The Philippines is often regarded as one of the world’s top tourist destinations. With its mile-long white sandy beaches and clear blue seas, its various mountainous terrains and pristine hills, its scrumptious cuisines showcasing western and eastern influences, and of course, the very people warmly welcoming visitors from all around the globe, it’s no wonder why foreigners flock the county all year round. But one thing is often not talked about in regard to vacationing in the Philippines: it’s cheap! Well, at least for foreigners coming from countries with higher costs of living. But for ordinary working-class Filipinos, it’s hard to earn a buck that is sufficient to provide for the basic necessities of their families. But why is it hard for Filipinos here to live comfortably as opposed to foreigners sojourning in the country? In order to answer that, a brief discussion on the cost of living in the Philippines is needed.
Cost of Living: what is it?
If you’ve ever had an Economics class or are an avid watcher and reader of the news, you definitely have heard of this term before. It’s often about technical macroeconomic jargon such as inflation, depreciation, output, gross domestic product (GDP), production, income, expenditures, and other similar terms and phrases that are a bit intimidating to hear as these are terms that we don’t often use in our layman conversation. However, compared to these often hard-to-understand mambo jumbos, the term cost of living is comparatively easy to understand. Basically, the cost of living is the amount of resources that are needed to secure the indispensable expenses of a household in order to sustain a certain standard of living in a particular place and time. Simply put, the definition is in the term itself: it is the cost of living. This is composed of the income of the household and the prices of basic commodities, such as but not limited to food and water, housing, healthcare, education, gas, utilities, transportation, and other indispensable expenses, as well as certain luxuries for a household’s rest, recreation, and entertainment.
Before we delve deeper into how we can compute one’s cost of living in the Philippines, let’s dissect further how household income is linked to one’s cost of living and the effect of the aforementioned expenses.
Every household is expected to have at least one source of income. May it be through their employment, business, or other passive sources of income. This is to ensure that every family may be able to buy and supply the basic needs of the family. However, the source of income of households are not the same as we are not all similarly situated. Some have high-paying jobs, and some are not as fortunate due to a myriad of reasons such as lack of formal education and no connections to back them up for employment, which all boils down to the cycle of poverty. Thus the government, in an attempt to alleviate the poorest of the poor, implemented minimum wages for our minimum wage earners. However, the minimum wages are not the same across the country as it is different per region.
The following are the daily minimum wage rates per region as per the National Wages Productivity Commission, the commission under the Department of Labor and Employment tasked to determine the minimum wages of workers in order to afford security of a livable wage to vulnerable sectors and increase productivity and gain-sharing pursuant to Republic Act 6727 of the Wage Rationalization Act:
- National Capital Region Php 500.00 – 537.00
- Cordillera Administrative Region Php 340.00 – 350.00
- REGION I (Ilocos Region) Php 282.00 – 340.00
- REGION II (Cagayan Valley) Php 345.00 – 370.00
- REGION III (Central Luzon) Php 304.00 – 420.00
- REGION IV-A (CALABARZON) Php 303.00 – 400.00
- REGION IV-B (MIMAROPA) Php 294.00 – 320.00
- REGION V (Bicol Region) Php 310.00
- REGION VI (Western Visayas) Php 310.00 – 395.00
- REGION VII (Central Visayas) Php 351.00 – 404.00
- REGION VIII (Eastern Visayas) Php 295.00 – 325.00
- REGION IX (Zamboanga Peninsula) Php 303.00 – 316.00
- REGION X (Northern Mindanao) Php 331.00 – 365.00
- REGION XI (Davao Region) Php 381.00 – 396.00
- REGION XII (SOCCSKSARGEN) Php 315.00 – 336.00
- REGION XIII (Caraga Region) Php 320.00
- BARMM (Bangsamoro Autonomous Region in Muslim Mindanao) Php 290.00 – 325.00
To assure that the minimum wage of the aforementioned 16 regions is sufficient for the varying cost of living in their respective region, it is the Regional Tripartite Wages and Productivity Board that prescribes the minimum wage rates for their respective region. The Regional Boards may set distinct minimum wage levels for the various provinces or localities within the region over which they have jurisdiction if, upon the assessment of the Regional Board, the conditions necessitate such variation that is appropriate and essential to effectuate the intent of the Labor Code.
Factors affecting the determination of fixed minimum wages are categorized into four: needs of workers and their families, capacity to pay, comparable wages and incomes, and requirements of economic and social development. Recently, there is an increasing clamor to have an across-the-board wage increase for minimum wage workers. However, the National Wages Productivity Commission discourages such a move as, according to the Commission, it would pave the way for more distortions in the market of labor which might negatively affect the incomes and standard of living of workers and their families.
As recently as March 2022, the price of food in the Philippines increased by 2.6%. This may be heavily attributed to the increase in gas prices due to the ongoing conflict between Russia and Ukraine, as Russia is one of the primary drivers of the fuel industry. Such is an important factor in the increase in food prices as there is an indispensable need to transport food products from the sources, such as the rural farms and fisheries. Such added cost is therefore added to the price of the food in order to compensate for the extra expense brought about by the fuel price increase.
This is also one of the reasons why the cost of living in the rural areas, as reflected by the minimum wages of rural areas, is comparatively lower as opposed to urbanized and metropolitan regions. It is in the rural regions where the majority of our raw food products come from, such as vegetables, fruits, crops, livestock, and fish. Such is then transported to the urbanized areas where agriculture is not as thriving as its landscape is dominated by residential, commercial, and industrial infrastructures. Another factor in the increase of food prices is the archipelagic design of the country, which increases the transport time and the consequent expenses of the same.
The Philippines, being one of the most affected countries when it comes to typhoons, does not help as well with regard to the food prices in the Philippines. The Philippines experiences an average of 20 typhoons and storms of varying intensities. Such typhoons adversely affect the production of food products in the rural areas when farmers are unable to harvest and sell the products which they have been growing for months on end. The seasonality of certain crops also adds an extra level of difficulty to the unfortunate situation.
Healthcare and Insurance
These two are not as forgiving as the above item, as healthcare and insurance is the same across all regions. That is why most of the population, especially those living below the poverty line, are unable to afford access to healthcare and insurance. Such is more important today, as we are still being ravaged by the pandemic. In case one is hospitalized, access to healthcare and insurance would alleviate the cost of hospital expenses incurred. Arguably, these two should be an indispensable expense of the Filipinos. In reality, however, everyone is not similarly situated.
Same with the previous item, education is sadly not afforded the same level of necessity. Although the majority of Filipinos acknowledge that education is important, access to affordable and quality education. Thanks to our legislators, however, through Republic Act 10931 or the Universal Access to Quality Tertiary Education Act enacted last 2017, has made tertiary education free in state universities and colleges with respect to tuition. However, tuition fees are not the only expenses that parents and breadwinners need to consider in the funding of one’s education. People still need to shell out money for books, learning materials, and other indispensable costs of education. The need for gadgets for the commencement of online or virtual classes also added an additional burden for parents. As such, many of our youth often temporarily or worse, permanently leave their studies to work and add to the income of the household.
Gas, Utilities, and Transportation
A macro-level discussion on how gas and transportation affect the cost of living of people was explained in a previous item. From a micro-level perspective, high gas and transportation cost heavily burden the people. Commuting in the Philippines is a chore, considering that our public transportation is not enough to accommodate the behemoth number of people who commute from their homes to their place of work. Those who can afford to buy a private vehicle also do not escape the heavy cost of fuel needed to drive said vehicles. Not to mention the effect of having more cars on the street which primarily contributes to the traffic problem plaguing the nation.
Additionally, utility expenses such as electricity and water also add to one’s cost of living in the Philippines. Utility expense is not constant and is contingent upon the consumer’s usage. In the Philippines, being a tropical country, it gets really hot and humid. So it is expected that during the summer season, which runs for months, the expenses for electricity and water are expected to increase.
May it be buying and maintaining a house, or renting a room or apartment, housing takes up the biggest bulk in one’s cost of living in the Philippines. In Manila alone, the average annual salary of a worker is only enough to afford 1.5 square meters, which places the city as the second most expensive city in Asia for residential property buyers. Luckily, BRIA Homes is here to provide you with your dream home without breaking the bank!
How to Compute the Cost of Living in the Philippines?
Now that we have discussed the top factors which drive up the cost of living in a particular area, let us now discuss how we compute the same. Basically, we just need to add all the expenses per a particular time, whether it be a month or a year. According to Inquirer.net, the city of Manila ranks third in Southeast Asia’s most expensive cities in a research conducted by data aggregator iPrice Group, with a cost of living of P50,800 for a single person. The city is only 1% behind Bangkok, with a cost of living of P51,500 per person.
Of course, the cost of living cited in the study is just the ideal amount in order to live a relatively comfortable life. However, a lot, if not a majority, of Filipinos struggle even just to put food on their table. As such, we must compare the cost of living in the Philippines with other areas of the country to be able to get an honest assessment.
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Cost of Living Index
As mentioned, there is a need to compare the cost of living of the different areas. This can be seen through a cost of living index. A cost of living index is a theoretic price indicator that evaluates the comparative cost of living over time or regions. It lets you assess how much it costs in one place compared to another. By evaluating the cost of living in areas, we can better comprehend the extent one’s income can go in different parts of the country as well as in other countries. Currently, the Philippines ranks 92nd in the world in the cost of living index.
Cost of Living Adjustment
The government has made steps to aid the people in their day-to-day expenses through the integration of COLA or cost of living adjustment in their wages. A cost-of-living adjustment is an increase in benefits or salaries to compensate for the inflation resulting from the increase of prices of necessities. In the National Capital Region, a ₱10.00 increase for the cost of living adjustment was integrated into the basics as mandated through Wage Order NCR-20.
In conclusion, various factors affect the high cost of living in the Philippines. More steps must be taken not just by the government, but by individuals as well to lower such costs. And as mentioned earlier, housing takes up a huge part of one’s cost of living. Thus, we must be wise in investing in our housing. That is why BRIA Homes is here to provide you with an affordable home of your own.
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