B A S I C E C O N O M I C P R O B L E M S O F T H E

C O U N T R Y

L E S S O N 3

UNEMPLOYMENT

6% - October

2014

6.6% -

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

5. Appropriate policy on labor income.

Self-

existingSustainableSubsistence

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

Minimum Wage – No TaxA 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