ANALYSIS: In lifting people’s well-being, Vietnam passes Philippines

Jose M. Galang

Posted at Mar 23 2017 04:19 PM | Updated as of Mar 23 2017 04:28 PM

Vietnam has overtaken the Philippines in terms of human development, according to the latest United Nations Human Development Programme (UNDP) report on the state of people’s well-being across the globe.

While the Philippines continues to post a higher per-capita national income value, Vietnam’s recent economic growth has succeeded in significantly narrowing the income inequality among its people, data from the report indicate.

More significantly, the proportion of population living below the income poverty line ($1.90 a day at 2011 purchasing power parity terms) stood at 13.1 percent as of 2014 in the Philippines, while that of Vietnam has dramatically gone down to 3.1 percent.

The UNDP report, “Human Development Report 2016: Human Development for Everyone”, is the 25th edition of the annual accounting of nations’ progress in improving people’s access to benefits from economic growth. The report features a Human Development Index (HDI) encompasses a broad range of indicators for income, education and health status in an effort to “give a more balanced picture of progress than measuring by GDP per capita alone can,” UNDP Administrator Helen Clark explained at the report’s launch the other day in Stockholm, Sweden.

In the latest HDI, the Philippines obtained at reading of 0.682 point, ranking the country on 116th among the 188 nations in the study and 10th among developing countries in the “medium human development” classification.

While the Philippines’ 2016 HDI reading represented a slight rise from the previous year’s 0.679, its ranking of 116 was a one-notch drop from the year before. Over the period 2010-2015, the Philippines’ rank in the HDI has seen a decline of 7 notches.

Southeast Asians’ record

Among Southeast Asian states, Singapore continued to post the best HDI record—scoring 0.925 to share the 5th spot with Denmark. Singapore’s performance also helped keep its place in the “very high human development” category. Brunei, ranked 30th with an HDI score of 0.865, is the only other country in the region to make it to that category.

Malaysia and Thailand ranked 59th and 87th, respectively, with HDI scores of 0.789 and 0.740 to make it to the “high human development” group.

In the “medium human development” category where Vietnam and the Philippines fell, there were four other Southeast Asian nations: Indonesia at 113th spot with an HDI score of 0.689, Laos at 138th with 0.586, Cambodia at 143rd with 0.563, and Myanmar at 145th with 0.556.

Quite noticeable too was the Philippines’ registering the only decline in the rankings over the period 2010-2015. On the other hand, the biggest improvements in ranking were those of Laos, up by 5 steps, and Thailand, up by 4 notches.

Philippine indicators

Human Development Reports website

Among the various indicators comprising the UNDP index, key factors behind the 13.1 percent ratio of the population living below the income poverty line in the Philippines were listed as: education (which contributed 35.3 percent of “deprivation in dimension to overall poverty”), health (30.2 percent), and living standards (34.5 percent).

Nearly 6.17 million people in the Philippines were estimated to be experiencing “multidimensional poverty” with a 51.9 percent “intensity of deprivation” (or the average deprivation score experienced by people in this group). Still, the number of people encountering multidimensional poverty, the study noted, marks a reduction from over 6.55 million in 2008.

The study also cited another group experiencing poverty: the “working poor” whose daily earnings are less than $3.10 (at purchasing power parity terms). In 2013, this “working poor” sector comprised 32 percent of the total employment level, which nevertheless was an improvement somewhat from the 40.3 percent share five years before.

Total employed individuals 15 years and older were 60.4 percent of the total population, on a total labor force participation rate of 64.7 percent. Employment in the services sector came to 53.6 percent of the total employment, the biggest proportion, while that in agriculture accounted for 30.4 percent. About 38.4 percent of total employment were in “vulnerable employment” sectors.

There was a 15.7 percent unemployment rate among the youth (15 to 24 years old). Overall unemployment rate was 6.7 percent of the labor force. Young people not in school or employment comprised 24.8 percent of the total 15-24 age group.

Not everyone benefits

The UNDP report noted that while basic human development has progressed well on average in all regions of the world, not everyone has benefited from this progress, or “at least not equitably.”

“Some have been left out, and some have been left behind,” the report noted.

The report proposed a four-pronged policy approach to ensure that human development reaches everyone. First, universal policies are needed to reach those left out, it said. Even with universal outcomes, there may be disparities, it said. 

Universal human development policies need to be reoriented to reach those left out. Economic growth is an important means to achieve human development, but if the benefits of growth are to reach disadvantaged and marginalized people, growth will have to be inclusive such that poor and disadvantaged people actively participate in the generation of growth and have an equitable share in the outcome, the UNDP study said.

But even with a new focus on universal policies, some groups of people have special needs that would not be met, the study cautioned. Their situations, it said, require specific measures and attention.

In the Philippines and other countries which experience large flows of remittances from their citizens working overseas, consolidating the streamlining remittances could make them a funding source for human development priorities, the report said.

“Remittance banks can be set up in countries where the flows are large,” adding that easy and transparent legal remittance-sending mechanisms can be put in place in consultation with host countries.

The report also called for a closer examination into human decision-making. What seems like “irrational behavior” by a group, such as poor people, may at times “simply reflect a lack of access to services that everyone else takes for granted,” the study said.

For example, people with stable incomes may fail to save and ensure future financial security. “This may appear to be irrational behavior. But it may simply be that these people lack access to basic services such as savings accounts.”

The report cited an example in the Philippines when about 30 percent of people who were offered a savings account with no option to make a withdrawal for six months accepted. “Individuals who used the accounts increased their savings 82 percent more than the control group did,” it was pointed out.

The UNDP report also cited the Philippines’ conditional cash transfer program as an example of programs being tailored to local contexts for bigger impacts. The program’s success in the Philippines, it was noted, resulted from its linking to “careful targeting and regular assessments to update the list of recipients and ensure that the program effectively matches the needs of the most vulnerable.”

But even with the Philippine examples of notable moves to improve the marginalized people’s lot, the country still saw a drop in its human development record. Obviously much more needs to be done. If the government focuses on these issues—instead of trying to exterminate citizens who fall victim to drugs—perhaps the country can prevent being overtaken by another better performing nation in the Southeast Asian region.