Types of Unemployment
Cyclical Unemployment
- Results from the ups and down of business cycle of the country
- It can controlled by implementing appropriate economic policies to avoid the
occurrence of such employment irregularities
- Is “cyclical” because:
o If the level of cyclical unemployment is low, it means that the people don’t have
enough purchasing power to consume the produced goods
o Manufacturers tend to sell their goods/products at lower prices
- Occurs because of the undesirable performance of the real Gross National Product
o GNP – refers to the actual national spending which is made up of four
components
Consumption spending by households (C)
Investment spending by firms and households (I)
Government purchases of goods and service (G)
Net exports (X-M)
Structural Unemployment
- Results from mismatch between the available skill and the requirements in the labor
market
- Various factors for the occurrence of structural unemployment:
o Introduction of modern technologies
o “unskilled” workers who have no knowledge about the technology (machines) are
compelled to quit their jobs and tend to look for other jobs
Frictional unemployment
- Considered as the transitional type of unemployment
- Circumstance: (1) poor placement services, (2) people who are entering or reentering the work (3) individuals who are searching for “greener pastures”
Technological Unemployment
- Employees are replaced by machines that can display fast and accurate outputs
- Popular labor organization in the Philippines:
o Kilusang Mayo Uno (KMU)
o Alliance of Progressive Labor
o Trade Union Congress of the Philippines (TUCP)
Seasonal Unemployment
- Refers to unemployment resulting from seasonal changes in the labor supply
- May occur because of the climatic change and during holiday seasons
Theories of Employment
Theory X
- Often said to describe a traditional view of direction and control
- States that:
o Average man dislikes work and will avoid it unless directly supervised
o Employees must be forced, manipulated and directed to ensure that
organizational aims are met
o Threat of reprimand
Theory Y
- Implies a more self-aimed workforce
- States that:
o Employees are determined, keen to accept bigger responsibility
o Employees will work in the direction of organizational purposes
Theory Z
- Employees are assured of a position for life, ever-increasing their fidelity to the
company
- Cautious assessment occurs over a phase of time and the accountability for
accomplishment of breakdown is shared among workers and the board
- Most workers do not concentrate in one skill area, but work several different tasks
- Some industries are often anxious about all aspect of their employees lives, on and
off the job
The Unemployment Pool
- People always decide, at any point, to quit job or find work
- Four reasons to be considered to be a part of the unemployed pool:
o Person might be a new graduate or new entrant into the labor force
o Person who resigned from his job in search for other employment and may be
considered as unemployed while searching
o Person may be laid off from work
Lay-off – refer to a suspicion without pay lasting for more than 7 consecutive days
which is initiated by the employer without prejudice to the worker
o Worker may lose his/her job; either he/she is fired or because the firm closes down.
Underemployed and Unpaid Workers
- Unpaid worker – “a person who performs voluntary work” (Word web online)
o Common in rural wherein these workers do not posses standard benefits/salary as
compared to the employed individuals.
o Their services may be compensated by various forms/kinds
o The government still considers unpaid worker as officially employed
- Underemployed worker workers refer to employed workers whose skills are not
suitable for the current job, or whose income is insufficient to support his material
needs
o He/she would naturally search for another job to gain additional income
Government’s Labor Policy
Labor Code of the Philippines
- The Constitution mandates the legislative and executive branches of the
government to enact and implement laws/decrees that will protect the labor
interest of the workers
- Declaration of basic policy:
The State shall afford protection to labor, promote full employment, ensure equal
work opportunities regardless of sex, race or creeds and regulate the relations
between workers and employers.
The State shall assure the rights of workers to self-organization, collective bargaining,
security of tenure, and just and humane conditions of work.
- The Code also serves as a guideline to determine whether the employer has
committed unfair practices to his laborers
o Unfair labor practice – a violation of the constitutional mandated right to selforganization
o Collective bargaining agreement – contains terms and conditions with regard to
salaries and wages of employees, guidelines with regard to labor disputes, working
conditions
o The Code expressly provides for the establishment of the National Labor Relation
Commission
In-charge of formulating rules and regulations with regard to the conduct of labor
hearings and internal rules of procedure
o Provides for the establishment of Bureau of Labor Relation to act on the labor
issues/disputes that may arise in inter-union or intra-union conflicts.
Inter-union – conflicts between two or more labor organizations
Intra-union – conflicts with a labor organization
- Labor force vs. Globalization
o What is Globalization?
A popular economic policy in the international community which greatly affects
the economy of the country
Encourages the international community members to engage in the international
trade
It only widens the disparity between the rich and the poor
Advantages of globalization
economic arena
reduction