Factors Causing Unemployment

7 July 2016

Even with a booming economy, there are still some countries experiencing the imminent problem of unemployment. This paper analyzes the major factors affecting the high unemployment rate in the Philippines. The country has showed some positive progress on their economy; however, its unemployment rate still ranks highest among its neighboring Southeast Asian countries.

Unemployment affects so many aspects of the economy, so knowing the root causes of unemployment will help the country’s government to act quickly in response to fluctuations in unemployment may be able to blunt the effects of an economic downturn or maximize the positives of an improving economy. GDP GROWTH AND UNEMPLOYMENT RATE Philippines met its government projections of 6%-7% growth range; the country’s gross domestic product (GDP) growth increased to 6. 6% in 2012 compared to 3. 9% in 2011 (Central Intelligence Agency, 2013).

Factors Causing Unemployment Essay Example

Despite the Philippines’ economy doing well of late in growing its GDP, the country still faces enormous challenges in generating more jobs and quality employment for its people. Based on the July 2012 Labor Force Survey (LFS), the unemployment rate in the country is 7% (National Statistics Office, 2013). The unemployment figures for the Philippines in 2012 are among the worst in Asia, higher than its South-East Asian neighbors according to the Bureau of Labor and Employment Statistics (BLES) of the country (Nepomuceno-Rodriguez, 2012).

The disparity between the high GDP growth and the unemployment rate attributed the result to the relatively slower economic growth of the country. Most of the unemployed in the Philippines by educational attainment: 21. 7% were college graduates, 13. 6 percent were college undergraduates, and 32. 8 percent were high school graduates (National Statistics Office, 2013). By understanding what are factors affecting unemployment, it can give the country’s government an overview on how respond on this specific economic problem.

With the worsening economic problem, several reasons why unemployment is high in the Philippines are identified: rapid population growth, lack of quality education, and environmental factors. FACTORS CAUSING HIGH UNEMPLOYMENT RATE Rapid Population Growth The more probable cause of unemployment in the Philippines is the unavailability of jobs provided. With an estimated population growth rate of 1. 84%, the country’s population will be approximately 105 million in the near future which is ranked as 13th compared to the world (Central Intelligence Agency, 2013).

There are millions of people needed jobs and only few can provide one. Overpopulation is one of the key factors in the growing unemployment in the Philippines. The growth of population directly encouraged the unemployment by increasing the labor force. As a relative effect, the country showed a high total dependency ratio rate of 61. 4% (Central Intelligence Agency, 2013). As we discussed in class, the Vicious Circles of Poverty Theory in relation to population growth states that the poorest countries also tend to have the highest dependency ratios that is, the percentage of population that is not of working age.

The rapid increase in the population indirectly affected the unemployment situation by reducing the resources for capital formation. As a consequence, more resources get used up in private consumption such as food, clothing, shelter and son on in public consumption like drinking water, electricity medical and educational facilities. This has reduced the opportunities of diverting a larger proportion of incomes to saving and investment. Thus, population growth has created obstacles in the way of first growth of the economy and underdeveloped the growth of job opportunities.

Lack of Quality Education One cause of unemployment in the Philippines may be lack of quality education. With the increasing demands of the fast developing world, it is really hard to find jobs when an individual is not a graduate of a particular skill or profession. Though the Philippines is a literate country, the country has literacy rate of 95. 4% for the total population which means that ages 15 and over can read and write (Central Intelligence Agency, 2013).

However, this is not enough to be able to reach the qualifications of most in-demand jobs because even mere sales ladies nowadays are required to have at least 1-2 years in college education. The country faces a competitive world and it’s a must to reach the norms of development. Thus, a high educational attainment, which most Filipinos lack, is one way to uplift the unemployment rate of the country. Environmental Factors Some areas of the Philippines solely rely on agricultural jobs as their means of employment. 32% of the labor force is in agriculture, according to the CIA World Factbook.

But, agriculture in the country is basically seasonal affair and heavily affected by natural hazards like any other Southeast Asian nations. World Bank has identified the Philippines as one of the most hazard-prone countries in the world; the Philippines also sits along the Pacific Ring of Fire, an area prone to typhoons, floods, drought, earthquakes and volcanic activity (The World Bank, 2013). The aftermath of these calamities heavily affect the labor force of the country. For example, devastations caused by massive flooding due to super-typhoons will affect areas that rely on agricultural lands.

CONCLUSION The Philippines is booming, but the current growth trajectory is not significantly job-generating. The country’s unemployment crisis will remain unresolved without a major structural change in the economy like an industrial transformation and an agricultural modernization; provide quality education for its citizen to have better job opportunities; and improving governance and fighting corruption to encourage foreign investors. As of 2012, there is only 15% of the labor force in industrial sector and 32% in the agricultural sector (Central Intelligence Agency, 2013).

Because of the Philippines’ geographical location, it should build more infrastructures for the people that would give them a better job opportunities and less vulnerability to sudden income difficulties and natural disasters; and most importantly, the government should re-focus on the country’s industrialization program that encourages value-addition on manufacturing or services. Philippines is constantly aiming to improve the quality of education for its people. As shown to the government’s 2013 expenditure, the Department of Education was the most funded with 230 Billion Pesos for its budget (Department of Budget, 2013).

However, Philippines, infamously known for corrupt government officials, the country scored 32 out of 100 in the 2012 corruption perception index as scores range from 0 (highly corrupt) to 100 (very clean) (Transparency International, 2013). This proves that funds given to the department may not be allocated properly and having a transparent and accountable government demonstrate a stable economy which boosts foreign investors to invest to the country which will create more job opportunities for the people. REFRENCES

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