Self-rated poverty down but belt-tightening still on, says SWS

The Second Quarter 2007 Social Weather Survey, fielded over June 27-30, found that 47% of families in the Philippines (estimated 8 million), consider themselves as "mahirap" or poor.

It was the first time for Self-Rated Poverty to fall to the 40's in the SWS quarterly surveys since August 2005, when it was 49%. It had ranged from 51% to 59% from December 2005 to February 2007.

Since 1986, the SWS Self-Rated Poverty surveys have been asking household heads to point to where they belong on a card with the words MAHIRAP or POOR on one side, DI-MAHIRAP or NOT POOR on the opposite side, and a line in-between.

Self-rated poverty is at 52% in the Visayas, 49% in Mindanao, 47% in Balance Luzon, and 36% in Metro Manila - all lower than in the previous three quarters.

In urban areas, 41% of households now consider themselves as poor; in rural areas, it is 54%. From March 2005 to February 2007, urban poverty was between 46% to 56%, and rural poverty was between 49% to 64%.

However, the decline in Self-Rated Poverty occurred in the context of a lowering of families' living standards. The Self-Rated Poverty Threshold, or the monthly budget that poor households say they need in order not to be poor, has actually fallen in money terms, despite the steady increase in the cost of living .

For poor households in particular, the median poverty threshold in Metro Manila is only P9,000 in the June 2007 survey, even though it had already reached as much as P15,000 several times in the past.

For the poor households in Balance Luzon, the median poverty threshold has ranged from P5,000 to P7,000 in the past two years, whereas it had already been as high as P10,000 before.

In the Visayas, the median poverty threshold of poor households has been P6,000 in the past year, whereas it had already been as high as P10,000 before.

For poor households in Mindanao, the median poverty threshold is currently only P4,000, even though it had already reached P10,000 before.

Since mid-2004, the median poverty threshold of poor households in Metro Manila has considerably weakened against the Consumer Price Index (CPI), which rose by over 40% since its base year of 2000. A declining poverty threshold, despite rising cost of living, means that households are lowering their living standards, in other words, belt-tightening.

In Metro Manila in particular, the median poverty threshold of P9,000 per month for June 2007 is equivalent to only P6,259 in base year 2000 purchasing power, after deflation by the Consumer Price Index (CPI). The last time that the deflated poverty threshold for NCR was below P7,000 per month was twenty years ago, in 1987.

In four SWS surveys in 2000, the base year of the CPI, the median SWS poverty threshold for NCR was already P10,000 per month, equivalent to P14,380 per month at the June 2007 cost of living, given the new CPI of 143.8. The difference of P14,380 - P9,000 = P5,380 between the thresholds of 2000 and June 2007 measures the extent of belt-tightening that took place.

Poverty thresholds can be calculated in real terms for any area with a Consumer Price Index. The official CPI is only available for Metro Manila and Other Areas, however.

The Second Quarter of 2007 Social Weather Survey was conducted over June 27-30, 2007 using face-to-face interviews of 1,200 adults divided into random samples of 300 each in Metro Manila, the Balance of Luzon, Visayas, and Mindanao (sampling error margins of ±3% for national percentages and ±6% for area percentages).

The area estimates were weighted by National Statistics Office medium-population projections for 2007 to obtain the national estimates.