EXPLAINER: Who are the Filipino middle class?

enablePagination: false
maxItemsPerPage: 10
maxPaginationLinks: 10

Metro Manila (CNN Philippines, April 25) - With the devastation from the COVID-19 pandemic expected to lead to huge economic losses, dark clouds now loom over livelihoods of many Filipinos.

The pandemic has erased jobs of over a million Filipinos, as the whole of Luzon and other regions elsewhere in the country have been placed under an enhanced community quarantine to curb the spread of the deadly disease.

As part of the quarantine measures, the government has urged people to stay at home and most industries to suspend operations. Only providers of essential services are allowed to remain open.

The government has so far focused amelioration efforts on providing aid to the ‘poorest of the poor,’ but some government officials have made appeals to include the middle class sector in the cash assistance program.

This begs the question – who are the middle class in the Philippines?

Income-based middle class

The Philippine Institute for Development Studies, a nonprofit government corporation that serves as the state's primary socioeconomic policy think tank, said in 2018 that 40 percent of the country’s population, that’s 4 out of every 10 Filipinos, belongs to the middle-income class.

PIDS senior research fellow Dr. Jose Ramon Albert told CNN Philippines on Tuesday that the welfare indicator in the Philippines for determining poverty as well as the middle class is per capita income.

"We essentially divided per capita income not just into the poor and the non-poor, but in seven groups, and the lowest two form the low income class, the next three groups form the middle class and the highest two groups, the upper income class," Albert said in an email to CNN Philippines.

“Our estimates of the poverty line, making use of more recent urban-rural classifications puts the poverty lines at around ₱11,690 for a family of five,” Albert added.

A recent study by Albay Representative Joey Salceda, which makes use of the same approach in defining the middle class, said a family of five is considered middle class if the household earns anywhere between ₱23,381 and ₱140,284 per month.

“Or around ₱25,000 and ₱150,000, respectively in 2020 prices,” Salceda said in the report.

The table provided by Salceda estimates the sizes of the income classes, both in terms of population and households, based on data sourced from the 2018 Family and Income Expenditure Survey conducted by the Philippine Statistics Authority.

A family is considered middle-class if their monthly income falls within the range of lower middle-income class, middle middle-income class, and upper middle-income class.

This means that among those considered middle-class households, 63 percent, or 7.6 million households, belong to the lower middle-income group. About a quarter are middle-middle class and a tenth in the upper-middle income class.

“Thus, if the social amelioration program for 18 million households out of 24.4 million estimated households in 2020 has been targeted well, it provides benefits for all of the low-income class, and a portion of the lower middle-income group,” Salceda said.

Finance Secretary Carlos "Sonny" Dominguez III earlier said that selected members of the middle class, particularly those working for micro, small and medium enterprises will receive assistance from the government's COVID-19 cash aid program.

READ: Middle class in MSMEs to receive COVID-19 aid – DOF

Characteristics of the middle class

The middle class plays a vital role in the economy since they make large investments in education and health care, and help improve public services.

The 2018 study showed that middle-income households spend a larger share of their overall household expenditures on education. At the time, the middle class was spending six times more on education than low-income households.

“In 2015, half of the middle-income persons aged 24 years and above attained education beyond secondary education,” the PIDS report said.

Latest data from the Labor Force Survey and Family Income and Expenditure Survey showed that members of middle-income households vary in the work they do.

According to the PIDS, about a quarter of middle-income persons work in wholesale and retail trade, working as vegetable vendors or sari-sari store owners, while nearly a fifth work in transport usually as tricycle and jeepney drivers or bus conductors.

About 16 percent of this income group work in government, mostly as clerks or public school teachers, and only 11 percent of them derive incomes from agriculture, and most of them belonged to the lower middle-income group, the report said.

The report also said about 13 percent of middle-income households had a member working as an overseas Filipino worker (OFW) with most of them belonging to the upper middle-income group.

Studies suggest that urban households are predominantly middle class. Based on Salceda’s study, three in five urban households are middle-class, but only 3 percent is high-income. Majority of them reside in Metro Manila followed by the Calabarzon region and Central Luzon, while a little more than half are spread across other regions.

But these characteristics of the middle class may change as more information becomes available.

“Limited variables have been provided by the PSA in the recent release of the 2018 FIES so only a few other characteristics in the profile we gave for 2018, such as breakdown by geographic location can be made available,” Albert told CNN Philippines. 

Given existing PSA data, the study determined the general expenditure characteristics and income sources of Filipino households.

However, further data such as characteristics of the household head, information about members of the household such as educational attainment, labor and employment, and household assets from the PSA would allow researchers to paint a better picture of the middle class, Albert said.

“We are awaiting other data on the Labor Force Survey that can be merged with the 2018 FIES, to get a much richer profile,” he added.

‘A middle-class lifestyle’

There is no universal standard of determining the middle class just as there is no internationally accepted definition of poverty, but there is a growing effort to define these terms in a multidimensional sense.

In 2016, the National Economic and Development Authority (NEDA) launched ‘AmBisyon Natin 2040,’ a long-term vision for the country that would guide the government’s development planning across at least four administrations.

NEDA said the vision represents the collective aspirations of the Filipino people, which were put together through focus group discussions with more than 300 citizens and a nationwide survey with close to 10,000 respondents. The process included members of government, private sector, academe, and civil society.

The survey showed that 79 percent of respondents said they want a ‘simple and comfortable life’ by 2040.

“For Filipinos, a simple and comfortable life is described as having a medium-sized home, having enough earnings to support everyday needs, owning at least one car or vehicle, having the capacity to provide their children college education, and going on local trips for vacation,” the NEDA report said.

That points to an alternative way of determining the middle class.

The statement summarizing the aspirations of the Filipino people also guided the socioeconomic planning agency in crafting a single long-term vision for the Philippines, which is stated as this: “By 2040, the Philippines shall be a prosperous, predominantly middle class society where no one is poor."