Mixed report card on poverty eradication

China scores most remarkable results in Asia; developed economies face new forms of poverty
By John Wong, Published The Straits Times, 10 Oct 2015

Last month, the United Nations launched a new set of Sustainable Development Goals - a blueprint to guide the world's development over the next 15 years.

The UN General Assembly adopted 17 goals to guide global development by 2030, including the ambitious target of providing productive employment for all.

The new goals build on the Millennium Declaration of 2000, when the UN adopted eight Millennium Development Goals (MDGs), at the top of which was the eradication of extreme poverty and hunger. The World Bank, the International Monetary Fund and other international development organisations all lent their support.

With the MDGs due to expire by the end of this year, it is time to take stock of the global agency's anti-poverty drive.

The 2014/15 Global Monitoring Report confirmed that the first goal of cutting extreme poverty in half by this year had been achieved ahead of time, in 2010. The most outstanding achievement was recorded in East Asia, particularly in China.

POVERTY IN DIFFERENT FORMS

Cases of abject "extreme poverty" in poor countries are easily observable in their slums or ghettos, as well as in their homeless people.

"Visible poverty" such as hunger can actually be measured by the daily calorie intake of each poor person. What is not so widely known is that poverty, or even extreme poverty, can actually occur in developed countries, including some wealthy societies.

The formal definition of poverty usually requires setting a per capita (or per household) minimum consumption standard required to meet basic needs in terms of food, clothing and shelter. Thus, the World Bank set a poverty level of US$1.25 (about S$1.75) a day in 2005 prices for developing countries to identify their poverty problems.

By this criterion, about 17 per cent of the population (or just over one billion people) in the developing world today still live on US$1.25 a day or less. The figure was 43 per cent in 1990.

The World Bank poverty benchmark was originally meant for general international comparisons. Most governments, in formulating their anti-poverty programmes, set their own standards for poverty, in line with economic and social conditions in their own countries (for example, local costs of living). The US$1.25-a-day gauge is also subject to exchange-rate fluctuations.

Defining "poverty" beyond the bare minimum of avoiding hunger is obviously an arbitrary exercise.

What constitutes "basic needs" can vary in both quantitative and qualitative terms, and in different cultural and social contexts. It can also vary over time, along with economic growth and rising social expectations. Each country thus sets its own poverty line - one appropriate for its own level of economic development and social norms. In other words, beyond certain "absolute thresholds", poverty becomes a relative notion.

EXPERIENCES IN EAST ASIA

Since the economic growth performance of East Asian countries has been uneven, their overall track records for poverty reduction have also been mixed.

Developed economies such as Japan, South Korea, Taiwan, Hong Kong and Singapore have successfully done away with their absolute poverty, and they are preoccupied mainly with their own kind of relative poverty.

China, Malaysia and Thailand, thanks to long periods of successful economic growth, are at the transitional stage of having basically resolved their absolute poverty problem. Their current poverty-fighting policy is targeted at certain regions or groups.

For Indonesia, the Philippines and the new ASEAN members of Cambodia, Laos, Myanmar and Vietnam, the main thrust of their poverty alleviation policies is still on reducing their absolute poverty levels in order to meet the MDGs.

China's overall poverty reduction performance is the most remarkable - a record 500 million people have been lifted out of poverty since 1978.

According to the UN, 70 per cent of global achievements in poverty reduction came from China. By the UN's original bare-minimum standard, only 2.8 per cent of China's rural population is still considered "poor". However, as the poverty standard was revised up to 2,300 yuan (about S$510) a year in 2011, 13 per cent of China's population, or 128 million people, are deemed poor.

Japan's cities are slum-free. Even so, it has its own group of working poor, and its government recently set the poverty rate at 16 per cent. With a rapidly ageing society, Japan will face a new problem of "elderly poverty".

For South Korea, its official poverty rate today is 16 per cent - the issue is confined mainly to the elderly, as almost half of those aged over 65 fall below the poverty line.

ANTI-POVERTY DRIVE IN ASEAN

An upper-middle-income economy, Malaysia saw its absolute poverty drastically reduced from 49.3 per cent in 1970 to 1.7 per cent in 2012. Most development programmes there have had built-in "redistributive policies" to benefit the dominant bumiputera ethnic group.

However, with economic growth coming down in recent years, Malaysia's relative poverty rate increased from 17.4 per cent in 2007 to 20 per cent in 2012. Increasingly, poverty has become more class-based, hitting all racial groups.

Thailand is also an upper-middle-income economy. Its poverty problem has been primarily a rural phenomenon. Thanks to rapid economic growth, overall poverty rates have also declined, from 32.3 per cent in 2003 to 10.9 per cent in 2013. This is remarkable, given that Thailand's income inequality has been consistently high, with its Gini coefficient at 0.5.

Indonesia is still a lower-middle-income economy following several decades of industrialisation. Strong economic growth has seen the poverty rate fall sharply, from 40 per cent in 1976 to 24 per cent in 1999 and just 11.4 per cent in 2013.

For the Philippines, poverty remains a big challenge, although its economic outlook has markedly improved recently. Based on the World Bank's US$1.25-a-day measure, the country's poverty rate dropped from 40 per cent in 1985 to about 20 per cent in 2012.

Of the new ASEAN members, Cambodia has fared the best in poverty reduction - its poverty rate fell sharply from 53 per cent in 2004 to 20.5 per cent in 2011.

Vietnam has made impressive progress too, with its poverty rate dropping from 60 per cent in the early 1990s to 21 per cent in 2010.

For Laos, its performance has been similarly remarkable even though it is a landlocked economy. Its poverty rate fell from 46 per cent in 1992 to 26 per cent in 2010.

In short, the war on poverty for both developing and developed countries will never end.

Even as the poorest nation resolves its basic problems of absolute poverty - hunger - it continues to face the issue of relative poverty. The poverty problem has become a perennial one, partly because it is a "relative" concept - and also because this is about a moving target.

The writer is a professorial fellow at the East Asian Institute, National University of Singapore.

Uniquely Singapore way of reducing poverty

Singapore's approach to poverty alleviation is manifestly different from that of other countries in the region.

There is no official definition of "poverty", or any official poverty line. The Government takes the view that setting such a single "one size fits all" definition would serve no practical policy purpose.

However, it has made available data on household income levels and average household expenditure on basic needs, which allows scholars to easily estimate poverty rates. Among various estimates, the poverty rates of 10 per cent to 12 per cent for 2011 seem quite reasonable.

Singapore long ago established the Public Assistance Scheme to provide long-term financial assistance to "hard-core poor" individuals or families - those who are permanently unable to work because of old age, disability or other serious family problems.

About 3,000 households in Singapore are currently in need of such long-term public assistance.

Prime Minister Lee Hsien Loong, during his National Day Rally speech in August, announced a new housing initiative - the Fresh Start Housing Scheme - to help families break out of the poverty circle.

The main feature of Singapore's approach to poverty alleviation is its strong emphasis on attacking the root causes of poverty. This involves supporting human resource development through education and training.

The central idea is that if someone does not take part in the development process, he also cannot benefit from it.

For those workers who could be at risk of being laid off, the Government provides various training and other incentives to help them stay employed. Such initiatives include the Workfare Training Support scheme and the Workfare Income Supplement scheme.