Towards Better Targeted and Focused Poverty Reduction Programs

2009 Official Poverty Statistics Towards Better Targeted and Focused Poverty Reduction Programs Presented by Ms. Jessamyn O. Encarnacion Director, Social Statistics Office National Statistical Coordination Board 2012 MCPI Annual Conference 9:00 AM, 26 July 2012 Hyatt Hotel, Manila

Outline of Presentation • Introduction • Official Poverty Estimation Methodology • 2009 Official Poverty Statistics • A. National • B. Regional/Provincial • C. Basic Sectors • D. Employed and Unemployed Population • IV. Some Policy/Program Implications

I. Introduction SOURCE OF OFFICIAL POVERTY STATISTICS IN THE PHILIPPINES Executive Order 352 Designation of Statistical Activities that will Generate Critical Data for Decision-making of the Government and the Private Sector • Issued on July 1, 1996 • The Technical Committee on Poverty Statistics (TC PovStat) created by the NSCB is in charge of the formulation/development of the official poverty estimation methodology. • The NSCB generates and releases the official poverty statistics in the Philippines.

What is the Food Threshold? • Refers to the minimum income/expenditure required for a family/individual to meet the basic food needs, which satisfies the nutritional requirements for economically necessary and socially desirable physical activities • Also referred to as the subsistence threshold or the food poverty line I. Introduction SOME DEFINITIONS

What is the Poverty Threshold? • Refers to the minimum income/expenditure required for a family/individual to meet the basic food and non-food requirements • Basic Non-Food Requirementincludes: 1) clothing and footwear; 2) fuel, light and water; 3) housing maintenance and other minor repairs; 4) rental of occupied dwelling units; 5) medical care; 6) education; 7) transportation & communication; 8) non-durable furnishing; 9) household operations and 10) personal care and effects • Basic Non-Food Requirementexcludes:1) recreation; 2) tobacco; 3) alcoholic beverages; 4) durable furnishings; 5) taxes; 6) special family occasion expenditure;7) total gifts and contributions; 8) total other disbursements (e.g., major repair of house, loans granted to person outside family; amortization of real property). • Is equal to the cost of minimum basic needs: • food + non-food I. Introduction SOME DEFINITIONS

Who are the Food Poor/Core Poor? • Refers to families/individuals with per capita income/expenditure less than the per capita food threshold I. Introduction SOME DEFINITIONS Who are the Poor? • Refers to families/individuals with per capita income/expenditure less than the per capita poverty threshold If a family is poor, all the members of the family are considered poor

What is the Magnitude of the Food Poor/Core Poor? • Refers to the number of families/individuals who are food poor/core poor I. Introduction SOME DEFINITIONS What is the Magnitude of the Poor? • Refers to the number of families/individuals who are poor

What is subsistence incidence? • Refers to the proportion of families/individuals with per capita income/expenditure less than the per capita food threshold to the total number of families/ individuals • Is Equal to the proportion of the food poor I. Introduction SOME DEFINITIONS What is poverty incidence? • Refers to the proportion of families/individuals with per capita income/expenditure less than the per capita poverty threshold to the total number of families/individuals • Is Equal to the proportion of the poor Both subsistence incidence and poverty incidence can be expressed as proportion of families or proportion of individuals

I. Introduction The 1st official poverty estimation methodology was adopted in 1987. Between 1987-2011(24 years), there were three refinements on the methodology since its adoption. History of the official poverty estimation methodology

II. Official Poverty Estimation Methodology

II. Official Poverty Estimation Methodology DATA SOURCES National food bundle PROVINCIAL food bundle FNRI “Visualizable” LEAST cost 100% RENIfor energy 100% RENI for protein 80%RENIfor vitamins and minerals Food eaten in the area Actual Prices NSO and BAS Farmgate Price Retail Price FOOD THRESHOLD If income/expenditure of family/individual is less than food threshold NSCB Provincial SUBSISTENCE INCIDENCE and MAGNITUDE OF SUBSISTENCE POOR

I. Introduction National reference food bundle from the Test of Revealed Preference Sample translation: NCR

II. Official Poverty Estimation Methodology • ACTUAL Non-Food Basic Needs • Education • Clothing & footwear • Medical care • Transportation & communication • Fuel, light & water • Housing • Housing maintenance & other minor repairs • Non-durable furnishings • Household operations • Personal care & effects • Rental of occupied dwelling unit Non-food threshold Food threshold Constant FE/TBE ratio POVERTY THRESHOLD If income/expenditure of family/individual is less than poverty threshold Provincial POVERTY INCIDENCE and MAGNITUDE OF POOR

III. The 2009 Official Poverty Statistics

III. The 2009 Official Poverty Statistics A. NATIONAL: Daily Threshold (family of five) In 2009, family of five* needed PhP 160 daily income to meet food needs and PhP 231 to stay out of poverty! Daily Food Threshold for a Family of Five (in PhP) Daily Poverty Threshold for a Family of Five (in PhP) Inflation for food: 2006-2009:24.3% Note: Applying 2010 and 2011 / Ave. of Jan - June 2012 Food CPI (2006=100) to 2009 Food threshold: 2010 : Phils = PhP 167 2012 : Phils = PhP 177 2011 : Phils = PhP 176 Note: Applying 2010 and 2011/ Ave. of Jan - June 2012 CPI for all items (2006=100) to 2009 poverty threshold: 2010 threshold= PhP 240 2010 threshold= PhP 256 2011 threshold= PhP 251

III. The 2009 Official Poverty Statistics A. NATIONAL: Subsistence Incidence (families) • Among FAMILIES: • Subsistence incidence among families improved – from 8.7% in 2006 to 7.9% in 2009. • Out of 100 families --- 9 families were classified as food poor in 2006, this was reduced to 8 out of 100 families in 2009. Subsistence Incidence among Families (%) Poverty Incidence among Families (%) (0.2) 8.7 7.9

III. The 2009 Official Poverty Statistics A. NATIONAL: Poverty Incidence (Families) Among FAMILIES: In terms of poverty incidence among families, there was only a slight reduction during the three-year period – from 21.1% in 2006 to 20.9% in 2009. Subsistence Incidence among Families (%) Poverty Incidence among Families (%) (0.2) 8.7 7.9 (0.8)

III. The 2009 Official Poverty Statistics A. NATIONAL: Subsistence Incidence (Population) • Among POPULATION: • Subsistence incidence among population improved – from 11.7% in 2006 to 10.8% in 2009! • Out of 100 Filipinos -- 12 Filipinos were classified as food poor in 2006, this was reduced to 11 in 2009! Subsistence Incidence among Population (in %) Poverty Incidence among Population (in %) 0.1 (0.9)

III. The 2009 Official Poverty Statistics A. NATIONAL: Poverty Incidence (Population) Among POPULATION: In terms of poverty incidence among population, there was a very slight increase during the three-year period – from 26.4% in 2006 to 26.5% in 2009. Subsistence Incidence among Population (in %) Poverty Incidence among Population (in %) 0.1 (0.9)

III. The 2009 Official Poverty Statistics A. NATIONAL: Magnitude of subsistence/poor families • MAGNITUDE among FAMILIES: • Magnitude of subsistence poor familiesdecreased by about 58,000 from 1.51 million in 2006 to 1.45 million out of 18.5M in 2009! • However, in terms of magnitude of poor families, there was an increase of about 185,000 from 3.67 million in 2006 to 3.86 million out of 18.5M in 2009! Magnitude of Subsistence Poor Families (in million) Magnitude of Poor Families (in million) 5.2% (4.0%)

III. The 2009 Official Poverty Statistics A. NATIONAL: Magnitude of subsistence/poor population • MAGNITUDE among POPULATION: • Magnitude of subsistence poor population decreased by about 410,000 in 2009 – from 9.9 million in 2006 to 9.4 million out of 87.4M in 2009! • The magnitude of poor population increased by almost 970,000 Filipinos- from 22.2 million in 2006 to 23.1 out of 87.4M in 2009 by 4.4%. Magnitude of Subsistence Poor Population (in million) Magnitude of Poor Population (in million) 4.4 % (4.2%)

III. The 2009 Official Poverty Statistics • A. NATIONAL: Summary • While food poverty and poverty deteriorated between 2003 and 2006, these improved between 2006 and 2009 – except for the increases in the poverty incidence among population, magnitude of poor families and magnitude of poor population. • The increases, however, were not as much as between 2003 and 2006! Summary of increases/decreases:

III. The 2009 Official Poverty Statistics In terms of poverty incidence among population in ASEAN countries, the Philippines is better off than Lao PDR, Myanmar, and Cambodia; but behind Vietnam (14.5%) and Indonesia (14.2%). Note: Brunei Darussalam is a regional member of ADB, but is not classified as a developing member country. Sources: Millennium Indicators Database Online (UNSD 2010), Pacific Regional Information System (SPC 2010), country sources. (http://www.adb.org/documents/books/key_indicators/2010/pdf/Key-Indicators-2010.pdf )

III. The 2009 Official Poverty Statistics A. NATIONAL: Rise in Income vs Rise in Prices-Bottom 10% Average per capita income of the bottom 10% of families rose faster than prices of food!

III. The 2009 Official Poverty Statistics A. NATIONAL: Rise in Income vs Rise in Prices-Bottom 30% Average per capita income of the bottom 30% of families rose faster than prices of all items!

III. The 2009 Official Poverty Statistics B. REGIONAL/PROVINCIAL Caraga and Region IX consistently posted the highest subsistence incidence among families in 2006 and 2009! Improvements in Reg VII and Reg V!

III. The 2009 Official Poverty Statistics B. REGIONAL/PROVINCIAL Caraga and ARMM consistently posted the highest poverty incidence among families in 2006 and 2009!

III. The 2009 Official Poverty Statistics B. REGIONAL/PROVINCIAL Regions VII, V, and X continue to have the biggest share in the total number of food poor families!

III. The 2009 Official Poverty Statistics B. REGIONAL/PROVINCIAL Regions VII, V, and VI continue to have the biggest share in the total number poor families!

III. The 2009 Official Poverty Statistics B. REGIONAL/PROVINCIAL: Batanes, the 4 districts of NCR, Benguet, Cavite, Bulacan, Laguna, Rizal, and Pampanga were consistently included in the least poor cluster of provinces in 2003, 2006, and 2009! • New entrants in the least poor cluster of provinces in 2009 were Ilocos Norte, Bataan, and Nueva Vizcaya!

III. The 2009 Official Poverty Statistics Agusan del Sur, Bohol, Maguindanao, Masbate, Surigao del Norte and Zamboanga del Norte were consistently included in the bottom cluster of provinces in 2003, 2006, and 2009!

III. The 2009 Official Poverty Statistics B. REGIONAL/PROVINCIAL: Cebu and Negros Occidental continue to have the biggest share in the total number of poor families!

III. The 2009 Official Poverty Statistics B. REGIONAL/PROVINCIAL: High Poverty Incidence In terms of poverty incidence, most provinces with more than 40% of total families are poor were located in Visayas and Mindanao. However, in terms of magnitude of poor families, provinces with more than 100,000 were mostly located in Luzon and Visayas.

III. The 2009 Official Poverty Statistics Subsistence and poverty incidence among families in 2009 were notably high in Mindanao provinces. • Provinces with high poverty and subsistence incidence • Zamboanga del Norte • Agusan del Sur • Eastern Samar • Surigao del Norte • Zamboanga Sibugay • Northern Samar

III. The 2009 Official Poverty Statistics C. POVERTY STATISTICS AMONG THE BASIC SECTORS Who are the basic sectors? • In Republic Act 8425, or the Social Reform and Poverty Alleviation Act, it was declared that the State should adopt an area-based sectoral and focused intervention to poverty alleviation. • Section 3 of RA 8425 defined the basic sectors as the disadvantaged sectors of Philippine society, namely: • Farmer-peasant • Artisanal fisherfolk • Workers in the formal sector and migrant workers • Workers in the informal sector • Indigenous peoples and cultural communities • Women • Differently-abled persons

III. The 2009 Official Poverty Statistics C. POVERTY STATISTICS AMONG THE BASIC SECTORS Who are the basic sectors? • 8. Senior citizens; • 9. Victims of calamities and disasters; • 10. Youth and students; • 11. Children; • 12. Urban poor; • 13. Cooperatives; and • 14. Non-government organization.

III. The 2009 Official Poverty Statistics C. POVERTY STATISTICS AMONG THE BASIC SECTORS The NSCB generates poverty statistics for 9 of the 14 basic sectors due to data constraints. The 9 basic sectors are operationally defined as:

III. The 2009 Official Poverty Statistics Fishermen posted the highest poverty incidence among the nine basic sectors in the Philippines in 2009 at 41.4%, the same level in 2006, followed by farmers and children at poverty incidences of 36.7% and 35.1% in 2009, respectively. 41.4% 36.7% 35.1%

Poverty incidence for four basic sectors increased between 2006 and 2009: youth and migrant and formal sector workers, both with 1.0 percentage point increases, and children and individuals residing in urban areas, both with 0.3 percentage point increases. 1/ Self-employed and Unpaid Family Workers is an additional sector, which serves as a proxy indicator for informal sector workers, considering data available in the PSS.

Children, women, and individuals residing in urban areas accounted for the largest number of poor population in the country in 2009 at 12.4 million, 11.2 million, and 5.7 million, respectively.

III. The 2009 Official Poverty Statistics D. City and Municipal Level Poverty Statistics • Official provincial poverty statistics are computed based on the final results of the Family Income and Expenditure Survey. • The FIES is costly to implement, with regions as current domains. The design of the FIES does not permit reliable analysis of smaller subgroups, such as cities and municipalities. • There is a strong clamor from policymakers and program implementers for more geographically disaggregated information on the poorest cities/municipalities. • In response to this need for poverty statistics at lower levels of disaggregation, the NSCB, with funding assistance from the World Bank implemented two projects on small area estimation (SAE) to generate poverty incidences at the city/municipal levels.

III. The 2009 Official Poverty Statistics D. City and Municipal Level Poverty Statistics Two projects undertaken by the NSCB with WB funding • Used the Elbers, Lanjouw and Lanjouw (ELL) technique developed by a WB research team.

III. The 2009 Official Poverty Statistics D. City and Municipal Level Poverty Statistics 2003 Poverty Incidence among Population By province By city/municipality

III. The 2009 Official Poverty Statistics D. City and Municipal Level Poverty Statistics Actual Policy Uses • In targeting beneficiaries of programs/projects • Implementation of nationwide programs on the: • 1) National Household Targeting System for Poverty Reduction; • 2) Conditional Cash Transfers; • 3) Comprehensive and Integrated Delivery of Social Services; and • 4) Training/deployment of unemployed registered nurses in the 1,000 poorest cities/municipalities of the country.

III. The 2009 Official Poverty Statistics D. City and Municipal Level Poverty Statistics Actual Policy Uses • In targeting beneficiaries of programs/projects (cont.) • Identification of priority households for: • 1) the implementation of a number of local livelihood projects for the five poorest municipalities of the provinces of Region VI under the Integrated Services for Livelihood Advancement of Fisherfolks (ISLA) and TulongPanghanapbuhaysaAting Disadvantaged Workers (TUPAD); • 2) targeting enrolment in health insurance sponsored projects of the Philippine Health Insurance Corporation, specifically in Regions VIII and XII; • 3) estimation of the volume of rice needed for the Food for Children program in Leyte province; and • 4) implementation of programs/projects of the MPAI-World Vision for schooling of indigent children and micro-enterprise development.

III. The 2009 Official Poverty Statistics D. City and Municipal Level Poverty Statistics Actual Policy Uses • 2. In policy formulation and planning • Design and implementation of local poverty action plans, particularly in Region VI; and • Development and monitoring of the Medium-Term Regional Development Plan (MTRDP), Provincial Development and Physical Framework Plan, and Provincial Plan for Children in selected areas/localities. • In poverty monitoring • Monitoring the attainment of the Millennium Development Goals (MDGs) in Regions I, IV, and VIII; and • Monitoring the State of Children and nutritional status of the population in Regions IV and VIII, respectively.

III. The 2009 Official Poverty Statistics D. City and Municipal Level Poverty Statistics • The NSCB is currently updating the small area estimates of poverty for 2009. • This is jointly funded by the Government of the Philippines and the World Bank. • Consultations/validations were undertaken by the NSCB Technical Staff, with the Project Consultant and Technical Adviser: • Technical Committee on Poverty Statistics on June 1, 2012 • A validation of the preliminary estimates was undertaken on July 22-25, 2012. • The 2009 poverty incidence among population for all cities and municipalities will be released by the NSCB through a national dissemination forum on July 30, 2012.

IV. Some Policy/Program Implications

IV. Some Policy/Program Implications A. Poverty and Unemployment/Underemployment: Need for quality employment Poverty incidence for the employed population increased from 22.1% in 2006 to 22.4% in 2009. Similarly, poverty incidence for the unemployed population increased from 15.8% in 2006 to 22.4% in 2009. Poverty incidence for employed population is higher than the poverty incidence for unemployed population both in 2006 and 2009! • Employment is not sufficient, quality of employment matters!

Towards Better Targeted and Focused Poverty Reduction Programs