The Philippines’ unemployment rate has decreased to 5.2% in 2022, as against 2021’s 7.2%. While this number, 5.2%, may seem small, it impacts the Gross Domestic Product (GDP).
GDP is the total monetary value of finished goods and services during a specific timeframe in a country. This allows for a look into how strong and healthy an economy is.
According to Okun’s law, every percentage of unemployment = a 2% loss in GDP. This means that if we can find a way to minimize, if not totally eliminate unemployment, the Philippines would have a 10.4% increase in GDP.
5.2% (current decrease in unemployment) x 2% (loss in GDP) = 10.4%
So how can we help decrease if not totally obliterate unemployment in the country?
I have four suggestions that could help address unemployment: investing in small businesses, expanding apprenticeships, investing in infrastructure, and tax credit incentives.
Investment into Small Businesses
One way to address unemployment is for the government to invest in smaller businesses. If the government provides money to keep new businesses going until they’re able to stand on their own, then once they’ve established themselves we can expect more jobs.
Since micro to medium-sized businesses creates around 66.2% of the jobs in the Philippines investing in them can be very potent. According to the Manila Times, 90% of new startups fail, and 10% of the 10% that do make it, fail in the first year, lots of potential jobs never get to appear.
Expanding Apprenticeships/Job Training
Apprenticeships are places where one can work (with or without pay) to gain experience and improve one’s resume. Since you’ve experienced an actual work environment, you are more effective in your work and thus more desirable to employers. Apprenticeships can help increase one’s chances of getting a job by 20%. Thus, this is a relatively cheap and effective option in combating unemployment.
Investment into Infrastructure
Another way of addressing unemployment is investment in infrastructure projects. If the government commissions a company to build critical infrastructures such as roads and telephone posts, a lot of people will be needed as builders. Thus, with the use of government funds, more jobs can be created. And not only will there be an influx of jobs, but the people will benefit from better roads and other types of infrastructure that help improve and interconnect the country.
A Tax Credit Incentive for Hiring Employees
The government can provide tax credits to companies that employ a certain threshold of full-time workers.
Tax credits are provisions that reduce a taxpayer’s final bill. So tax credits are very beneficial for companies that need to pay large amounts of taxes as it helps cut down on expenses. Hence, not only do the companies receive the benefit of tax credits, but they also get an influx of new workers. So it’s a win-win situation, where employees and employers win.
There are plenty more ways of addressing unemployment. Anything that helps brings jobs and lowers unemployment can be a valid solution.