Unemployment Has No Welfare Significance

Adeva, Anchoris, Pangilinan (Group 2)

“ HOW GOOD IS UNEMPLOYMENT AS A MEASURE OF WELFARE IN A DEVELOPING COUNTRY?”

… if the principal concern of the government and its critics is to relieve the poverty of the vast majority and

to pull them into themiddle class, then the unemployment rate is actually a

bad statistic to focus on.

Statistics● Poverty incidence is worse

among the employed than the unemployed.o 23% versus 17%

● This comparison in itself proves that employment/unemployment isn’t a reliable statistic to focus on in gauging poverty.

● Poverty incidence among the fully employed is almost the same as the unemployedo 19% versus 17%

Poverty in the Employed● Most poor people are found

among the employed.● The employed account for

68% in the poor populationo 46% of the poor are fully

employedo This reflects the poor

quality of jobs that are available

● If the fully employed are still experiencing poverty, what does it say about the productivity of jobs in our country?

So why are there more poor employed than unemployed?

Analysis● “In rich countries, once a person loses a job,

unemployment insurance and welfare payments kick in, which allow her to devote herself full time to her job search.”o Because they have these insurances and

payments to fall back on, they can afford to look for high productivity jobs.

Analysis● On the contrary, no such social or unemployment

insurance exists in a developing country like the Philippines.

● No social or unemployment insurance = desperationo The poor must find work no matter how low the

pay and productivity, thus the high poverty incidence among the employed.

Conclusion● Adding job opportunities won’t help in relieving

povertyo “It is the quality of jobs that matter for the poor…”o More people would have jobs, but if these are still

low-productivity employment, then there won’t be changes in poverty statistics.

● The country’s employment structure should be changed from low to high-productivity employment.

Analysis● Informal sector jobs

o Vending, hawking on the streets, street food, etc.o Easy to enter into these jobs because there are

low skill-requirements along with low payo Some economists termed this “disguised

unemployment”

“The poor cannot afford to be unemployed: in the extreme, they must employ themselves.”

Analysis● On the other hand, the unemployed is more than

80% likely not to be poor.o “...it is people with savings, who come from

better-off families, and who have better qualifications and prospects (e.g., college graduates) that have both the incentive and the means to support themselves through a spell of full-time job-hunting.”

● Unemployment is largely a middle-class phenomenon.

Policy Recommendations

1.Industrialization of Agricultureo in order to raise the productivity of

farmers, and income as well2.Unemployment Insurance3.Lower Taxes for small businesses

To sum it up...“Don’t count jobs,

silly; think structural shift

instead.”

#chickensad