CONT.

…
CUSTOMERS
 In economics the market may refer to the structure where the firm belong. In other disciplines, the word
“market” refers to the types of customer and their number as well

 Knowing and understanding your customers are essential to identify the service or good to present to the
market.

 Market segmentation – is categorizing your customers according to demographic and

geographic groups

 Demographics play an important role in knowing your customers. It describe the kind of customers
you have in terms of gender, age and income.
 Geographic segment refers to consumers belonging to a certain place. They can be classified as
urban or rural areas, western, eastern, southern and northern parts of a certain country or region,
and it may also refers to different provinces or cities.
SUPPLIER

 Is defined as the sources of materials used in production by a producer, a seller, or a manufacturer.

 Before one enters into a business, one needs to first determine the sources of raw materials. If one is
getting a machine for factory or business, one needs to see the specification of capital inputs.

COMPETITORS SUBSTITUTES
 There are three types of competitors
 Are goods that can replace other
 Competitors have the same qualities and goods because of similarities,
characteristics appearance, use, among others.
 Competitive advantage
 Colluding
LABOR SUPPLY AND LABOR DEMAND

 Labor Supply - Is comprised of the available labor force who are willing
and able to work, and are waiting deployment.

 Labor Demand - Refers to the industry’s total available job vacancies from
the previous cycle or year up to the present.
LABOR SUPPLY AND POPULATION GROWTH
 Labor force refers to the total number of people identified as employed and unemployed.
 The term employed represents those individuals who have a job in either full-time or part-time capacity.
 The term unemployed, on the other hand, refers to the people who are presently searching for a job;
workers who are temporarily laid off but are waiting to be called for a job, and applicants who are about
to start a new job.
 Finally, underemployed describes those workers who are better skilled than what their current jobs
require. Underemployment happens when there is a mismatch in skills and capabilities or there is over
qualification. A civil engineer doing manual construction is an example of underemployment.

 Population Growth is the increase in the total number of human beings in the country.
 A census, or the official collection of population information, is locally conducted once every five years buy
Philippine Statistics Authority (PSA).
 How does population growth affect the labor force?
An increase in population potentially increases the labor supply. However, the impact of
population growth largely depends on the increase in the number of population.
LABOR FORCE PARTICIPATION RATE EQUATION

𝐿𝑎𝑏𝑜𝑟 𝐹𝑜𝑟𝑐𝑒
Labor Force Participation Rate = x 100
𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝐴𝑔𝑒 𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛

 The Labor Force Participation Rate approximates the percentage of the

population that is usually a part of the labor pool. A population growth affects the
labor force only in as much as there is growth in the working age population. The
working age in the Philippines is 15 to 64 years old.
UNEMPLOYMENT AND WAGES

 Full employment is another macroeconomic goal of a nation. In reality however there are imbalances
in the economy (also known as market failures) that makes it impossible to achieve a state of zero
unemployment.
 The unemployment rate measures the percentage of individuals in the labor force who do not have a
job. It is calculated using the equation below:

𝑈𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑚𝑒𝑛𝑡
Unemployment Rate = x 100
𝐿𝑎𝑏𝑜𝑟 𝐹𝑜𝑟𝑐𝑒
FOUR TYPES OF UNEMPLOYMENT
 Frictional unemployment, which is temporary unemployment that is a result of people having
in between jobs or being in transition.

 Structural unemployment, which is a type of unemployment that results from technology

changes and upgrades that require specialized skills.

 Cyclical unemployment is caused by the upturn and downturn in the business cycle.

 Seasonal unemployment, which happens in industries with peak and lean seasons. Examples
would be tourism and farming. The peak season for most beach destinations in the country is in the
summer during which time, there is a higher demand of workers in businesses such as hotels, travel
and restaurant in the tourist areas.
FACTOR INCOME
 Just as business earn profit in exchange for goods and services, factors of production earn what is
called as factor income. The factor income is a labor wage.

 Wage is what a worker gets as compensation for hours of labor. In the Philippines, employees are
paid in salaries instead of wages.

 The difference between wages and salaries is that wage measures the hourly or daily rate, salary
refers to aggregate amount received.

 Minimum Wage is the least possible amount firms must pay their employees as mandated by the
country’s labor laws. Minimum wage in the Philippines varies per region and across sectors.
 The Department of Labor and Employment (DOLE) is responsible for the setup and regular review of
minimum wages in the Philippines.
LABOR MIGRATION AND OVERSEAS FILIPINO WORKERS (OFW)

 Filipino working abroad are formally referred to as Overseas Filipino Workers

(OFWs). Choosing a work in a foreign country is the concept of labor migration.
Filipino labor migration is driven by the lack of opportunities locally and encouraged
by better pay abroad.
 Globalization is another driver of increased labor mitigation. It encourages
interdependence of factors of production across the world driven by advances in
technology.

 Labor policies in the Philippines are governed by the labor code implemented by
government agencies such as DOLE for locally employed individuals and the
Philippine Overseas employment Administration (POEA) for OFWs
 𝐿𝑎𝑏𝑜𝑟 𝐹𝑜𝑟𝑐𝑒
Labor Force Participation Rate = x 100
𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝐴𝑔𝑒 𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛

𝑈𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑚𝑒𝑛𝑡
Unemployment Rate = x 100
𝐿𝑎𝑏𝑜𝑟 𝐹𝑜𝑟𝑐𝑒
EXERCISE

 Use the given data calculate the labor force, employment rate, and labor force participation rate.
Given: Employment individuals = 35 800 000
Unemployment individuals = 8 500 000
Working age population = 50 000 000

A. Labor Force = Employed + Unemployment individuals

= 35 800 000 + 8 500 000 = 44 300 000 or 44.3 Million

𝑈𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑚𝑒𝑛𝑡 𝐿𝑎𝑏𝑜𝑟 𝐹𝑜𝑟𝑐𝑒

B. Unemployment rate = x 100 C. Labor force participation rate = x 100
𝐿𝑎𝑏𝑜𝑟 𝐹𝑜𝑟𝑐𝑒 𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝐴𝑔𝑒 𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛

8 500 000 44 300 000

= 44 300 000 x 100 = 19.2 % = 50 000 000 x 100 = 88.6 %
SEATWORK

 Use the given data calculate the labor force, employment rate, and labor force participation rate.
Given: Employment individuals = 43 287 000
Unemployment individuals = 9 500 000
Working age population = 55 300 000

Given: Employment individuals = 73 087 000

Unemployment individuals = 10 501 000
Working age population = 85 390 000
SEATWORK

 Use the given data calculate the labor force, employment rate, and labor force participation rate.
Given: Employment individuals = 43 287 000
Unemployment individuals = 9 500 000
Working age population = 55 300 000

A. Labor Force = Employed + Unemployment individuals

= 43 287 000 + 9 500 00 = 52 787 000 or 52.8 Million

𝑈𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑚𝑒𝑛𝑡 𝐿𝑎𝑏𝑜𝑟 𝐹𝑜𝑟𝑐𝑒

B. Unemployment rate = x 100 C. Labor force participation rate = x 100
𝐿𝑎𝑏𝑜𝑟 𝐹𝑜𝑟𝑐𝑒 𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝐴𝑔𝑒 𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛

9 500 000 52 787 000

= 52 787 000 x 100 = 18 % = 55 300 000 x 100 = 95.5 %
ASSIGNMENT #

 Research/study about the contemporary Economic Issues Facing the Filipino

 Define entrepreneurship and differentiate from an employee.
 What are the types of Business Structures.
 How easy is it to register a new business in the Philippines?