ADBI: Income gap in PH widens amid pandemic

The COVID-19 pandemic has further increased the income gap between the rich who got to cope and the poor who suffered more in the Philippines, Tokyo-based think tank Asian Development Bank Institute (ADBI) said.

“In the Philippines, households in the lower-income classes are more likely to have income declines than those in the upper-income classes. This implies that income inequality may have widened amid the COVID-19 pandemic,” ADBI research vice chair Peter Morgan and project consultant Trinh Long said in a working paper titled “Impacts of COVID-19 on Households in Asean Countries and Their Implications for Human Capital Development.”

Based on the results of the ADBI surveys in Asean countries last year, poor households in the Philippines likely faced financial difficulties amid the pandemic more than rich households by a difference of 40 percentage points (ppts).

“This may be due to the fact that some households suffered from income decline, but they had to increase their expenditure,” ADBI said.

Across Asean, the difference in likely occurrence of financial difficulties among the poor and the rich averaged 20 ppts.

In Cambodia, for instance, ADBI found out that lower-income households were less likely to experience a decline in income than those in higher-income classes despite the pandemic, which meant narrower gap.

ADBI said people in the Philippines, Cambodia and Indonesia “lacked a well-developed social safety net to support them when there is a shock.”

Households whose income come mainly from salaries are less likely to experience income declines during a crisis, it said.

ADBI said that in the Philippines, “being located in a lockdown area increases the likelihood of having an income decline” of a more significant amount compared to its Asean peers.

Across the region, it was in the Philippines where the biggest share of households, or 85 percent of respondents, said they had experienced financial difficulties amid the pandemic. Also, 84 percent of Filipinos surveyed said their incomes dropped last year.

In terms of sufficiency of resources to cover daily necessities in case households lose all of their income sources, ADBI said “the situation is also serious in the Philippines, with less than 30 percent having enough resources to cover necessary expenditures for more than a month.”

Referring to the Philippines and Indonesia, where 86.6 percent of households said they could survive for only two weeks without income, ADBI said “if the COVID-19 pandemic is prolonged, many households in these countries may suffer from hunger and increased poverty.”

As cases surged in recent weeks, the Philippines remained under the longest COVID-19 quarantine in the region. The government imposed stricter measures for the next two weeks.

Data from the Manila-based Asian Development Bank showed the Philippines’ war chest to fight COVID-19 had hit $38.13 billion or 10.36 percent of gross domestic product as of March 8.