The document discusses various topics related to labour markets including: - Labour is one of the four factors of production and its supply is determined by the number of able people and their willingness to work. Demand is determined by economic conditions. - Labour markets exist at the international, national, local, and internal levels and labour can transfer between these markets. - Unemployment rates are used to measure economic performance and are a target of macroeconomic policy, with different types of unemployment like frictional and structural unemployment. - Current labour issues include topics like globalization, technological changes, job mismatches, and developing human capital with the right skills. The Philippine government addresses these through strategies in the Philippine Labor and Employment Plan.

1. By: JC, M.B.A.
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2. Labour
 One of the factors of Production, with
Land, Capital, and Enterprise.
 Supply is determined by number of ABLE
people in the population and their
willingness to work.
 Managed by DOLE.
 Demand is determined by the health of
the economy and firms, labour laws and
regulations, PRICE and supply of other
factors of production.
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3. Scope of the Labour Markets
Market-an area where buyers and
sellers are in sufficiently close
communication that price tends to be
the same throughout the area.
International Market
National Market
Local Market
Internal Market
Labour Transfer
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4. Simplified Market
(Competitive Market)
1. There are many workers in the market and
also many employers, so that no one has
appreciable influence on the market
wage.
2. Workers and employers are free to enter
and leave the market at will.
3. There is no organization on either side f the
market.
4. Workers and employers are well informed.
5. Economic motivation is dominant.
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5. Additional...
1. The attractiveness of a job is solely measured
by its hourly wage rate. Other job conditions
are taken as given and constant.
2. All job vacancies are filled through the market.
We ignore the fact of internal hiring.
3. Workers are interchangeable in the eyes of the
employer and are of equal efficiency.
 The Method of Ceteris Paribus – Everything
Equal
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6. Additional...
 Theory of Marginal Productivity means profit
maximising firm will hire additional units of
variable factor up to the point of MRP=MFC. It
means in perfect competition, each factor will
receive payment equal to the value of its
marginal product
 Marginal Factor Cost is total cost cause by
employing one more or less
 Marginal Revenue Product is the change in
revenue cause by employing one more or less
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7. Market Demand
Source:
http://wps.prenhall.com/bp_hubbard_micro_1/36/9318/2385572.cw/index.ht
ml
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8. Market Supply
 Source:
http://upload.wikimedia.org/wikipedia/commons/1/1a/Labour_supply_small.png
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9. Market Supply
 Source:
http://www.thomascarrollandassociates.com/factor-markets-
and-income-determination-chapter-8.html
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10. Market Supply Changes
source:http://img.sparknotes.com/figures/3/38bf88807fd6b1e5beccc807f687acf4/choc4.gif
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11. Market Equilibrium
Source: http://www.dineshbakshi.com/images/stories/economics_diagrams/equilibrium-level-
of-employment-small.gif
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12. Measuring Labour Supply
 Labour is the totality of people counted in the
workforce. This is the human capital of a nation.
Also a number of worker-hours available for
production over a period of time.
 Participation Rate-the proportion of the
potential workforce that is working or actively
seeking work.
 Census measures the workforce. Newly grads
and people who just turned 18 are counted into
the workforce.
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13. Labour Force Survey By Philippine
Statistics Authority
 Survey sample of 41,000 households
 Performed on quarterly basis
 Household- aggregate of people living together
in one roof and not necessarily related.
 In the Labour force or Economically active are
15 years old and above employed or not.
 Unemployed- looking for a job but cant find
any.
 Out of Labour force-no job or business and not
actively looking
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14. Continuation...
 Underemployed-workers wanting to work more
hours or looking for a second job but can’t find
any. Works less than 40 hours a week.
 Sampling-a population is selected in every
economically significant baranggay.
Baranggays that are far and expensive to reach
are not counted.
 Current Labour Force: TABLE 1 Percent
Distribution of Population 15 Years Old and Over
by Employment Status by Sex and Age Group
January 2014.pdf
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15. 9/12/2014 15

16. Simplest Model of Labour Supply
 Traditional analysis of labour supply views
workers as faced with market wage and with
choosing the work week that will yield max
satisfaction at that wage.
 Individual decision: working hours or leisure
hours.
 Income effect- reduces labour supply when an
individual has more income.
 Substitution effect-increases labour supply.
Happens when cost of leisure is too much or
motivation is increased in income.
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17. Simplest Model of Labour Supply
Preference Income versus Leisure
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18. Simplest Model of Labour Supply
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19. Simplest Model of Labour Supply
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20. Simplest Model of Labour Supply
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21. Wage Differentials
 Under what conditions would wages for all jobs
be equal?
 Follows the wage, supply, and demand of
labour.
 Barriers to the mobility of labour.
 Non Competing Groups-jobs requiring specific
skills and abilities.
 Government labour laws and regulations.
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22. Imperfections in Labour Market
Demand Side
 Monopsony is a single buyer of labour services in
a particular labour market.
 Oligopsonies are employer organization
collectively negotiating the conditions of
employment and wages for a member firm.
Supply Side
 Trade Unions-negotiate wages and employment
conditions (Denmark). Gov’t labour laws and
regulations.
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23. Disequilibrium in the Labour
Market
 Happens at any wage rate.
 Friction in labour market preventing the balance
of supply and demand.
 Rigidity of Wages
 Labour as Heterogeneous Factor-labour is a
collection of different skills, education, training,
experience and so consist of non competing
groups.
 Internal Labour Market
 Information Cost
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24. Theory of Search
 Labour buyers and sellers engage in a process of
search to strike the best possible bargains about
wages, terms and conditions of employment. The
longer the search, the higher the cost and usually this
cost is ignored.
 Labour buyers spend a lot in recruitment process
(advertising, screening, training, interview process,
recruitment firm)
 Labour sellers have opportunity costs. Employed
worker looking for a new job has a cost called lost
leisure time.
 Discouraged Worker Hypothesis explains a worker
withdraws from the labour market for not finding
work.
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25. Equal Pay
 Movement to promote equal pay between
genders.
 It also aim to provide both gender of equal
opportunities.
 Differences still occur:
 Women are concentrated in industries where unions
are weak.
 Traditions of women’s work and men’s work.
 Profit seeking firms prefer employees who can stay
longer after training to serve as human capital.
Women tend to lay low from their careers to focus on
family unlike men.
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26. Philippine Set-up
 Wage determination is managed by National
Wages and Productivity Commission.
 Each region in the country have its own regional
wage board.
 Wage increase can only take place once a
year after an increase is issued.
 simplified_Q_A Wage and Labor.pdf
 stat_current_regional wage.pdf
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27. Unemployment
 The number of unemployed consists of all those
people in a country who are willing and able to
work but are unable to find a job.
 Measured by Philippine Statistic Authority on a
quarterly basis.
 Current Employment Data: TABLE 2 Percent
Distribution of Population 15 Years Old and Over by
Employment Status by Region and Sex January
2014.pdf
 TABLE 17 Percent Distribution of Unemployed Persons
Looking for Work by Number of Weeks Looking for
Work, by Sex and Region January 2014.pdf
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28. Source: http://www.tradingeconomics.com/philippines/unemployment-rate
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29. Actual number of job vacancies
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30. PHL and ASEAN
Country 2014
Brunei Darussalam 2.9
Cambodia 0.6
Indonesia 5.9
Lao People's Democratic
Republic 1.6
Malaysia 3.3
Myanmar 3.7
Philippines 7.5
Singapore 3.6
Thailand 0.9
Viet Nam 2.3
Source: http://www.philstar.com/headlines/2014/05/02/1318587/philippines-jobless-rate-highest-southeast-asia
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31. According to Social Weather
Station...
 A Social Weather Stations survey showed more
people are unemployed in the second quarter.
But a separate survey by the Department of
Labour shows a different result.
 Current Unemployment rate is 25.9% in Q2 of
2014.
 Joblessness Vs Unemployment
http://www.abs-cbnnews.com/video/business/08/19/14/ph-unemployment-rate-rose-259-pct-q2
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32. Uses of Unemployment Rates
 A Business Cycle Indicator-when economy is
good it means employment rate is at a low rate.
Opposite happens during recession. If
employment rate is seen rising, it may indicate
that economy is recovering.
 A Hardship Indicator-related to poverty since a
person or household may have no income at
all.
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33. Uses of Unemployment Rates
 A Measure of Economic Performance-costs in
terms of output and income. Output (GNP) is
reduced when there is high unemployment
cause there is no/reduced input (income spent
by households).
 Target of Macroeconomic Policy-uses fiscal and
financial power to either stimulate or restraint
economic activities. Concept of Non-accelerating
inflationary rate (usually at 5% or
6%).
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34. Costs of Unemployment
 Social Costs-effects on an individual who is
unemployed and having a hard time looking for
a job.
 Economic Costs- it is costly for a government to
have reduced outputs due to unemployment.
There is an output gap. Resources are wasted.
Some resources are spent on economic stimulus.
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35. Costs of Unemployment
 Cost to Exchequer-
 Benefits paid to an unemployed.
 The loss of tax revenues (income tax and VAT)
 The loss of national insurance contributions.
 Voluntary Unemployment-workers refuse to
accept a cut in real wages.
 Involuntary Unemployment- workers unable to
find a job.
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36. Flows Through The Labour Market
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37. Types of Unemployment
 Frictional Unemployment-arises from normal
turnover in the labour market and the fact that
finding jobs takes time.
 Structural Unemployment-job mismatch
 Deficient Demand Unemployment-arising from a
decrease in total demand for labour.
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38. The Differential Impact of
Unemployment
 Analysis of Unemployment rate record.
 Class participation
 TABLE 1 Percent Distribution of Population 15 Years Old
and Over by Employment Status by Sex and Age Group
January 2014.pdf
 TABLE 2 Percent Distribution of Population 15 Years Old
and Over by Employment Status by Region and Sex
January 2014.pdf
 TABLE 15 Percent Distribution of Unemployed Persons by
Highest Grade Completed by Sex and Age Group
January 2014.pdf
 TABLE 17 Percent Distribution of Unemployed Persons
Looking for Work by Number of Weeks Looking for Work,
by Sex and Region January 2014.pdf
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39. Labour Issues
 The Twentieth Century
The Great Depression and World War 2
The Post War Boom
The Period since 1970
Asian Economic Crisis of 1997
The fall of Asian Currencies
WTO establishment
Globalization
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40. Labour Issues: Current and Future
Issues-Labour Supply
 Developing Nations and China
 Gender equality
 Eliminating Barriers in Recruitment and Hiring
 Addressing emerging and developing
discrimination issues.
 Enforcing equal pay laws
 Migrant workers
 Low birth rate in developed nations
 Terrorism
 Job mismatch
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41. Labour Issues: Current and Future
Issues-Labour Demand
 The rise of start ups and entrepreneurs
 The booming trend of Business Process
Outsourcing
 Technological advancements and acquisition
of highly skilled individuals.
 Job mismatch
 Mass production to flexible production
 The slow economic recovery of USA and
Europe.
 The emergence of Chinese firms.
 World poverty, terrorism, diseases.
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42. Labour Issues: Current and Future
Issues-Human Capital
 The need to acquire new knowledge and skills
to secure jobs
 Chinese human capital is so huge and cheap
 More multi-skilled workers are needed
 The need to be multi lingual
 The right education and training for the right job
(job mismatch)
 Basic education and Higher education schools
response to the changing labour market and
economy
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43. The PLEP 2011 to 2016
 The Philippine Labor and Employment Plan 2011 to
2016: Inclusive Growth through Decent and
Productive Work.
 Used to address the current labour and employment
issues in medium term. Spearheaded by NEDA and
DOLE.
 Employment indicators: Eradication of Extreme
Poverty and Hunger; Achieve full and productive
employment and decent work for all; Promote
gender equality and empower women; Eliminate
gender disparity in primary and secondary
education.
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44. The PLEP 2011 to 2016
Some strategies include:
 Improvement of human capital through
education and training.
 Promoting entrepreneurship
 Addressing job and skill mismatch by improving
the processes of labour market information
exchange and cooperation between employers,
government, and academe.
 Adopting reforms in employment facilitation.
 Promoting better business environment.
 PLEP 2011.pdf
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45.  Sources:
Lloyd G. Reynolds, Stanley H. Masters, and
Colletta H. Moser. Labor Economics and Labor
Relations, 1998. 11th Ed.
Philip Hardwick, John Langmead, and Bahadur
Khan. An Introduction to Modern Economics,
1998. 5th Ed.
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46. Thank you.
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