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 the middle 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 unemployed o 19% versus 17%

Poverty in the Employed ● Most poor people are found among the employed. ● The employed account for 68% in the poor population o 46% of the poor are fully employed o 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 = desperation o 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 poverty o “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 pay o 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 Agriculture o in order to raise the productivity of farmers, and income as well 2.Unemployment Insurance 3.Lower Taxes for small businesses

To sum it up... “Don’t count jobs, silly; think structural shift instead.” #chickensad