3 ways of looking at the income distribution of the Philippines -2006 updates

A.  Median incomes  

1.  Income distribution from 1960 to 2000 has remained stable, if not stagnant, using median income comparison.  Over four decades, from Vice President Macapagal to Vice President Macapagal Arroyo, the upper half of the income distribution earned 82 percent of total income while the lower half earned 18 percent.  This situation cannot be explained from the perspective of lopsided distribution of productive assets like land and other properties simply because there are no available statistics on capital ownership of families.  We can conjecture however that salaries and wages have remained low through the years.  

As of 2003, there appears to be an ‘encouraging’ 1 percent increase in the share of families in the lower 50 percent of the distribution.

Median Income and Income Distribution

Family Income

1961

2000

2003

Median income (x P1,000)

1

89

95

% Income Share of upper 50% families 

82.4

82.2

81.0

% Income Share of lower 50 % families

17.6

17.8

19.0

Source: National Statistics Office.  Website: http://www.census.gov.ph; Family Income and Expenditures publications.

As of 2006, we see a standstill relative to the 2003 distribution. 

Median Income and Income Distribution
Family Income 1961 2000 2003 2006
Median income (x P1,000) 1 90 95 111
% Income Share of upper 50% families  82.4 82.2 81.0 81.0
% Income Share of lower 50 % families 17.6 17.8 19.0 19.0
Source: National Statistics Office.  Website: http://www.census.gov.ph; Family Income and Expenditures publications.

 

B.  Incomes of Top 1% families 

 

2. In 1985, right before EDSA 1, the families in the top 1 percent (numbering about 100 thousand)  of the income distribution earned an aggregate income of PhP 31.4 billion.  This is nearly what the combined 3.15 million families (or 32 percent) in the lower brackets of the distribution earned, which amounted to PhP 31.3 billion.

3. In 2000, right before EDSA 2, the top 1 percent families (numbering about 150 thousand)  in the income distribution earned an aggregate income of PhP 251.2 billion.  This is nearly what the combined 5.8 million families (or 38 percent) in the lower brackets of the distribution earned, which amounted to PhP 249.6 billion.

4. In 2003, before the end of the first term of Mrs. Arroyo, the top 1 percent families (numbering about 165 thousand)  in the income distribution earned an aggregate income of PhP 235.0 billion (hard to imagine that this declined by 6.4 percent from 2000 but this is the official figure).  This is nearly what the combined 5.3 million families (or 32 percent) in the lower brackets of the distribution earned, which amounted to PhP 227.1 billion.

5. In 2006, before the last national elections, the top 1 percent families (numbering about 174 thousand)  in the income distribution earned an aggregate income of PhP 256.3 billion.  This is nearly what the combined 5.2 million families (or 30 percent) in the lower brackets of the distribution earned, which amounted to PhP 257.9 billion.

6. So 174 thousand ‘top 1 percent’ families earned the equivalent of what 5.2 million ‘bottom 30-percent’ families collectively earned in 2006.

7.  I am not sure if this is cause for relief or even success for the economic managers, using this measure.  The 1:30 ratio in 2006 was marginally better than the 1:32 ratio in 2003 and 1:38 ratio in 2000. 

C.  ABCDE Socio-economic classification

6.  Market/opinion researchers classify according through proxies of wealth/assets, rather than direct measure of income to segment the (consumer) market.

7.  From the 16 April 2007 release of Pulse Asia, its nationally-representative sample has seven (7) percent making up classes A, B, and C; sixty-seven (67) percent, class D; and twenty-five (25) percent, class E.  This breakdown has a sampling error of +/- 3 percent.  [Statistically speaking, classes ABC may be  4 to 10 percent of the population; class D, 64-70 percent; and class E, 22-28 percent.]

8.  While statistical rigor will not be as robust, we can apply the above Pulse Asia percentages to the income distribution and find out how much income these classes earned in 2003.

CLASS

Families

Cumulative Income

Average Income

Number

Share

Amount

Share

(x 1000)

%

 (x PhP 1 million)

%

(x PhP 1000)

ABC

1154

7

         722,645

30

626

D

11206

68

       1,556,915

64

139

E

4120

25

         157,690

6

38

Total

16480

100

       2,437,250

100

148

9. We also apply the above Pulse Asia percentages to the income distribution and find out how much income these classes earned in 2006.

CLASS Families Cumulative Income Average Income
Number Share Amount Share
(x 1000) %  (x PhP 1 million) % (x PhP 1000)
ABC 1,218 7 871,770 29 716
D 11,834 68        1,923,907 64 162
E 4,351 25        210,427 7 48
Total 17,403 100 3,006,104 100 173

In summary, in 2006 -

the good news: the income distribution has not worsened.

the bad news: the income distribution in 2006 has remained essentially the same. 

Not worth a praise release from the powers-that-be…  

 

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19 Comments

Filed under income distribution, market research/opinion surveys, Philippine development, statistics

19 responses to “3 ways of looking at the income distribution of the Philippines -2006 updates

  1. Guess who just brightened up my day? :) Thanks a lot!

  2. Can you tell me your sources for this particular article? Thanks

  3. i would also like to know the source of this information.. thank you

  4. If you ever want to read a reader’s feedback :) , I rate this article for four from five. Decent info, but I just have to go to that damn msn to find the missed bits. Thank you, anyway!

  5. anonymous

    can you please give me the links of your sources especially about the pulse asia part? thank you. :)

    • makuhari

      http://pulseasia.com.ph

      Thank you for your kind comments.

      • Francis

        Could you tell me where to get the pulse asia segmentation of families to classes? I couldn’t seem to find it in the pulse ASIA website…Also, could you kindly tell me what it means if you are a Class A. B. C, D, and E. and do you have the source which I could site for my thesis. Thank You Very Much and God Bless!

      • makuhari

        Go to the Pulse Asia website . Click on Ulat ng Bayan. Select October 2007 Nationwide Survey on Presidential Performance and Trust Ratings. You will see at the middle of the report (See Table 1). Click on this link; this brings you to a table entitled ‘Awareness & Performance Ratings of President Gloria Macapagal Arroyo’. You will see that class ABC has 10 percent; D, 67 percent; and E 23 percent, slightly different from mine which came from an earlier survey, but still statistically the same. For the definitions of these socioeconomic classes, I suggest that you write directly to the Pulse Asia Executive Director Ana Tabunda at . Hope this helps

  6. aser

    Where can I find the site for the demography of the class ABC? What is the percentage of Metro Manila people on class ABC?

  7. I really enjoyed reading your blogpost, keep up creating such exciting articles!

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  9. Kris

    lulz. I’m moving to the Philippines in 6 months to run a BPO branch office. I will be bringing with me my US salary of $75K/year USD + a $20k/year USD stipend for overseas work. So at $95K/year USD I make more than 3x the average income for those in the top 1% of the Philippines? I’m going to live like a king! This income is barely even considered affluent in my country. 20% of Americans make more than this amount. w00t!

    P.S. Quick math for you thats $4,322,504 php / year.

    • makuhari

      You will certainly live here comfortably. Take note though that the top 1% are able to declare less of what they earn to government, more so in a government survey. The rich-poor gap is definitely much wider.

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  11. lalyn

    thanks!where can i find a time series data(1970-2006) of income distribution in the Philippines?

  12. juhyun

    Is the average income indicated annual income?

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