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Freeman Cebu Business

Severe case of income inequality in Central Visayas

Ehda Dagooc - The Freeman

CEBU, Philippines - “If Central Visayas were a country, it would be among those with severe case of income inequality,” this according to a study on income distribution in the region, indicated in the Regional Development Council (RDC).

According to the report which carries figures supported by the National Statistics Office (NSO), and the National Statistics Coordination Board (NSCB), poverty remains to be persistent in the region, despite its strong economic performance, particularly in the years 2004-2009. However, poverty incidence started to rise again in 2003 to 2006.

NSCB and National Statistics Office (NSO) record revealed that inequality in Central Visayas is worse than in some countries considered poorer than the Philippines such as Sri Lanka and Bangladesh.

High income inequality implies that few individuals benefited from the gains of economic growth.

Individuals who had the capacity to participate in the economy got more of the benefits while majority of the people in the region did not experience an increase in their incomes as a result of economic growth.

An underlying theory of inclusive growth is that societies based on equality tend to perform better in development. Countries with more equal income distribution are likely to attain higher rates of poverty reduction than those with unequal income distribution.

This inequality income distribution was explained by Asian Development Bank (ADB) senior country economist Norio Usui earlier, saying the robust economic growth in the country in general is only driven by the upper sector, which means opportunities of livelihood, and employment is only available to a certain segment in the society, who have good educational attainment.

The reason why, despite the good economic growth in the Philippines, many Filipinos have yet to experience the effect of the good economic state.

According to Usui, opportunities are mostly available only in Business Process Outsourcing, or tourism, of which only college graduates are hired. On the other side of the spectrum, those that used to employment in the manufacturing and agriculture for instance slowly losing their opportunities.

In order to solve this concern, Usui highly recommended that the Philippines will work double-time in attracting manufacturing investments, as well as further develop the agriculture sector, including the growth of agri-business.

Based on the Regional Development Council (RDC) plan, effective systems of support are deemed essential to the realization of high and sustainable growth and the promotion of equal access to development opportunities.

Economic development requires the creation of full, decent and productive employment opportunities that would effectively raise the income of individuals. Higher income is vital for improving standards of living and for achieving human development.

On the average, Central Visayas economy expanded by 5.1 percent annually from 2004 to 2009 as measured by the Gross Regional Domestic Product (GRDP).

The GRDP of the region grew faster than expected in 2004, 2005 and 2007 at 7.2 percent , 6.0 percent, and 8.6 percent respectively.

However, this remarkable growth of the regional economy did not create significant impact on the labor market and on the poverty situation in the region.

During the period of rapid economic growth, incidence of unemployment and poverty in Central Visayas remained high  indicating that the growth of the economy was far from being inclusive.  — (FREEMAN)

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ASIAN DEVELOPMENT BANK

BUSINESS PROCESS OUTSOURCING

CENTRAL VISAYAS

DEVELOPMENT

ECONOMIC

GROSS REGIONAL DOMESTIC PRODUCT

GROWTH

IF CENTRAL VISAYAS

INCOME

NATIONAL STATISTICS OFFICE

REGIONAL DEVELOPMENT COUNCIL

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