Average family income dips 2.7% to P144,000 in 2006 – NSO report

The National Statistics Office (NSO) reported that the average income of Filipino families has declined 2.7 percent to P144,000 per family last year from P148,000 in 2003.

In a report, the NSO said total family income rose 22.7 percent from the 2003 figure to reach P2.99 trillion in 2006. But adjusting for inflation, total income of families in real terms grew a mere 2.6 percent to P2.5 trillion compared to the P2.4 trillion registered in the last survey period.

But total family expenditures expanded by a larger 25.7 percent as families spent more on fuel, light and water, transportation and communications and medical care.

Moreover, the share of food, clothing, footwear, house rent and taxes posted the largest cut on total expenditure, the NSO added.

Thus, given the 19.6-percent increase in the price of family expenditure items between 2003-2006, coupled with the 5.6- percent increase in the number of families during the same period, real average income of families declined 2.7 percent to P144,000 from P148,000 in 2003, the NSO pointed out.

In the same manner, average family expenditures in real terms dropped 0.8 percent. As a result, real average family savings was slashed by 12.5 percent to just P21,000 from P24,000 in 2003.

The spending pattern of Filipino families, particularly among those in the bottom 30-percent income group, also changed in 2006.

The bottom 30 percent of the families exhibited a change towards greater spending on food. Higher food expenditures, therefore, constricted the shares of other expenditure items like house rent/rental value (from 12.7 percent to nine percent), transportation and communication (from 6.1 percent to 3.8 percent) and education (from 2.9 percent to 1.3 percent).

Meanwhile, the average nominal income of families in the bottom 30 percent grew faster at 17.5 percent compared to families in the upper 70 percent which grew by 15.9 percent from 2003 to last year, the NSO reported.

Income growth among the lower income groups was also higher than the national average income growth of 16.2 percent.

Nonetheless, families from the bottom 30 percent posted negative savings due to higher spending. Income distribution among families was more equitable in 2006 than in 2003.

The Gini coefficient, a measure of income inequality ranging from zero to one where a value away from zero means increasing income inequality, improved to 0.4564 in 2006 from 0.4605 in 2003.

The improvement was mainly brought about by the decline in share in total income of the richest 10 percent of families, from 36.3 percent in 2003 to 35.9 percent in 2006. Also, there was an increase in income shares of the poorest 10 percent of families, from 1.8 percent in 2003 to 1.9 percent in 2006.

Acting Socioeconomic Planning Secretary and director general of the National Economic and Development Authority (NEDA) Augusto B. Santos admitted that while some improvements were registered in the nominal incomes, further reforms are still imperative.

“The need to accelerate the pace of growth should also be complemented by significant income gains within the lower income brackets,” Santos said.

He noted that the National Government must push for policies to sustain macroeconomic stability, modernize agriculture, strengthen small enterprises, and expand export markets in order to create employment opportunities.

The realignment of the national budget towards social services is a good opportunity for the government to put more emphasis on education and health in tandem with an effective population management program, Santos added.