Unemployment as a Developmental Issue in the Philippines: A Term Paper

This term paper, presented to Prof. Cherry Pink D. Barredo, examines unemployment as a significant developmental issue in the Philippines. It begins with an introduction outlining the problem's prevalence and impact, referencing key statistics and definitions from Hayes (2021) and Felipe et al. (2006). The paper highlights the social and economic costs of unemployment, including poverty, psychological problems, and unequal opportunities. It discusses the impact of the COVID-19 pandemic on unemployment rates, citing data from the Philippine Statistics Authority (PSA) CNN Philippines (2021). The literature review synthesizes findings from various researchers, including Felipe and Lanzon (2006), Tarriela (2006), Rutkowski (2015), Connolly (2014), and Brooks (2002), to explore the causes, consequences, and potential solutions to unemployment. The paper also discusses the importance of technology and sustained economic growth as strategies to address unemployment. The paper concludes by emphasizing the need to resolve this critical developmental issue.

Unemployment as Developmental Issue in the Philippines
A Term Paper presented to
Prof. Cherry Pink D. Barredo
In partial fulfillment of the Requirements for the Subject CD2:
Theories of Development
By:
Mendoza, Anna Louise (WONG: ENTREPRENUERIAL FAMILISM)
Perez, Jacinth S. (AMIN: TRANSITION TO PERIPHERAL CAPITALISM)
BSCD 1- A
June 2021

Table of Contents
Title Page
Title Page
Chapter 1. Introduction 3
Chapter 2. Review of Related Literature 7
Chapter 3. Analysis 11
References

Introduction
"When large number of men are unable to find work unemployment result."-Calvin
Coolidge.
Our country faces the same problems as any other country in the world. Poverty,
unresolved crimes, economic and environmental problems, etc. If avoided immediately, most of
them are easy to fix. However, these have not been avoided, and more problems have arisen
from this. One of these problems is unemployment. Unemployment is one of the common
problems that affect many people in the world, but it does not always bring happiness to the
millions of people looking for the best job. Unemployment is the most difficult part of life
because it's hard to look for a job and also the development in the society lags behind.
According to Hayes (2021), he defined unemployment that occurs when people
actively seeking jobs cannot find a job. Unemployment is often used to measure economic
conditions. The most common measure of unemployment is the unemployment rate, which is the
number of unemployed divided by the number of laborers. Also, Felipe et al. (2006) stated that
unemployment and underemployment rates highest in the Philippines key issues and key
indicators of weaknesses in so economical. They mentioned that around 4 million workers
(around 12% of workers labor force) unemployed and 5 million more (around 17% of employed
people) are underemployed. The workers' reserve army is a reflection of this occurs in the
economy, especially due to its inability to provide employment (especially in the formal sector)
with its growing workforce. The social cost of this mass unemployment ranges from loss of
income to severe psychological problems due to lack of employment and feelings of insecurity
about the future. Overall, this results in great social inefficiency.

Unequal opportunity is also one of the developmental problems of the
unemployment situation in the Philippines. It is the selection according to relation and not to its
ability. For all job seekers, the available jobs are not enough, especially in the Philippines.
Therefore, many Filipino workers find work abroad to meet their daily needs. Also, there are best
workers in our country that can help promote our country’s economic growth or development,
but they are found unemployed.
In addition, despite the relatively rapid growth in employment in the past decade,
the unemployment rate in the Philippines has remain high, twice that of neighboring countries.
Also, due to rapid population growth, increasing labor force participation rates, and the inability
to accept existing jobs, employment growth is not enough to reduce the unemployment rate.
Thus, unemployment problems lead to debt and poverty problems. Young people who have been
unemployed for a long time have found the wrong way to earn money. To get rid of the pressure
of unemployment, they accept alcohol or drugs and do crimes as well. The government must take
care of these people while increasing social spending. When the unemployment rate is very high,
there will be a budget deficit, which is due to the combination of the two, the decrease in tax
revenue and the increase in social spending. Therefore, in addition to these certain reasons, the
Philippines also face unemployment, which leads to a bigger development problem, namely
poverty. Unemployment is one of the causes of poverty and unemployment is also caused by
these factors.
Furthermore, the crisis in this country and the world in particular has caused
problems for the people and the economy. Due to the COVID-19 pandemic, many workers have
lost their jobs, and job seekers are unlikely to find a job. Although the government is doing its
utmost to help the country fight the epidemic and lead a normal life, it is not enough to alleviate

this problem. The unemployment rate continues to rise, which has also exacerbated poverty in
the Philippines.
Subsequently, the Philippine Statistics Authority CNN Philippines (2021) reported
that the unemployment rate in the Philippines has become very high in the first months of this
year. Due to the COVID-19 pandemic, 4.2 million Filipinos are unemployed.
The Philippine Statistics Authority (PSA) announced about 4 million Filipinos
unemployed in January 2021. This is higher than the 3.8 million unemployed in October 2020
and the 2.4 million in January 2020. The January 2021 figure equates to an unemployment rate
of 8.7%, as businesses struggle to stay open amid the coronavirus pandemic.
The unemployment rate also stood at
8.7% in October 2020. It remained stable in
January, as the labor force participation rate also
increased. The labor force participation rate, or
the number of people in the labor force relative to
the total population aged 15 and over, was 60.5%
in January, compared with 58.7% in October last year.
The employment rate in January 2021 which is 91.3%, corresponding to the rate for
October 2020. This means that 41.2 million
Filipinos have been employed out of the 45.2
million Filipinos currently employed, operational
in January 2021. Meanwhile, there are 6.6
million people who are underemployed or have
jobs but are looking for more to meet their daily

needs. This translated into a 16% higher underemployment rate in January. Last October, 5.7
million people were underemployed, with an underemployment rate of 14.4%.
In order to solve the unemployment and underemployment problems in the country,
especially today that we are facing an epidemic and the government had announced that this is
the new normal now. Technology is useful for everyone. All transactions, whether in work, in
school and everything we do depend on the use of technology. Therefore, digital skills should
and must be strengthened for those job seekers to keep up with the new normal.
In contrast, maintaining sustained economic growth is another way for the government
to solve the unemployment problem. When the economy grows, employers will be more willing
and able to hire more workers. This helps solve the unemployment problem. The President and
Congress can reduce the unemployment rate by directly creating jobs. They increased their
spending on government projects, just like what happened in the New Deal and the economic
stimulus plan. The best solution to unemployment is to increase spending on public works and
education.
On the other hand, this paper seeks to evaluate unemployment as developmental
issue in the Philippines. Nevertheless, unemployment has a huge impact in the society or in the
country and should be resolved.

Review of Related Literature
According to Felipe and Lanzon (2006), unemployment and underemployment are the
Philippines' most important problem and the key indicator of the weaknesses the economy.
Today, around 4 million workers (about 12% of the labor force) are unemployed and another 5
million (around 17% of those employed) are underemployed. The Reserve Army of workers is a
reflection what happen in our economy, because of the low capacity of providing job
opportunities especially in the formal sector to its growing labor force. The social cost of this
huge unemployment has range from social to psychological aspect of the lives of the people that
causes them to be stress in the future. In summary, it causes a massive social inefficiency.
According to Tarriela (2006), he stated that the Philippines have few jobs for its
population. The unemployment rate has been steadily increases from 8.4% in 1990 to 12.7% in
2003, (BLESS, 2003). Even to those who have a job there are difficult condition that they need
to overcome. In five employed workers there one underemployed, underpaid, or employed below
to his potential. As a result low job opportunities, many of the Filipinos are working abroad.
Employment abroad has been a great help to a lot of job-seeking Filipinos and one of the major
generator of foreign exchange in the country through remittances.
Rutkowski (2015), also study about the performance of the labor market here in the
Philippines from the perspective in the welfare of the workers. He argues that spreading of
poverty here in country affects labor policy. Also, labor market segmented into two the “good”
and “bad” jobs, which the unprivileged work in the latter. They are working in the informal,
casual, temporary and low-paid jobs. For example, not company based work and without
requirements to pass. An unprivileged person does not get a chance to benefit in any labor
policies that increases their wages and they do not get protection from the abuse of the employer.

These “bad jobs” is rampant in rural areas; their wages is barely can reach the minimum wages.
The most affected of the “bad jobs” are the uneducated people. However, labor regulations
should be simple and flexible that everyone would benefit especially the uneducated and
unprivileged young ones. He concludes that targeted training programs have the potential to
address the problem of the low skill in the poor workers. These training programs should be
developed in pilot basis and expanded if proven to be cost-effective.
Connolly (2014) also investigates the effects of education, inflation and GDP growth
in the unemployment in the Philippines. Several theories indicate that an increase in education
and consumption is associated with a decrease in unemployment. However, the result of paper
shows otherwise. The findings suggest that the country's labor force grows faster than its GDP.
Furthermore, the government highly invests in education, but focuses less on the availability of
jobs for future labor force participants. Because of this, there is an oversupply of potential
workers that would not only lead to more unemployment but underemployment as well. On the
other hand, even though all Filipinos can get a degree and finish college there is no assurance
that they can get a job because job opportunities are very low in our country. Unemployment has
been a developmental issue in the Philippines that cannot be eradicate. Mostly of the Filipinos
are unemployed and cannot sustain their daily needs. According to this research paper, some
theories are stating that an increase in education can lessen the unemployment in the Philippines
but the result of this study shows the opposite. However, the result of the research is true because
as we noticed and due to the experiences of our friends and acquaintances, after they graduate in
college they remain jobless. It is it should not be the increase in education but the increase in job
opportunities for the people because what is the use of the degree you finished if you cannot have
a job after it.

Brooks (2002), in his book is about Unemployment that has remained high in the
Philippines, at almost twice the level of neighboring countries, despite relatively fast
employment growth in the past decade. He argues that employment growth was not sufficient to
reduce unemployment because of rapid population growth and increased labor force participation.
The author concluded that employment growth and unemployment rate were strongly correlated
with the real GDP growth and lesser extent, negatively with the real minimum wage. The key
policy implications are that higher economic growth and moderation of increases in the real
minimum wage are required to reduce unemployment. The Philippines may and had encountered
a lot of problems. In the book the author discussed about unemployment which is a phenomenon
that occurs when a person who is actively searching for employment is unable to find work.
Years had passed but this issue is one of the most relevant problems that should be forecast. We
like this book because this analyses the factors behind unemployment in the Philippines, and
explained the employment growth and unemployment rate. This book also discussed the
performance of the labor market and its institutional features.
Urrutia, et.al (2017), this book is about unemployment and an unemployed citizen is a
huge problem in the Philippines. Despite the fact that employment in the Philippines has been
growing fast the past decade, still, many Filipinos are jobless. This book aims to generate a
mathematical model that can project the future values of unemployment rate in the Philippines
from 2015-2020 on a quarterly factors of unemployment rate are found to be labor force rate and
population. Fortunately, the authors of the book had discussed there aims on their study about the
unemployment in the Philippines. We all know that even there are a lot of projects that the
government and NGO’s has implemented we cannot deny that unemployment is still rising.

There are so many factors that affect unemployment example population growth and labor force
rate. As a result, some of Filipinos seeks better-paying jobs overseas.
Gleeson (2019) stated that unemployment affects the unemployed and his family not
only in his income but also the health and mortality in the family. Nevertheless, the effects of
unemployment stay for decades and also the effect of unemployment in the economy is severely
equal. A 1% increase in unemployment reduces the GDP by 2%. Also, the longer the
unemployment the more it become difficult to find a job for a worker. Both because employers
wary of the long-time unemployed and also because the unemployed workers lose job skills.

Analysis A
WONG: ENTREPRENUERIAL FAMILISM
Wong Siu Lun is an honorary professor in Hong Kong institute for the Humanities and Social
Sciences. Emeritus professor of Sociology in the University of Hong Kong. He was also the
director of the former Centre of Asian Studies from 1996 to 2010. Currently, he is the chairman
of the University Council of Hong Kong Shue Yan University and also a member of the Center
for Asian Studies of Chu Hai College of Higher Education. Wong started this theory with a
critique of the classical modernization theorists or interpretation of the traditional Chinese family.
In classical modernization literature, Chinese families are seen as a strong force of
traditionalism that promoted nepotism, weakened work force discipline, opposed the free market
selection of labor, weakened individual incentives to invest, blocked rationalization, and
inhibited the emergence of universalistic business norms that classical modernization researchers
advocated the discarding of the traditional Chinese family values in order to promote economic
development. However, Wong argues this kind of belief in Chinese family values; tracing the
influence of the family on the internal organization of Chinese enterprises in Hong Kong
especially through paternalistic managerial ideology and practice, nepotistic employment, and
family ownership he demonstrate that family has a positive impact in economic development. On
the other hand, instead of treating family as an antithetical to economic development, Wong
argues for an economically dynamic ethos of entrepreneurial familism. This ethos involves that
family is the basic unit of economic competition, providing the impetus towards innovation and
risk taking. Also, he argues that this ethos is that only applied in entrepreneurs but in the whole
society of Hong Kong.

As we know in this theory, family has a bigger part in the economic development of
Hong Kong. Family business has a big impact to increase their economic development. This
theory can be a very big help in our country especially in the unemployment rate here in the
Philippines. Giving jobs with your family members and relatives can be a better help to increase
employment rate and lessen unemployment growth. Entrepreneurial Familism builds unity and
trust within the family and it reflected in the country because family is the basic form of society.
This theory can be a great help if we enhance ourselves and strengthen our bond with our family.
However, unemployment has been a problem here in the Philippines despite of the
economic development here. Unemployment worsens since the start of the COVID 19 pandemic,
the unemployed people became high and it slow down the economy of the Philippines. As well
as, job opportunities are very low and cannot sustain the population of workers who is seeking a
job. On the other hand, to relate it to the theory of Wong's Entrepreneurial Familism theory,
unemployment can be lessening through family business. Development comes from within and
unemployment can be reducing through family business. It should start in us. Giving the
opportunity to work to your relatives and other family members can be a big help to them. To
also feed their own families and to provide their own needs. Providing jobs to your relatives can
be their motivation to build a business that will also help their other family members and
relatives, it’s a domino effect of helping each other. Especially, here in the Philippines that we
are consisted of different families and family really matters. It builds unity and trust within the
family as well as if we apply it to our country, if we treat each other as a family and giving fair
opportunities to others, the other people who can give a job will also give a fair opportunity to
others and so on.