-2009Source: Celia M. Reyes, Aubrey D. Tabuga, Ronina D. Asis
and Maria Blesila G. Datu, 2012, Poverty and Agriculture in the
Philippines: Trends in Income Poverty and Distribution (PIDS DP
2012-09) Unemployment Rate, 2005-2012Note: Data refers to average
of January, April, July and October rates except for 2005 which is
the average of April, July and October rates.Source: Yearbook of
Labor and Statistics: http://www.bles.dole.gov.ph/ (downloaded
13June2013)Underemployment rate, 2005-2012Note: Data refers to
average of January, April, July and October rates except for 2005
which is the average of April, July and October rates.Source:
Yearbook of Labor and Statistics: http://www.bles.dole.gov.ph/
(downloaded 13June2013)Weak investmentInadequate
infrastructureGovernance issuesHuman capitalConstraints to
inclusive growth include Investment to GDP Ratio ( in
percent)Source of basic data: National Income Accounts,
NSCBInfrastructure Ranking of Selected Countries (out of 144),
2012-2013OverallRoadRailwayPortAirPhilippines988794120112Indonesia92905110489Malaysia
2927172124Thailand4939655633Viet Nam1191206811394Source: World
Competitiveness Report 2012-2013.Electricity Rates for General and
Business Use in Selected ASEAN Cities (2012)CityCountryElectricity
Rate for General Use (US$/kWh) *Average Electricity Rate for
Business Use (US$/kWh)
**ManilaPhilippines0.250.15CebuPhilippines0.240.23SingaporeSingapore0.230.2176Phnom
PenhCambodia0.160.216YangonMyanmar0.120.12BangkokThailand0.110.14Kuala
LumpurMalaysia0.110.09DanangVietnam0.080.085Ho Chi
MinhVietnam0.080.085HanoiVietnam0.080.085JakartaIndonesia0.080.08VientianeLao
PDR0.070.0685BatamIndonesia0.060.11Table taken from: Navarro, A.
(2013) Finding solutions to the problem of high electricity rates
in the Philippines. Philippine Institute for Development Studies
Discussion Paper (forthcoming)Proportion of children attending
school, by income quintile and by age group, 2011Basic source of
data: APIS 2011, NSO.Percentage distribution of workers by highest
educational attainment and by income quintile, 2009Basic source of
data: Family Income and Expenditure Survey 2009, NSO.Distribution
of workers who have elementary education by sector of employment,
2011
Source of basic data: LFS (July 2011), NSOAverage daily wage of
wage/salary workers by educational attainment, 2011
Source: Celia Reyes, Aubrey Tabuga, Christian Mina and Ronina
Asis, 2013. Regional Integration, Inclusive Growth and Poverty:
Enhancing Employment Opportunities for the Poor (PIDS DP
2013-10)Poor to Benefit from growth Redistributive policies and
programsPoor to Participate in the growth process Social Protection
programs such as Conditional cash transfer program or the Pantawid
Pamilya Pilipino Program (4Ps)
What can be done to promote inclusive growth?Features of the
4PsObjectives:Social Assistance provide cash assistance to
alleviate immediate needs (short-term poverty alleviation)
Social Development to break the intergenerational cycle of
poverty through investments in human capital
Features of the 4PsTarget families: Extremely poor families with
children aged 0 to 14Components: Health and EducationHealth: P6,000
annually (P500 per month)/familyEducation: P3,000/child/school year
(P300/child/month for 10 months); up to a max. of 3 children in
each familyFeatures of the 4PsConditionalities:Pregnant women must
avail of pre- and post-natal care and be attended during childbirth
by a trained health professionalParents must attend family
development sessions0-5 year old children must receive regular
preventive health check-ups and vaccines3-5 year old children must
attend day care or preschool classes at least 85% of the time6-14
year old children must enrol in elementary or high school and must
attend at least 85% of the time 6-14 years old children must
receive de-worming pills twice a yearFeatures of the 4Ps: Targeting
SchemeCriteria for selection of beneficiaries:Residents of poorest
municipalities;Households whose economic condition is equal to or
below the provincial poverty threshold;Households that have
children 0-14 years old and/or have a pregnant woman at the time of
assessment; andHouseholds that agree to meet conditions specified
in the program.21Features of the 4Ps: Targeting SchemeThe DSWD
selects the beneficiaries through the National Household Targeting
System for Poverty Reduction (NHTS-PR).The benificiaries are
selected from the poorest municipalities based on the 2003 Small
Area Estimates of poverty incidence generated by the NSCB.
Municipalities with poverty incidence higher than or equal to 50%
are saturated all families are interviewed and assessed for
eligibility.In municipalities where the poverty incidence is less
that 50%, pockets of poverty are identifies by the municipal social
welfare and development officer and then families in these pockets
are interviewed and assessed for eligibility. Families residing
outside these pockets of poverty are excluded in the assessment.
This leads to significant exclusion.The poorest households in the
selected municipalities are identified through a Proxy-Means
Test.
Number of 4Ps families (in millions), Philippines, 2007-2014
Source of basic data: Reyes, et al (2013)4Ps has been scaled up too
rapidly4Ps Targeting: LeakageBased on the APIS 2011, 4Ps
beneficiaries comprise 6.4% of the total number of families. Over
82% of all 4Ps beneficiaries are rural families.Only 70.81% of the
4Ps beneficiaries in 2011 are income poor (after taking out the
cash grant). Among the 4Ps beneficiaries who are poor, only 7.2%
became non-poor when given cash transfers.NHTS-PR identified 5.2
million poor families, way above the estimated 3.9 million poor
families in 2009. Including all these families will lead to even
higher leakage rate.
24Leakage rateProportion of 4Ps beneficiaries who are
nonpoorSourceLeakage ratesAPIS 2011(less cash grant)29.24Ps
Targeting: Exclusion IssueAs of 2011, the 4Ps has reached 20.3% of
the countrys total poor familiesOn-demand system (families who
claim eligibility but are not selected have to go through the
on-demand system); they are entered into the database of eligible
beneficiaries in the NHTS-PR; there is a lag before they can be
accommodated into the 4Ps database of beneficiaries
ON-DEMAND SYSTEMFamilies who can prove their eligibility to the
program can seek to be included among the beneficiaries. However,
based on an interview with program implementers, these families are
not directly entered into the database of 4Ps beneficiaries but on
the database of eligible families under the NHTS-PR. This procedure
may cause delay in the inclusion of deserving families to the
program, if they get included at all.
26 Budget category20112012Total 21,194 39,450 Cash
transfer/grant to beneficiaries 17,138 35,453 Implementation
support* 4,056 3,997 Trainings1,625 703 Salaries and allowances for
1,800 new personnel 716 1,877 Bank service fee171 346 Information,
education and advocacy materials; printing of manuals and
booklets649 252 Capital outlay 218 133 Monitoring, evaluation and
administration support 677 686 Share of cash transfer to total
budget80.9%89.9%Source: DSWD, available online
http://pantawid.dswd.gov.ph/index.php/pantawid-pamilya-financialsShare
of Cash Transfer to Total BudgetAdministrative cost of the program
is substantialNeed to find ways to reduce administrative costs one
way is the unified data collection system27 IMPACTS of 4Ps on
Education
Based on Reyes et al assessment of the 4Ps Source of basic data:
APIS 2011, NSOProportion of children in 4Ps families who are
attending school, by ageSchool Attendance falls below 90% after age
13Proportion of children attending school, by income group and by
age group, 2011Source of basic data: APIS 2011, NSOOlder children
drop out of school to work to augment family income Source of basic
data: Matched files of APIS 2011 and LFS July 2011, NSOProportion
of children in matched 4Ps families who are attending school and/or
working, by single year of age, 2011Comparison of school attendance
rates of children in matched 4Ps and non-4Ps families, by age
group, 2011Age group4PsNon-4PsDifferenceSignificance(=0.05)Aged
6-1496.392.83.5significantAged 6-1197.895.02.8significantAged
12-1493.189.04.1significantAged 15-1857.154.32.8not
significantNote: Figures are estimates from the Nearest Neighbor
(1), or One-to-one, matching with replacement.Source of basic data:
Matched files of APIS 2011 and LFS July 2011, NSO Average daily
wage of high school graduate is 40% higher than an elementary
undergraduateSource of basic data: LFS (July 2011),
NSORecommendations of the studyTo extend the 4Ps to cover high
school education - children up to 18 yearsImprove targeting scheme
to reduce leakages and exclusionGovernment response:Extended it to
high school and increased the budget allocation for 4PsUpdating the
targeting schemeRevenue and Tax Effort(GDP base year 2000)*Using
the 2000 rebased/revised GDP by NSCBDistribution of total public
expenditures, by Sector, 2013Source: Department of Budget and
Management (DBM) The Philippines is in a higher growth trajectory.
However, inclusive growth still has to be achieved.To address
constraints, investments in infrastructure and human capital, among
others, are necessary.Raising government revenues to finance these
investments are critical.Sin tax on alcohol and tobacco (2013) to
finance higher health care programs
Concluding remarks
Thank you