(Part 1 of 2)

To gauge the state of the Philippine economy, we rely on periodic indicators — GDP, inflation rates, and minimum wage orders. Two major announcements made in the same week deserve to be examined side by side.

The first is Wage Order NCR-27, announced on June 30 and effective July 19, 2026. At P85 per day, the Department of Labor and Employment (DOLE) has described it as a historic wage increase — the largest single daily wage hike ever enacted in Metro Manila. Yet minimum wages in the Philippines are set by Regional Tripartite Wages and Productivity Boards, so the NCR rate is the country's highest; workers in most provinces earn less, and self-employed micro-entrepreneurs like those described below fall outside the wage-order system entirely.

The second came on July 1, when the World Bank reclassified the Philippines as an upper-middle income country, based on a gross national income per capita of $4,850 — a milestone that had eluded the nation for nearly four decades, dating back to 1987. The World Bank's upper-middle income bracket for its 2024 fiscal year spans GNI per capita from $4,466 to $13,845, placing the Philippines just above the entry threshold alongside countries such as Thailand, Malaysia, and South Africa — still far from the high-income tier occupied by neighbors like Singapore and South Korea.

On the surface, both developments appear to be unambiguously positive. The author welcomes the wage hike, having worked closely with countless nanays (mothers) and staff members who are themselves children of nanays, and having seen firsthand the difference such an increase can make for their families. The World Bank reclassification was likewise greeted with pride and optimism by the Philippine government.

Yet these headlines invite a deeper question: how do such macroeconomic milestones actually affect the majority of Filipinos who remain impoverished and vulnerable? The Philippine Statistics Authority reported that 15.5% of Filipino families lived below the official poverty threshold in 2023 — roughly one in six households. Moreover, the wage orders and income classifications that dominate headlines speak primarily to the formal sector, while a substantial share of Filipino workers and micro-entrepreneurs operate in the informal economy, where such policies do not directly reach them.

Mary Grace's Story

This question recalled a conversation in July 2023 with Mary Grace Jarogon at her small carinderia (eatery) in Catarman, Northern Samar. The visit was made in the capacity of President of RestartME, Inc., a foundation that works with microfinance institutions to refinance micro-entrepreneurs whose livelihoods have been disrupted by calamities. Noel Gabrito, Executive Director of the Samar Crusade Against Poverty, Inc. (SCPI), a local microfinance NGO, introduced Mary Grace as one of their clients.

Mary Grace explained that the student market that once filled her carinderia had shrunk since the pandemic lockdowns two years earlier and had never fully returned. As she continued, the full weight of her circumstances became clear. Beyond a child she had adopted, she had also taken in her late sister's three orphaned children after her sister suffered a fatal stroke. She feeds them, sends them to school, and provides them a safe home. One nephew had recently been in a motorcycle accident, and she covered his hospitalization. She was also caring for an older brother left incapacitated by his own stroke.

Despite all of this, Mary Grace was not waiting for rescue. She diversified her food business by delivering food packs to reach customers beyond the walk-in traffic she had lost. She advertised her silog meals — a classic Filipino dish combining garlic fried rice (sinangag), a fried egg (itlog), and a choice of protein — on Facebook Marketplace. Because she occasionally needed to serve late-night customers, her carinderia doubled as her bedroom, evidenced by a folding bed tucked in the corner.

Leaving Catarman, the lingering question was not about Mary Grace's resilience, which was evident. It was about the math beneath it. Here was a household hit by a pandemic, a death, a stroke, and an accident — with barely a season to recover between each shock — yet still expected to stay afloat on an income that reports and wage orders describe merely as "low."

A National Pattern

To find whether this was an isolated case or a national pattern, the author commissioned Dr. JC Punongbayan and his research team from the UP School of Economics, together with WeSolve Foundation, to conduct the 2024 Philippine Microfinance Survey — a nationwide study of nearly 1,900 households.

The findings confirmed it was a national pattern. When asked to identify the top five shocks experienced in the past five years, 82% of respondents named the pandemic as the primary financial shock — an expected answer. The second most common response, however, was unexpected: high inflation, cited by over half (54.6%) of all households, ranking ahead of typhoons and ahead of job loss.

Unlike a pandemic or other single-event calamity, inflation arrives quietly. There is no lockdown order, no evacuation center. The same money simply buys a little less, month after month, until the difference is no longer little.

The average surveyed household had only 1.59 income-earning members. When a household's earning power rests on just one or two people and prices keep compounding year after year, the real question is whether total income can keep pace at all.

The Philippines' minimum wage has risen approximately 29% since 2019. Yet over the same period, the price of rice alone has climbed about 38%. The gap is especially consequential for low-income households, for whom rice can account for a significant share of the monthly food budget — and the Philippines is among the world's largest rice importers, making domestic prices sensitive to global supply disruptions and currency movements.

The 2024 Philippine Microfinance Survey also revealed how households absorb that gap. When asked what they actually do when prices climb, 26.8% of respondents reported cutting back on consumption — often on basic necessities like food — while 15.3% resorted to borrowing.

Nanay Laarni's Carinderia

That statistic came to life during a visit to Nanay Laarni, an ASA Philippines Foundation client who runs a small carinderia in Quezon City. When asked whether she had raised her prices due to oil price increases caused by the US-Iran war, she said she had not.

"Hindi ko na mataas kasi hindi na kaya ng mga customer ko (I can't raise them because my customers would no longer afford it)," she said. "Binabawasan ko na lang ang portion. Halimbawa 'yung one cup of rice noon na sinisiksik, ngayon hindi ko na sinisiksik (So, I'm just cutting down on portion sizes. For instance, the cup of rice I used to pack tightly — now, I don't pack it down anymore)."

She could not raise prices because her customers could no longer afford them, so she quietly shrank the scoop of rice instead. That is what the survey's statistic on cutting consumption actually feels like at a carinderia counter: a smaller cup of rice, never announced, absorbed silently by both seller and customer at once. The gap between rising prices and stagnant income is real money — and sometimes real rice — that is no longer on the table.

Compounding Shocks

What emerges more clearly from close listening is that shocks rarely arrive one at a time, and rarely wait for the last to be paid off. Mary Grace's pandemic losses, her sister's death, her nephew's accident, and her brother's stroke each landed before the previous one had been absorbed.

A similar pattern surfaces in ASA client group meetings: the pandemic, then a punishing spike in rice prices during the 2023 dry spell, then typhoons and floods, then fuel and transport costs in the aftermath of geopolitical conflicts, then a weaker peso quietly raising the price of nearly everything a family does not grow or make itself — all borne by the same one or two income earners the survey predicted.

Just recently, nanays visited in Sarangani and General Santos City shared similar stories of yet another compounding shock. A 7.8-magnitude earthquake struck 32 kilometers west-southwest of Maasim, Sarangani, shaking the province and the city and leaving another trail of infrastructure and livelihood destruction.

Additionally, PAGASA has warned that another El Niño — possibly a severe one — may strike before the year ends. Before the 2023 El Niño hit, rice was trading at approximately P42 per kilogram. By early 2024, it had surged to over P50 per kilogram. If history repeats, the most vulnerable clients will be hit again before any policy can catch up to protect them.

Rafael C. Lopa is the president and CEO of ASA Philippines Foundation (www.asaphil.org), a microfinance NGO serving close to 2.5 million women entrepreneurs across all provinces of the Philippines. He is also the president of RestartME, Inc. (www.restartme.ph), an NGO mandated to work with microfinance institutions in addressing unexpected shocks to the lives and livelihoods of their clients and families. He co-funded the 2024 Philippine Microfinance Survey conducted by WeSolve Foundation.