Target highly vulnerable households for support during the enhanced community quarantine

(This is a shortened and updated version of a policy brief that was first released on March 22 titled “Addressing the Needs of Highly Vulnerable Households in Luzon during the COVID-19 Lockdown.”)

The enhanced community quarantine (ECQ) in Luzon, although necessary to contain the spread of COVID-19, has resulted in the grave vulnerability to hunger and poverty of households reliant on non-regular forms of employment and with no savings and little or no access to social protection. Programs intending to alleviate the impact of the ECQ should target them first.

We propose here a methodology for identifying the “highly vulnerable households” and estimate the monthly cost required to support them during the quarantine. We also propose a way for government to operationalize this in the current crisis.

A highly vulnerable household is one that has no source of income during the lockdown period and no savings to tide it over. Operationally, we define a highly vulnerable household as one which belongs to the poorest 30% of all households, and which does not have even one member who has a “quality regular job.”

A quality regular job we define as any of the following: employment in government; permanent employment in a private establishment paid on a daily or monthly basis; an overseas job; or being an employer.

Not counted among quality regular jobs are self-employment among those in the poorest 30% of households, as well as employment in private establishments, where the employer changes on a daily or weekly basis, or where the pay is on a per-day, or per piece, or pakyaw, or commission basis.

In Metro Manila, typical examples of these occupations are car/van, taxi, and motorcycle drivers, building construction laborers, shop sellers, live-out helpers and cleaners, market and sidewalk stall and street ambulant vendors, carpenters, waiters and bartenders, among others. Outside Metro Manila, farm workers would also be included.

Using nationally-representative data from the Philippine Statistics Authority (PSA), we estimate the number of highly vulnerable households to total about 2.4 million for the whole of Luzon. These 2.4 million highly vulnerable households are estimated to have about 8.2 million members.

After converting PSA’s 2018 annual regional poverty lines to their monthly equivalents and adjusting for inflation, we get the estimated amount each individual in these households will need to address their monthly basic food and non-food needs during the quarantine. Our estimate is that for the entire Luzon about P17.7 billion per month is needed to address the most basic food and non-food needs of highly vulnerable households, of which P13.9 billion is for food needs alone. The total translates to about P7,500 per household.

If the quarantine were expanded to the entire country, we estimate that there would be 5.2 million highly vulnerable households, needing P40.3 billion per month in total, of which P31 billion is for food.

Note that the monthly amount required to address the needs of the highly vulnerable will rise the longer the quarantine continues, as more households become highly vulnerable due to depleted savings or the loss of jobs from an economic downturn, or even a spike in the cost of goods that will raise the poverty line. To date, a projected decline in Philippine GDP growth is already foreshadowing a recession, which is likely to be aggravated by the pandemic-generated global recession.

The estimated amount needed is well-within the budget amount approved for the Bayanihan to Heal As One Act, which promises to provide “an emergency subsidy to around 18 million low income households.” Under the Act, low-income households are to be provided P5,000 to P8,000 per month for two months, depending on the prevailing regional minimum wage, but including what the households already receive from the Pantawid Pamilya Pilipino Program (4Ps) and rice subsidy program. The Act also provides for the implementation of an expanded and enhanced 4Ps and an assistance program for households “with no income or savings to draw from, including households working in the informal economy and not currently recipients of (4Ps), of an amount adequate to restore capacity to purchase basic food and other essential items during the duration of the quarantine”.

It is not yet clear, however, how these would be implemented. The identified 18 million households already make up about three-fourths of all households in the country. We propose prioritization of highly vulnerable households as defined above, and for the Department of Social Welfare and Development (DSWD) to take the lead using its Listahanan database, which is the basis for identifying 4Ps beneficiaries. With information on 15.1 million households included, this database should suffice to identify highly vulnerable households as defined above or even using a refined definition.

As a first step, DSWD can identify who among the current 4Ps beneficiaries are also part of the highly vulnerable households and supplement their regular benefits with the amount needed to allow them to cross the poverty threshold. Doing so will reduce the possibility of “inclusion error,” or of identifying those not (or not yet) highly vulnerable as among the highly vulnerable, which can happen if there is too much leeway in identifying the beneficiaries.

For beneficiaries not yet among the 4Ps beneficiaries, the DSWD could consider drawing from the responses and experiences of governments in other countries, such as the monthly cash grants in Malaysia and Thailand (via e-payment platforms), and the voucher program in Seattle, USA, where grocery vouchers are allotted to families enrolled in the supported child care and food assistance programs, and are also affected by the COVID-19 closures.

Addressing the needs of the highly vulnerable should be prioritized; not only is it the humane thing to do, it may help stem social unrest that is sure to follow a prolonged period of hunger and distress.

n(http://ateneo.edu/ls/soss/economics/downloads/wp-2020-01addressing-needs-highlyvulnerable-householdsluzon-during-0)