Philippines' Upper-Middle Income Status Masks Widespread Economic Hardship, IBON Warns

MANILA, Philippines – The IBON Foundation has issued a stark warning that the Philippines' recent upgrade to upper-middle-income (UMIC) status by the World Bank is a statistical classification detached from the daily realities of millions of Filipinos. The think tank argues that this economic milestone masks deeper structural problems in employment, inequality, and the decline of domestic industries. Sonny Africa, executive director of IBON Foundation, described the World Bank classification as "a mere statistical classification" that fails to create decent work with livable pay for the majority of Filipinos. While the government highlights low official unemployment rates, IBON's analysis indicates that employment has increasingly become a coping mechanism rather than a pathway out of poverty. A staggering 78% of the workforce, approximately 38.7 million Filipinos, are trapped in "vast informality," enduring volatile working conditions in unregistered establishments or as self-employed individuals and unpaid family workers. The purchasing power of the average minimum wage has eroded by 21% compared to 1989, and IBON estimates that 14.4 million families, or about 62% of the population, remain poor or low-income. This starkly contrasts with the immense concentration of wealth at the top, driven by an exclusionary growth model favoring large conglomerates. Furthermore, the foundation pointed to the long-term weakening of the country's productive sectors as a root cause. Manufacturing's share of the gross domestic product (GDP) has dropped to 17.4%, its smallest in 76 years, while the agricultural sector has shrunk to a historic low of 7.9%. This lack of a strong industrial and agricultural foundation hinders the generation of high-quality, secure jobs, signaling the "exhaustion" of the country's current growth model. IBON also raised concerns about development models heavily reliant on foreign capital, citing the US-led Pax Silica alliance as an example. They warned that without deliberate state intervention, such as binding requirements for technology transfer and local supplier development, these high-tech hubs will not lead to genuine Filipino industrialization. Africa cautioned that initiatives like the Luzon Economic Corridor and Pax Silica, implemented under a one-sided foreign investment regime, risk locking the Philippines into a subordinate role within global value chains, merely supplying real estate, minerals, and cheap labor while foreign corporations retain control over operations, technology, and profits. "There will likely be a lot of optimism during the SONA. But this will ring hollow because the Marcos administration is unable to deliver real economic reforms while the people’s conditions continue to worsen," Africa stated. The foundation asserts that national development cannot be measured by GNI averages alone or achieved solely through foreign investment enclaves. Instead, the country needs secure employment, stronger domestic agriculture and manufacturing, and economic growth that translates into tangible improvements in Filipinos’ lives. Source: Rappler Philippines