By Brian James Lu

Government assistance to middle-income families

January 13, 2024, 2:59 pm

The news caught my attention at the start of the new year. This is the continuation of DSWD’s Assistance to Individuals in Crisis Situations (AICS). The DSWD has halted the issuance of guarantee letters (GLs) under the AICS program since Dec. 7 last year. It resumed issuing GLs at the onset of January. GLs are issued to a person in crisis to guarantee the services of a service provider, such as a hospital. The DSWD will reimburse the service provider for the services rendered to the person issued with a GL. The AICS is considering the needs of poor Filipinos during emergencies, such as death and health, among others.

What is striking about the news, however, is that the AICS now includes middle-income earners. To avail of government assistance from DSWD or from local government units, one must present a certificate of indigency from the barangay. With the inclusion of middle-income earners in the DSWD assistance program, I guess there is no need for the certificate.

What is the reason for the inclusion of middle-income earners? According to DSWD Assistant Secretary Irene Dumlao, even if a family has resources, they can still experience crises.

Middle-income and middle-class families are classified according to income. According to the Philippine Institute for Development Studies (PIDS), a lower middle class has a monthly income between PHP21,194 and PHP43,828, a middle class between PHP43,828 and PHP76,669, an upper middle income between PHP76,669 and PHP131,484, and a high-income (but not rich) class between PHP131,484 and PHP219,140. You are considered rich if your monthly income is at least PHP219,140 and up.

I have been contemplating even before that it is unfair for middle-income families not to be included in government financial assistance considering that they regularly pay their taxes, especially the employees, who are automatically deducted from their income taxes. By prioritizing indigents, middle-income employees are marginalized from government services.

All levels of the middle class are affected by crises, though at different levels. The most vulnerable are the lower middle class since their resources are enough for their daily needs. An emergency sickness of a family member can pull their resources together to respond to such a crisis, leaving them in debt.

The inclusion of middle-income earners in AICS is a recognition of their vulnerability and a call for the government to address their welfare. AICS assistance includes medical, funeral, educational, transportation, food, and even cash. Beneficiaries can access medical and funeral assistance from various government institutions, including local government units (LGUs). Medical bills pile up if a loved one is committed to a hospital. While DSWD can issue GLs, the family is left to spend on medicines, which are exorbitant, especially for fatal diseases, such as cancer and kidney problems, among others.

The middle class was also affected by the pandemic. Companies depleted their meager savings immediately by closing their operations due to the lockdowns. I remember when only the poor were given “ayuda” by local and national governments. However, the middle class was later included as the lockdowns dragged on for several months, then years. Cash assistance was also provided to employees through the Social Security System (SSS). The Social Security System (SSS) also provided cash assistance of PHP10,000 each to returning overseas Filipino workers (OFWs).

According to the Philippine Statistics Authority (PSA), three out of 20 households belong to the middle-class population, and two-thirds reside in urban areas. When you reside in urban areas, the standard of living is quite high compared to those living in rural areas.

In November last year, a World Bank official said that the Philippines is projected to become an upper-middle-income economy by 2025 or 2026. Since 1987, the country has been classified as a lower middle-income country with a gross national income (GNI) per capita of USD3,950.

The forecast of the World Bank is in line with the PBBM administration’s target for the Philippines to reach upper middle-income status by 2025. If the government achieves that target, that means a GNI per capita income of USD4,466 to USD13,845 for the country. Achieving this target may be ambitious for the administration, but it is necessary to ensure the development of the country. According to the World Bank, development is not just about the income of a country’s citizens. It also includes improving access to clean water and sanitation, lowering the stunting rate, and reducing poverty.

I think what is primary here is the provision of employment for Filipinos and the increase in wages and benefits. Definitely, the minimum wage of PHP610 in Metro Manila is not enough for a family of five. Increases in the prices of prime commodities have further weakened the buying power of the peso. We are not discounting, however, the desire of many Filipinos to work abroad, where salaries are much better. After the pandemic, there is again an increase in OFW deployment as economies have opened. This is side by side with the efforts of the Department of Migrant Workers (DMW) to simplify the processing of papers that cause bottlenecks in OFW deployment.

It is interesting to note from the study conducted by PIDS that OFWs predominantly belong to the middle-income category. There are also those that belong to upper-middle-income households. These may be professionals, such as engineers, architects, doctors, ship captains, and managers who sought greener pastures abroad. The desire to survive the family and provide a bright future for the children remains the driving force behind why Filipinos work abroad.

Editor’s note: The opinions expressed in the foregoing article are solely the author’s and do not reflect the opinions and beliefs of the Philippine News Agency (PNA) or any other office under the Presidential Communications Office.


About the Columnist

Image of Brian James Lu

BRIAN JAMES J. LU, MMgt, is an entrepreneur, business adviser, government consultant, and is deeply involve in civil society organizations. He advocates good governance, ethical business practices, and social responsibilities. He is the President of the National Economic Protectionism Association (NEPA) and Chairman of the Foundation for National Development (Fonad). His broad experiences in the private and public sectors give him a unique perspective to advance his advocacies.