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…