Prosperity measured in averages must be felt at home

The Philippines’ recent reclassification as an upper-middle-income economy has been hailed as a milestone of progress. After reading my article, Uriel Galace makes the case convincingly: Household access to electricity has surged from 23% in the 1970s to 95% today, clean water availability has risen from 51% to 98%, and access to sanitation facilities has increased from 23% to 95%.

Ownership of refrigerators and televisions, once considered luxuries, has become commonplace. Education has expanded, with the average number of years of schooling rising from 5.6 to 9.4, while mortality among children younger than 5 has fallen from 82 deaths per 1,000 live births to 26.5.

These are not abstract numbers. They represent real improvements in the daily lives of millions of Filipinos.

Yet optimism collides with lived reality. According to a Social Weather Stations survey in March 2026, 52% of Filipino families, or about 14.5 million households, still considered themselves poor, while 42% rated themselves as food-poor.

This self-rated poverty underscores the gap between statistical progress and household experience. As SWS President Mahar Mangahas has often noted, “Self-rated poverty is the most authentic measure of how families feel about their condition.”

The middle class, once seen as an engine of growth, is also under strain. Studies by the Philippine Institute for Development Studies and the World Bank warn that nearly one-third of households classified as middle-income are vulnerable to sliding back into poverty because of inflation, unstable wages and weak job security.

Rural families are especially at risk, with vulnerability rates as high as 43%, compared with 20% in urban areas. This fragility explains why even families with televisions and refrigerators increasingly feel poorer as they are squeezed by rising food, fuel and housing costs.

Most Filipinos remain far below the World Bank’s upper-middle-income benchmark despite the country’s reclassification. Official data show that only about 20% to 25% of households reach the $4,850 per capita threshold, while 75% to 80% earn below it.

The top 50 families control 40% to 45% of gross domestic product, underscoring the concentration of wealth. Of the Philippines’ 117 million people, most earn $3,000 or less annually, far below the upper-middle-income benchmark.

To meet the $4,850 per capita cutoff, a family of five would need P1.48 million a year. Most households earn only P250,000 to P400,000 annually.

The official poverty rate in 2023 was 15.5%, representing 17.5 million Filipinos. When the “near poor,” or those just above the poverty line, are included, 75% to 80% of Filipinos fall below the effective poverty threshold and cannot sustain middle-income living standards under inflationary pressures.

The gap is glaring. Inflation and peso depreciation erode purchasing power, pushing many households downward. The concentration of wealth among elite families distorts national averages and makes upper-middle-income status appear disconnected from household realities.

The Philippines risks falling into a “middle-income trap” in which growth benefits only a small elite. While the country is statistically an upper-middle-income economy, most Filipinos remain unable to sustain middle-income living standards, with wealth concentrated among a few families. This helps explain why the middle class feels squeezed and vulnerable.

Against this backdrop, social protection programs remain indispensable. The Pantawid Pamilyang Pilipino Program, or 4Ps, has a 2026 budget of P113 billion and provides conditional cash transfers for health and education, helping millions of families stabilize their consumption.

The Assistance to Individuals in Crisis Situations received P63.9 billion to provide immediate aid for medical, burial and food needs. Ayuda programs supplement these efforts during crises.

The contrast is stark. The Philippines has made remarkable strides in basic living standards, validating its upper-middle-income classification. However, the fact that more than half of Filipino families still consider themselves poor and that the middle class remains precarious underscores why 4Ps, ayuda and AICS are not signs of failure.

As Department of Social Welfare and Development Secretary Rex Gatchalian has emphasized, “These programs are lifelines, not luxuries — they prevent vulnerable households from falling deeper into poverty.” /dm

The Philippines has climbed the income ladder, but the climb is incomplete. Prosperity measured in averages must be matched by prosperity felt in households across the archipelago.

Until then, the country’s upper-middle-income status will remain both a symbol of achievement and a reminder of the unfinished work ahead. /dm