BASIC ECONOMIC

PROBLEMS
OBJECTIVES:
UNEMPLOYMENT

6% - 6.6% -
October January
2014 2015

LABOR FORCE SURVEY

•UNEMPLOYMENT
•POVERTY
•POOR QUALITY OF
INFRASTRUCTURE
•INCOME
INEQUALITY
UNEMPLOYMENT
Common Causes:
1. The number of people entering the job market has been
greater than the number of jobs created.
2. The rural-urban migration increases due to employment
opportunities.
3. May of the unemployed individuals are college graduates.
 RURAL BETTER JOB OPPORTUNITIES
TO URBAN MIGRATION

Few services Access to services

Lack of job opportunities More entertainment
Unhappy life Improved living conditions
Poor transport links Hope for a better way of life
Natural disasters Family links
Wars
Shortage of food
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.

Sustainable Subsistence
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%
MAJOR CAUSES OF INCOME
INEQUALITY

3. Income Taxes Minimum Wage –

No Tax A little more than minimum
wage – 32% 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