GABRIEL, ROBELYN M.

BSMA 2-9

ECONOMIC DEVELOPMENT DECEMBER 20, 2020

REVIEW QUESTIONS

1. Define employment and unemployment.

 Employment is an important development goal whereby all members of the
economy are productive and contributing to national growth. On the other hand,
unemployment is caused by certain circumstances that lead to a significant part of
the labor force becoming unproductive or without a job. Also, it occurs when a
person who is actively searching for employment is unable to find work.
 Unemployment, also referred to as joblessness, occurs when people are without
work and actively seeking employment. During periods of recession, an economy
usually experiences high unemployment rates. There are many proposed causes,
consequences, and solutions for unemployment. It has a huge effect to economy.
When unemployment rates are high and steady, there are negative impacts on the
long-run economic growth. Unemployment wastes resources, generates
redistributive pressures and distortions, increases poverty, limits labor mobility,
and promotes social unrest and conflict. The effects of unemployment can be
broken down into three types:
o Individual: people who are unemployed cannot earn money to meet their
financial obligations. Unemployment can lead to homelessness, illness, and
mental stress. It can also cause underemployment where workers take on
jobs that are below their skill level.
o Social: an economy that has high unemployment is not using all of its
resources efficiently, specifically labor. When individuals accept
employment below their skill level the economies efficiency is reduced
further. Workers lose skills which causes a loss of human capital.
o Socio-political: high unemployment rates can cause civil unrest in a
country.
2. Determine and critically analyze the causes of unemployment.
 Overpopulation – high population means more people needs to be considered for
employment. Right now, the Philippines has a 1.7% population growth rate, higher
than the world’s 1.2% growth average. When a country becomes overpopulated, it
gives rise to unemployment as there are fewer jobs to support a large number of
people. The rise in unemployment gives rise to crime, such as theft, as people want
to feed their families and provide them basic amenities of life.
 Oversupply of labor force and inability to absorb available jobs – this is directly
related to overpopulation, but also the quality of our education and training
institutions. While several quality jobs are available, the supply of graduates and
workers are not directly responsive to the demand present in our labor market. A
clear mismatch may have to be resolved overtime by regulatory agencies and
education policies to ensure that we would later on match skills with available jobs.
For example, Philippines is producing too many nursing graduates, to a point that
supply of nursing graduates exceeds its effective demand. This can be seen by the
fact that there are 2,000 nursing schools with an annual total enrollment of over
420,000 students, yet hospitals can only absorb less than 5,000 nurses each year
while overseas opportunities are very limited. This has resulted in around 400,000
licensed nurses who are not gainfully employed, with 80,000 board-passers joining
the ranks each year. As shown in this case, the direct result of inefficient allocation
of human resources leads to high unemployment rates as a particular job market is
unable to support the huge supply of the population. Therefore, college graduates
with the appropriate degrees are unable to find work consistent with their course.
This in turn leads to widespread unemployment due to factor immobility of labor
-- people who are trained to be nurses are unable to become doctors, electricians,
etc.
 Mismatching workers with jobs. Often this happens when new graduates enter the
workforce or former workers re-enter the labor force, change in employment due
to resignation, removal from work. Job mismatch has negative effects on work
productivity, at macroeconomic level and at microeconomic level. It is obvious
 that if human resources have a high level of education and qualification and skills
and do not utilize them, they represent a loss of resources and work potential. They
tend to lose interest to the job, so they end up resigning or being removed from the
work.
 Skills mismatch or a significant change in demand or technology altered the
structure for labor demand- skills mismatch is a discrepancy between the skills
that are sought by employers and the skills that are possessed by individuals. This
means that workers are not providing the skills demanded in the labor market, or
that the economy does not create jobs that correspond to the skills of individuals.
 Recession or a breakdown in the economy- recessions cause high unemployment.
Businesses lay off workers and jobless workers have less to spend as a result.
Lower consumer spending reduces business revenue, which forces companies to
cut more payroll. This downward cycle is devastating.

3. What are possible measures to improve employment conditions in developing countries?

 Increasing Decent Employment- improving working conditions in the informal
sector, which still accounts for the vast majority of jobs in developing countries,
while also, as much as possible, encouraging the formalization of activities and
developing social protection mechanisms to reinforce the application of labor laws
and enable workers, self-employed workers included, to receive the allowances to
which they are entitled
 Improving Youth Employment- an urgent need to recognize youth employment as
a priority for both public policy and the private sector to offer young people more
and better employment opportunities. Worldwide, more than one out of five young
people (under the age of 25) are without an occupation, meaning that they are
unemployed, with no training and not in school.
 Responding to the Environmental Crisis- Climate change and the decline in
biodiversity will affect millions of workers worldwide, particularly farmers whose
crops are vulnerable to extreme weather events (intense precipitation, drought) or
dependent on insect pollinators. The transition toward more environmentally
respectful societies, will meanwhile destroy 6 million jobs globally.
STUDENT EXERCISES / ASSESSMENT

EXERCISE 1- DESCRIPTIVE RESEARCH

Aside from professional experience and academic credentials, salary structures and
wages in the Philippines are determined by factors such as nature of work, workplace
location, working hours, type of industry/sector, and others. The salaries of those working
in major cities and business districts are relatively higher compared to those employed in
second-tier cities and provincial areas around the country.

Philippine laws, however, grant fair compensations and benefits to all types of
employees regardless of differentiating factors such as those previously mentioned. Among
these compensations and benefits are minimum wages, the thirteenth-month pay, health
and insurance benefits, and holiday pays. The Department of Labor and Employment
(DOLE) and its affiliate agency, the National Wages and Productivity Commission
(NWPC), are mandated to enforce the provisions of the Labor Code of the Philippines –
which prescribes employment regulations and labor laws for companies operating in the
Philippines. Minimum wage rates in the Philippines vary in every region, with a Regional
Tripartite Wages and Productivity Board (RTWPB) in each of them to monitor economic
activities and adjust minimum wages based on the region’s growth rate, unemployment
rate, and other factors.

Given that my parents came from a poor family; they were not able to attain formal
education or even finish their primary education. In connection to this, they have
experienced difficulty finding decent jobs that offer them salaries that is higher than the
minimum wages. I believe that my family’s situation represents the majority of households
here in the Philippines.

My brothers are working as truck drivers and my mother is working as a utility

worker in a public high school. Per month, they were earning maximum of 10,000 and
fixed income for 9,000, respectively. When being compared to the salary grades that are
being received by the government officials, it can be observe the huge disparity in
salary/wages. We can notice that having a formal education really played a huge role in
determining our job and the salary that we will be receiving.
 Attached below is the table of Salary Grades of Philippine Government Officials
under the Salary Standardization Law IV:

Attached below is a photo showing the highest paying careers in the Philippines according
to Salary Explorer:
 When comparing their salary wages, I have noticed that the salary wages that are
being received by the government employees and people who have degree in education, it
is significantly higher than those salaries that are being received by people without decent
job because of not having formal education.

Employers often indicate that they look more at employees' skills and ability to do
a job than at their level of formal education. However, most studies of the correlation
between formal education and employee wages strongly support that more education
equals more money. Naturally, an employee's ability to get promoted and to see pay raises
increases with performance, but formal education often means a foot in the door at a higher
entry-level salary.

We can therefore conclude that education is an investment that guarantee more

income. It showed clearly that more education usually leads to higher lifetime earnings.

EXERCISE 2. UNDERSTANDING LABOR STATISTICS

Before the COVID pandemic, the Philippine employment situation was vibrant,
expanding at 4.0 percent or 1.6 million net employment generated. When the global
pandemic hit, we feared that employment will be impacted badly. We expected these
results given that health crisis has crippled most of our economic activities.

With the imposition of community quarantine, hundreds of thousands of

establishments resorted to temporary closures or flexible work arrangements as evidenced
by millions of workers affected both in the formal, informal and overseas sectors.

The 17.7 percent unemployment rate which translates to 7.3 million unemployed is
highest, surpassing the 10.3% unemployment rate in the 1998 recession in the Philippines.

It is also recognized that there’s a huge drop in the labor force participation rate at
55.6%, the lowest in the history of the Philippine Labor Market. The lockdown during the
community quarantine from March up to this dates, which is supposed to be the period for
job hunting of our fresh graduates, has put the labor force in a standstill as two-thirds of
the economy is shut down.
 As the economy opens gradually, we are hopeful that the labor market will also
recover. The Department of Labor and Employment is committed to preserve and protect
employment as we all await the approval and implementation of the whole-of-government
Recovery Plan in the remainder of the Duterte Administration.

Attached here is the Employment Situation in October, 2020. As of Thursday,

December 3, 2020:

We can assume on the above data from Philippine Statistics Authority that the
country’s unemployment rate in October 2020 was estimated at 8.7 percent. This is
equivalent to 3.8 million unemployed Filipinos who are 15 years old and over. This
unemployment rate is the lowest since April this year although it is still higher than the 4.6
percent (or about 2.0 million unemployed Filipinos who are 15 years old and over) in the
same period a year ago.

Also, the Labor force participation rate (LFPR) in October 2020 was 58.7 percent
or 43.6 million Filipinos reported as either employed or unemployed. This is the second
lowest LFPR reported in the history of the Philippine labor market following the record
low of 55.7 percent reported in April 2020. In October 2019, the LFPR was posted at 61.4
percent, translating to 44.6 million Filipinos in October 2019.
 Employment rate in October 2020 was reported at 91.3 percent. This translated to
about 39.8 million employed Filipinos out of the 43.6 million who were in the labor force.
This employment rate was the highest since April 2020. In October 2019, employment
rate was estimated at 95.4 percent or 42.5 million employed persons.

Therefore, I can conclude that official employment and unemployment rates

capture the real labor condition of a country. Based on what I have found out, there’s a
significant increase in Philippines Unemployment rate due to the implementation of
Community quarantines. Although, as the months passed by, the Employment rate
increases again. Maybe, in my own opinion, because of the different online businesses that
rises during pandemic. Also, perhaps we are now coping and adjusting to our new normal
like working from home.

Based on the Technical Notes on the Labor Force Survey by the National Statistics
Office, the Philippine government defines employment and unemployment like this:

 Employed - consists of persons in the labor force who are reported either as at work or
with a job or business although not at work. Persons at work are those who did some work,
even for an hour during the reference period
 Unemployed - consists of persons in the labor force who are reported as (1) without work;
and (2) currently available for work; and (3) seeking work or not seeking work because of
the belief that no work is available, or awaiting results of previous job application, or
because of temporary illness or disability, bad weather or waiting for rehire or job recall.

Labor Force refers to the population 15 years old and over who contribute to the
production of goods and services in the country. It comprises the employed and
unemployed. On the other hand, Labor Force Participation Rate (LFPR) - proportion of
total labor force to the total household population 15 years and over. The labor force
participation rate is a measure of an economy's active workforce. The formula for the
number is the sum of all workers who are employed or actively seeking employment
divided by the total household population 15 years and over.

Seeing their relationship to each other we can critically analyze how such standards
for employment and unemployment affect the way we measure labor force participation.
 For example, during this pandemic, given that the employment rates goes down, the Labor
Force Participation Rate also goes down.

• Look at ILO statistics on employment and unemployment. Compare the status of

our Southeast Asian neighbors with the Philippines. How are we similar and different?
Identify and critically analyze the reasons why.

 The International Labor Organization (ILO) is the United Nations agency for

the world of work. This ILO definition defines unemployed people as being: without a job,

have been actively seeking work in the past four weeks and are available to start work in

the next two weeks. out of work, have found a job and are waiting to start it in the next two

weeks.

 The importance of employment as a pathway to economic development, social

inclusion and well-being has long been recognized. As well as being at the heart of the
ILO’s Decent Work Agenda, employment is a central element in the 2030 Agenda for
Sustainable Development which places emphasis on promoting productive employment
and decent work for all (Goal 8). In this context, statistics on employment are crucial to
monitor progress towards many national and international policy goals. These statistics
must not just quantify work and people in employment but also provide meaningful
information on the types of jobs people are doing.
While observing the data gathered from ILO Employment statistics, here is the
ranking of Southeast Asian Countries based on Employment-to-Population Ratio. The
employment-to-population ratio is equal to the number of persons employed divided by the
working-age population and multiplied by 100. The employment-to-population ratio
provides information on the ability of an economy to provide employment for those who
want to work.
1. Cambodia- 81.8%
2. Laos - 78.0%
3. Vietnam- 75.9%
4. Singapore- 67.6%
5. Thailand- 66.8%
 6. Indonesia and Timor-Leste both have 64.3%
7. Malaysia- 62.2%
8. Myanmar- 60.7%
9. Brunei has 58.8%
10. Philippines - 58.3%
When analyzed, Cambodia has the highest employment-to population ratio while
Philippines has the lowest. I can assume that this statistic is accurate especially when it
comes to our country. We all know that, our country cannot support each Filipino in giving
decent jobs that’s why most of us resort in working abroad as an OFW. Also based on my
observation, when it comes to population differences, Canada only has a low population as
opposed to the Philippines. This in essence lead me to a conclusion that, the lower the
population the higher that chance that a country can provide employment for all of those
who want to work.

 The unemployment rate is probably the best-known labor market measure and is
certainly one of the most widely quoted by the media. The unemployment rate is a useful
measure of the underutilization of the labor supply. It reflects the inability of an economy
to generate employment for those persons who want to work but are not doing so, even
though they are available for employment and actively seeking work. In terms of
unemployment rate and supplementary measures of labor underutilization, the
following data has been obtained:

1. Laos- 9.4%
2. Brunei- 6.9%
3. Timor-Leste- 4.7%
4. Indonesia- 3.6%
5. Malaysia- 3.3%
6. Singapore- 3.1%
7. Philippines- 2.2%
8. Vietnam- 2.0%
9. Thailand- 0.7%
 10. Myanmar- 0.5%
11. Cambodia- 0.1%

We can observe that three countries namely Thailand, Myanmar and Cambodia
have an unemployment rate of less than 1. Meaning their economy have the highest ability
to generate employment for those persons who want to work but are not doing so, even
though they are available for employment and actively seeking work. This is parallel to the
data observed on the ILO Employment Statistics wherein Cambodia also ranked the
highest. On the other hand, Laos has the highest unemployment rate and our country--
Philippines ranked 7th.

EXERCISE 3: COMPARATIVE ANALYSIS OF OFW-RELATED LAWS

One of the reasons why Filipinos leave the country is because of our socio-
economic conditions. The government, in part, also crafted laws in favor of labor export.
There are a lot of related legislations and government policies on OFW welfare, labor
export, and migrant protection implemented in our country.

Some of this salient provisions and its major goals are the following:

 REPUBLIC ACT No. 10801- This Act shall be known as the “Overseas Workers
Welfare Administration Act”. AN ACT GOVERNING THE OPERATIONS AND
ADMINISTRATION OF THE OVERSEAS WORKERS WELFARE
ADMINISTRATION. It is the policy of the State to afford full protection to labor,
local and overseas, organized and unorganized, and promote full employment
opportunities for all. Towards this end, it shall be the State’s responsibility to
protect the Overseas Filipino Workers (OFWs). This Act is enacted to provide
guidelines on matters concerning the OWWA, its mandate, purposes and
objectives, membership, collection of contributions, and availment of benefits and
services. This Act also embodies the policies on fund management, programs and
services administration.
 REPUBLIC ACT NO. 8042- also known as Migrant Workers and Overseas
Filipinos Act of 1995. In the pursuit of an independent foreign policy and while
considering national sovereignty, territorial integrity, national interest and the right
 to self-determination paramount in its relations with other states, the State shall
afford full protection to labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment opportunities for all.
Towards this end, the State shall provide adequate and timely social, economic and
legal services to Filipino migrant workers. While recognizing the significant
contribution of Filipino migrant workers to the national economy through their
foreign exchange remittances, the State does not promote overseas employment as
a means to sustain economic growth and achieve national development. The
existence of the overseas employment program rests solely on the assurance that
the dignity and fundamental human rights and freedoms of the Filipino citizens
shall not, at any time, be compromised or violated. The State, therefore, shall
continuously create local employment opportunities and promote the equitable
distribution of wealth and the benefits of development.
 REPUBLIC ACT NO. 7111- This act shall be known as Overseas Workers'
Investment (OWI) Fund Act. An act establishing the overseas workers' investment
fund to provide incentives to overseas workers, reduce the foreign debt burden, and
for other purposes. This Act shall apply to all Filipino citizens overseas, who are
workers duly registered with the Philippine Overseas Employment Administration
(POEA) and/or the Commission on Filipino Overseas (CFO), and their
beneficiaries in the Philippines: Provided, That the additional benefits as
enumerated in Section 8 of this Act shall not apply to Filipinos overseas, as defined
in Section 2 of Batas Pambansa Blg. 79, who have already acquired immigrant
status in their host countries: Provided, further, That the participation of Filipinos
overseas, as defined in Batas Pambansa Blg. 79, in the remittance programs under
this Act shall be limited to the first two (2) years of operation of said programs
effective from the date of publication of the implementing rules and regulations of
this Act.

The participation of said overseas workers shall not exceed their total salaries
or earnings for the period, counting from the effectivity of this Act.
 PRESIDENTIAL DECREE NO. 1809- Welfare Fund for Overseas Workers
(Amending Certain Provisions of Presidential Decree 1694, Creating the "Welfare
Fund for Overseas Workers")
 PRESIDENTIAL DECREE NO. 1694- Welfare Fund for Overseas Workers
(Organization and Administration of the Welfare Fund for Overseas Workers).
Welfare Fund for Overseas Workers. — There is hereby created a "Welfare Fund
for Overseas Workers," hereinafter referred to as The Welfund which shall be used
for the purpose of providing social and welfare services to Filipino overseas
workers, including insurance coverage, legal assistance, placement assistance, and
remittance services.

These salient provisions and major goals are consistent with our Philippine
Development Plan and AmBisyon 2040. The Philippine Development Plan 2017-
2022 is the first medium-term plan to be anchored on the 0-10-point Socioeconomic
Agenda and is geared towards the AmBisyon Natin 2040 which articulates the
Filipino people’s collective vision of a MATATAG, MAGINHAWA, AT
PANATAG NA BUHAY PARA SA LAHAT. It also takes into account the
country’s international commitments such as the 2030 Sustainable Development
Goals.

AmBisyon Natin 2040 represents the collective long-term vision and

aspirations of the Filipino people for themselves and for the country in the next 25
years. It describes the kind of life that people want to live, and how the country will
be by 2040. By 2040, Filipinos enjoy a strongly rooted, comfortable, and secure
life. In 2040, we will all enjoy a stable and comfortable lifestyle, secure in the
knowledge that we have enough for our daily needs and unexpected expenses, that
we can plan and prepare for our own and our children’s future. Our family lives
together in a place of our own, and we have the freedom to go where we desire,
protected and enabled by a clean, efficient, and fair government. With the
aforementioned policy, it will help the OFWs secure safety and achieve
comfortable, and secure life.
 • Looking into recent studies and news articles on the plight of Filipino
overseas workers, how are these policies responsive to identified OFW issues and
challenges?

Mobility regimes have for a long time enabled overseas Filipino workers
(OFWs) to harness new capital and boost development back home. But amid the
ongoing COVID-19 pandemic, the precarity of these workers’ lives has been made
all too clear. Both land-based and sea-based OFWs are among the hardest hit by
this tide of unemployment.

For the Filipino labour migrants who remain abroad, many of them suffer
from income loss due to the ‘no work, no pay’ scheme. Border closures and
lockdowns are common, resulting in restrictions on movements that affect labour
schemes. Although the direct effects of these restrictions — foremost being the loss
of income — may be temporary, the employment gap can generate secondary
impacts that could outlast the pandemic and create various forms of insecurity.

The Philippine government has already extended some financial assistance

to displaced OFWs through the DOLE-AKAP initiative. But at US$200 per worker,
this aid may prove to be insufficient in the long-term considering that the lockdown
has spanned for months and prospects for employment are uncertain given the
economic recession. Other long-term means of relief — such as the Department of
Labor and Employment’s Displaced/Disadvantaged Workers (TUPAD) program
— need to be maximized, as such programs target employment generation and not
merely cash assistance.

Also, The Overseas Workers Welfare Administration Regional Welfare 1

(OWWA RWOI) has started releasing Cash Assistance to OFWs who are affected
by the temporary travel ban in mainland China, Hongkong and Macao due to the
Novel Coronavirus Acute Respiratory Disease or 2019-nCoV ARD outbreak.

The said cash assistance given to the affected OFWs was an immediate
response of the Department of Labor and Employment (DOLE) and OWWA to the
call of President Rodrigo “Roa” Duterte to ease and lessen the burden of the would-
be departing OFWs after the government has imposed the travel ban.

• Using you field of specialization, how would we best support OFWs and
respond to challenges that affect their welfare?

 Being in the field of Accounting and as a student studying Bachelor of

Science in Management Accounting, I think the best support that I can give to
our modern day heroes—the OFWs is the awareness and guidance when it
comes to managing their finances. One of the main reason why most of them
chose to work outside our country is to surpass poverty and earn more than
what are country can offer. But, we can also observe that majority of them tend
to stay longer or spend the rest of their life working despite of having good
salary wages. In my opinion, this is due to their lack of ability to manage their
finances well.
 For me, it will be better if they won’t be focusing too much in spending
money for food consumption always and learn to invest their money that will
give them future benefits and return. Also, sign up for insurance services that
will protect his/her family’s life from the future risk that might happen. Health
and Educational insurance is very important, to the point that every OFW can
work calmly knowing that the money from their hard works are in good places
that will ensure the life of their loved ones.
REFERENCES:

https://courses.lumenlearning.com/boundless-economics/chapter/introduction-to-unemployment/

https://kcrecruitment.com/hr-consulting/labor-and-employment/salary/

http://www.salaryexplorer.com/best-paying-jobs.php?loc=171&loctype=1

https://psa.gov.ph/content/employment-situation-october-2020

https://psa.gov.ph/article/technical-notes-labor-force-survey2012-08-16
1659#:~:text=Unemployed%20%2D%20consists%20of%20persons%20in,temporary%20illness
%20or%20disability%2C%20bad

http://2040.neda.gov.ph/about-ambisyon-natin-2040/

https://owwa.gov.ph/index.php/news/regional/76-owwa-region-i-gives-financial-assistance-to-
stranded-ofws-due-to-2019-ncov-ard

https://www.eastasiaforum.org/2020/09/05/saving-the-philippines-overseas-workers/

https://ilostat.ilo.org/topics/employment/

https://ilostat.ilo.org/topics/unemployment-and-labour-underutilization/