Why the Middle Class is the New Poor in the Philippines and How Political Dynasties Keep Them There
- SJ&P | Wealth Advisory
- May 12
- 6 min read
5 MINUTE QUICK TAKE | OPINION
Chief Financial Planner | SJ&P Wealth Advisory
As the Philippines evolves, an unsettling trend emerges: the middle class seems to be slipping into poverty. This shift prompts serious questions about social mobility and the impact of longstanding political structures that seem to maintain inequality. Central to this issue is the powerful influence of political dynasties that have long dominated the Filipino political scene.
This post explores the realities of this development, emphasizing how the political elite maintain their power while the middle class faces increasingly difficult financial challenges.
The Changing Face of the Middle Class
The middle class represents economic stability, bridging wealth and poverty, and is vital for a balanced economy by providing a workforce and consumer demand. Historically, it enjoyed steady income, education access, and investment opportunities, forming the backbone of economic growth and social stability.
Today, this stability is threatened as workers demand higher wages due to a 6.1% inflation rate in 2022, straining budgets for essentials like food, housing, and healthcare. Previously secure families now face financial challenges.
This shift is influenced by the Philippines' political climate, where policies favor the wealthy, perpetuating inequality. Economic growth benefits large corporations and the affluent, while average workers' needs are overlooked. Consequently, the middle class faces stagnant wages, rising living costs, reduced job security, and insufficient social welfare, threatening their economic status and contributions to the economy.
How Political Dynasties Operate
Political dynasties in the Philippines are influential families that dominate political offices across generations, deeply embedded in the nation's cultural, social, and economic fabric. With substantial financial resources, they craft favorable policies, fund campaigns, and maintain a strong public image, consolidating their control over governance. They often prioritize their agendas over community needs, dominating local economies and public services.
Their mix of business interests and political power results in policies that protect their wealth, creating a cycle of patronage and dependency that stifles democracy and hinders new leaders. This concentration of power raises concerns about accountability and transparency, leading to corruption and reduced civic engagement, resulting in a stagnant political landscape with little room for reform.
Political dynasties represent a complex interplay of power, wealth, and influence that affects governance and societal structure in the Philippines, impacting the country's political, economic, and social development. Understanding these dynamics is crucial for addressing democratic challenges and promoting a more equitable political environment.
The Political Dynasty Cycle in the Philippines
Dynasties perpetuate power across cultures by passing influence through generations, leading to political landscapes dominated by a few families. These families maintain control through political maneuvering and networks, creating an exclusive system that favors continuity over change.
Elected officials from these families often prioritize political survival over constituents' needs, resulting in a disconnect between the elite and the populace. This focus on maintaining power leads to policies that preserve their influence, reducing governance accountability and responsiveness.
This approach exacerbates social inequalities and widens the wealth gap. A 2022 study found that the richest 1% of Filipinos control 25% of national wealth, marginalizing the middle class and highlighting barriers to upward mobility. As wealth concentrates, opportunities for education, employment, and social advancement diminish, deepening the divide between rich and poor.
This cycle fosters corruption, including nepotism and manipulation of laws to benefit those in power. Breaking this cycle requires systemic reforms and collective efforts from the populace to demand accountability and transparency. Engaging in civic activities, advocating for equitable policies, and supporting inclusive candidates are crucial for disrupting the power cycle and fostering a just society.
Economic Factors at Play
Middle-class families in the Philippines are facing economic hardship due to factors affecting their financial stability and quality of life. They struggle to maintain their standard of living under these pressures.
Inflation is a key issue, with rising rates causing significant price increases in essential goods and services. Rice prices have risen by over 8% in a year, heavily burdening family budgets. Prices for vegetables, meat, and cooking oil have also increased, worsening financial strain.
Wages have stagnated, not keeping pace with the rising cost of living, reducing purchasing power. Families are forced to compromise on spending, opting for cheaper, less nutritious food, cutting healthcare expenses, or delaying home repairs, impacting their well-being.
External factors like global economic trends, natural disasters, and political instability exacerbate these challenges by disrupting supply chains and inflating prices, creating financial insecurity and making it difficult for families to save, invest in education, or enjoy leisure activities.
Employment Instability
Job security is increasingly elusive in today's economy, with many middle-class roles lacking stability and benefits due to technological automation, globalization, and shifts in consumer behavior. Traditional industries like manufacturing and retail are shrinking, leading to precarious jobs.
The gig economy, with roles like ride-sharing drivers and freelance designers, often replaces stable jobs. Though it offers flexibility, it lacks income stability and benefits, causing financial stress as many juggle multiple jobs.
Political dynasties exacerbate job market inequities by securing jobs and contracts, widening the gap between the elite and middle class, and increasing job insecurity.
This insecurity increases reliance on social safety nets, strains resources, and lowers worker morale and productivity, negatively affecting the economy and workforce skills.
Addressing job security requires policy changes to protect workers' rights, support job transitions, and promote an equitable job market for stable employment and a healthier economy.
Education and Opportunity
Education is widely considered the key to social mobility, but this promise often falls short within a system skewed toward political dynasties.
Despite the Philippines boasting a literacy rate of over 95%, access to quality education often hinges on wealth. Families that can afford it gain entry to better institutions, while others settle for less. This disparity continues to limit opportunities for the middle class.
The Impact of Education on Social Mobility
Access to quality education directly affects economic prospects. Many middle-class families can only afford subpar education, leaving them unprepared for jobs that increasingly demand specialized skills. In contrast, children of political dynasties benefit from luxury education options, further entrenching their family’s wealth and status.
The Role of Governance
Governance affects the middle class's economic stability, social mobility, and quality of life. Political dynasties often create laws favoring the wealthy, imposing burdens like skewed tax regulations on the middle class. They influence business practices, hindering small enterprises and limiting economic opportunities. Public spending typically favors affluent areas, leaving the middle class with inadequate education and healthcare services.
This dominance leads to middle-class disenfranchisement and apathy, as their concerns are often ignored, preventing advocacy for beneficial policies and perpetuating elite influence. Reforming political systems to represent all citizens is necessary for a more equitable society.
Corruption and Its Consequences
Corruption remains a significant hurdle for governance in the Philippines, with political dynasties fostering environments that enable unethical practices.
Governments squander public funds, leading to inadequate services in education, healthcare, and infrastructure. As a consequence, middle-class families endure rising costs, declining services, and a pervasive sense of helplessness in advocating for change.
The Struggle for Political Reform
There is a growing call for political reform as citizens seek to break down the barriers of poverty and inequality.
However, established political families often resist such changes to safeguard their interests.
Grassroots Movements
In the face of this resistance, grassroots movements have emerged to advocate for increased transparency, accountability, and fair representation.
Though these movements face uphill battles, their success largely relies on garnering public support amid media narratives that often favor political dynasties.
The Future of the Middle Class
The future for the middle class is uncertain as they face economic difficulties.
Meanwhile, younger generations are becoming more politically active and aware of systemic problems, suggesting a possible change in the current state of affairs.
Hope Amidst Challenges
Creativity flourishes among those seeking solutions, leading to entrepreneurship and community projects. Innovative thinkers in challenged communities identify gaps and develop inspiring initiatives. Community projects, driven by a shared desire to improve conditions, unite groups to create jobs or enhance sustainability through local businesses or gardens.
Though these efforts may not solve structural issues, they show determination against adversity. Participants know systemic change requires persistence and a multifaceted approach. While immediate projects might not dismantle societal problems like inequality or poverty, they empower, spark discussions, and inspire policy changes. These grassroots efforts can attract support from larger entities, benefiting communities and paving the way for systemic transformations.
A Call for Engagement and Change
The middle class in the Philippines is increasingly becoming the new poor due to socio-economic challenges linked to political dynasties. This shift has led once-stable families to face financial instability as rising living costs outpace wage growth.
Families are trapped in poverty cycles, sacrificing essential needs as they struggle with debt and economic hardship. Political dynasties, prioritizing their interests, perpetuate inequalities by hindering reforms that could alleviate poverty, concentrating wealth and power.
For genuine change, Filipinos must advocate for transparency and accountability in governance through civic engagement, such as participating in elections and community organizing. Despite obstacles like entrenched interests and corruption, the resilience of the Filipino people offers hope for a more equitable society where all voices are heard and policies support economic well-being.
5 Minute Quick Take is a commentary about political, investments, healthcare, business, and other current event issues.
About the Author
Mr. King San Jose Santos is a FINANCE FELLOW and a certified and licensed financial consultant serving both individuals and businesses. Click here for more information.
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