Policy responses to cost-of-living crisis seen neglecting middle class

By Erika Mae P. Sinaking

THE issues facing middle-income households have not been adequately addressed by government policy responses to the cost-of-living crisis, analysts said.

“The middle class is underrepresented in policymaking,” Jose Enrique A. Africa, executive director of IBON Foundation, told BusinessWorld at the Pandesal Forum in Quezon City.

He noted that the broadness of the middle-income category, where the income band runs from P25,000–P30,000 to around P200,000 or P250,000 in monthly income — fails to reflect the economic vulnerability of most families in that range.

According to Mr. Africa, only a small segment of households can be considered securely middle class or affluent, while the vast majority remain economically precarious.

“The secure middle class and the rich represent at most only 10% to 15% of families,” he said. “So we’re talking about 80% to 85% of families who are either poor or in a middle class that is not secure, but vulnerable”.

He said the government’s current reliance on targeted social aid is a “shortcut for saving money” by focusing only on the smallest possible groups to minimize expenditure. He argued that the government must move away from the mindset that it lacks resources.

“It is a policy choice for the government as to who will bear the burden of adjusting to the crisis,” he said.

Teodoro A. Casiño, chairman of Bagong Alyansang Makabayan (Bayan), said government support should not be limited to lower-income households, as middle-income families are also experiencing significant strain from rising prices.

“The middle income categories have resilience, so the government usually prioritizes the lower income categories,” he said.

He added that broader interventions, such as suspending the excise tax and value-added tax (VAT) on fuel, could provide relief not only to the poor but also to middle-income earners. These measures were also among the demands of transport groups  Thursday at the start of the transport strike.

“It cannot be purely targeted only at the poor or lower income because even the middle incomes are also suffering,” he said. “Many middle-income households rely on transportation and LPG, which are directly affected by fuel price increases.”

Mr. Casiño said that without policy intervention, middle-income households could risk slipping into poverty as economic pressures persist.

Despite the challenges, he said middle-income households have some capacity to adapt, particularly through investments in renewable energy such as solar power systems.

“They are the ones who have the capacity to invest in that; they just need incentives,” he said, adding that expanding access to solar energy could help households reduce long-term electricity costs, though upfront expenses remain a barrier without policy support.

Regarding the labor market, Mr. Africa said informality and underemployment may worsen as households adjust to weaker economic conditions, with some workers taking on additional jobs or shifting to less stable forms of work.

To fund the needed interventions, Mr. Africa proposed a wealth tax on the 3,000 Philippine billionaires, whose combined wealth isP8.2 trillion. He calculated that a tax of 1% to 3% on this group could generate P500 to P600 billion a year.

He noted that the 15 richest Filipinos have a combined wealth of P2.6 trillion—exceeding the total wealth of the poorest 15 million families.

“As long as the government considers the profits, income, and wealth of the rich to be sacrosanct, they are actually the ones tying their own hands,” Mr. Africa said.

“They are shutting themselves out from generating the revenue for the fiscal stimulus and subsidies that not just these households need, but even the economy needs,” he added.