WHAT IS THE MOST PRESSING ECONOMIC PROBLEM IN THE PHILIPPINES

Unemployment

Definition I
What is unemployment?
Unemployment is a phenomenon that occurs when a person who is actively searching
for employment is unable to find work. Unemployment is often used as a measure of the
health of the economy. The most frequently measure of unemployment is the
unemployment rate, which is the number of unemployed people divided by the number
of people in the labour force.1

One of the major causes of poverty is unemployment, since the Philippines has been
producing very few jobs.

At the same time, the low-quality education received by many workers excludes them
from accessing higher-paying jobs.2

Statistics II

In 2012, 10 million Filipinos were either unemployed (three million) or underemployed

(seven million). In October 2013, unemployment rate was 6.5% in comparison to 6.8%
in 2012. According to the Labour Force Survey, the unemployment rate was 6% and
6.6% in October 2014 and January 2015, respectively.3

Only one-fourth of the Filipinos that enter the labor force are able to find good jobs in
the country, and the rest of them find jobs overseas, leave the labor force, or end up
becoming unemployed/underemployed. Thus, three-fourth of the workers are
unemployed or informally employed, with lack of opportunities to find good jobs. Though
jobs are being generated, there's a need to generate jobs at a much faster rate, to be
able to bring down the unemployment rate. Many of the unemployed individuals are
college graduates. Many wait for job opportunities abroad, and many families depend
on remittances from family members who are staying abroad.3

1
https://www.investopedia.com/terms/u/unemployment.asp
2
http://carnegieendowment.org/2012/04/27/economic-and-political-challenges-in-philippines-event-3645
In January 2015, out of the 62.87 million Filipinos in the age group of 15 years and
above, the labor force comprised 40.11 million. Out of these, 2.65 million were
unemployed.3

Philippines Unemployment Rate (1994-2018)

The unemployment rate in the Philippines dropped to 5.3 percent in the first quarter of
2018 from 6.6 percent a year ago. The number of unemployed persons went down by
441 thousand to 2.32 million while the number of employed increased by 2,408
thousand to 41.76 million. Also, the labor force participation rate rose to 62.2 percent
from 60.7 percent. Among employed persons, workers in the services sector made up
55.9 percent of the total, followed by those in the agriculture sector (26.0 percent) and
industry (18.1 percent). Unemployment Rate in Philippines averaged 8.47 percent from
1994 until 2018, reaching an all-time high of 13.90 percent in the first quarter of 2000
and a record low of 4.70 percent in the fourth quarter of 2016.4

Workers were grouped into three broad sectors, namely, agriculture, industry and
services sector. Workers in the services sector comprised the largest proportion of the
population who are employed. These workers made up 55.6 percent of the total
employed in July 2017. Among them, those engaged in the wholesale and retail trade;
repair of motor vehicles and motorcycles accounted for the largest percentage (33.9%)
of workers in the services sector. In July 2016, workers in the services sector
accounted for 55.0 percent of the total employed, with those engaged in the wholesale
and retail trade; repair of motor vehicles and motorcycles making up the largest
proportion (36.0%) of workers.5

3
https://www.buzzle.com/articles/economic-problems-of-the-philippines.html
4
https://tradingeconomics.com/philippines/unemployment-rate
Workers in the agriculture sector comprised the second largest group making up 25.2
percent of the total employed in July 2017, while workers in the industry sector made up
the smallest group registering 19.2 percent of the total employed. In July 2016,
workers in agriculture accounted for 27.2 percent of the total employed; while workers in
the industry sector, 17.8 percent. The July 2017 LFS results also showed that in the
industry sector, workers in the construction and manufacturing subsectors made up the
largest groups, accounting for 50.1 percent and 45.3 percent of the workers in
these subsectors, respectively.5
Among the occupation groups, workers in the elementary occupations remained the
largest group making up 26.8 percent of the total employed in July 2017. In July 2016,
such workers made up 26.9 percent of the total employed in that period. Managers
comprised the second largest occupation group (15.3%), followed by service and sales
workers (14.5%), and skilled agricultural, forestry, and fishery workers (13.5%) in July
2017.5
Employed persons fall into any of these categories: (1) wage and salary workers, (2)
self-employed workers without any paid employee, (3) employers in own family-
operated farm or business, and (4) unpaid family workers. Wage and salary workers
are those who work for private households, private establishments, government or
government-controlled corporations, and those who work with pay in own family-
operated farm or business.5
Underemployed persons who work for less than 40 hours in a week are called visibly
underemployed persons. They accounted for 51.6 percent of the total underemployed
in July 2017 and 54.9 percent in July 2016. By comparison, the underemployed
persons who worked for 40 hours or more in a week made up 47.4 percent. By sector,
46.8 percent of the underemployed worked in the services sector, while 33.1 percent
were in the agriculture sector. Those in the industry sector accounted for 20.1 percent.5
Overseas Filipino Workers are not considered part of the labor force in the
Philippines. Hence, in the LFS, data on economic characteristics of household
members who are overseas workers are not collected. For the LFS reports, they are
excluded in the estimation of the size of working population, that is, population aged 15
years and older, and in the estimation of the labor force.5

5
https://psa.gov.ph/content/employment-rate-july-2017-estimated-944-percent
Causes III
Unemployment in the Philippines is attributed to reasons including overpopulation,
oversupply of labour force on certain industries and the inability to take on available
jobs. 6
Structural unemployment occurs when there are shifts in the demand among the
industries. The workforce possesses skills for jobs that were previously high in demand.
With the shift in demand for jobs, supply for the jobs that were previously high in
demand outstrips the demand for these jobs. As a result, many people become
unemployed until market equilibrium is reached, where supply equals demand.
Moreover, the jobs that are now high in demand may require skills that the unemployed
do not possess. Unless they invest in re-training, which is time consuming, they will find
it difficult to find a place for themselves in these jobs because firms prefer employees
with the necessary skills and experience.6
Undergraduates are still taking up college courses that are popular but were previously
high in demand. After graduation, these graduates possess skills that are not high in
demand in the job market. As such, there is a skill mismatch. For example, in the
healthcare industry, nurses were previously in demand abroad. Many undergraduates
took up nursing and soon supply matches demand. However, the country's education
system continues to produce college graduates who have taken up nursing. As supply
increases above demand, there is an oversupply of labour. As a result, these graduates
are unemployed.6
The number of graduates have been increasing over the years. Getting a degree is all
too common nowadays. However, the labour force does not require so many graduates.
National Development Minister Khaw Boon Wan once said that Singapore, which has a
significant number of graduates, could not be a nation entirely made up of them. “Can
you have a whole country where 100% are graduates? I am not so sure. What you do
not want is to create huge graduate unemployment.” 6
Economic recession is one of the main causes of unemployment. During a recession,
firms experience a decrease in revenue. As profit equals to revenue minus cost, firms
would want to cut as much cost as possible. One of the ways to do so is through the
retrenchment of employees, where employees deemed to be not productive enough
lose their jobs. As this happens, unemployment rates go up.6
Philippines has a high population growth rate at an average of 1.7% for the past few
years, consistently higher than the world's population growth rate at an average of
1.2%. The high population growth rate which translates to a steady supply of graduates
outstrips the rate at which jobs are created, leaving these graduates finding themselves
unemployed.6

6
http://econsilp2014.weebly.com/causes.html
“Para magkatrabaho kailangan ng experience. Eh paano makakakuha ng experience
kung hindi matanggap-tanggap sa trabaho dahil walang experience?” – Julie-Ann C.
Mina (BSME – 3F)

“Siguro mataas ang unemployment rate kasi maraming di nakatapos ng pag-aaral tsaka
kulang job opportunities dito sa Pilipinas.” – Shaira Mae S. Castillo (BS Biology, UST)

“Kasi ang nakikita kong mas malalim na problema diyan, baka kahit employed sila, hindi
naman okay ang employment nila. Pero kasi ang nakikita kong mas malalim na
problema diyan, baka kahit employed sila, hindi naman okay ang employment nila.
Tapos kadalasan pa diyan, hindi sila nagiging regular. Kumbaga contractual lang sila.
Kapag contractual ka, wala kang benefits, wala kang leave, wala kang bonus, wala
kang health card, sss, philhealth, pag-ibig card.
Minsan kasi yung mga kumpanya, kapag manual labor yung trabaho (kunwari sa factory
o mga janitor o messenger), kumukuha lang sila ng mga tao sa agency.
Kapag agency ka, contractual ka. Hindi ka nagiging regular. Minsan shinushuffle nila
yung mga workers every three-6 months, para laging bago. Para hindi nila kailangan
bigyan ng benefits. Feeling ko yung isa pang pressing na issue ngayon, yung TRAIN
law.
Kasi kahit tinanggal yung tax ng middle class workers, yung mga bilihin naman tumaas
yung presyo. Yung gas, yung mga basic commodities. Kaya apektado lahat. Kasi
syempre kapag tumaas gas, tataas pamasahe, tataas presyo ng lahat kasi lahat naman
halos ng produkto ay binabiyahe.
Tapos yung mga minimum wage o yung walang regular na trabaho, kunwari farmers o
labandera, hindi naman nabawasan tax nila kasi hindi naman sila kinakaltasan ng tax in
the first place.
So para sakanila, same lang din yung kinikita nila, pero tumaas yung presyo ng mga
bilihin.” – Abigale P. Saldana (BS Communication Arts)

Possible solutions IV
1. Full development of small-scale, labor-intensive industries
The expansion of these mostly small-scale and labor-intensive industries in both
urban and rural areas can be accomplished in two ways: directly, through
government intervention and indirectly through investment incentives for the private
sector. This is because the consumption activities of barrio folk demand less import-
intensive and more labor-intensive than that of the rich (there are less import-
oriented shopping malls in the provinces).7
2. Choosing appropriate labor -intensive technologies of production
One of the principal factors inhibiting the success of any long-run program of
employment creation both in urban industry and rural agriculture is the almost
complete technological dependence of Third World nations on imported (typically
labor saving) machinery and equipment from the developed countries. Both
domestic and international efforts must be made reduce this dependence by
developing technological research and adaptation capacities in the developing
countries themselves. Such efforts might first be linked to the development of small-
scale, labor-intensive rural and urban enterprises. They could also focus on the
development of low-cost, labor-intensive methods of meeting rural infrastructure
needs, including roads, irrigation and drainage system, and essential health and
educational services.7
This is an area where scientific and technological assistance from the developed
countries could prove extremely fruitful.7
3. Creating a more direct link between education and employment
The phenomenon of the educated unemployed calls into question the
appropriateness and relevance of the educational system, especially at the higher
levels in this country.7
The creation of attractive economic opportunities in rural areas would make it easier
to redirect educational system toward the needs of rural development. The present
educational systems, being transplant of Western systems, are oriented toward
preparing students to function in a small modern sector which can absorb only so
much of school-leavers. Many of the necessary skills for development therefore
remain largely neglected.7
Kung mabibigyan natin ng mas magandang edukasyon ang mga Pilipino, ay mas
magbibigay ito ng daan para sa mas maraming career at mas magandang quality ng
trabaho ang mga Pilipino.

4. Reduce rural migration

The last half-century in this country has been associated with urbanization which in
turn has attracted migration from thru province bringing down the total population in
agriculture.7
The arrival of these urban migrants has not only helped to exercise a continuous
downward pressure on real wages but also contributed to the problem of urban
unemployment if not social problems.7
 5. Remove capital intensive bias
The failure of the urban industrial sector to provide more jobs (i.e. to absorb more
from the swelling pool of the available urban labor force) may be attributed to the
over-all scarcity of capital and to its increasingly excessive concentration in large-
scale industries using increasingly capital-intensive technologies. The consequently
slow expansion in the demand for labor was caused partly by policies which biased
industrialization in capital-intensive directions and the consequent benign neglect of
agriculture specifically the food sector which could have been fertile grounds for
employment given an enlightened rural mobilization policies and agrarian reforms.7
6. Employment strategy package
The demand by the urban industrial sector for labour failed to expand quickly
enough to absorb the increasing supply, continuously augmented as it was by the
“premature” migration of a rural population seeking more remunerative job
opportunities not available in the provinces. This led not only to real wage
stagnation, but more importantly to the persistence of open and disguised
unemployment, and the worsening income distribution. Had it not been for the safety
valve of overseas employment the poverty situation in this country would have
entered serious proportions.7
This lead us to a two-pronged strategy package as essential to eradicating the pesky
unemployment problem – the full mobilization of the preponderant rural sector, and a
labour-intensive industrial diversification drive for a more dynamic industrial sector. 7
The diversification drive must emphasis the move towards labor-intensive
industrialization to service the burgeoning domestic market of close to a 100 million
people and the export market export. For such a non-traditional export drive to be
successful, past biases against the use of labour must be corrected so that
international markets can be penetrated with wider participation by medium- and
small-scale entrepreneurs.7

7
http://www.manilatimes.net/solving-the-unemployment-problem/80176/
 SSCI – 111A

MIDTERM
WHAT IS THE MOST PRESSING ECONOMIC PROBLEM IN THE PHILIPPINES

Submitted by:

SALDANA, JOSHUA P.
BSME-4B

Submitted to:

ANTIONIO ZAPANTA

Date:
November March 15, 2018