Basic Economic Problems of the Country

Philippines appeared to be one of the tastest 8rowing economies of

Asia. As reported by the PhilipPpine National tatistical Coordination

Board, the Philippines economy grew an annual . percent in the De.

cember quarter of 2015. According to the Philippirne National Statistics

Office, Philippines annual inflation rate slowed to 1.3 percent in January

2016 from 1.5 percent in December, recorded a Current Account surplus

of 88.41 USS Million in September of 2015 as reported by the Bangko Sen-

tral ng Pilipinas but still need to address different economic problems to

achieve economic growtn.

Unemployment. According to the Labor Force Survey, the

unemployment rate was 6 percent in October 2014 and 6.6

percent in January 2015.Unemployment remains a persistent

problem in the Philippines because of its increase in popula

tion. As reported by the Bangko Sentral ng Pilipinas, the total

population in Philippines was last recorded at 102.2 million

people in 2015 from 26.3 million in 1960. The number of peo-

ple entering the job market has been greater than the number

of jobs created. The rural-urban migration increases due to

insutficient employment opportunities. Many of the unem

ployed individuals are college graduates.

What Can Be Done to Solve Unemployment Problem?

1 Appropriate economic policies for labor-intensive industries.

2 Improvement in the educational system of the country especially

in the rural areas.

environment in the rural areas.

4. Provision of more investment opportunities to encourage local

and international investment like tax incentives.

5. Proper coordination between the govermment and the private

Sector to solve the problem of job mismatch.

63 Decreasing the retirement age from 65 to 60 for public sector to

gve chance to younger generation to enter the labor market but

providing an attractive well-defined benefit pensions and retiree

health care for retirees.

7. Slowing population growth. To improve standard of living of the

Flipinos, Piiippine economic growth must increase faster than its population. If the country's output over
a period of time nctea

bypercent, while its population increased by 20 percent, standar

of living is beter in the beginning of the period but difficult in the

end. It population increased by 5 percent, while output increasea

by 20 percent, standard of living would have been improvea

The government must encourage people to limit the size ot thei

tamilies and at the same time increasing economic growth.

Poverty. As a fast-growing economy, with 6.3 percent Gross

Domestic Product for the 4h quarter of 2015, still there is a

decline in the incidence of poverty in the Philippines. Poverty

remained not only an economic problem but also a 5ociai

proolem ot the country. Increase in population, increase in the

cost of living unemployment, inequality in the distribution of

income are some of the reasons why a decline in poverty

What Can Be Done To Solve Poverty Problem?

1. Reduce unemployment.

2. Appropriate policy on labor income.

3. Promote economic grOwth to improve the standard of living

4. Provision of unemployment benefits for those who will be

unemployed due to natural and man-made calamities.

5. Increasing social services like education, health care and food subsi-

dies leads to sustainable poverty reduction.

Quality of Infrastructure. Based on the Global Competitive

ness Report 2014-2015, the Philippines ranks 91* out of 144

countries on a World Economic Forum survey of infrastruc-

ture quality. This can be the result of low investment on infra-

structure projects. The budget for infrastructure is consistent-

ly below 3 percent of Gross Domestic Product (GDP) and the

8overnment spending on social infrastructure for education

and health is only 4 percent of GDP. From the economisť's

point of view of poor infrastructure, the 2.2 million vehicles

a day experiencing traffic congestion cost the country Php876

bilion a year, or more than $20 billion, in lost productivity

and wasted energy based on the study conducted by the Ja

pan international Cooperation Agency that would cost a seri-

ous drain on an economy of about $250 billion.

What Can Be Done to Improve the Quality of Infrastructure?

1. Quality infrastructure increases macro-leve competiiveness

straints, the Philippines need to achieve a gradual increase in in.

frastructure investments to at least 5 percent of Gross Domestic

Product (GDP), and an increase in the eticiency ot spending

2. The government shall implement fiscal reform program.

3. Continues reform in key sectors-particularly power, roads, and

water-to improve cost recovery, competition, and institutional

credibility, and to sharply reduce corruption.

4. Improving central oversight of the planning and coordination of

investments

5. Focus on investments through public-private partnerships to ad-

dress key bottlenecks, and achieve quick gains in service delivery.

Income Inequality. Income is the money that an individual

earned from work or business received from investments.

ncome inequality refers to the gap in income that exists

between the rich and the poor.

The following are the major causes of income inequality in the

Philippines

1. Political culture can be considered as one of the major causes of

income inequality in the Philippines. The "palakasan" and the

"utang na loob that cannot be avoided especially after election. If

you are a relatives or friends or someone in power they can have

all the chances to get the position even without or less knowledge

on the position given to them. "utang na loob is indebledness to

Someone who has done someone a favor. It is an obligation of a

may be in the form of voting for them in the election or do

something tor them til the end.

2. Indirect taxes also one of the major causes of income inequality.

Indirect tax is a regressive tax that the poor people shoulder the

burden of paying higher taxes like the Value Added Tax.

3. ncome taxes. A Filipino worker receiving minimum wage is

exempted in the payment of income tax, but for those Filipino

workers eaming more than theminimum wage is taxed 32 percent.

What Can Be Done to Solve the Problem of Income Inequality?

. Polices to entorce progressive rates of direct taxation on income

and wealth, especially at the highest levels.

2. Direct money transfers and subsidize food programs for the urban

and rural poor.

3. Direct government policies to keep the price of essential products

low.

Reform people's political culture.

5. Raise the minimum wage

6. Encourage and expand collective bargaining

7. Encourage profit sharing

Philippine Socio-Economic Development

Socio-economic development is the process of social and economic

development ot the people in the community. Socio-economic development

is measured with indicators such as Gross Domestic Product (GDP), lite

Philippine Development Plan: 2011-2016 MIDTERM UPDATE TARGETS

Based on the NEDA Philippine Development Plan: 2011-2016, the

following are the Midterm Update Targets:

A. Economic Development. Economic development is the process of im

proving the standard of living of every individual.

Gross Domestic Product (GDP) is targeted to grow by 6.5 to 7.5

percent in 2014, 7.0 to 8.0 percent in 2015, and 7.5 to 8.5 percent

1n 2016.

Employment rate is expected to increase to 93.3-93.5 percent and

incidence of income poverty to be reduced to 18.0-20.0 percent.

Reduction of multidimensional poverty incidence from 28.2

percent in 2008 to 16.0-18.0 percent by 2016.

Private construction and manufacturing are expected to gain

momentum beginning late 2014 up until the end of the Plan

period.

The employment rate is expected to decrease from 7.0 percent in 2012 to 6.5 to 6.7 percent by 2016.
Assuming a labor lorce growth

ate of between 1.7 to 1.9 percent, these targets translate to an

additional 740,000 employed persons per year

Reduce the underemployment rate from the current 20.0 percent

to 17.0 percent by 2016 to improve the quality of employment.

Decrease the incidence of poor individuals to 18.0 to 20.0 percent

by 2016.

8. Social Development. Social development interventions will directly

reduce poverty in its multiple dimensions by increasing the poor's ac.

The government is committed to improve the delivery of health

services to reduce maternal mortality HIv (human immunodef

Ciency virus).

Investment in education will be increased and improve the quality

of public investments.

Social protection programs will be developed to address the

diferent hazards faced by different localities like, increasing the

Philippine Health Insurance (Philtealtn) coverage and benefits.

The Community-Based Employment Program will be re-designed

to function as a social protection mechanism that replaces

lost income in times ot calamities. It represents all projects of

8overnment that employ unskilled workers.

The government will also developed housing options/assistance

based on the needs and affordability of intended housing benefi-

ciaries. The beneficiaries included informal settler families, vic

tims of calamities such as typhoons, earthquakes, fire and armed

conflict, and low-salaried employees.

SUMMARY

Economics is the study of the ways that individuals and societies

allocate their limited resources to satisfy unlimited wants.

Eoonomics is a social science because it uses scientific methods to

buld theories that can help explain the behavior of individuals, groups anu

organizations.

0-1Econoie Tesouraes are factors of production used to produce thng