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Module 6-in-ABM-Applied Economics

Bachelor of Science in Psychology (University of San Jose - Recoletos)

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Applied SENIOR
HIGH
Economics SCHOOL

Self-Learning
Module
Basic Economic Problems in 6
the Philippines
666
Quarter 3

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Applied Economics
Quarter 3 – Self-Learning Module 6: Basic Economic Problems in the Philippines
First Edition, 2020

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Applied SENIOR
HIGH
SCHOOL
Economics

Self-Learning
Module

6
Quarter 3

Basic Economic Problems

in the Philippines

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Introductory Message

For the facilitator:

Welcome to the Senior High School – Applied Economics Self Learning Module
on Basic Economic Problems in the Philippines!

This Self-Learning Module was collaboratively designed, developed and

reviewed by educators from the Schools Division Office of Pasig City headed by its
Officer-in-Charge Schools Division Superintendent, Ma. Evalou Concepcion A.
Agustin, in partnership with the City Government of Pasig through its mayor,
Honorable Victor Ma. Regis N. Sotto. The writers utilized the standards set by the K
to 12 Curriculum using the Most Essential Learning Competencies (MELC) in
developing this instructional resource.

This learning material hopes to engage the learners in guided and independent
learning activities at their own pace and time. Further, this also aims to help learners
acquire the needed 21st century skills especially the 5 Cs, namely: Communication,
Collaboration, Creativity, Critical Thinking, and Character while taking into
consideration their needs and circumstances.

In addition to the material in the main text, you will also see this box in the
body of the module:

Notes to the Teacher

This contains helpful tips or strategies that
will help you in guiding the learners.

As a facilitator you are expected to orient the learners on how to use this
module. You also need to keep track of the learners' progress while allowing them to
manage their own learning. Moreover, you are expected to encourage and assist the
learners as they do the tasks included in the module.

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For the learner:

Welcome to the Applied Economics Self Learning Module on Basic Economic

Problems in the Philippines!

This module was designed to provide you with fun and meaningful
opportunities for guided and independent learning at your own pace and time. You
will be enabled to process the contents of the learning material while being an active
learner.

This module has the following parts and corresponding icons:

Expectations - This points to the set of knowledge and skills

that you will learn after completing the module.

Pretest - This measures your prior knowledge about the lesson

at hand.

Recap - This part of the module provides a review of concepts

and skills that you already know about a previous lesson.

Lesson - This section discusses the topic in the module.

Activities - This is a set of activities that you need to perform.

Wrap-Up - This section summarizes the concepts and

application of the lesson.

Valuing - This part integrates a desirable moral value in the

lesson.

Posttest - This measures how much you have learned from the
entire module.

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EXPECTATIONS

After going through this module, you are expected to:

1. identify the basic economic problems of the country;
2. discuss the causes of economic problems; and
3. explain how applied economics can be used to solve economic problems.

PRETEST

Directions: Choose the letter of the best answer. Write the letter of your answer on a
separate sheet of paper.

1. Which of the following is an economic problem?

a. Poverty
b. Unemployment
c. Traffic jam in Metro Manila
d. All of the above
2. What is unemployment?
a. People who are available for work but do not find any jobs.
b. These are the people who have no work.
c. It refers to a person who leave their current job.
d. All of the above
3. Which of the following is NOT TRUE about poverty?
a. It is a condition where people’s basic needs for foods, clothing, and
shelter are not being met.
b. It occurs when people do not enjoy a certain minimum level of
living standards as determined by a government.
c. It is a state which the income for a family/individual is not enough
to sustain the basic food and non-food requirements.
d. None of the above

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4. Which of the following is a cause of poverty?

a. Exposure to risk such as natural disasters

b. High inflation during crisis

c. Both A and B are correct

d. None of the above

5. Which of the following is a cause of unemployment?

a. Due to people moving between jobs

b. Fewer jobs available in the market

c. Both A and B are correct

d. None of the above

RECAP

Directions: Differentiate and give a real-life scenario of trade-off and opportunity cost.
Write your answer in the space provided below.

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LESSON

For the past discussions, we are dealing with scarcity as the main economic
problem. Economics is deeply rooted with this problem. It is the source of what we
are experiencing today. Hence, economists use applied economics to come-up with a
policy to lessen the risk of the problem. For today’s lesson, we will discuss the basic
economic problems in the country and its causes.

Economic Problem
Economic problem exists because of imbalances of resources and satisfaction
of human needs and wants. Resources are limited to suffice the unlimited desires of
the society. Because of this, all societies are not excused with the economic problem.

Philippines is one of the competitive countries in the world. In the past years,
the economy has been increasing and stable. According to the study of World Bank
in 2019, the Philippine economy remains strong and is projected to grow 5.8% in
2019, before recovering to 6.1% and 6.2% in 2020 and 2021, respectively.

Filipinos are very proactive to attain these figures. However, there are
hindrances to meet this goal –and these are economic problems. It is hard for the
Philippines to fully eradicate poverty, unemployment and other problems because of
the resources.

Unemployment
As per NSCB Resolution No. 15 dated October 20, 2004, 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.

The latest unemployment report posted by Philippine Statistics Authority

(PSA) was in April 2020. According the report, unemployment rate increased to 17.7
percent with 7.3 million unemployed Filipinos in the labor force in April 2020. This
is a record high in the unemployment rate reflecting the effects of Corona virus
disease 2019 (COVID-19) economic shutdown to the Philippine labor market.
Unemployment rate in January 2020 was 5.3 percent, while in April 2019 it was
recorded at 5.1 percent. This global pandemic has a great effect not only in our
country but the rest of world. Let’s us find out what are the causes of high
unemployment.

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Major Causes of Unemployment

There are reasons why unemployment occurs. These causes are categorized
as structural, cyclical, frictional, and seasonal unemployment.

1. Frictional Unemployment

It is transitional unemployment due to people moving between jobs because

of the many factors. Frictional unemployment can be both voluntarily leaving from
their jobs and new entrants in the labor market. Workers quitting their job to look
for better pay adds to frictional unemployment. In other cases, workers may resign
from their job to go back to school or learn a new skill because they believe they need
the skill to earn more income. Others might leave the workforce for personal reasons,
such as to care for a family member, sickness, retirement, or pregnancy.

2. Structural Unemployment

This happens when there is a long-term decline in demand in an industry

leading to fewer jobs as demand for labor falls away. This type of unemployment
exists because though jobs are available, there’s a mismatch between what
companies need and what available workers offer. Technology tends to worsen
structural unemployment. Jobs on a production line being replaced by robots e.g.
motor manufacturing, online banking and online retailing. Thus, structural
unemployment is long-lasting unemployment due to shifts in an economy.

3. Cyclical Unemployment

Cyclical unemployment is the impact of economic recession or expansion on

the total unemployment rate. This is also known as Keynesian unemployment or
demand-deficient unemployment. During recession, there’s an increase in
unemployment because of business closures and failures that would result to mass
lay-offs. Firms are likely to reduce employment to cut costs and/or maintain profits
– this is called “labour shedding" or “down-sizing"

4. Seasonal Unemployment

The concept of seasonal unemployment describes a situation when workers

experience unemployment at certain times of the year when the demand has
decreased. Although unemployment is always problematic, the upside is that
seasonal unemployment doesn’t last–eventually, the peak season of a given industry
arrives and many workers become employed once again.

Many workers adapt to seasonal unemployment by working quite a bit when

demand is high and saving up much of their earnings, then living off of those savings
during their seasons of unemployment. Employment opportunities are offered only
during holiday seasons, increase in number of tourists, and agriculture.

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Poverty
Basically, poverty is a condition where people’s basic needs for foods, clothing,
and shelter are not being met. In the final report of Family Income and Expenditure
Survey (FIES) in 2018, the poverty incidence among population, or the proportion of
poor Filipinos whose per capita income is insufficient to meet their basic food and
non-food needs, is now estimated at 16.7 percent. This translates to about 17.7
million Filipinos living in poverty. (PSA, 2020). The poverty incidence has been
decreased throughout the years. This is a good indicator that the economy is really
performing.

Major Causes of Poverty

1. Corruption

The World Bank recognizes the harmful effects of corruption. Public sector
corruption is defined as the abuse of public power for private benefit. Corruption
refers to preferential access to public goods and services, gratuitous insuring of
public procurement and contracts, illegal hiring in the public sector, bribery or
grafting, abuse of official information, inconsistent application of rules etc.

2. Education

Poverty is not only a problem of low incomes but it is a multidimensional

problem that includes low access to opportunities for developing human capital and
education. Poor countries increase their poverty level due to lack of training skills,
productive knowledge and transforms human beings into more valuable human
capital and education. Poverty levels are strongly linked to educational attainment.
Two-thirds of poor households are headed by people with only an elementary school
education or below. Access to quality education is identified as a key pathway out of
poverty. Without proper training for the respective skills and knowledge in the work
force such as read, write, communicate and be able to choose different alternative
choices in more informed way would lead to low earnings and therefore increase
poverty level.

3. Natural and Geographical Characteristics

Many countries are inherently poor due to their geographic characteristics

that predispose them to weak economic growth. In the Philippines, the majority live
in rural areas and work in the agriculture sector. Asian Development Bank (ADB)
suggests that there’s a need of agricultural development for the farmers and
fishermen to generate more income. Also recurrent shocks and exposure to risks
such as economic crisis, conflicts, and natural disasters are the main drivers of the
poverty in the country.

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4. Ineffective Governance & Government Policies

The ineffective local governance and government policies seem to prevent the
chronically poor from escaping the poverty trap. In time of high inflation, people can’t
afford to buy goods and services that they need. ADB also highlight that there’s a
high level of population growth in the country. Most large families, with six members
or more, are having difficulties to cope with every living. The government needs to
put effort in creating jobs, quality and accessible education, strong macroeconomic
policies, and programs to alleviate poverty.

ACTIVITIES

Activity 1: Economic Problem

Directions: Enumerate the effects of the above-mentioned economic problems to
individuals and economy. Write your answer in the table below.
Economic Problem Effects to Individuals Effects to the Economy

Unemployment

Poverty

Activity 2: My Policy!
Directions: Below are some of the economic problems in the Philippines. Think of
ways or policies to solve these problems by answering the basic economic questions.

Economic What to Produce? How to Produce? For whom to

Problem Produce?
Traffic System in
Metro Manila

Housing
Problem/
Informal Settlers

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WRAP-UP

To summarize what you have learned in the lesson, answer the following
questions:

1. What are the basic economic problems of the country?

2. What are the causes of poverty?
3. What are the causes of unemployment?

VALUING

Reflect on this!

If you were the President of the country, what economic problem do you want
to solve first? Why?

POSTTEST

Directions: Identify the following terms in each statement. Write your answer in the
space provided.

____________1. It refers to persons in the labor force who are reported as without
work and currently available for work.

____________2. A condition where people’s basic needs for foods, clothing, and
shelter are not being met.

____________3. It is a type of unemployment caused by economic recession or

expansion.

____________4. It is an unemployment due to people moving between jobs because

of the many factors.

____________5. It is a report conducted by Philippine Statistics Authority about the

poverty incidence of the country.

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KEY TO CORRECTION

Survey (FIES)
5. C 5. Family Income and Expenditure
4. C 4. Frictional Unemployment
3. D 3. Cyclical Unemployment
2. D 2. Poverty
1. D 1. Unemployment
PRETEST POSTTEST:

References
Agarwal, Prateek. "Seasonal Unemployment." Intelligent Economist. May 21, 2020. Accessed July 8,
2020. https://www.intelligenteconomist.com/seasonal-unemployment/#seasonal-
unemployment-definition.

"Cyclical Unemployment." Investopedia. April 13, 2020. Accessed July 8,

2020https://www.investopedia.com/terms/c/cyclicalunemployment.asp.

Government of the Philippines. Philippine Statistics Authority. Technical Notes on the Labor Force
Survey. Accessed July 8, 2020. http://www.psa.gov.ph/article/technical-notes-labor-force-
survey2012-08-16-1659

Government of the Philippines. Philippine Statistics Authority. Technical Notes on the Labor Force
Survey. Employment Situation in April 2020. Accessed July 8, 2020.
https://psa.gov.ph/content/employment-situation-april-2020

Government of the Philippines. Philippine Statistics Authority. Updated 2015 and 2018 Full Year
Official Poverty Statistics. Released June 4, 2020. Accessed July 9, 2020.
https://psa.gov.ph/poverty-press-releases/nid/162559

Kagan, Julia. "How Frictional Unemployment Occurs in an Economy." Investopedia. May 20, 2020.
https://www.investopedia.com/terms/f/frictionalunemployment.asp.

Kenton, Will. "Structural Unemployment." Investopedia. May 27, 2020. Accessed July 8, 2020.
https://www.investopedia.com/terms/s/structuralunemployment.asp.

"Philippines Economic Update October 2019." World Bank. Accessed July 8, 2020.
https://www.worldbank.org/en/country/philippines/publication/philippines-economic-
update-october-2019-edition#:~:text=Amidst rising global uncertainties, the,in 2020 and 2021,
respectively.&text=In the long-term, promoting,poverty reduction in the Philippines.

"The_economic_problem." Economics Online. January 25, 2020. Accessed July 8, 2020.

https://www.economicsonline.co.uk/Competitive_markets/The_economic_problem.html.

"Unemployment - Main Causes of Unemployment: Economics." Tutor2u. July 01, 2020. Accessed July
8, 2020. https://www.tutor2u.net/economics/reference/unemployment-causes-of-
unemployment.

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