Unemployment Rate In The Philippines And Proposed Policies
Introduction
Unemployment is both an economic and social problem. The accumulation of unused labor creates a permanent loss of output together with the decrease of its consumption. Meanwhile, it also bears essential existential minimum such as social transfer, lost taxes, increased health service cost and crime cost. In which Jorde Jakimovski set it into an example through the European Committee (1993) who estimated a total of 210 billion Euros including the social transfer, lost taxes, increased costs for health and social service, and also the costs from increased crime. Employment is essential since for it signifies social recognition and the maximization of labor resulting to high productivity. Relatively, employed families and individuals will have a financial stability enough for their consumption. As more people afford their goods, the businesses will also gain more. The prosperity of both households and firms is already a big step towards a better economy. In reality, the rate of unemployment in the Philippines have been constantly high in comparison to other countries under the Association of South East Asian Nations (ASEAN). It increasingly poses threats to the citizen. For instance, with no jobs, people will have no money to afford even their basic needs. This then leads to another economic problem ― poverty. Other negative effects of which shall be discussed in the succeeding explanations. Hence, unemployment qualifies as an economic and social issue.
To lessen unemployment, the government shall yield sacrifices such as increase in the rate of inflation and huge disbursements of cash to fund programs or actions being taken. Also, as Jakimovski stated, two fundamental elements must be taken in consideration, the severity of the issue and its social reality, with public opinions filtered by elusive socio-psychological procedures activated by assumptions.
This paper shall therefore contain a set of proposed policy options such as the provision of more scholarships, more job openings and free trainings regarding entrepreneurship, all aiming for a desirable goal of diminishing unemployment for the betterment of our country. However, through objective reasoning, free trainings regarding entrepreneurship turned out to be the most favorable policy with a more certain outcome.
Background of the Study
The rate of unemployment was at its lowest amid the Former President Benigno Aquino’s regime, falling from 7 percent to 6. 4 percent in the second quarter. However, progress has been uneven and the Philippines is still one of the countries with the highest rates of unemployment in the ASEAN region according to an article by Felipe Salvosa (2015). By January 2018, the employment rate was estimated at 94. 7 percent according to the Philippine Statistics Authority (PSA). Tracing the factors affecting unemployment, various articles seemed to agree that illiteracy, lack of job opportunities and the increasing rate of population and are mainly to blame. Higher job positions demand background checks of the aspirants, and literate people certainly creates impact for they are expected to be academically inclined over illiterate applicants. Nonetheless, not all literate people acquire jobs. As Index Mundi cited from CIA World Factbook, updated on January 20, 2018, 96. 3 percent of the total population is literate. Thus, creating tough competitions over job application and gradually lessens the number of job opportunities. In addition, unemployment rate doesn’t seem to cope up with the growing population. PSA stated that labor force participation rate (LFPR) in July 2017 was 60. 6 percent was increased to an estimate of 62. 2 percent in January 2018. As the supply of labor force increases, its demand decreases. Embedded with the increase of the rate of unemployment are its several effects to individuals and the economy as a whole. It mainly includes poverty, expanding division in society and increasing illiteracy rate.
Increasing unemployment rate results to deflation which can lead to poverty since it increases the real value of debts according to an article by Tejvan Pettinger (2010). As poverty worsens, the division between socio-economic classes widen resulting to more discrimination. Illiteracy can also arise from poverty for taking classes demands payment. Actions such as investment in education and health for programs like conditional cash transfer and senior high school reforms are taken by the government to address the problem according to the Oxford Business Group. Programs covers much time for there are no short-term solutions for unemployment.
Formulation of Economic Policy
Goal
The goal is to decrease the rate of unemployment in the Philippines. The proposed policies aim to lessen the persistent and increasing rate of unemployment in the country by addressing the roots that promotes its growth. High unemployment rate indicates that a low standard of living is more prominent in a country. As discussed in Investopedia, this leads to higher budget for unemployment benefits, food and medical assistance. In addition, the collection of income tax also decreases.
Policy Options
Scholarships
Education is considered to a tool in shaping an individual’s future. However, financial aspects draw back people with potentials and interest in learning. In response to this, scholarships should bridge the two together, eradicating the hindrance to a foreseeable success of these individual. Probably, with the guide of gratitude, they will become the next generation of scholarship providers. As the cycle goes, its coverage expands and more citizens becomes literate. Education will then serve as their asset in job hunting. In United States of America, a scholarship called PSAT/NMSQT (National Merit Scholarship Qualifying Test) are given to top qualifying students with high scores on the test. Some of the most successful people such as Bill Gates, Jeffrey Bezos and Steven A. Ballmer are all linked together by National Merit Scholarship or a college or corporate sponsored Merit Scholarship, according to Thought Co. Now, these well-known people are sponsoring scholarship programs such as the Gates Millennium Scholars Program and Bezos Scholarship Program.
More job Openings
If there is excessive growth in supply, counter it with a growth in demand to progressively draw them in an equilibrium. This probable solution will therefore necessitate two ways. First, to gain the cooperation of firms in opening up jobs via expansion or admission of part-time workers. Second, to attract international businesses to invest in our country, creating more infrastructures and jobs. Nevertheless, the first way has already been started, if pushed further, there isn’t still certainty of their cooperation. Though, if some agrees, it still wouldn’t be enough to cover all the supply of labor. The second possible way also has multiple downsides. According to Lamudi, having foreign ownership in the country can result to price hike and the abuse of agricultural lands. In the case of Canada, a fresh report covering 546 Canadian businesses as respondents was released by the Export Development Canada (EDC). It confirmed that business growth is domestically reinforced by the investment of foreign markets, as stated in Mentor Work. They believe foreign direct investment creates impacts on their international competitiveness by setting them as the main drivers of strategic growth and broadening. It even came to a point wherein businesses turned to foreign labor, while the rate of unemployment across some of its provinces went down, leading to a better economy according to Global News.
Free training regarding Entrepreneurship
The quantity of jobs available increases as new businesses emerge. Through free trainings, part of the labor force are being molded as future businessmen or entrepreneurs. Not only are they establishing a source of income for themselves or their successors but also, they are creating jobs for job seekers as well as offering a variety of goods in the market. However, this project requires more funding to expand nationwide.
In West Nigeria, a CBN Entrepreneurship Development Center program was implemented. It offers a 6-week training to aspiring entrepreneurs through the Entrepreneurship Development Center together with the Business Development Service, Tech Hub and Post Training Service, according to their website. AS Solarin Adebayo testified, “I learnt tactical approach to business. The training changed my mindset and I acquired managerial skill that increased my horizon. ”
Chosen Policy
The free training regarding entrepreneurship seems like a viable and an efficient option since it is applicable regardless of age. It should be open to all including people who quit school, never experienced going to school or anyone interested in entrepreneurship can attend. Though, it requires more fund, it’s effects should cover a wider range than that of the scholarship policy option. If it is successful, new businesses will start to grow and open more jobs. In the case of battling population growth, the knowledge gained by an attendee of the training can be pass on to their children or successors, gradually influencing them generation by generation and progressively molding consecutive generations of entrepreneurs.
