BA S IC ECONOMIC

PROBLEMS OF THE
COUNTRY
LESSON 3
UNEMPLOYMENT

6% - October 6.6% -
2014 January 2015

LABOR FORCE SURVEY

•UNEMPLOYMENT
•POVERTY
•POOR QUALITY OF
INFRASTUCTURE
•INCOME INEQUALITY
UNEMPLOYMENT

COMMON CAUSES
• The number of people entering the job market has
been greater than the number of jobs created.
• The rural-urban migration increases due to
employment opportunities.
• May of the unemployed individuals are college
graduates.
RURAL TO URBAN MIGRATION
WHAT CAN BE DONE TO SOLVE
UNEMPLOYMENT PROBLEM?
1. Appropriate economic policies for labor-intensive
industries.
2. Improve the educational system of the country
especially in the rural areas
3. Minimize rural-urban migration by improving the
economic environment in rural areas.
WHAT CAN BE DONE TO SOLVE
UNEMPLOYMENT PROBLEM?
4. Proper coordination between government and the
private sector to solve the problem of job mismatch.
5. Slowing population growth. Philippine growth must
increase faster than the population. Limit the size of
families.
6. Provision of more investment opportunities to
encourage local and international investment.
POVERTY

COMMON CAUSES
• Increase in population
• Increase in the cost of living
• Unemployment
• Income inequality
WHAT CAN BE DONE TO SOLVE THE
POVERTY PROBLEM?
1. Reduce unemployment
2. Appropriate policy on labor income
3. Provision of unemployment benefits for those
who will be unemployed due to natural or man
made calamities.
Ex. Typhoon, Bombing of terrorists,
Earthquake
WHAT CAN BE DONE TO SOLVE THE
POVERTY PROBLEM?
4. Increase social services like education, health
care and food subsidies for sustainable poverty
reduction
Self-
Subsistence Sustainable
existing

5. Appropriate policy on labor income.

POOR QUALITY OF INFRASTRUCTURE

91ST OUT OF 144 COUNTRIES ON

POOR INFRASTRUCTURE QUALITY

LOST ABOUT $250 BILLION IN

ECONOMIC GROWTH
WHAT CAN BE DONE TO IMPROVE THE
QUALITY OF INFRASTRUCTURE?
1. The government shall implement fiscal reform
program
2. Continue reform in key sectors- particularly
power, roads and water – to improve cost
recovery, competition, and institutional
credibility and to sharply reduce corruption.
WHAT CAN BE DONE TO IMPROVE THE
QUALITY OF INFRASTRUCTURE?
3. Improving central oversight of the planning
and coordination of investments
4. Focus on investments through public-private
partnerships to achieve faster delivery of service
 INCOME INEQUALITY
• Income is the money that
an individual earned from
work or business received
from investments.
• Income inequality – refers
to the gap in income that
exists between the rich
and the poor
MAJOR CAUSES OF INCOME
INEQUALITY
1. Political culture
“ palakasan” “utang na loob”
Ex. Voting for the wrong person during
election

2. Indirect taxes – poor people shoulder this

taxes like the Value Added Tax – 12%
INCOME INEQUALITY
3. Income Taxes

A little more than minimum wage – 32%

Minimum Wage – No Tax
TAX
WHAT CAN BE DONE TO SOLVE THE
PROBLEM OF INCOME INEQUALITY
1. Policies to enforce progressive rates of direct
taxation on high wage earners and wealthy
individuals.
2. Direct money transfers and subsidize food programs
for the urban and rural poor
 SOLUTIONS TO INCOME INEQUALITY
3. Direct government policies to
keep the price of basic
commodities low

4. Raise minimum wage

5. Encourage profit sharing