Income inequality in the Philippines is the extent to which income, most commonly measured by household or individual, is distributed in an uneven manner in the Philippines.
Overview
Based on gathered data, the gross domestic product (GDP) of the Philippines has been growing at a rate of 6.8%.
Source:Philippines GDP-Real Growth Rate-Economy(www.indexmundi.com)
According to World Bank Country Director Motoo Konishi, the Philippines had become a "rising tiger" in East Asia. However, at the same time, during the 2010–2011 fiscal year, the increase in the wealth of the richest families in the Philippines, amounting to 47.39%, comprised 76.5% of the GDP increase for that year. Thus, the benefits of this economic growth has not yet trickled down to the poorer segments of the population, as seen with the malnutrition, and poverty that continue to plague the country despite the fact that the economy seems to be growing.
According to Albert and Ramon, the poorest 20% of the population only had a share of 4.45% of the national income. This shows that the distribution of wealth is uneven in the Philippines for the data shows that the poorest 20% earned 14,022 pesos while the richest 20% of 176,863 pesos.
Measurement
Gini Index
The Gini coefficient is also known as Gini index or Gini Ratio. It measures the degree of inequality in the distribution of family income in a country. A Lorenz curve plots the cumulative percentages of total income received against the cumulative number of recipients, starting with the poorest individual or household. The Gini index measures the area between the Lorenz curve and a hypothetical line of absolute equality, expressed as a percentage of the maximum area under the line. If income distribution were more nearly equal, the index would be lower or nearer to zero; if income distribution were more unequal, the index would be higher or nearer to 100. Zero indicates perfect equality, while 100 indicates perfect inequality. In the Philippines in 2015, the Gini Coefficient was approximately 0.4439. This is a slightly smaller number in comparison to a few years prior (in 2012, 0.4605). This means a bit more even wealth distribution across families. [3]
Palma Ratio
The Palma ratio is an alternative measure of inequality based on the work of Gabriel Palma. It is ratio of the top 10% of population's share of gross national income (GNI), divided by the poorest 40% of the population's share of GNI. Palma suggests that distributional politics relates mainly to the struggle between the rich and poor, and who the middle classes side with.
The Palma ratio could be a good comparison to the Gini coefficient measurement, and could cater the disadvantages of the commonly used Gini. These disadvantages include the fact that the measurement may give different results for individuals as compared to households. Furthermore, countries that are more diverse will display a higher regional coefficient than it does individually.
Historical background
Second World War (1942–1945) When the Japanese occupied the Philippines, those who were ruthless enough to deal with their fellow Filipinos as well as the Japanese forces became part of the elite. However, the number of people who fell to the lower classes increased and thus, became the main problem of the post-war period. The number of people who fell into poverty increased because of the fighting which led to personal and property loss, monumental destruction, and social upheaval.
Since production was practically destroyed people engaged in the buy-and-sell business. To encourage this, the Japanese created the so-called "Mickey Mouse" Money as their currency for the occupied Philippines and this caused inflation. An effect of this inflation was that prices rose to astronomical levels. A good example of this would be matches being sold at 100 "Mickey Mouse" Pesos. This kind of money caused inflation because the Japanese had no way of backing it, thus it was worthless.
By the end of the war, irrigation facilities in farms were damaged and destroyed, and agricultural lands were neglected. Livestock also was reduced to 65%, thus a scarcity of food resulted and thus, family heads padded the numbers of their family members to get more food, thus becoming hoarders. Due to this hoarding, prices rose and thus, President Osmeña tried to solve this by prescribing the maximum prices for goods. However, in reality, the real market prices were way higher than those stated by Osmeña's order. Due to this, people had no choice but to follow the higher prices set by profiteers, since money was already circulating.