Back to Basics: What Constitutes Unemployment?

How does the natural rate of employment or the NAIRU help in determining policies geared towards maximizing employment for most countries? Would this measure benefit the Philippines? Why or Why not?

As what everyone says, unemployment is merely one of the main causes of poverty. Basically, man needs to have a job in order for him to feed his family and without it; it would be difficult to live life. Nowadays, it is one of the needs that our government should focus more on because more and more people suffer from poverty because of it. It is said that unemployment has something to do with the economic activity where when the economy is experiencing some good growth and advancement, the employment rate within the country also rises.

Unfortunately, that is not always the situation in an economy. There would always come a time where the economy is experiencing some difficulties and problems which result to it becoming low in productivity. If that is the case, then firms and businesses also experience the same which would cause them to cut their employment and results to a higher unemployment rate. An increase in unemployment rate would result to a bigger number of people who would or can experience poverty.

The Natural Rate of Unemployment is said to be a labor market characteristics that is driven by policies which determines it.  In my own point of understanding, I believe that having such policy on employment (for example in wages) might result to a better and fair policy to everyone.

The Non-Accelerating Inflation Rate of Unemployment or NAIRU on the other hand, tends to capitalize on the economy where the unemployment rate would not be changed, either higher or lower. Basically, this means that the economy has already set a certain standard where the remaining percentage of unemployment can still be improved.

On the question “would the measure benefit the Philippines,” I believe so. In some way, yes it can benefit the country. Because these measures can help maximize the employment rate where the NRU could help the Philippine government set up and make some policies regarding the employment of firms or businesses in the country while the NAIRU could also be used as a point of comparison where the country’s unemployment rate would have its standard where improvements can still be implemented.

Though, in my own point of view, it is better first to have some further investigations and examines if the said measurements could help maximize the employment in the country since each of the country has its different economy where they implement different policies regarding employment. Therefore, there might still be some changes and improvements from their country that our country can implement in order for those measurements to work within our government, and economy.


2 thoughts on “Back to Basics: What Constitutes Unemployment?

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