Single shock could push middle class Filipino households into poverty—study

We often view the middle class as a safe haven, yet many are just one emergency away from poverty, staying afloat through a cycle of hyper-vigilant spending.

Jose Alfonzo Añes, a 26-year-old freelancer from Isabela, said that although he is technically in the middle class, he often feels like he’s “always in survival mode.”

Añes takes on commission-based jobs with evening tutoring to make ends meet. His freelance portfolio is a mix of writing—handling everything from scripts to transcriptions—alongside occasional administrative support and creative consultancy.

Living and earning entirely on his own, he carries the full weight of his day-to-day expenses, with a weekly budget of P2,500 to P3,000. Most of the time, he keeps a tight budget, and currently, there’s virtually no leisure spending because all funds are going towards basic necessities.

"The math is simple but scary: I spend around P2,500 a week just to survive, but my income from commissions is unpredictable. Some weeks I'm 'okay,' other weeks I'm just breaking even," he lamented.

He described his financial situation as "stable but tight"—able to cover daily needs but often at the expense of personal comfort. He usually drives to work and takes public transportation when traveling to his hometown about twice a month. 

"I need to be strategic, kasi kailangan e," he said, noting how the rising fuel prices have affected his budget. "At the same time, I manage my expenses din for the purpose of easing my financial anxiety. What if bukas mawalan ako?”

In its policy note, the Philippine Institute for Development Studies noted that in 2023, about 30% of households were at risk of falling into poverty, meaning a single shock—economic, health-related, or environmental—could push them into financial distress.

"Many Filipinos who have exited poverty remain highly exposed to shocks and face a substantial risk of falling back into deprivation. Health emergencies, job losses, price spikes, and natural disasters frequently push households across the poverty line, revealing that welfare status in the Philippines is often fragile and reversible rather than stable," it noted.

It added that poverty in the Philippines "is transient rather than chronic, with many households clustering just above or below the poverty line and frequently crossing it over time.”

What vulnerability looks like

To illustrate this, Deanne Cabalfin, one of the authors of the policy note, described a typical family of five living in Metro Manila.

"The family earns above the poverty threshold. They put food on the table and they manage their monthly bills, but they may have a little or no savings buffer," she told PhilSTAR L!fe.

While the middle class is often perceived as secure due to stable jobs or OFW remittances, sociology professor Niño Leviste pointed out that a large segment is actually "informal and unstable."

"Many appear stable economically, but are actually highly exposed to shocks," Leviste explained. He noted that many middle-class workers are contractual and lack the insurance or savings to survive a sudden job loss or a medical emergency.

"The idea of getting out of poverty doesn't automatically make you secure. Many are still one crisis away from falling back," Leviste stressed. He cited the COVID-19 pandemic as a prime example, where middle-class families suddenly saw parents lose jobs and children drop out of school because they lacked an economic buffer.

For people like Añes, the rising fuel prices amid the Middle East crisis are the “most visible entry point” for financial strain.

According to Cabalfin, the ripple effects move quickly through the entire household budget because “transportation costs feed directly into the prices of food, goods, and services.”

“In practice, savings are usually the first casualty. And once savings are depleted, the household has lost its primary buffer against the next shock,” she noted.