PIDS: Protect the Vulnerable Middle Class

A development studies institute has called for protection for “vulnerable” middle-class Filipinos, pointing out that Filipinos who are near or just above the poverty line continue to live in persistent poverty.

The Philippine Institute for Development Studies (PIDS) recently made this call during the launch of the 22nd Development Policy Research Month (DPRM), where it recommended measures to address the problem, including social protection for the near-poor, inclusive growth policies, and building household resilience through disaster response, financial access and market protection.

With the theme “Securing a Future for All by Growing a Resilient Middle Class,” the DPRM reflects on AmBisyon Natin 2040, which envisions the Philippines as “a prosperous middle class where no one is poor.”

Citing key insights from a study they conducted, “Wealth Creation for Expanding the Middle Class in the Philippines,” Dr. Jose Ramon Albert, a senior researcher at PIDS, described a middle-class family as one typically consisting of 3 to 4 members, with a monthly income ranging from P24,060 to P144,360.

According to Albert, this segment represented about 39.8 percent of the population in 2021 and played a crucial role in socio-economic growth due to their access to higher education and income.

However, he said there are also threats to this growing population.

“Many middle-class households have faced job losses, lower incomes and higher spending on education and health care,” Albert said, warning that if left unaddressed, these setbacks could prevent the middle class from fully contributing to inclusive growth.

To address these concerns, he stressed the need for a “comprehensive strategy to not only expand the middle class, but also make it resilient to global megatrends that could exacerbate existing inequalities.”

The PIDS study, led by Albert and co-authors PIDS senior research fellows Dr. Roehlano Briones and Dr. John Paolo Rivera, proposed a four-pronged approach to achieving sustainable transformation.

This includes promoting social justice in natural resource management and climate action, seizing new trade and investment opportunities for SMEs, ensuring a future-proof workforce and social protection, and improving digital governance and public service delivery.

National Economic and Development Authority (NEDA) Undersecretary Rosemarie Edillon, who served as one of the participants at the forum, on the other hand, identified key investment areas that can help fulfill the aspirations of the middle class.

Examples include housing and urban development, agriculture, manufacturing, connectivity, financial services and tourism.

“We need to implement many more strategies so that they can better climb the social ladder,” she said, while also stressing the importance of social protection to ensure the well-being and continued growth of the middle class.

Discussing the broader implications for governance, Daniela Braun, country director of the Konrad Adenauer Stiftung, pointed out that good governance is essential for strengthening the middle class.

“Good governance is not only a valuable end in itself, but also a means to achieve economic growth,” she said, comparing the effects of corruption in countries with poor governance to the trust and investment that comes from good governance.

Marco Sardillo III, Executive Director of Asia Society Philippines, highlighted the apparent fragility of the middle class, especially during crises such as the Covid-19 pandemic.

“The assumption is that the oligarchs are invested in our politicians and that they take care of the poor. It is the middle class that is left behind,” Sardillo noted, urging both the government and the media to raise awareness of middle class issues, as a more informed population is better equipped to engage in its own development.

“If more people were aware of what’s at stake when we talk about the middle class, maybe we would take these issues more seriously.”

The DPRM is held annually in September to raise national awareness and enhance the importance of policy research in formulating evidence-based plans, programs and policies.