FRANCISCO, Ma.

Francesca DL
2ASN2
CHAPTER SUMMARY AND ANALYSIS
CHAPTER 15 : UNEMPLOYMENT AND UNDEREMPLOYMENT

SOUTH ASIAN COUNTRIES

o are characterized by its extreme underutilization
o low average output of the labor force because :
much of the labor force is idle, either completely or
for a large part of the day, week, month or a year
low labor efficiency
o assumed to constitute a reservoir of untapped productive
potential
because of the lack of demand for wage of
employees, some might be self-employed or are
farmers
WASTE OF LABOR is commonly discussed under the terms of
unemployment and/or underemployment
UNEMPLOYMENT AND UNDEREMPLOYMENT
o are supposed to be involuntary and the low labor efficiency
is kept from attention
o regarded as a primary cause of poverty in the South Asian
countries
o the large volume of unused or underutilized labor
possessed by the countries is thought to have a productive
potential capable of creating capital and increasing
production, thereby making possible higher levels of
income and consumption
THE SUPREME TASK OF PLANNING IS TO ELIMINATE THE DRAIN IN
LABOR RESERVOIR OR THE UNEMPLYMENT AND
UNDEREMPLOYMENT
BASIC PROBLEM OF LABOR UTILIZATION :
o The providing of demand and work opportunities for the
unemployed and underemployed masses.
PRACTICAL PROBLEM :
o To devise ways to employ the labor force more fully
The Western concepts of unemployment and underemployment
is that IDLENESS, above the set of standards of work, was
involuntary and that there was a reservoir of labor that could be
tapped by increasing demand and augmenting opportunities for
work.
Difficulties experienced in recruiting labor as well as the view
held by employers and governments tat new enterprises offered

progress to a backward economy gave force and sanction to

policies that is called the MERCANTILISM.
FACTUAL BACKGROUND
o Approach of government and employers
o It must have seemed to correspond to actual
circumstances and to be founded on experiences
AGRICULTURAL SECTOR
o COLONIAL TIMES
Much idleness in the stagnant and traditional
economy, among self-sufficient agriculturalists and
among the village craftsmen
TRADITIONAL bent is followed thus it is conditioned
by POVERTY itself
People tended to be idle for much of what would be a
normal working day from a Western point of view
The masses were poor but they were not eager to
improve their lot by increasing their lot by increasing
their labor input in agriculture
THE COLONIAL THEORY
its main theme that the natives tendency
toward idleness and inefficiency
reluctance of the natives seek wage
employment
o POST WAR
Was a protest against the dominant theory of the
colonial period
Unemployment issue came to the center of Western
economic theory and planning at about the same
time the South Asian countries gained their
independence and could start planning or their own
development
DIFFERENCE IN CLIMATE became a cause of the labor
input and inefficiency of the South Asian popularity
The post-war approach to the problem of utilization implies a
number of assumptions about economic and social facts that are
fairly realistic in the Western world but not in South Asia, some of
which are as follows :
o That labor input can be discussed primarily as a quantity
with the little specific attention to its quality
o That a low aggregate labor input can be treated as
involuntary
o That idle labor represented by unemployment and
underemployment constitutes a readily available labor
supply in the sense that the provision of work

opportunities is the main condition necessary for the

elimination of idleness
Environmental conditions present in South Asia :
Climatic factors
Low nutritional and health levels
Institutional conditions
Attitudes that are molded by institutions, and,
in turn, reinforce them
The relative immobility of labor and the great
imperfection of all markets and of the labor
market in particular resulting from climatic
factors, low nutritional and health levels,
institutional conditions and attitudes that are
molded by institutions, and, in turn, reinforce
them
o That in the economic discussion political, administrative,
and organizational problems can largely be bypassed
o That the general explanation for failure of idle labor to be
absorbed in work opportunities lies in deficient supplies of
complementary factors of production
o An insufficiency of capital from internal savings and foreign
capital inflow
o The unemployed and underemployed together can be
viewed as constituting not only a labor reserve, but at the
same time a savings reserve. To the extent that they can
be set to work without increasing aggregate consumption,
and the costs arising from their employment can be held
down, the aggregate volume of investment can be
increased without making claims on the organized capital
market
Productivity of the labor force can be increased by means of a
higher total labor input and this depends on :
o The PARTICIPATION RATE, or that portion of the labor force
normally performing some work, at least when the whole
year is taken into account. The participation rate is lower
than one everywhere in the world but, for various reasons,
it is strikingly low in some South Asian countries
o The DURATION of work by those participating, in terms of
weeks and months per year, days per week and hours per
day.
The second major variable besides the quantity of labor input is
average output per unit of labor unit, depends on a number of
factors :
o Labor efficiency

o
o
o
o

Occupational distribution of the labor force

Natural resources
The volume of capital resources and their allocation
Technology

REACTION / ANALYSIS
o Unemployment and underemployment are just two of the
contributors of poverty. The most common reasons why
unemployment and underemployment is present is
because of the over population, the lack of job
opportunities and so on. But one reason would not
normally be part of the reasons one person would be
stating and that would be the CLIMATE of a country. This
just came to me that climate does affect ones work. The
climate whether hot or cold would sometimes make you
bored, tiresome and inefficient.