A Treatment for Unemployment

Submitted by:

Annika M. Bunag

Mikaela May M. Gonda

Submitted to:

Jerold FD

Submitted on:

10 Aug 18
 I. Executive Summary

Unemployment is a problem present in every country. However, its effects are most felt

in the Philippines due to the country’s staggering government debt. Ergo, an efficient and

effective solution is needed to rectify the problem.

Republic Act 7796 or the TESDA Act of 1994, is a government policy aimed at solving

this problem. This policy paper shall dive further into the topic of unemployment and the role

RA 7796 plays in remedying it. The policy shall be assessed in detail in order to find plot holes

within it and, to come up with solutions for these.

The paper is divided into four parts. The Introduction and Background of the Issue (II),

provides in-depth information about the origin and history of unemployment. Here, critical

incidents which emphasize the importance of the issue shall be mentioned, and so shall an

explanation as to why this issue is in need of addressing. The Problem and the Current Policies

(III), will delve further into the topic of unemployment and the policies created to address it.

Alternatives and Impacts (IV) provides readers with a list of alternative solutions to solve the

problem while Action Plan and Recommendations (V) relays the group’s recommended plan of

action, concerning the improvement of RA 7796. And lastly, Bibliography (VI) contains a list of

all the references used in the making of this paper.

 II. Introduction and Background of the Issue

When an individual is unable to find a job, they are in a state known as unemployment. It

is often used as an evaluation for an economy's condition. Unemployment occurs: (1) when

someone simply transfers from one job to another, a very short-term state of unemployment, (2)

during recessionary periods of the economy. These are periods when there is a significant decline

in economic activity, it usually lasts several months and, (3) when employees with outdated

skills are in disadvantage of technological advances and end up losing their jobs.

The issue of unemployment and most of its other intractable problems can be traced to

the country’s colonial past, under the Spanish rule. It stemmed from how there was a great

difference between the wealth and authority of the higher-class population and the mass of

low-income and impoverished Filipinos.

The joblessness rate in the Philippines gravely escalated during Duterte Administration’s

period in office. The adult joblessness rate obtained from March 23-27 SWS (Social Weather

Stations) survey rises to 23.9%, or approximately 10.9 million. On December 2017, the

unemployment rate was 15.7%, translating to an estimated 7.2 million Filipinos. The latest poll is

brought up to be the highest level of joblessness since December 2016 (Flores, 2018).

It is also important to note that critical incidents such as school shootings have been

triggered by instances of unemployment and financial distress. A research was conducted while

focusing on 6 cities reported with the most gun-violence at school in the United States (New

York City, Detroit, Chicago, Memphis, Los Angeles and Houston), and evidence proves that

there is a correlation with the increasing number of school shootings with the periods of higher

unemployment in these cities (Pah, 2018).

 Unemployment can have a devastating impact on both a household and the general

economy. “The loss of income has an immediate effect in the reduction of consumer spending.

However, the increase in uncertainty for the household can have a multiplier effect on the

reduction of consumer spending,” explained Timothy E. Zimmer (2016), Professor of Economics

and Finance from the University of Indianapolis, in his article. “A household that endures

unemployment is likely to significantly cut spending, often in excess of the loss of income due to

the uncertainty, and the resumption of spending can lag after the return of income. The

psychological impact of unemployment on a household can have a significant impact on the

broader economy.”
III. The Problem and the Current Policies

Since former President Benigno Aquino’s election into office last 2010, the rate of

unemployment in the Philippines has decreased. The latest figures show the rate at 6.4% in the

second quarter of this year, from 7% the previous year. However progress remains uneven and

the Philippines still has one of the highest unemployment rates in Asia. In a recent survey

conducted by ​the Social Weather Stations (SWS), the number of unemployed Filipinos soared to

10.9 million individuals in the first three months of 2018. ​Furthermore, participation in the

labour force remains relatively low. Only about 65% of the population aged 15 and above is

looking for work, one of the lowest levels in the region. This compares with 78% in Vietnam,

72% in Thailand and 68% in Indonesia (Salvosa, 2015).

In addition to this, in a news article published in Phil Star by Mayen Jaymalin, about 1

million Filipino graduates are in danger of facing unemployment. In the article, Alan Tanjusay,

Associated Labor Union spokesman, said job prospects are not bright for the estimated one

million students who are set to graduate in the coming weeks. “Job-skills mismatch, short-term

contractual work, low wage and unsafe workplaces are awaiting those estimated one million

graduates in colleges and vocational schools,” said Tanjusay (2017). “We don’t want to give this

young workforce any false hope. Though we also don’t want to discourage them, these are the

issues that confront our new graduates.”

Whenever an employee is released, there is one less person that will pay state and federal

income taxes, and one less person that will pay additional sales tax revenue as a laid off worker

will instantly cut back on their non-necessary spending due to less disposable income and worry

about future financial security. This poses a problem, as many countries are facing a big debt
crisis that requires higher tax revenues to prevent a default. Since 2017, the Philippines, owes a

debt of 73,097.87 million USD, according to data released in Trading Economics. This means

that the problems caused by unemployment will be more severe here. “If the country’s

government is not financially stable, then the banks and the whole financial system will

experience a decrease in confidence translating to a downturn in the value of the stock market”

writes Paul Hudson in Elite Daily (2018).

Unemployment stems from numerous reasons. One reason is that job creation has

struggled to keep up with the rate at which the population grows. In three of the past five years,

the number of people that entered the job market has been greater than the number of jobs

created. This highlights the difficulty of spreading the benefits of economic growth and suggests

that they have yet to trickle down to more deprived areas (Salvosa, 2015). Lack of education or

skills for employment is another key element of unemployment. This occurs when an

individual’s qualifications do not meet the requirements of his or her job responsibilities. As the

need for skilled and educated workers grows due to modernization, the employment

opportunities for those without a college education decrease, leading to higher unemployment

rate.

As for the Philippine’s relatively low participation rate, this is partly explained by the

high value set on further education in the country. “Young Filipinos typically spend some time in

college before entering the labour market, contributing to the lower participation rate. Others in

the region go to work earlier” explained Salvosa (2015).

With these staggering and heaping problems, comes the Republic Act 7796, also known

as the Technical Educational and Skills Development Act of 1994 or the “TESDA Act of 1994.”
It’s goals are to provide relevant, accessible, high quality and efficient technical education and

skills development in support of the development of high quality Filipino middle-level

manpower.

In the June quarter of 2018, the unemployment rate in the Philippines dropped to 5.5%

from 5.7% a year ago, according to data released in Trading Economics. That being said, it is

safe to say that the implementation of this policy has been effective. However, it has not

completely solved the issue as, going back to Jaymalin’s article, a substantial number of citizens

still run the risk of unemployment.

A limit the RA 7796, suffers from is lack of funds. At a forum hosted by the Association

of Government Information Officers and the Philippine Information Agency last 2017, TESDA-7

Training Center administrator Engr. Winnie Salas said “we train our students to be able to

enhance their skills, but to capacitate their training system we need funds also.” “Hopefully, next

year there will be funds for training facilities improvement,” he added. Moreover, in a news

article published in the Manila Bulletin, TESDA Director Guiling Mamondiong expressed his

sentiments about TESDA’s need for more trainers. “We have a problem on trainers and

assessors. We don’t have enough of them. This is a national problem as far as TESDA is

concerned. We conducted inspection of training centers and we found out the problem,

sometimes they are just sending their substitutes to train the students,” Mamondiong disclosed.

“How can you give quality skills training to the students when you don’t have enough trainers

and assessors? Aside from that, our assessors and trainers are being pirated by other departments,

I won’t namedrop, so I’m urging the board of directors to conduct a national registration of

trainers and assessors,” he added.

IV. Alternatives and their Impact

To combat the issue of unemployment, the group recommends the following plans:

Anti K-12 plan

While a seemingly far-fetched and absurd idea, the idea of an Anti K-12 plan has actually

been on the minds of a few Filipinos for quite some time now. Ever since the implementation of

the K-12 program during former President Noynoy Aquino’s reign, numerous people have

expressed their disapproval of this act.

Now, in the article by Jaymalin mentioned before, it is revealed that the Supreme Court

has been asked to now rule on petitions questioning the K-12 program of the Department of

Education (DepEd), which added two years in the country’s basic education system.

In a most urgent motion, parents and teachers from Manila Science High School (MSHS)

urged the high court to rule on the merits of their petition filed in June 2015 that sought to stop

the implementation of the program under Republic Act 10533 or the Enhanced Basic Education

Act. The high court last tackled the case in April 2016 when it denied the plea of petitioners for

the issuance of a TRO, which paved the way for the implementation of the controversial program

last year. “Petitioners have already suffered the grave injustice and irreparable injury of being

compelled to still go through one year of senior high school, which this despotic and

anti-democratic education program, pushed by purely selfish private school interests, has

inflicted on them,” the pleading read.

From this, it is implied that although the K-12 program’s aim is to better prepare students

for life outside of school, it’s end goal was not met as students are still and if not, are even more

prone to the clutches of unemployment. Instead of students learning more skills that’ll aid in
their securing a job, the K-12 program actually hampers them by adding up to their expenses due

to the requirement of an additional two more years of schooling. While this may seem

advantageous at first, students benefit very little from this as what they learn does not translate

into better job-finding prospects. They are better off left on their own to find a job and in this

manner they shall learn independence and skills that’ll be paramount to their future. Instead of

being forced to attend two more years of school, students should be allowed to decide whether to

continue their studies or not and perhaps attend a training course instead such as the programs

offered in the RA 7796, that’ll be better suited for their specific goals. Should this plan be

implemented, then parents can worry less about supporting their children until they have

graduated (as this will not take as long anymore should K-12 curriculum be discontinued). A key

weakness to this plan is that compared to other countries in Asia, the Philippines would be

among one the few countries not to follow the K-12 curriculum. A strength and merit potentially

gained from the implementation of this plan however, is the fact that Filipino citizens will be

able to save more money (and for some, spend less on education they deem substandard), and

students shall be able to have more freedom as to what they shall spend their time on and

subsequently, the set of skills they will learn.

Education Enhancement plan

In contrast to the previous plan, the Education Enhancement plan aims to ​upgrade​ the

education being given to students across the nation, instead of ​trimming​ it down.

Compared to its neighboring countries, Japan and Korean, who are both considered to be

countries with world-class education, the Philippines lags behind.

 To quell the sentiments of those who are dissatisfied with the current quality of education

and to ​truly​ be able to prepare students for the jobs they wish to take on, this plan should be

taken into consideration. This will entail the conception of more and better programs that’ll

allow students to develop coveted skills in the job market such as accounting and the likes, and

the government’s support so that its students may be taught under instructors of higher caliber.

However a weakness of this plan would have to be its cost. The price of education will

and always be high but if it means a promise of a better future for all Filipinos, then no price

could be too high to pay. An advantage to be gained from the implementation of this plan is that

should it be set into motion, then Filipino students will be able to ask for higher salaries, taking

into account the quality of the education they’ve undertaken. Furthermore, job finding would not

be as challenging as it was before because students will then be better equipped with up-to-date

skills.
 V. Action Plan and Recommendations

The group recognizes that although abolishing K-12 may have its merits, the

disadvantages of this act will however outweigh the advantages, ergo the group recommends the

Education Enhancement plan be followed. In this policy, rather than cutting down student’s time

at school, the government ought to improve the quality of their education so that their time at

school shall not be in vain. To implement this, the group recommends that the government take

the following course of action:

1. Increase the allocation of funds to the education department

2. Invest in expert trainers and teachers

3. Improve information on labour market

In response to the aforementioned limitation of TESDA which is the lack of funds for

necessary equipments, this will no longer be a problem should step one come into fulfillment.

Step 2 is partly influenced by the comment made by Associated Labor Union spokesman, Alan

Tanjusay in Mayen Jaymalin’s article (mentioned before), ​“Young workers are not aware that

they are walking into death traps and fire hazard workplaces when they apply for work. It’s

because schools didn’t teach college students the basic occupational safety and health

information.” The quality of a student’s education is largely affected by the proficiency of their

instructor or teacher. If the government invests in better trainers and teachers, then students will

be better informed and educated about the many skills and facts they ought to know about before

seeking a job. Doing this can ensure that students will be less gullible and less susceptible to

scams.
 And lastly, should step 3 be followed through, the government would be able to

effectively minimize the chances of young people who want to work abroad becoming dependent

on illegal recruiters who promise "ghost jobs." Additionally, better information about the labor

market will make the burden of finding a job less difficult. Sites like PhilJobNet which are

continuously enhancing their services in order to help job seekers should be promoted.
VI. Bibliography

Flores, H. (2018, May 01). SWS: Jobless Filipinos soar to 10.9 million in Q1 of 2018. Retrieved

from

https://www.philstar.com/headlines/2018/05/02/1811354/sws-jobless-filipinos-soar-109-million-

q1-2018

Brief History of TESDA - TESDA. (n.d.). Retrieved August 07, 18, from

http://www.tesda.gov.ph/About/TESDA/10

Salvosa, F. (2015, September 02). Unemployment plagues the Philippines despite growth.

Retrieved August 07, 18, from

https://www.cnbc.com/2015/09/01/unemployment-in-philippines-an-issue-despite-rapid-economic-

growth.html

Hudson, P. (2018, June 20). How Unemployment Rates Affect The Economy. Retrieved August

07, 18, from

https://www.elitedaily.com/news/business/how-unemployment-rates-affect-the-economy

Philippines Unemployment Rate | 1994-2018 | Data | Chart | Calendar. (n.d.). Retrieved from

https://tradingeconomics.com/philippines/unemployment-rate

The Effects and Causes of Unemployment. (n.d.). Retrieved from

https://www.ukessays.com/essays/economics/the-effects-and-causes-of-unemployment-economics-

essay.php
Jaymalin, M. (2017, March 13). 1 M graduates face unemployment. Retrieved from

https://www.philstar.com/headlines/2017/03/14/1678970/1-m-graduates-face-unemployment

Zimmer, T. E. (n.d.). The Importance of Education for the Unemployed. Retrieved from

http://www.ibrc.indiana.edu/ibr/2016/spring/article2.html

Philippines - History. (n.d.). Retrieved from ​http://countrystudies.us/philippines/2.htm

Galarpe, L. (n.d.). TESDA-7 facing funding problems for building improvement. Retrieved from

http://www.pna.gov.ph/articles/1005341

Sadongdong, M. (n.d.). TESDA faces very serious problems – Mamondiong. Retrieved from

https://news.mb.com.ph/2017/08/26/tesda-faces-very-serious-problems-mamondiong/

Pah, A. (2018, April 20). Unemployment and financial distress may lead to school shootings.

Retrieved from

https://www.cnbc.com/2018/04/20/unemployment-and-financial-distress-may-trigger-school-shooti

ngs.html