Philippines and her shrinking middle class

RP middle class shrinking even before crisis


By Karen Flores, abs-cbnNEWS.com | 06/13/2009 11:09 AM

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Many Filipino middle-class families were already lost to the low-income groups years before the global economic crisis started.

Data from the government’s Family Income and Expenditure Survey (FIES) showed that middle-class families only accounted for 19.1 percent of all the families in the country in 2006–lower than 22.7 percent in 2000 and 23 percent in 1997.

“The Pinoy middle class remains vulnerable and has continued to shrink. And this is prior to the global crisis,” National Statistical Coordination Board Secretary General Dr. Romulo Virola said in his column early this week, referring to the FIES, a survey conducted by the National Statistics Office once every three years.

Half of Filipino families belonged to the low-income, non-poor segment in 2006 (54 percent), while a quarter of households (26.9 percent) were considered as poor.

The elite segment, meanwhile, was only composed of 0.1 percent of the country’s population.

The Philippines had fairly decent economic figures in 2006, led by a gross domestic product (GDP) of 5.4 percent, an average unemployment rate of 7.9 percent, $3.2 billion in average monthly export earnings, and $4.29 billion in average import earnings.

Still, even with these numbers, the country’s middle-income group continued to collapse throughout the years.

This is expected to worsen come 2009 as the government conducts its next FIES, especially with the economy showing a dismal 0.4-percent GDP growth for the first three months.

Other key indicators such as remittances, exports, imports, and foreign direct investments (FDI) have also reflected how the global slowdown battered the economy this year.

Exports, for instance, which account for 40 percent of the local economy and a major employer, have been plunging at a range of 30 to 40 percent for the past seven months. Imports have also posted double-digit declines for the past six months, while FDIs dropped more than 80 percent in the first quarter.

Middle class lifestyle

So who belongs to the Filipino middle class?

Citing data from the 2006 FIES, Virola said the Filipino middle class family as an annual income ranging from P246,109 to P2,000,072. He said, however, that this range has been raised throughout the years to match the country’s worsening economic conditions.

“In 2009, you would need to earn close to half a million pesos to be in the middle class,” he said.

According to Virola, there were 12 significant predictors of middle-income households in 2006, citing the FIES. For one, the head of the family usually has a college degree, and works either as an official of government, a corporate executive, a manager, or a supervisor.

Some indicators of middle class families were similar to standards set in 2000 and 2003, which include the ownership of an oven, an air-conditioning unit, and a vehicle, as well as the presence of a non-relative member and an employed house helper, among many others.

A number of factors were also taken into consideration when classifying middle-class households, such as the high usage of mobile phones, the increased ownership of DVD players, and the reduced popularity of radio sets.

The top four spending priorities among the middle class and the general population are the same in 2003 and 2006, which include food, house rentals, transportation and communication, and utilities such as electricity, water, and fuel.

For the least priorities in expenditures, the middle class and the general population also shared four things in common, which include non-durable furnishings such as utensils and household linens, alcoholic beverages, house repair and maintenance, and recreation.

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