What is Unemployment?
• In economics, unemployment refers to the
condition and extent of joblessness within an
• measured in terms of the unemployment rate,
which is the number of unemployed workers
divided by the total civilian labor force
• Hence, unemployment is the condition of not
having a job, often referred to as being "out of
work", or unemployed
Types of Unemployment
1.) Frictional Unemployment
- when a person loses his current job and is out
looking for a new one
- the time period from shifting from one job to
another is known as frictional unemployment.
2.) Structural Unemployment
- happens because of structural changes in the
- In this type of unemployment, workers do not
match with their jobs or they do not have the skill
that is required in doing the work.
3.) Classical Unemployment
- Classical Unemployment occurs when real
wages for a job rises above the market-clearing level
- Because of this, many more people apply to that
job but only few vacant slots are available.
4.) Cyclical Unemployment
- happens when there is an economic recession,
wherein there is less demand for goods and
- During this time more unskilled workers are
unemployed due to the fact that demand for
labour decreases.
5.) Seasonal Unemployment
- happens because there are some jobs that
concentrate only at a certain time of the year
-Industries that are seasonal may be fruit picking,
tourism, hotels and caterings.
Factors Affecting Unemployment
lack of employment opportunities
lack of investors and businesses
fast population growth
lack of education
Unemployment vs. Underemployment
• condition of not having a
job, often referred to as
being "out of work", or
• described as person who is
not working or one who
does not get paid, but seeks
“underemployed people” is defined
as those holding jobs but who want
to work longer hours in their
present job, those wanting an extra
job, or those who want a new job
with longer working hours
described as a person who is
working partime but would like to
work full time
also means that the workers skill is
greater than that of what he is
required to do
• from July 2010 until around January 2011, the
trend of the unemployment rate was
• However, starting on April 2011 until October
2011, which is the most recent data on the
unemployment rate, the trend was decreasing
showing a big drop by .7%
What brought about the drop?
• 2.1 million new jobs have been created
• Although there are many new jobs, there is an issue of
quantity versus quality present
• Employed vs. underemployed
• “…how can we commend this report if out of the two
million new jobs, 1.5 million are part-time while half a
million are full-time? Underemployed workers were
7.38 million in October, higher than 7.1 million in July.”
“If this is the case, then NCSB and the
government should go back to the basic definition
of a FULFILLING JOB –one that supports at least a
family of four, provides family’s daily needs and
doesn’t require a person to borrow money just to
make up for his salary’s insufficiency.”
The two views
– that unemployment will
remain in the 7 to 7.5 percent
range which is still the worst
among the Asean-5 countries.
– Have faith in the Aquino
administration’s inspirational
goal of a rapid and sustained
shrinkage from 8 to 7 percent.
– that the jobs market will
continue to deteriorate both
in quantity and quality.
– That unemployment will
follow in-suit to the debt
crisis in Europe, the political
instability in the Middle East
and North African territories,
the stubbornly high
unemployment worldwide,
the triple tragedy in Japan and
the apparent weakness in US
economy recovery all pointing
to a weak and prolonged
world economic recovery.
The current situation
• The latest employment numbers show that the
Philippines’ neighboring countries are doing much better:
unemployment rate is 0.7 percent (May 2011) in Thailand,
2.6 percent (June 2011) in Vietnam, 3.0 percent (April
2011) in Malaysia, and 6.8 percent (February 2011) in
Indonesia. As of April 2011, unemployment rate in the
Philippines was 7.2 percent while underemployment rate
was 19.4 percent.
• The current labor statistics show some disturbing
developments. First, the unemployed are mostly young
(50 percent are in the age group 15 to 24 years), mostly
male (64 percent are males) and mostly college graduates
or undergraduates( 43.5 percent).
Two sectors that will be in trouble
• The young, college-trained
working class.
– There were 1,249,000
college-trained jobless
workers in April 2011
compared to 1,198,000
similarly situated
unemployed in April 2008,
or a difference of 51,000
college-trained workers.
This represents a huge
waste of resources. It also
means that not only is the
number of jobless collegetrained workers large, it is
• The agriculture working
– The number of employed
workers in agriculture
remains high: 29 percent or
12,188,000 in April 2011
compared to 32 percent or
10,732,000. This represents
a decline of 53,000 workers
in agriculture.
• Underemployment is a situation
in which a professional is
employed in a low-wage, lowskilled position that does not
utilize the individual’s
professional skills.
• More than four of ten
underemployed workers – parttime workers who are poorly
paid and are looking for better
jobs, better in terms of more
hours and higher paying – are
found in the agricultural sector.
And the situation has not
improved much since before the
world crisis. Some 3,079,000
underemployed workers existed
in agriculture in 2008; the
number rose to 3,093,000, or by
14,000 underemployed
The role of the agriculture sector
• In any event, this pattern
of employment, where a
big segment of the labor
force is employed in
agriculture, is not
necessarily pretty. It does
not imply progress. In fact
it means that the lowpaying agriculture sector
continues to remain the
employer of last resort for
a big segment of working
• The more people go into
the agriculture sector, the
greater the
underemployment rate
will be.
• This is just as bad as
The plan
• The inspirational goal of the Noynoy
administration to shrink unemployment from 8
to 7percent is possible if some necessary
conditions -- for example, high public
investment supported by sustainable fiscal
resources, hefty foreign direct investment,
strong world economic recovery – exist. For
now, these conditions have yet to materialize
along with the capital needed for these big
Attracting back OFWs… HOW?
• PNoy’s 1 Million Jobs Project
– Created to open more opportunities to the jobless
and attract the OFW community back to the
– Some goals:
• Attracting both domestic and int’l investors to open up more
job opportunities
• Coordinating the DepEd with the Department of Labor and
DOLE and reforming the education system in order to
prepare students for jobs that will demand upon graduation
• Using Phil-Jobnet, the Labor Department’s online jobapplicant matching system to reach out to the jobless
• Benefits:
– Will provide students with better quality
education in the various fields students choose to
– Will equip them with sought-after skills
– Open opportunities in booming markets
– Increase job opportunities and investors
• Progress Report:
– Found success in getting foreign investors
– Chinese investments worth 1.2 or 1.8 billion
dollars for the country
– Several European and Middle Eastern firms
involved in business process outsourcing (BPO),
energy, food, mining, oil exploration, personal
care, and tourism
Sectors that will generate the
additional jobs
• Labor and Employment Secretary Rosalinda
Dimapilis-Baldoz :
“the government will improve the business
environment, develop our industries, and focus more
incentive package on key job generating areas, such as
tourism, business process outsourcing, mining,
housing, agri-business, logistics, shipbuilding,
infrastructure, and other high-potential industries that
include production of home style products (furniture
and furnishings, holiday décor, houseware, woodcraft,
wearables, motor vehicle parts and components,
garments, and construction and related materials.”
• Objective: to increase exports and encourage
foreign and domestic investments in these
sectors so that they generate more jobs as they
• Infrastucture projects such as irrigation,
reforestation, drainage and sewage systems, and
seaport development are prioritized
– they support the development and job generation
capacities of the agriculture and tourism sectors
– 2012: The government is set to bid out 16 PPP (Public
Private Partnership) projects
• Edgardo B. Lacson, president of the Employers
Confederation of the Philippines (ECOP), said
that “the recovery of lost jobs would come
from the infrastructure sector, which has a big
multiplier effect.”
• He concludes that unemployment would not
be worse in 2012
• “employment opportunities will be available
for highly-educated workforce, such as
accountants, lawyers, human resource
exporters, marketing consultants, graphic
artists, content developers,
doctors, radiologists, and other professionals”
as a shift to a more higher-value services will
be seen
Factors of inflation
• Inflation, in economics, is an increase in the
general level of prices
• There are 2 factors of inflation
(1) Demand- Pull Inflation. Demand pull inflation
happens when price levels go up because there
are problems concerning supply and demand.
(2) Cost push inflation. Cost push inflation
happens when the general prices of products rise,
due to increase in raw materials or wages.
Relation of inflation to unemployment
• There is an inverse relationship between
inflation and unemployment.
• When unemployment is high, inflation is low
but when Inflation is high, Unemployment is
Inverse Relationship of Inflation and
• When Unemployment is low and Inflation is
- As more people work, the national output
increases, causing wages to increase, causing
consumers to have more money and to spend
more, resulting in consumers demanding
more goods and services, finally causing the
prices of goods and services to increase.
• country’s annual inflation eased in December to
its lowest level in 11 months
• consumer prices dropped by 0.2 percent in
December due to lower prices of heavily
weighted food items such as rice, cooking oil,
vegetables, and sugar in many regions including
the National Capital Region (NCR)
• According to the National Statistics Office, all
commodity groups except furnishing, household
equipment, and routine house maintenance;
recreation and culture; and education indexes posted
either slower annual increment or negative annual
rate during the month
• the general downward adjustments in the prices of
gasoline and diesel nationwide, along with lower
electricity charges in the NCR, contributed to the
decline in month-on-month inflation
• the 2011 inflation figure is well within the
government’s target range of between 3 and 5
percent for the full year, said the National
Economic and Development Authority (NEDA)
• Benjamin E. Diokno of the UP School of
“The slowing inflation is good news. It is
consistent with the view that growth, rather than
inflation, should be the focus of policymakers.”
• The government said it would soon announce
its 2012 and 2013 inflation targets
• average figure was within the central bank's
3.0-5.0 percent target for 2011-2013
• As the purchasing power of the average
Filipino appears to be generally unaffected by
problems abroad, consumers will be
encouraged to continue buying goods which,
in turn, will support businesses and keep
workers occupied
• BSP Governor Amando Tetangco said the
December inflation data reinforced the central
bank’s view that inflation would remain
manageable over the policy horizon, giving
policymakers room to adjust interest rates if
• Authorities remain watchful of developments
abroad, including geopolitical risks in the
Middle East, because of their impact on
inflation, he said.
– The Philippines imports most of its crude oil
requirements from the Middle East.
• “Philippine inflation may become elevated
due to oil supply-related issues such as
geopolititical tensions in Iran and other
countries in the Middle East, but the average
rate should remain within target”
• threatened to respond to sanctions over its nuclear
program by shutting the Strait of Hormuz, a transit
route for a fifth of the world’s oil
• Despite higher food prices due to crop
damage from recent bad weather, DBS
expects Philippine inflation to trend toward 4
percent by March, and average at the same
level throughout 2012
Policies to reduce inflation
1.) Monetary Policy
- The regulation of money supply and interest rate by a central
bank, such as the BSP (Bangko Sentral ng Pilipinas), in order
to control inflation and stabilize currency.
2.) Fiscal Policy
- Decisions by the government, usually relating to taxation and
government spending with the goals of price stability and
economic growth.
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