THOUGH more Filipinos turned to the informal sector to cope during the pandemic, the share of entrepreneurial activities in overall family income saw a decline, the Family Income and Expenditure Survey (FIES) showed.
The first semester data of the FIES showed Filipino’s incomes increased by 6 percent to P3.959 trillion in 2021 from P3.736 trillion in 2018. Of this, the bulk or 51.4 percent was raised from wages and salaries.
Another income source, the Philippine Statistics Authority (PSA) data showed, are entrepreneurial activities with a share of 17.3 percent in 2021, a 3.1-percentage point decline from the 20.4-percent share in 2018.
“(There was a) widening of the informal sector most especially during the pandemic. We have seen people starting to sell anything under the sun,” De La Salle University economist Maria Ella Oplas told BusinessMirror over the weekend. “These are activities (however are) not captured in the formal sector.”
Oplas said it is difficult to capture data on informal sector income because they do not issue official receipts. This is why the Bureau of Internal Revenue (BIR) encourages those with online businesses to register.
University of Asia and the Pacific (UA&P) economist Cid L. Terosa said entrepreneurial activities as a share of income may have also declined owing to mobility restrictions to curb Covid-19.
He said the restrictions also increased the importance of wages and salaries as a percentage of income of Filipino households. PSA data showed wages and salaries used to only have a share of 49.5 percent in 2018.
The increase in the share of wages and salaries in income rose with the decline in the share of the other sources, according to Terosa. “Hence, wages and salaries became a more important source of income since there were less funds coming from other sources,” Terosa told BusinessMirror.
“Although many lost their jobs, the proportion of wages and salaries in income grew because the other sources of income were more severely restricted during the pandemic. This is exemplified by the decline in the share of entrepreneurial income,” he added.
New businesses
National Economic and Development Authority (Neda) Officer in Charge Mercedita A. Sombilla told this newspaper that the share of wages and salaries in the income of Filipino households increased due to the recovery.
Sombilla said in the follow-up surveys conducted by Neda, businesses were able to slowly recover as mobility restrictions began to ease. She added new businesses linked to pandemic response were also created.
“In the follow-up business surveys that we did when the virus was slowly being contained, new businesses sprouted, especially in areas where we found ourselves deficient e.g. PPE (Personal Protective Equipment) manufacturing, transport service, etc.,” Sombilla said.
FIES data
The average income of Filipino families from January to June 2021 was estimated at P149,980 —higher by 0.2 percent from the P149,710 in the same period of 2018.
From January to June 2021, the average family expenditure was P113,670, down by 5.9 percent from the P120,750 in the same period of 2018.
PSA said the average income of families in the first income decile to the eighth income decile grew in the first half of 2021, compared to the same period in 2018.
Based on the average income of families in the lowest income decile groups in the first half of 2021, the average income of those in the first and second income decile both grew by 5.5 percent.
On the other hand, average income of the families in the ninth and tenth income decile declined by 1.5 percent and 5.5 percent, respectively.
Meanwhile, PSA data also showed that across all income decile groups in the first half of 2021, the average family expenditure decreased compared to the the first half of 2018.
In the first half of 2021, the average expenditure of families in the first income decile group was recorded at P47,190, or down by 14 percent from P54,880 in the same 2018 period.
The average expenditure of families in the 10th decile group or the richest Filipino families decreased by 7.2 percent.
The data also showed the income disparity between the richest and poorest Filipinos narrowed in the first semester of 2021.
“With the increase in the average family income among lower income families and decrease in the average family income among higher income families in the first half of 2021, the gap between the upper income decile groups and the bottom income decile groups contracted,” PSA said.
Total income of the upper 10 percent income group was 9.0 times that of the bottom 10 percent income group. This is narrower compared to the first half of 2018, when the disparity was 10.1 times.
As for income disparity between the upper 20 percent and bottom 20 percent income groups in the first half of 2021, the former earned 5.6 times than the latter.
In the first half of 2018, the upper 20 percent income group earned 6.2 times the income of the bottom 20 percent income group.
A lower income disparity was observed in the first half of 2021, implying a more equitable distribution of income. The Gini coefficient was recorded at 0.4414 in the first half of 2021 from 0.4596 in the same period of 2018.
The Gini coefficient is used to measure the income inequality among families. It ranges from 0 to 1, with 0 indicating perfect income equality among families, while a value of 1 indicates absolute income inequality.