ECONOMIC PROBLEMS AS

OBSTACLES TO DEVELOPMENT

APPLIED ECONOMICS
GRADE 12
Major obstacles to development:

1 2 3

Pover ty And Unemployment Infla tion

Inequality

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 “
POVERTY AND INEQUALITY

poverty as the condition where a population is

only able to meet its basic subsistence needs
such as food, clothing, and shelter. Economic
inequality, which refers to the unequal access to

”
wealth and income, is a major factor which
brings about poverty.
- Todaro

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 ABSOLUTE POVERTY

severe deprivation of basic

human needs which include
food, safe drinking water,
sanitation facilities, health,
shelter, education, and
information and lack of access.
People who earn $1 (P50) or
less per day are considered to
experience absolute poverty.
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 ABSOLUTE POVERTY

In its 2015 Report, the

Philippine Statistics Authority
(PSA) determined that a family
of five needs to earn about
P9,000 monthly in order to
meet its basic needs.

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 ABSOLUTE POVERTY
Recently, the Philippine government
has implemented various programs
to address poverty.
Foremost of these is the Pantawid
Pamilyang Pilipino Program (4Ps)
which provides conditional cash
grants to poor families to improve
the health, nutrition, and education
of children.

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 The 4Ps is a human development measure of the Philippine

“
government patterned after the conditional cash transfer
(CCT) schemes in Latin American and African countries,
which have lifted millions of people from poverty.

The short-term objective: to pull people out of poverty by

providing them sufficient income to meet their needs.

”
The long-term objective: give these families access to
better education, health, and opportunities for livelihood
and employment.

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 “
UNEMPLOYMENT

To understand the problem of

unemployment, we must first be
familiar with the labor force in the
country. The latest figures (2016) put

”
the labor force of the Philippines at
around 68 million individuals aged 15
years old and over.
- Todaro

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 UNEMPLOYMENT

the portion of the labor force

who is willing to engage in
productive activities yet fails to
do so. A population with a high
unemployment rate means that
a large portion is unable to
engage in productive work.
Unemployment can hinder
economic development since the
human resources of the country
are not efficiently utilized.
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 FRICTIONAL UNEMPLOYMENT

occurs when a worker is

"between jobs," which means
that he or she has left a job
and is looking for another.

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 CYCLICAL UNEMPLOYMENT

Brought about by changes in

the economy or the business.
This is seen during a downturn
in the economy when there is
less demand for workers.
Recession, for instance, would
result in low demand,
decreased production, and low
income.
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 SEASONAL UNEMPLOYMENT

find themselves unemployed at

certain times of the year. This is
mainly seen in industries such as
tourism, retail, construction, and
agriculture. Farms often employ
more workers during the
harvest season because they
need the additional labor.
After the harvest, these workers
find themselves out of work.
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 STRUCTURAL UNEMPLOYMENT

This type of unemployment

arises when workers experience
longer periods of frictional or
cyclical unemployment. They
find themselves looking for
work for a longer time or
experience irregular periods of
employment and unemployment.

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 UNDEREMPLOYMENT
refers to the state of an individual being
employed, but his or her talents and
expertise are underutilized or are not
matched to the job. Mismatch.
Visible underemployment includes
workers who work for less than the
normal work hours and who look for
additional work.
Invisible underemployment includes
workers who work the normal hours or
even more in their jobs, but their talents
are underutilized or they receive
inadequate compensation for their work.
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 Employment and underemployment can be addressed by
improving the skills of the labor force and are trained in professions
which are vital to the economy. To ensure that future workers and

“
professionals are equipped with the needed skills and knowledge that
will enable them to become productive workers and contribute to our
economy.

One of these is educational reform with the implementation of the K to

12 curriculum which provides for 12 years of basic education which
will ensure that graduates are equipped with the necessary

”
knowledge and skills for lifelong learning, employment,
entrepreneurship, and further studies.

Strengthened technical and vocational education to give students the

option of learning technical skills to enable them to find work in
industries and even overseas.
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CURRENT TRENDS IN LABOR AND
EMPLOYMENT

Compressed

“ work week proposal

- problem of traffic: Congress proposed a
compressed 4-day work week where the
employee will work more than 12 hours a
day with a day-off during weekdays.

Caregivers,
practitioners
nurses, and
needed
medical
abroad
- in Japan where the percentage of
people getting older is increasing.
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- Todaro
” 16
UNDEREMPLOYMENT PROBLEM
FORECASTED TO DECLINE

because of a mismatch between what the

schools offer and what the industries
require, K to12 curriculum hoping to bridge
the gap, the future of K-12 graduates is
bright because they are already equipped
with courses required by industries.

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UNDEREMPLOYMENT PROBLEM
FORECASTED TO DECLINE

Those who will venture into college are

better off compared with those who finished
the old curriculum because of the outcomes-
based program and the spiral curriculum
where subjects taken in senior high are not
repeated but leveled-up for effective and
efficient learning.

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INFLATION

HYPERINFLATION effects:
1. Lowers the value of currency
2. Lowers consumer's purchasing power
3. Discourages investments and savings
4. Cost of borrowing by businesses and
individuals will also increase, as lenders
increase their interest rates in reaction to
increased prices
STAGFLATION - A period of high inflation,
slow economic growth, and high unemployment
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INFLATION
CPI (Consumer Price Index), a
statistical estimate based on
prices of selected commodities
regularly purchased by
households.
The inflation rate is then
determined by calculating the rate
by which the CPI has changed
over time.
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The government control of inflation to not reach unmanageable levels.

Monetary policies: controlling money supply and interest rates to control the circulation of

“
money in the economy and discourage people from excessive spending or borrowing.
The Bangko Sentral ng Pilipinas (BSP): implementing monetary policies in the country.

• The government can also control spending by imposing taxes on certain products, resulting
in reduced demand.
• The government also monitors the exchange rate of its currency against other foreign
currencies. Pays close attention to the exchange rate between the peso and the US dollar,

”
as an increased exchange rate results in increased prices for many products, particularly
imports.
• Finally, the government also imposes controls on the prices of commodities and wages.

The Department of Trade and Industry (DTI) imposes price ceilings on basic commodities and
monitors markets to ensure that sellers comply with the price controls.
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