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Unemployment

time involved in looking for a work) Includes:    people entering the market for first time people reentering after an absence people who have quit jobs in search for new ones Structural Unemployment    Unemployment caused by structural changes in the economy that eliminate certain jobs Changes occur due to      technological progress shifts in demand for goods and services problem: mismatch between the skills of prospective workers and skills needed in vacant jobs solution: training or additional education long-term (policy-makers regard this kind as a more serious problem) .e.BASIC CONCEPTS AND DEFINITIONS Frictional Unemployment    Temporary unemployment caused by the normal workings of the labor market (i.

 Cyclical Unemployment  Unemployment caused by the drop in economic activity that occurs during the contraction phase of the business cycle  Unemployment rate  Percentage of the total labor force that is unemployed  UR = (U/LF)*100  Labor force (in the Philippines)  include all people 15 years old and over as of their last birthday who are either employed or unemployed  Labor force participation rate (LFPR)  % of total number of persons in labor force to total population 15 years old and over  LFPR = (LF/P)*100 .

. and/or would be available and willing to take up work in paid employment or self employment within two weeks after the interview date. had no job or business during the basic survey reference period. i.e.. and (e) waiting for rehire/job recall.e.. OR not seeking work due to the following reasons: (a) tired/believe no work available.e. (d) bad weather. AND currently available for work. .Unemployed (in the Philippines)  The unemployed include all persons who are 15 years old and over as of their last birthday and are reported as:    without work.e. AND seeking work. i. were available and willing to take up work in paid employment or self employment during the basic survey reference period. the discouraged workers who looked for work within the last six months prior to the interview date. i. i.. © temporary illness/disability. had taken specific steps to look for a job or establish a business during the basic survey reference period. (b) awaiting results of previous job application.

e. malnutrition  Unproductive  People who are employed who get caught in long hrs.Kinds of Unemployment  Open Unemployment   Voluntary unemployed – those unwilling to accept jobs for which they could qualify Involuntary unemployed – situation in w/c job seekers are willing to work but there are no available jobs  Underemployment  Persons are working less than they would like to work (i. part-time jobs)  Disguised Unemployment  People who are required to work more hours work less hours (tasks are split among resources –typically labor)  Hidden Unemployment  People who in engage in second-choice nonemployment activities  Impaired  People who are sick. of traffic .

MODELS OF UNEMPLOYMENT  Traditional Competitive Market Model  Assumption: flexible wages & full employment  Limitations:  assumption of fully flexible wages  unemployment persistent in LDCs esp. commodity. due to urban migration  Keynesian Model  Increase gov’t spending to reach full employment  As ouput increases. employment also increases  Limitations:  Increase in G may result in crowding-out of private investment w/c may lead to decrease in output & employment levels  Factor. money markets in LDCs not well developed  Unemplymnt persists in LDCs due to urban migration .

Y increases  Price-incentive model           Deals with factor price distortions Price of capital is distorted bec: Capital subsidies Overvalued ER Tax incentives Interest rate ceilings Price of labor is distorted bec: Minimum wage Unions collective bargaining Multinational hiring practices . Output-employment Macro Model     Conflict argument K-intensive T => Y increases but at expense of N Congruence argument L-intensive T => more N is generated.

the Labor and Employment Action Plan provides for the following:      Improving workers’ competency. To address these problems. and in particular. providing opportunities for the youth to acquire skills and competencies required by the market Enhancing worker-employer relationship and improving labor welfare both here and abroad Facilitating access of Filipino workers to both the local and overseas labor markets Advocating flexible work and employment arrangements in tune with the requirements of the globalizing labor market which now widely practice subcontracting and outsourcing Quick action on labor cases and the promotion of alternative dispute .POLICIES (Based on the MediumTerm Development Plan 2004-2010)  The last chapter of Part 1 addresses the problems of the labor sector.7% unemployed) and in the urban areas (2/3 of the unemployed) and cites the jobs-skills mismatch as one of the major causes. particularly the high unemployment rate among the youth (48. productivity and work values.

10-point Agenda The creation of six million jobs in six years via more opportunities given to entrepreneurs. . tripling of the amount of loans for lending to small and medium enterprises and the development of one to two million hectares of land for agricultural business.

559 4.425 4.4 1999 2.397 5.9 2000 2.1 Year Source: National Statistics Office .203 5.900 5.561 8.030 5.3 15.899 5.744 11.686 8.6 1996 2.5 2005 4.818 9.945 9.724 10.9 1998 2.6 16.3 16.3 16.9 2003 3.597 4.Employment Status of Household Population 15 years old and over of 1st Quarter: 1995-2005 Unemployed Underemployed Unemployment Rate Underemployment Rate 1995 2.098 11.393 4.3 21 1997 2.488 5.424 7.8 18.849 10.5 21 2001 3.6 21.522 11 17.657 8.9 2002 3.1 2004 3.741 5.2 21.8 20.

Underemployed Household .

Unemployed Household .

Success in the workplace (Outliers. 1955. 1953. Vinod Khosla Jan. Steve Ballmer March 1956  Apple Computer: Steve Jobs Feb. Andy Bechtolsheim Sept 1955  Where you were born  What parents did for a living  Circumstances of upbringing  Tradition and attitude we inherited . Paul Allen Jan. 1954. 1955. Gladwell 2008)  When you were born  Microsoft: Bill Gates Oct. 1954  Sun Microsystems: Scott McNealy Nov. 1955  Novell (software firm): Eric Schmidt April 1955  Computer legend: Bill Joy Nov.