Julia Moneylyn smiles. Dirt smeared all over her face, the 26-year-old mother of two appears happy as she buys bread and milk powder for her children. The few pesos needed came from a tourist, who nonchalantly answered her plea for money. 'The milk is good for my babies and the bread will fill their bellies,' she said, hunkering down on a one-square metre box used as a bed for Marvin, four, and three-year-old Sarah Jane. Nearby, her husband's wry smile hides a veil of desperation. 'I met Julia six years ago,' Julious Gabrinao said. 'I had a cart then, and I was working as a scavenger. The cart was stolen two years ago. We have begged and kept on moving ever since. I am not sure what else we can do.' The Gabrinaos are not alone in their plight. Nearly 2.2 million families, or 10.5 million Filipinos, are homeless in the country, according to recent figures from the National Statistics Office. Hordes of the poor and homeless crowd Manila's streets every night. Ermita, the tourist neighbourhood where the Gabrinaos spend most of their time, is among their preferred locations. 'We stay here because there are lots of tourists,' Ms Moneylyn said. 'But it is getting difficult because there are lots of beggars. Sometimes we argue among ourselves. With two children it is difficult to get enough money. And there are days when we go hungry.' Hunger is widespread in the Philippines, where almost 90 per cent of the national budget is taken up by debt repayments and the state payroll, while far too little is left to alleviate poverty. An estimated 3.4 million households suffered 'involuntary' hunger at least once in the first three months of this year, according to a survey by the Social Weather Stations (SWS), a Manila-based public opinion polling institute. It revealed that poverty had worsened in Metro Manila and the rest of Luzon, the country's main island, while it has barely changed on the southern island of Mindanao - the poorest part of the country - and declined on the Visayas Islands, which are located in the middle of the archipelago. The government's estimates say that 30 per cent of the Philippines' 87 million people are poor. World Bank data shows 10.8 per cent of the country's population survives on just US$1 a day and another 41.2 per cent have less than US$2 daily. The data also shows that about 28 per cent of children under the age of five are malnourished. Rural people, who make up 65 per cent of the country's poor, tend to be self-employed, primarily in agriculture or casual labour, and almost all are landless. Their frustration is fuelled by a lack of change in land reforms that started soon after independence in 1946. About 2 per cent of the landowners control 36 per cent of farmlands, while 86 per cent own just 35 per cent of agricultural lands, consisting of farms of less than seven hectares. In urban centres the poor scrape together a living through unskilled jobs or, like the Gabrinaos, by begging. Petty crime is also rife. President Gloria Macapagal-Arroyo's administration has made some improvements, yet the country's economic prospects do not bode well for the poor people's immediate future. The Philippines' economy expanded by 5.4 per cent in 2006 and, according to the Asian Development Bank (ADB), it is expected to grow by 5.3 per cent this year and 5.7 per cent next year. It needs a minimum of 7 per cent growth to aid the large number of unemployed and under-employed, which the ADB puts at 8 per cent and 23 per cent, respectively. More than half of the jobless are high school and college graduates and a lot of them are likely to leave the country and search for any work abroad. About 8.5 million Filipinos are migrants. The US$13 billion they sent home to their families last year helped Manila to improve its balance sheets - it accounts for about 10 per cent of the Philippines' economy - but the massive brain drain of a young, educated workforce is damaging the capital's long-term development. 'As long as there is this system, the nation cannot really develop. Migrants help, but basically they sentence their children to the same destiny. It is a sad irony,' said Maita Santiago, Secretary General of Migrante, the Philippines' leading migrants organisation. Poverty is aggravated by a rapid population growth of 2.3 per cent a year for most of the past two decades. Some analysts say poverty is caused by an economic system structured to benefit the interests of the local and foreign elite. Others blame a geopolitical game played by the US, saying the former colonial power wants to keep the Philippines poor and exploitable. Manila-based commentator Antonio Abaya said poverty was mostly due to a series of wrong decisions taken by local leaders for decades, including the minimum wage law passed in the 1950s, the failure to build an export-oriented economy throughout the 1970s and '80s, and failing to capitalise on a tourism boom in the '90s. 'I was a proponent of the minimum wage, but in hindsight it made the situation worse with multinationals choosing cheaper countries,' said Mr Abaya, chairman of TAPATT, an independent watchdog. 'Our tourism industry is very weak, and we didn't go into export of manufactured goods until the 1990s, when the global marketplace had already become crowded, especially after the entry of China. This all contributed to a decline in the country's living standards. Forty years ago the Philippines had the second-highest standard of living in East Asia, next only to Japan.' The Philippines' past means nothing to Maria, 12, who has spent most of her life rummaging through rubbish. Maria, who did not provide her full name, is one of about 30,000 people who scavenge through the Little Smokey Mountain rubbish dump that is their home in Manila. She is one of 4.5 million people living in slums around the nation. Partly covered by rubbish, Maria's family's house is a shack made from scraps of wood and iron sheeting. There is neither water nor electricity, and the hygiene is abysmal. Inside the house, as in the rubbish dump outside, the stench is sour and thick. Most of the scavengers wear a handkerchief over their nose and mouth but Maria said that 'after a while, you get used to the smell'. Her daily routine begins soon after sunrise, when she joins other children to slowly pick through the mountain of rubbish dumped daily by hundreds of trucks. She looks mostly for plastic and tin. 'Tin sells for 3 pesos [HK50 cents] a kilo and plastic sells for 20 pesos a kilo,' she said. Her family also sells charcoal, which is 20 pesos for a 20kg bag. Maria is one of 2.5 million Filipino children aged five to 17 who work to augment family income, or merely to survive, according to the local independent think-tank IBON. IBON says more than three-quarters of these children work as labourers and unskilled workers in psychologically and physically hazardous conditions. ADB estimates that about 150,000 residents in Manila depend on the 7,500 tonnes of household rubbish collected daily. Little Smokey Mountain is close to where the former Smokey Mountain rubbish dump stood until 1994. Smokey Mountain gained prominence in the 1980s as a symbol of the country's squalor and poverty. It was closed down and the government housing project, Katuparan, was built on the site. Katuparan has only slightly improved the conditions of the 8,000 people who were relocated to 1,600 homes there. With an average of five families occupying each 18-square-metre housing unit, space is tight. Most women and children sleep on the floor, while men sometimes sleep on the roof. The stench from a nearby slaughterhouse mixes with the stench of the overflowing drainage and rubbish, which piles up without regular collections. Many residents suffer from tuberculosis, asthma or skin diseases. Almost half of them are too poor to afford treatment. According to the militant group Gabriela, residents are forced to pay rent of between 750 and 1,200 pesos per unit. Most men work as rickshaw drivers, earning just enough for food. Women work as laundry assistants or maids when they can. Many families have debts and are threatened with eviction. Lita Mandia, 40, the president of a residents association, also tells of a string of social problems. 'There is a lot of violence. Some children are abused socially and sexually. There is also a rampant drug problem,' she said. 'Maybe it has to do with the hopelessness around us.' The association she heads runs a workshop one day a week, aimed at teaching mothers and children about their rights. 'What we can do is little, but it helps,' she said. But in front of flashy restaurant signs in Ermita, nobody is telling the Gabrinaos about their rights. 'What I know is that the department of health sometimes picks us up and puts us in some sort of jail for a few days,' Ms Moneylyn said. 'It is just a cosmetic measure; they do not want us in the street. It is not meant to help us. I cannot see life improving. I think I will soon take my children to their grandmother. At least there they will have a house. But I will miss them. They are my children and we are meant to be together.'