PRICES OF BASIC COMMODITIES

Commodities are raw materials or primary agricultural products that can be bought and sold in the market like
corn, wheat, copper, crude oil, etc.

BASIC CONSUMER GOODS IN PHILIPPINES

A. Oil Products like gasoline, diesel, liquefied petroleum gas (LPG)
B. Processed and Manufactured Commodities
Canned goods, processed milk, instant noodles, bread, commercial rice, sugar, cooking oil, meat and poultry, fish
vegetables, basic medicines
WHAT CAUSES COMMODITIES PRICE TO CHANGE?
1. When supply exceeds demand, prices fall and when demand is greater than supply prices rise.
2. Natural disasters can also cause prices to change like the El Niño and La Niña climate phenomenon, volcanic
eruptions, earthquakes, typhoon, and landslide, among others.
3. Production costs can also cause price to rise or fall like the implementation of Salary Standardization Law and
Minimum Wage Law, and the shifting of production from human to technology.

LABOR SUPPLY, POPULATION GROWTH AND WAGES

LABOR FORCE – is defined as the people who are willing and able to work. The labor force population consists of the
employed and the unemployed 15 years old and over. People under the age of 15, students, retirees, the disabled,
homemakers, and the voluntarily idle are not included in the labor force.

LABOR FORCE = EMPLOYED + UNEMPLOYED

The size of the labor force is used to determine the unemployment rate.

UNEMPLOYMENT RATE= ( UNEMPLOYED

LABOR FORCE )
∗100

LABOR FORCE
LABOR FORCE PARTICIPATION RATE= ( CIVILIAN NON −INSTITUTIONALIZED POPULATION )
∗100

CIVILIAN NON-INSTITUTIONALIZED POPULATION – everyone living in the Philippines who is 15 or older except
inmate institutions such as prisons, home for the aged and mental hospital.

UNEMPLOYMENT – he/she is willing and able to work, actively looking for job but no suitable job available.
UNDEREMPLOYMENT – employed persons express their desire to have an additional hour of work in their present job,
or to have additional job, or to have a new job with longer working hours.

LABOR SUPPLY – is the number of hours people are willing and able to supply at a given wage rate. It means that as
wage increases, workers are usually attracted to work more hours.

EMPLOYMENT SECTORS IN PHILIPPINES

1. Agricultural Sector 2. Industrial Sector 3. Services Sector

CATEGORIES OF WORKERS
1. WAGE AND SALARY – who work for private households, private establishments, government or government
owned or controlled corporations, and those who work with pay in own-operated farm or business.
2. SELF-EMPLOYED WORKERS WITHOUT ANY PAID EMPLOYEE – an individual who works for himself instead
of working for an employer
3. EMPLOYERS IN OWN FAMILY-FARM BUSINESS
4. UNPAID FAMILY WORKERS – who work for his family business without pay.

CLASSIFICATION OF WORKERS
1. FULL-TIME -who works for 40 hours or more in a week
2. PART-TIME - who work for less than 40 hours a week

Table 1
Supply of Labor in Metro Manila
MONTHLY QUANTITY OF
SALARY (PHP) LABOR SUPPLIED
10 000 100
15 000 200
20 000 300
25 000 400
30 000 500
As the salary for workers increases, the quantity supplied
Supply Labor in Metro Manila will increase. If worker’s salary In Metro Manila is higher
than in other urban areas, more workers will transfer to
Metro Manila to find jobs.
FACTORS THAT MAY CHANGE THE LABOR SUPPLY
1. SUBSTITUTION EFFECT. When the wage rate increases, leisure becomes more expensive than other goods
that workers might purchase. Higher wage rate would lead workers to work more hours because high price of
leisure makes leisure less attractive.
2. INCOME EFFECT. The income effect of higher wages would lead more workers to work less, while those
receiving lower wages, it reduces the income of workers that would lead them to look for additional income to
maintain the family’s standard of living.

Table 2
Labor Demand in Metro Manila
MONTHLY QUANTITY OF
SALARY (PHP) LABOR
DEMAND
10 000 500
15 000 400
20 000 300
25 000 200
30 000 100 Demand Labor in Metro Manila

FACTORS THAT MAY CHANGE THE LABOR DEMAND

1. INCREASE IN DEMAND FOR GOODS AND SERVICES. The demand for labor increase when there is an
increase when there is an increase in the demand for goods and services like during Christmas season, Lenten
season and election campaign.
2. DURING RECESSION, the demand for labor decreases when the company needs to decrease their production
costs.
3. CHANGES IN TECHNOLOGY will change the demand for labor for workers with technical know-how.

Table 3.0
Demand and Supply of Workers in Metro Manila

QUANTITY MONTHLY QUANTITY QS −Qd

OF LABOR SALARY OF LABOR
SUPPLIED (PHP) DEMAND
100 10 000 500 -400
200 15 000 400 -200
300 20 000 300 0
400 25 000 200 +200
500 30 000 100 +400 Demand and Supply of Labor in Metro Manila

LABOR SURPLUS – an economic condition in which the supply of labor is greater than the demand of labor.
WHAT CAN BE DONE TO REDUCE SURPLUS OF WORKERS?
1. Encourage early retirement by offering an early retirement package or incentives depending upon the agreement
between the employer and workers.
2. Freeze hiring. Proper alignment of workers for them to be efficient and effective.

LABOR SHORTAGE – an economic condition in which the supply of labor is less than the demand of labor.

WHAT CAN BE DONE TO OVERCOME SHORTAGE OF WORKERS?

1. Recruitment of new workers
2. Offer promotion package for deserving workers for them to discourage leaving the company and accept the
employment package from the other company.
3. Establish a new program innovation to encourage workers to stay in the company in the long-run like increases in
compensation and fringe benefits, workers safety, improved working conditions and more learning opportunities,
among others.
4. Look for substitute workers during peak season like accepting part-timers, and apprenticeship.
TYPES OF MARKET
1. RESOURCE MARKET – a place where business owner purchases all the resources needed in producing goods
and services.
2. PRODUCT MARKET – a place where consumers, businesses and the public sector purchase finished goods and
services.
3. LABOR MARKET - a place where workers and employers interact with each other.

POPULATION GROWTH refers to an increase in the number of people living in a country, province or city.
POSITIVE EFFECTS OF POPULATION GROWTH
1. Increase in Labor Market.
2. Increase in Demand for goods and services.
3. Price Stability. Increase in population, increases the demand and supply for goods and services; if there’s no
shortage/surplus, prices will remain stable.

NEGATIVE EFFECTS OF POPULATION GROWTH

1. POVERTY AND INEQUALITY. Increase in population falls heavily on the poor since most of them suffer from
unemployment, environmental damage, cuts from government budget on health, sanitation and education
programs, and greatly affected by income inequality.
2. ECONOMIC GROWTH. It lowers the growth of per capita income if production level does not increase most
especially in poor families and those who depend heavily on agriculture.
3. EDUCATION. Large family with low income limit opportunities of parents to educate their children.
4. UNEMPLOYMENT. Increase in labor supply; many qualified workers but very low job opportunities
5. RURAL-URBAN MIGRATION. Excess of job seekers in urban areas.
6. HIGH COST OF LIVING. Increasing the gap between demand and supply of goods and services continues to
grow due to high population; it increases the price of basic commodities.
7. SOCIAL PROBLEMS. Bribery, prostitution of women and children, violation of human rights, armed robbery, etc.

WAGE is a monetary renumeration computed on hourly, daily, weekly or piece of work basis paid by an employer to an
employee in exchange for work done.

WHAT ARE WAGE-RELATED BENEFITS GIVEN TO WORKERS?

1. MINIMUM WAGE. The minimum wage rates applicable per region, province and industry sector as stated in
WAGE RATIONALIZATION ACT, Republic Act No. 6727. Minimum Wage: PHP 537
2. HOLIDAY PAY. The Labor Code of the Philippines requires the payment of an employee’s daily basic wage for all
non-working regular holidays.
3. OVERTIME PAY. It is the additional amounts paid to employees who work more than 40 hours in a work week.
Overtime pay rates vary depending on when overtime work takes place.
4. VACATION LEAVE. Thirteen (13) vacation days, with additional one (1) vacation day every year starting 2 nd year
of service and convertible to cash at the end of the year. Maximum total vacation leave is eighteen (18) days.
5. PARENTAL LEAVE. The Labor Code of the Philippines covers three (3) different types of parental leaves:
a. MATERNITY LEAVE. Whether married or not, each pregnant employee is entitled to a maternity leave
benefit of 60 days for a normal delivery or miscarriage, or 78 days for a caesarean delivery, for up to four (4)
pregnancies.
b. PATERNITY LEAVE. All married male employees are entitled to a seven (7) day paternity leave for the
delivery or miscarriage of his legitimate spouse with whom he must live, for up to four (4) pregnancies. The
paternity leave is the cost of the employer and is not reimbursed by the Social Security System (SSS).
c. SOLO PARENT LEAVE. In addition to parental leaves at the time of a child’s birth, the Labor Code of the
Philippines included a special leave for solo-parent employee as described in the Solo Parent’s Welfare Act of
2000, Republic Act No. 8972. Parental leave of not more than seven (7) working day every year shall be
granted to any solo parent employee who has rendered service of at least one (1) year.
6. 13TH MONTH PAY. The company grants 13th month pay equivalent to one (1) month’s basic salary to all
employees with at least one (1) year of service. 13 th month pay is mandatory to and must be paid before
December 24. Employee who resigned or retired from the company before the payment of 13 th month pay is
entitled to it in proportion to the length of time they have worked during that year. The 13 th month pay must be at
least 1/12 th of the total basic salary of each employee earned during that calendar year.
7. SEPARATION PAY. It is the amount due to the personnel where the termination of employment is due to causes
authorized by law. The two (2) most commonly used grounds for termination of employee are Authorized Causes
under Article 283 and 284 and Just Causes under Article 282 of Labor Code of the Philippines,

AUTHORIZED CAUSES
a. Installation of labor-saving device
b. Redundancy
c. Retrenchment to prevent losses
d. Closure of cessation of operation
e. Disease
 JUST CASES
a. Serious misconduct or willful disobedience by the employee of the lawful orders by his employer or
representative in connection to his work
b. Gross and habitual neglect by the employee of his duties.
c. Fraud or willful breach by the employee of the trust reposed in him by his employer or any immediate member
of his family or his duly authorized representative.
d. Commission of a crime or offense by the employee against the person of his employer or any of the
immediate members of his family or his duly authorized representatives.

In case of termination due to the installation of labor-saving devices or redundancy, the employee affected shall
be entitled to a separation pay equivalent to at least one (1) month pay or to at least one (1) month pay for every
year of service, whichever is higher.
In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one
(1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at
least six (6) months shall be considered one (1) whole year.
An employer may terminate the services of an employee who has been found to be suffering from any disease
and whose continued employment is prohibited by law or is prejudicial to his health as well as the health of his co-
employees: provided, that is paid separation pay equivalent to at least one (1) month salary or to one-half month
salary for every year of service, whichever is greater, a fraction of at least six (6) months shall be considered one
(1) whole year.
8. RETIREMENT PAY. It is the amount to be paid to the employee who has reached the compulsory retirement age
or who availed of voluntary retirement. In case of retirement, the employee shall be entitled to receive such
retirement benefits as he/she may earn under existing laws and any collective bargaining agreements.

WAGE DIFFERENTIAL refers to the difference in wages between workers with different skills in the same industry or
localities or between workers with the same skills in different industries or localities. It may also differ in different
employment or occupations.

FACTORS THAT AFFECT WAGE DIFFERENTIAL

1. Government Policy on Salary and Wage Adjustment
2. Company Policy on Employees Compensation
3. Collective Bargaining Agreement between Management and Workers in Private Sector
4. Collective Bargaining Agreement between Management and Workers in Public Sector
5. Nature of Work required in the workplace
6. Nature of Role and Responsibilities performed in the workplace
7. Employee’s education, experience and training

MINIMUM WAGE is the lowest renumeration that employers may legally pay to workers. It is a monetary renumeration
computed on hourly, daily, weekly, or piece work basis paid by an employer to an employee in exchange for work done.

ADVANTAGES OF INCREASE IN MINIMUM WAGE

1. Maintaining standard of living of the wage earners
2. People have more money to spend for goods and services.
3. Minimum wage earners will no longer quit from their job if they will be given a raise in income.
4. Help the government to increase revenue from the tax collected from the wage earners and businesses.

DISADVANTAGES OF MINIMUM WAGE INCREASE

1. Employers that will be affected by a wage increase would result to termination of some workers to lessen the cost
of labor.
2. Prices of goods and services will increase to cover the cost of paying higher wage to workers.
3. Employers may shift to outsourcing, which means hiring form other company or agency to do the same work
instead of direct hiring.
4. Employers may not offer additional benefits or incentives to workers due to wage increase.