CHAPTER II

Conceptual Literature

Unemployment rate is the percentage of workers in the workforce without jobs. A

high unemployment rate weakens an economy, together with increased interest and

inflation rates. According to Azizan et al (2020), macroeconomic factors, such as

unemployment, interest and inflation rates, have become controversial subjects of

interest to most economists and central bodies across the globe. Every country aims for

price stability, full employment, currency stability and economic growth. However, the

views taken by structuralists and monetarists regarding the growth engines of an

economy differ.

According to Armonia (2021), the regional director of CALABARZON,

unemployment rate in CALABARZON wherein Batangas belongs that recorded in

Philippine Statistics Authority (PSA) is estimated at 13.4 percent, higher by 0.3

percentage points compared to 13.1 percent in the first quarter of 2021. As compared to

the unemployment rate of 16.7 percent in the same period last year, it is lower by 3.3

percentage points. Underemployed persons in the region were estimated at 1.19 M as

of April 2021. This number represented 18.6 percent of the total employed persons in

the region.  Underemployment rate was lower by 5.1 percentage points compared to the

same period last year. Note that Underemployed persons are those who were employed

but still express their desire to have additional hours of work in their present job or to

have an additional job, or have a new job with longer working hours.
 Hence, unemployment has received much attention among economic analysts,

governments, and scholars in pursuit of better understanding such occurrence and

henceforth be better able to harness the forces that breeds it. This study is a

contribution to the growing literature aimed at understanding the relationship between

unemployment, inflation, and economic growth rate using Philippine data with a more

extended and updated period of study. The relationships established herein may serve

as a guide in both fiscal and monetary policy. (Resurreccion, 2014)

In terms of unemployment, the increase in level and persistence of

unemployment after the pandemic supports the design and implementation of policies

that minimize or avoid that companies fire workers during the pandemic. The

researchers suggested that once the number of unemployed increases, it is a long and

arduous process to return to employment levels before the pandemic. This is in line with

the notion that the longer people are out of the workforce, the more difficult it is to

reintroduce them to the job market. (Rodríguez-Caballero et al, 2020)

Research Literature

One of the major determinants of a country’s economic well-being is its

unemployment rate. The unemployment rate is defined as the number of unemployed

people in terms of the percentage of the labor force. The labor force consists of the

unemployed and those who are in a paid or self-employment position. Evidently,

unemployment occurs when there are imbalances in the labor market, wherein the

number of labor forces offered is beyond the number of labor forces demanded. It is

common for a certain country developed or still developing to experience this, but a

consistently high unemployment rate is a sign of an even bigger and deeper

complication. A high rate of unemployment is more prevalent in developing countries

like the Philippines, wherein it can exacerbate underlying social and economic issues

such as poverty. There are usually two criteria to consider for someone to be identified

as unemployed in the Philippines: either they do not have a job, or they are currently

looking for one except for students, housewives, retired workers, and disabled persons

who are deemed to be excluded from the labor force. In addition, when unemployment

is high, some people start to feel discouraged, which then leads them to stop looking for

work because of this, they will now also be omitted from the labor force. This indicates

that the unemployment rate may either fall or stop rising, even if there has been no

underlying improvement within the labor market. (Caligagan et al, 2022)

References

Armonia, C. (2021). Employment Situation in CALABARZON: As of April 2021. (2021,

June 25). Retrieved from Philippine Statistics Authority:
http://rsso04a.psa.gov.ph/article/employment-situation-calabarzon-april-2021?
fbclid=IwAR0VAOvfBUm6F3tUCb4nsPx8yzes9Y7ya8SHDC7gS6Z0r_Nq0S8oaM
Ofe4#:~:text=Unemployment%20rate%20is%20recorded%20at,the%20first
%20quarter%20of%202021
Azizan, N., Sorooshian, S., Panigrahi, S., & Thoudam, P. (2020). Effects of Inflation,
Interest, and Unemployment Rates on Economic Growth: Evidence from ASEAN
Countries. ABAC Journal, 140-155.
Caligagan, A. A., Ching, R. R., & Suin, K. A. (2022). An Analysis on the Economic
Factors Affecting the Unemployment Rate in the Philippines from 1993-2018.
Journal of Economics, Finance and Accounting Studies, 1-17.
Resurreccion, P. F. (2014). LINKING UNEMPLOYMENT TO INFLATION AND
ECONOMIC GROWTH: TOWARD A BETTER UNDERSTANDING OF
UNEMPLOYMENT IN THE PHILIPPINES. Asian Journal of Economic Modelling,
156-168.
Rodríguez-Caballero, C. V., & Vera-Valdés, J. E. (2020, September 17). Long-Lasting
Economic Effects of Pandemics:Evidence on Growth and Unemployment.
Retrieved from Econometrics: https://doi.org/10.3390/econometrics8030037