ANNEX D

Demographic Concepts Relevant to PopDev Planning

(This was taken from the book developed by POPCOM entitled Gender-Responsive Population and
Development Planning Guide)

Population Growth

The most important concept in demography from the development planning perspective is population
growth.

Rate of Natural Increase (RNI) is the speed at which a population is increasing in a given period as a
result of the interaction of the natural demographic processes at births and deaths. This is the difference
between the crude birth rate (CBR) and crude death rate (CDR). The RNI is actually population
increase per 1,000 persons in a population.

RNI is calculated as follows:

RNI = CBR-CDR

Where:
RNI = Rate of Natural Increase
CBR = Crude Birth Rate
CDR = Crude Death Rate

For example:

CBR for the Philippines in 2003 = 25.6 per 1,000 pop

CDR for the Philippines in 2003 = 5.7 per 1,000 pop

RNI = CBR – CDR

= 25.6 – 5.7
= 19.9 or 20

The RNI can also be expressed in terms of percent or per 100 population. This can be accomplished
by dividing 20 by 1,000 and multiplying it by 100 ( a short cut of which is dividing 20 by 10). Based
on the said example, the population was growing at the rate of 2.0% percent through natural increase.

a 2003 NDHS Preliminary Report

b NSO, 1995 Census-Based National and Regional Projections

Population Growth Rate (PGR) indicates how fast a population increases or decreases resulting from
the interplay of births, deaths and migration in a given period of time. Where the population is closed,
meaning no migration, the rate of natural increase is the same as the population growth rate. There
are three methods for computing the rate of growth based on the assumption with respect to the
change: arithmetic change, geometric change and exponential change. However, to avoid confusion,
we will only show the commonly used method, which is the geometric change.

Geometric Change:

Log Pt
_____
Po
r = antilog __________________ - 1 * k

Log Pt
______
Po
__________________ - 1 * k
r = antilog t

Log 68,616,536
____________
r = antilog 60,703,206

___________________ - 1 * k
5,3397

Log 0.5332
r = antilog __________ - 1 * k
5.3397

= antilog 0.000997 – 1 * 100

= 1.0232213639 – 1 * 100

= 0.02322 * 100

= 2.32 percent

This means that the population grew at the rate of 2.32 percent per year between 1990 and 1995

Table 1 shows average annual growth from 1948 – 2000.

TABLE 1
 Population of the Philippines
And Average Annual Growth Rates: 1948-2000

CENSAL POPULATION GROWTH RATE

PERIOD ( in millions ) (geometric)
1948 19.2
1960 27.1 2.87
1970 36.7 3.03
1975 42.1 2.75
1980 48.1 2.66
1990 60.7 2.33
1995 68.6 2.32
2000 76.5 2.36

Population Doubling Time

The rate of growth that we calculate, say 3% or 2% by itself does not say much. It does not acquire
dynamism in it unless one asks: Suppose that rate of growth remains the same or continues to grow, what
would be the implied population size over a given number of years? The simplest way of looking at it is to
look at doubling time of population.

Doubling time refers to the length of time a particular population would double its size under a given
growth rate. It has been found out that a population growing at the rate of one (1) percent annually
doubles its size in 69.3 years. A quick way to estimate doubling time is to divide 69.3 by the growth rate
expressed in percent.

Doubling Time = ____ 69.3____________

Growth Rate (%)

= ______69.3______
2.36
= 29.5 years

Between the period 1995-2000, the growth rate of the Philippine population was 2.36 percent. If this
prevails over time, the Philippine population would double in less than 30 years.

The doubling time in years of various rates of growth is shown in Table 2. If population grows at 0.5% per
year, it will double in 138 years; if the rate of growth is 1%, the doubling time will be 69 years and if the
rate of growth is 2%, the doubling time is 35 years, and so on.
 TABLE 2

Doubling Time of Various Rates of Growth

RATES OF GROWTH DOUBLING TIME (years)

(%)
0.5 138
1 69
2 35
3 23
4 17

TABLE 2 shows that, as the rate of growth increases, the doubling time declines rapidly. With a 3% rate of
growth, the doubling time is only 23 years. If we look at sub-national populations, some cities like Metro
Manila are growing at say, 4% to 5%. The doubling time of a 4% growth rate is only 17 years, which is very,
very short. If Metro Manila already has 10 Million people now, that means it will have 20 Million people
in 17 years.

What this means is that the higher the population growth rate, the faster the population doubles in time
and, therefore, if we are to accommodate a larger population, there is really very limited time to
accommodate them.

Our concern is really not so much of growth as such, but how fast that growth is; how slow that growth
should be; and what can we gain from slowing it down from its current rapid rate. Doubling time tells us
how much more time we have to think of ways to accommodate a large population: If it does not grow
too fast, we will have more time to plan how= to provide the basic services. On the other hand, it grows
very fast; we will have less time to make needed adjustments to fulfill their needs.

Age-Sex Structure of the Population

The above rates, by themselves, do not say much until one tries to find out what happens when all these
sources of change actually change. They do have implications on the status of the population, particularly
in terms of age and sex structure. Different levels of fertility and mortality, as well as inmigration and
outmigration, cause changes in the composition of the population by age and sex. For a national
population where the migration component is not important, birth rates affect age/sex structure more
than death rates. In other words, the structure of the national population reflects changes in birth rates.

Sex Ratio

Sex Ratio is simply the number of males per 100 females in a population. This is obtained by dividing the
male population by the female population then multiplied by 100.
M
SR = ______ * k

F
Where:
SR = Sex Ratio
M = the male population in a given year
F = the female population in the same year
K = 100

For example:
M = Male population, 2000 census = 38,534,267
F = Female population, 2000 census = 37,979,810

M
SR = ______ * 100 = 38,524,26 * 100
F 37,979,810

= 1.014 * 100 = 101.4 or 102

Based on the 2000 total population count, there were 101 males for every 100 females in the Philippines

Population Pyramid

One way to look at the breakdown of population by age and sex is to construct a population pyramid
(Figure 1). This graphically shows what the proportion of the population of a given age and sex is with
respect to total population. It consists of bars: the height represents the age groups while the length
represents the absolute population, or a percent of the population in each age group. The sum of the bars
is equal to the total population or 100% of the population. The graph usually depicts the male and female
populations separately. The bars for males are given on the left of the x-axis and the bars for females are
on the right of the x-axis. It is constructed by five-year age group.

There are three general types of population pyramid as shown in Figure 1. The first is the expansive
pyramid. The age-sex composition of the Philippine population is represented by the expansive pyramid.
Those under five years of age are around 17% of the total population and this is made up of about 8.5%
males and about 8.5% females, and so on upwards. You can also see that the population of age 65 and
over constitutes a very small proportion of the total population.

The population pyramid of the Philippines has a broad base, that is, a very large proportion of population
belong to younger age groups. For example, those 15 years constitute about 40% of total population. This
kind of population pyramid is brought about by very high fertility since new births are naturally added to
the bottom, producing a broad-based age and sex distribution.
 Figure 1
The Three General Profiles of Age-Sex Composition

A second type of population distribution is illustrated by the age and sex situation of the United States.
This is based on 1976 data, so by now, the age and sex structure of the US would probably have changed
significantly. Here is a country that had low fertility for some time, reflected in a smaller pyramid base.
You could consider this a population in transition where fertility declines are reflected in progressive
decreased in the younger population with corresponding increases among the older population.

Finally, we have seen the case of Sweden, which for some time had a very low rate of population growth.
In fact, close to zero or even zero. Here, an almost rectangular population is shown. We would expect that
the US pyramid would become like that of Sweden over a long period of time as population ages, and
each segment moves up until they all die. The upper segment will increase over time and it will begin to
look like Sweden’s rectangular distribution.

Dependency Ratios

Different fertility and mortality levels, but mostly fertility levels, imply different age compositions. This
implies, in turn, the consideration called dependency burden. Dependency burdens or dependency ratios
can roughly be defined by looking at the proportion of the population normally considered dependents
relative to the working age.

One dependency ratio is the youth dependency ratio, which is the population aged 0-14 divided by the
population aged 15-64 multiplied by 100. The higher the ratio, the higher is the proportion of the younger-
age group population, and the more young dependents there are per worker. The other dependents are
the elderly. The old-age dependency ratio is the ratio of population aged 65 and over to the population
aged 15-64 multiplied by 100. As we said, as fertility declines, the age structure changes such that the
proportion of population aged 65 and over increases. In other words, as fertility declines, the old-age
dependency ratio tends to increase while the youth dependency ratio decreases. A total dependency ratio
can be obtained by combining both dependency ratios.

This simply implies that a reduction in fertility would tend to reduce dependency burdens, but the
composition of dependents changes. That brings back the question: Who is really more manageable to
support, the young or the old?

The calculation of the dependency ratios is demonstrated below using the following data:

P0-14 : Total population aged 1 = 0-14 years based on the 2000 Census = 28,313,897

P15-64 : Total population aged 15-64 years based on the 2000 Census = 45,257,770

P65 and over : Total population aged 65 years and over based on the 2000 Census = 2,932,410

k : 100

Child Dependency Ratio = P0-14

______ * k
P15-64

= 28,313,897
___________ * 1000
45,257,770

= 62.6 or 63 dependents

In 2000, there were approximately 63 child dependents per 100 persons in the working age group

Old-Age Dependency Ratio = P65 and over

__________ * k
P15-64

= 2,932,410
______________ * 100
45,257,770

= 6.5 or 7 dependents

There were seven old-age dependents per 100 persons in the working age group in 2000

Age Dependency Ratio = P0-14 + P65 and over

_________________ * 100
P15-64

= 28,313,897 + 2,932,410 = 31,246,307 = 69.04 or 69

___________________________________________
45,257,770 45,257,770
In 2000, there were 69 dependents per 100 persons in the working group

Some Basic Fertility Measures

Fertility refers to the live births that occur within a population. The production of live births is connected
with many factors like the start of cohabitation, use of contraception, infant and child mortality and
pregnancy wastage. Fertility varies with the characteristics of the mother like educational or occupational
status and the like.

Crude Birth Rate (CBR)

This is the number of births divided by the midyear population. It is usually expressed in terms of
thousands. The CBR is a “crude” measure because births are divided by the entire population (including
those who do not give birth) and is affected by the age structure. One can have a population with the
same fertility rates but because they have different age structure, one will get different crude birth rates.

The formula for CBR is as follows:

B
CBR = ___ * k
P

Where:
CBR = Crude Birth Rate
B = number of births in a given year
P = total mid-year population of the same year
K = 1,000

For example:
B = number of births in 1990 = 1,930.301
P = total mid-year population in 1990 = 60.940.207
K = 1,000

B
CBR = _______ * 1,000
P

= 1,930,301
_________ * 1,000 = 31.7
60,940,207

There were 32 live births per 1,000 population in the Philippines in 1990.

Age-Specific Fertility Rate (ASFR)

Since fertility varies by age, we want to look at fertility in terms of the age groups of women, and the
measure is called age-specific fertility rate. This would be the births in a specific age-group of women, say,
age group I, divided by the population of women in group “I”. Very often these age-groups are broken
into five-year age groups.

To get this age-specific fertility rate, we simply need information on the number of births by age group,
say 20-25, the number of women in age-group 20-25, and we divide the births of women belonging to
age-group 20-25 by number of women aged 20-25. Generally, you multiply that by 1,000 to express that
per thousand women. Age-specific fertility rate is a refinement of GFR by disaggregating fertility rates by
age-group of women of reproductive age.

The age-specific fertility rates could be graphed as in Figure 5 with age-specific fertility rate on the vertical
axis and the five-year age group of the women, 15 to 49 years on the horizontal axis. The resulting curve
is an inverted “U” meaning that at very young ages, fertility rates are relatively lower and it usually peaks
at age 25-29 and 30-34. Changes in age-specific fertility rates can easily be shown by calculating age-
specific fertility for different years (Table 4).

One might see a much lower level of fertility at each age depending on the pattern; in this case, the graph
shows that much of the fertility decline occurs, more or less, at ages 35-49. That is probably what one
might expect when there is fertility regulation. Much of this decline here at ages 30-44 over time might
be due to fertility regulation within marriage, and also to increase in the age-of-marriage or postponement
of marriage. Women here consist of married and unmarried women. Therefore, part of the reason women
of younger ages have lower fertility is that many of them are not married, or otherwise not exposed to
the risk of childbearing. Those two are not necessarily related because one can be exposed to childbearing
even without getting married.

In short, the two factors that affect age-specific fertility rates are marriage patterns and marital fertility
or fertility within marriage. Postponement of marriage is clearly reflected in Table 4 where, in more recent
years, the age-specific fertility rates of women aged 15-24 are declining.

The ASFR is computed as follows:

B
ASFR = _____ * k
Wi
Where:
ASFR = Age-Specific Fertility Rate
Bi = the number of live births to women in age group I
Wi = the number of women in the same age group I
K = 1,000

For example:

Bi = the number of live births to women in age group 15-19 in 1990 = 166.743
 Wi = the number of women in the same age group 15-19 in 1990 = 8,334.851

K = 1,000

B15-19
ASFR = _______ *1,000
W15-19

= 166,743
3,334,85

= 501

The Philippines had 50 live births per 1,000 women aged 15-19 in 1990.

Figure 2
Age-Specific Fertility Rates (ASFRs) per Thousand Women
1993-2003
 TABLE 3

Age-Specific Fertility Rates (ASFRs) per Thousand Women

and Total Fertility Rates (TFRs) per Woman: Philippines
1993-2003

Age Group Survey Year

1993 1998 2003

15-19 50 46 53
20-24 190 177 178
25-29 217 210 191
30-34 181 155 142
35-39 120 111 95
40-44 51 40 43
45-49 8 7 5
TFR 4.1 3.7 3.5
Source: 2003 NDHS Preliminary Report

Total Fertility Rate (TFR)

This is the sum of all the age-specific fertility rates. In the case of these age groups, one could sum it from
age group “I” to “n”. Simply add all of the figures in Table 4. All of them are in terms of five-year age
groups. The birth rates here are averages for each of the five years. Hence, the sum of all of these ASFR’s
is then multiplied by five to get the TFR.

What does TFR mean or tell us? Suppose a hypothetical woman goes through her childbearing age (15-
49), bearing children according to the rates in 1970 so that when she is 15-19, she will have, on the
average, 0.56 children. By the time she is 20-24 she will have 2.28 children more, and so on until she is
finished with childbearing bearing two children on the average; so that during her entire reproductive
period, she would have given birth to 5.9 children. That is the concept of TFR.

As one can see, it is actually a hypothetical rate, meaning that is what a woman would be capable of
bearing through her entire reproductive or childbearing age, subject to theses age-specific fertility rates
that we observed in the current period. It will not tell us the number of children that a woman is actually
going to have. We have to follow her through time. What is implied by the age-specific fertility rates? Over
time, when age-specific fertility rates decline, then obviously, TFR also declines. This is an important
concept: it is an excellent summary measure of current fertility that is comparable from population. It is
a commonly used measure when we talk about fertility.

The TFR is calculated as follows:

TFR = 5 ∑ ASFR i
Where:

TFR = Total Fertility Rate

ASFR = the age-specific fertility rate for age group I 15-49

5 = age group interval

For example:

ASFRs for 2003 are as follows:

Age Group ASFR

15-19 .053
20-24 .178
25-29 .191
30-34 .142
35-39 .095

40-44 .043
45-49 .005

TFR = 5 ∑ ASFR i

= 5 (.707)

= 3.5

A woman in the Philippines would bear an average of 3.5 children by the end of her childbearing years if
she were to pass through those years bearing children at currently observed age-specific

TFR tells us how many births, an average, a woman might have if she follows the current curve, but we
are not only interested in total births but also in the concept of reproduction – the ability of the population
to reproductive itself. Who reproduce themselves? Not just any birth or person but female births, the
female who replaces her mother.

Some Basic Mortality Measures

Mortality refers to the occurrence of deaths in a population. The incidence of death is related to many
factors like age, sex, occupation, economic and social class. While fertility represents additions to the
population and results in the restoration of the population, mortality represents an attrition or reduction
in numbers.

Crude Death Rate (CDR)

Similar to CBR, CDR is a rough measure of mortality. It refers to the number of deaths per 1,000
population. It is crude because it masks the effect of mortality on the population at different ages. It does
not show that mortality is high among the infants and highest among the very elderly.

The formula for CDR is as follows:

D
CDR = _____ *k
P
Where:

CDR = Crude Death Rate

D = number of deaths in a given year
P = total mid-year population in 1990
K = 1,000

For example:

D = number of deaths in 1990 = 426.581

P = total mid-year population in 1990 = 60,940.207
K = 1,000

D
CDR = _____ *k
P

= 426,581
_________ * 1000 = 7.0
60,940,207

The crude death rate in 1990 was 7.0 per 1,000 population

Infant Mortality Rate (IMR)

IMR is the number of deaths under one (1) year of age per 1,000 live births in a given year.

The infant mortality rates that we get from the vital registration simply measures number of infant deaths
over number of births. It simply measures how many infants die in relation to the number of births that
occurred in the same year.

The IMR is conventionally computed using the formula below:

IMR = D < *k
1
Where:

IMR = Infant Mortality Rate

D<1 = deaths to ages < 1 year in a given year

B = total live births in the same year
K = 1,000

For example:

D<1 = deaths to infants in 1990 = 109.448

B = total live births in 1990 = 1,930.301
K = 1,000

IMR = D < * 1,000

1
= B
= 109,448/ 1,930,301 * 1,000
= 56.7

As of 1990, there were 57 infant deaths per 1,000 live births in the Philippines

Maternal Mortality Rate (MMR)

MMR refers to the number of women who die as a result of complications of childbearing and childbirth
In a given year per 100,000 live births in that year. It is obtained by dividing the total number of maternal
deaths in a given year by the total live births for the same year, multiplies by a constant (k).

In computing for the MMR, higher constant (100,000) is used because of the much fewer number events
(maternal deaths).

The formula for Maternal Mortality Rate is as follows:

MD
MMR = __________ * k
B

Where:
MMR = Maternal Mortality Rate
MD = maternal death in a given year
B = total live births in the same year
K = 100,000

For example:
MD = maternal deaths in 1990 = 1,307
B = total live births in 1990 = 1,930,301
K = 100,000
MMR = MD
_____ * 100,000
B
= 1,307
__________ * 100,000
1,930,301

= 7.7

In 1990, there were 68 maternal deaths per 100,000 live births in the Philippines

Concept of Life Table/Life Expectancy

It will take some time to describe what a life table is but essentially, it is based on age-specific mortality
rates: what demographers do is to convert ASDR into mortality probabilities. It tells us what would be the
risk of dying in each age group. Demographers use that information to come up with a measure that we
often use – life expectancy at birth. This is a measure of overall mortality similar to TFR which, more or
less, summarizes information on fertility.

Life expectancy gives us a number that we can compare from time to time, and see whether the mortality
situation is improving or not. Life expectancy tells us the average number of years that a person born now
will live, given that he is exposed to all of mortality probabilities from age 0 up to age at year of death.

Let us take an example of how life expectancy is usually calculated. List the mortality probabilities in one
column, which tells you the risk of dying in that age. If we assume there is only one person and he lives to
be 100, the total number of years that he lived is 100 years divided by the number of persons, which is 1,
so the average number of years that he lived is 100. That is his life expectancy at birth.

Suppose we come up with a more realistic number. Usually the base used by demographers is 1,000
population. Let us use 100. If all 100 of them lived for 100 years from birth to death at the same time, the
life expectancy at birth would be 100 years (100 x 100/100). Suppose 50 of them die at age 50 and 50 of
them die at age 100. What would be the average life expectancy that they would contribute? For those
who live up to 100, 50 of them would contribute 5,000. The other 50 would die at age 50. How many life
years did they contribute? 2,500. All in all, these 100 individuals would have lived 7,500 years. What is the
average years that each had lived? It would be 7,500/100 or 75, on the average. If we have 100 people at
the beginning, on the average, they would have a life expectancy at 75 years. That does not mean that all
of them will die at age 75. It means that some of them would die somewhere along the line.

This is a crude way of computing life expectancy. Actually, it is being done using a life table where we
compute how many die at age 1, at age 2, etc. We have to compute how many each member contributes
to the total years lived, and averaging them out by the number of cohorts that we started out with.
Eventually, we come up with this measure, which gives us summary measures of the average lifetime that
can be expected from a group of people born now. If they are exposed to these kinds of mortality
probabilities that are observed at the current period.

Obviously, mortality rates change over different periods. Perhaps mortality declines. If so, the
probabilities of dying at each age would decline and the life expectancy at birth would increase. Changes
in life expectancy at birth tell us about changes in these mortality probabilities by age, which in turn tell
us improvements in socio-economic conditions.

Table 4
Philippine Life Expectancy at Birth for Both Sexes. Male and Female
1902-1995

Years LIFE EXPECTANCY BIRTH Difference

(in years) (F-M)
BOTH SEXES MALE FEMALE
1902 12.70a 11.54b 13.92b 2.38
1918 25.61a 25.17 26.07 0.90
1938 46.22a 44.80c 47.72 2.92
1948 51.17 48.81 53.36 4.55
1960 53.30d 51.17 55.00 3.83
1970 57.60a 55.24e 60.89e 5.65
1975 59.3a 56.9f 61.8f 4.9
1985j 63.0 61.0 65.0 4.0
1990h 64.80 62.30 67.40 5.10
1992h 65.46 63.00 68,05 5.05
1995h 66.25 63.82 68.80 4.98
2000k 68.0 65.0 71.0 6.0

a Estimated Assuming a Sex Ratio at Birth of 1.05

b Estimated by Sison, Lara, Herbosa and Lazaro as Cited by Jaraillo
c Estimated by Dr. T.J. Jaramillo
d Estimated by Manuel O. Hizon and Isagani de Castro
e Estimated by Luisa T. Engracia
f Estimated by Wilhelm Flieger
j Source: 1987 World Development Report
h Source: Estimates from NSO
k Source: 2002 Philippine Statistical Yearbook

To construct a life table, death rates are needed. One can obtain death rates from the vital registration
but they are not very accurate. Thus, demographers try to check the data against census figures in a very
elaborate estimate measure.

Suppose the data are defective because of poor reporting and, overtime, as the region develops, reporting
becomes better. What does this imply? A government worker tries to so as much work to improve health
and mortality situations. But instead of expecting it to improve, it worsens. It might be that death rates
are really going down but because of better reporting, more deaths are now being reported and so the
mortality rates are going up. These are things one has to be aware of in order to interpret data better.

Looking at the figures in Table 5, in 1990, the national life expectancy at birth was around 65 compared
to around 51 in 1948. An improvement in mortality condition is noted.

Population Growth Momentum

The last concept to be discussed in this chapter is population growth momentum. What this means is that
there is an inherent tendency for population to continue to grow, even if you apply the brake on fertility.
Part of that momentum is related to the age structure. If in the past we had high fertility, even if fertility
is suddenly reduced, it is still possible that the number of births produced by women, even with low
fertility, will still exceed the number of deaths. Therefore, a positive growth rate will still ensue.

The reason for this is because of the broad-based age structure, there are still many women giving birth
even if each has a smaller number of births. Even when fertility declines, we still have a large number of
women, each producing a given number of children and together those births constitute a number greater
than the total number of deaths.

In short, even if fertility is reduced quickly such that NRR = 1, population will continue to grow long before
it finally reaches zero population growth (ZPG)

To illustrate: In a relatively old projection done by the World Bank, the estimated population in 1977 was
44 million. Assuming that the country at that time was able to achieve fertility reduction sufficiently fast,
such that by the year 2015 we would have reached NRR = 1, our population would still continue to grow
up to 2075. By that time, the population would be 128 million.

The population momentum is like the momentum of a rapidly moving car. If one suddenly applies the
brake, one does not stop exactly at the point where the break was slammed. The weight of the car would
carry it forward before screeching to a stop. Same thing happens with population; the speed of the moving
car can be likened to the rate of fertility. If it is very high in the past, the time it will require to reach ZPG
would be much longer. Therefore, the size of the ultimate stationary population would be much higher.

What does this mean? No matter what we do about fertility now, whether we succeed in reducing it
quickly or not, we can expect a much larger population in the future. The question is not so much whether
a population would grow or decline (unless we declare war with a superpower nation). We expect
population to increase even if fertility declines rapidly. However, if fertility does not decline rapidly, it will
take longer to reach replacement fertility (NRR = 1), if we ever reach it at all, it will take even longer for
ZPG to be achieved. Therefore, we will have a much larger population size in the future. It is really more
of a choice between a slow or rapid population growth because population will definitely continue to
grow.

Our task might be easier if the population does not grow too quickly, so that we will then have more time
to think of the appropriate strategy to support them.

Relevant Economic Concepts to POPDEV Planning

FOUNDATION OF ECONOMICS

The foundation of economics – scarcity and choice, which is based on the following facts:

1. Society’s wants are unlimited; but

2. Economic resources or the means for producing these goods and services are limited.

Economic problems exist because resources are scarce while society’s wants are unlimited. Scarcity is the
reason why people economize. Scarcity refers to the limitations that exist in obtaining all the goods and
services that people want. It gives rise to economic problems and it is the reason why we have to make a
choice. There is a need to allocate scarce resources to satisfy our wants. This implies the need to have
choices – how to choose the allocation of resources among competing demands, among competing
objectives. Choices are important because if we allocate resources toward one activity, those resources
are no longer available to produce other things. In other words, we are giving up other goods and
resources to produce another set of goods and services.

Three (3) Fundamental Economic Problems

1. What goods and services should be produced and in what quantities?

2. How should such goods and services be produced? This is decision of what resources are to
be used in production – land, labor, capital, technology, etc. What combination of these
resources should be used and what is the best way to combine these resources in order to
produce the greatest output?
3. For whom are these goods and services? How are they distributed? How are they shared
among various individuals in the society.

TYPES OF ECONOMIC SYSTEMS

The way a nation answers these economic problems determine the type of economic system it adopts.
There are three (3) types of economic systems: The free market system – relying on a system of market
and price; centrally planned economy – all decisions made by central authority; mixed economy – both on
free market system and some of central authority.

The Free Market System

Of the three (3) types of economic system, the free market economy or the perfectly competitive market
is chosen. The so-called “law of supply and demand” applies to a competitive situation, when regulatory
actions are made the law of supply and demand is used to suit certain situation. Competition is also a
good regulator of efficient allocation of resources.

The basic characteristics of this type of economic system are that resources are privately owned and
decisions are made by the consumer themselves. Figure 3 represents a very simple model of the free
market economy.

Figure 3
Two-Sector, Two-Market Model of the Economy
 Products

Product Goods &

Consumptions Markets Services
Expenditures
Revenues

Money
Income (rent, Land, labor Land, labor Resource
wages, capital capital expenditure
Resources
interest) Markets

There are two sectors – the households and the business firms: and two markets – the product market of
goods and services and the market of factors of production – land, labor, and capital, it is assumed that
this is a closed economy. Nothing flows in and out of the system.

The households, having incomes, register what they want in terms of goods and services in the product
market, and they spend their money on goods and services. The money that they spend goes to business
firms as revenues in exchange for the goods and services that they produce which in turn, the households
can obtain and consume.

On the other hand, the firms in order to produce goods and services would have to utilize resources –
land, labor, and capital. They pay rent, wages and interest to the owners of these resources – the
households. In other words, the households obtain their money incomes through the sale of these
resources – land, labor, and capital – in the resource market to firms who in turn produce goods and
services and offer them for sale in the product market.

DEMAND AND SUPPLY

A market is a place where buyers and sellers interact and engage in exchange. In economics, a market is
not just a physical place. But anytime where there are buyers and sellers there is the market, even though
it does not exist in any particular place. If there are buyers and sellers of goods and services, there is a
product market; and if there are buyers and sellers of resources, there is a resource market.

The demand curve is a graphical presentation of the demand schedule and therefore shows the quantities
of the commodity the consumers are willing to buy at the corresponding prices. The demand curve (Figure
4) reflected by line D – at each point in the curve shows quantity demanded and the corresponding price.
As the price of commodity or service increase, the consumer buys less quantity. Therefore, there is a
downward slopping demand curve which shows that the higher the price, the less quantities demanded.

Figure 4 Figure 5
Demand: Product Market Supply: Product Market

S
The interaction of demand and supply (Figure 6) leads us to concept of equilibrium, or the point of
interaction, where quantity demanded (Qo) equals quantity supplied (So) at the price specified (Po) when
equilibrium is reached, demand equals supply at the given price and quantity.

The same thing is happening in the resources market, Figure 7 below shows the demand, supply and
equilibrium in the labor market. We have units of labor on the horizontal axis and the price of labor or
wage rate on the vertical axis. The demand for labor, D, represents the units of labor, the producers are
willing to hire to produce goods and services. The higher the wage rate, the less quantities of labor the
producer is willing to hire as means of production. The supply of labor shows the quantities of labor those
households are willing to offer for sale in the market.

Figure 6 Figure 7
Equilibrium Demand and Supply: Product Market Demand and Supply Equilibrium: Labor Market

Price S
S Wage

D W
P
Quantity Units of
D
D labor
Unit Lo
s of
labo
rThe supplier of labor will supply moreD labor if the wage rates are higher. Again, when supply and demand
Units
for labor is equal, at the intersection, there is equilibrium of labor units (Lo) and wage rate (Wo). At this
of labor D Units of
point, there is no tendency for the system to change unless either or both supply and demand change.
labor
How does this system of markets and price answer the basic economic questions?

1. What good and services are to be produced in what quantities?

In the product market, the consumers are the sovereigns. They decide what goods they want and
producers act in accordance with those decision. If they want the people’s car it will be produced; if they
want jeepneys or motorcycles, these goods will be produced. The importance that the consumers attach
to the goods is indicated by the price they are willing to pay for them. If the price is high enough such that
producers can make a profit, then the producers will go ahead and produce them.

2. How shall the goods be produced? What resources shall be used? And what combinations of
resources?
Under a market system where producers are trying to maximize profits, obviously it is to their interest to
use the least expensive resources or the least costly combination of inputs. Otherwise, given the price of
the product, if they produce it inefficiently and use the most expensive resources, they will lose money
and eventually go out of business.

Thus, the producer will hire only those resources where their contribution to total output is equal to, or
greater than, the cost of hiring them. This introduces us to the concept of efficiency in the system that is
built into the way producers make decisions based on their objective of maximizing profits.

3. For whom shall the goods be produced? How will they be distributed and how will they be
shared with all members of society?

The market system is a very impersonal system, it does not care whether one is rich or poor, handsome
or ugly; the market simply distributes these goods and the consumer buys according to his purchasing
power, if he has the money to pay for them, then he can have the goods, if he does not have the money,
no matter how good-looking he is, he will not get the goods.

Therefore, those who have higher incomes will be able to buy more goods. Income, in turn (as discussed
earlier in the two-sector, two-market model) depends on the resources that households have. Some
households might own more land, have more capital, etc. and therefore, they can generate more incomes
with those resources. Incomes, in turn, are used to buy more goods and services.

Determinants of Demand

1. Price of the goods – as the price of the good goes up, the quantity demanded declines; as the
price of the product goes up, the quantity supplied also goes up.
2. Taste of preference for certain goods – if one prefers certain type of goods; one might increase
his demand for them, given his level of income and the price.
3. Income – This is a major factor of demand. If one’s income increases, one would now be able to
demand more goods and services at the same price than before. This result in a shift in the
demand curve to the right.
4. Price of related goods: complements and substitutes – There are goods that either substitute or
complement a particular good. An example of substitutes would be margarine and butter. If the
price of butter goes up, then the demand for margarine increases. An example of complements
 would be pants and shirts. If the price of pants increases the demand for pants decreases and the
demand for shirts decreases since the price of shirts also decreases.
5. Number of buyers – The demand of goods and services increase with the number of buyers. Thus
represents a shift in the demand curve.

Determinants of supply

1. Technology and change in technology – The introduction of cost-reducing innovation production

technology increases production. An increase in production will result in a shift in the supply curve
to the right because the producer can now supply more goods and services for same price.
2. Price of inputs – Higher prices of resource inputs imply that a producer can now produce only a
smaller amount of outputs for the same budget. An increase in the price of inputs would result in
a shift in the supply curve to the left. He can now produce less output for the same total cost,
because he can now buy only a smaller amount of inputs because prices have increased.
3. Number of sellers – The supply of goods or services with the number of seller. This represents a
shift in the supply curve.
4. Price of the good produced – The higher the price of the commodity in the market, the more
producers will be willing to supply. This change, however, represents a movement along the
supply curve rather than a shift of the curve.

RESOURCE ALLOCATION DECISIONS

Consumer’s Resource Allocation Decision

The main objective of the consumer is to maximize his satisfaction subject to income, prices and their
tastes. The consumer will maximize total satisfaction by choosing the combinations of goods and services.
Naturally, he will consume less of the goods of higher prices and consume more of the goods with lower
prices. The combinations of goods and services and their corresponding prices are reflected in the
consumer’s demand curve. Each point in the demand curve represents efficient choices of the consumer.
In each point of the demand curve, the consumer has already maximized his satisfaction, given prices, his
income and tastes.

The price, represents the benefit the consumer derives from the good or the value that the consumer
attaches to the good, it also represents the cost to him. The consumer, in fact, is already doing a cost-
benefit analysis and he will consume the good up to the point where cost is equal to the benefit. The
equilibrium price, is in fact, equal to the benefit that he gets out of consuming the good, which is also
equal to the price that he pays for it.

Producer’s Resource Allocation Decision

The producer, on the other hand, makes a decision from a different perspective. He wants to maximize
his profits subject to the prices of inputs, a given budget and available technology. In terms of producing
the level of output that would maximize his profit, he will produce that level of output such that the cost
of production is equal to the price of that output. Otherwise, if the cost of production is greater than the
price at which he can sell the output, he will lose the money.

The production decision shows his supply curve. Each point in the supply curve represents efficient
combination of inputs or what is called the efficiency of production (i.e use of the least costly combination
of inputs in producing a given level of output).

Since the demand curve indicates the efficiency in consumption and the supply curve represents the
efficiency or production – the efficient combination of inputs that are used in the production of the good
at equilibrium, the efficiency of consumption and production is attained. At equilibrium, the value of the
good to the consumer is equal to the cost or producing that good.

The demand and supply analysis is in effect a cost-benefit analysis: while the consumer and the producer
act independently from each other, at equilibrium, the value or benefit derived from a good is equal to
the cost of producing that good.

PERFECTLY COMPETITIVE MARKET

The following are the conditions under which efficiency in resource allocation would be achieved under a
perfectly competitive market:

1. Perfect information – All household and firms have perfect information on everything, they have
to know the goods and services – prices, quality, future price, price of inputs, etc.
2. No Joint Consumption – No two persons can consume the same commodity simultaneously. Only
the person consuming that good gets satisfaction from it.
3. No Externalities – When a person consumes or produces a good or service, the costs and benefits
accrue to him alone. That is, all the costs are borne by him and all the benefits go to him. There
are no costs or benefits to others as a result of that consumption or production – there are no
external effects.

A very common example of externalities in production is pollution. When MERALCO expels that black
smoke as a result of operating their gas turbines to produce electricity, it pays the costs and enjoys the
revenues but everybody in the neighborhood also bears the costs of health hazards due to black smoke.

4. No Economies of Scale in Production – In a perfectly competitive market, it is assumed that it is

cheaper by the dozen, but that there is a constant return to scale for each additional output; that
additional output will cost as much or even more than the previous one. Economies of scale
should not be present in a perfectly competitive market because if the average cost declines as
one produces more goods, then it is more efficient to have a large producer to produce the
output.
5. Consumers Maximize Utility while Producers Maximize Profits – In a free market system,
consumers and producers maximize their own self-interests. However, this might not be true in
real life. Producers might have other motives besides profits – prestige, etc. – and consumers
 might not always maximize utility in the usual sense but might blindly follow fashion or consume
conspicuously for prestige.
6. Competition – The market has large numbers of sellers and buyers of commodity such that no
single buyer or seller can influence the price.
7. Freedom of Entry or Exit in the Market – There is a perfect mobility of resources, i.e. there are as
many buyers or sellers, and each one can freely enter or leave the market.

ROLE OF GOVERNMENT

Under conditions of perfectly competitive market, individual decisions of consumers and producers all
lead to efficient allocation of resources that can be considered socially optimal. But the reality is that the
conditions in a perfectly competitive market do not hold. When these conditions of the perfectly
competitive market are not met, the operations of the market and prices may not lead to efficient
allocation of resources. When such conditions are not met, there are market failures. Thus, there is a need
for government intervention.

Causes of Market Failures

The following are the causes of market failures:

1. Imperfect Competition – Households and firms may not always have the full and complete
information on everything they should know in deciding what to consume and produce. They may
not know the prices, the changes of prices in the future, qualities of certain products, etc. In this
case, the decisions of individual consumers and producers may not always be optimal, especially
in the calculation of costs and benefits. For instance, in health people may not know much about
the cause of illness or how illness is transmitted. Due to lack of knowledge or ignorance, they
might not demand the optimal quantities of health services. This is an example of imperfect
information and, as a result, in the example give, the demand for a particular commodity may be
less than optimal.

2. Public Good – A public good is one in which an individual can enjoy without reducing the
enjoyment of the same good by others. The usual example of these goods is national defense
which benefits and protects everybody. Part of the nature of the public good is that everybody
can consume them jointly. The other important aspect is that if everybody can consume them
simultaneously, then most likely no one would be willing to pay. Public goods are essential goods.
But since the private sector are not willing to produce this good if they will not profit from
producing them, then the government has to provide for such public goods. Provision of public
goods by the government is the classic justification of government intervention.
 3. Externalities – These are costs and benefits borne by those consuming or producing the goods.
When externalities exist either in consumption or production, the goods will either be over-
consumed or overproduced.

Many of the examples of externalities in production relate to pollution. There are many producers
whose production processes pollute the environment. Pollution is hazardous to the health of the
people. In this case the government is justified to intervene through regulation. The government
can require these firms to clean up the air, put anti-pollution devices or tax them heavily to
partially capture the costs that the people bear.

4. Economies of Scale – Economies of scale tends to create natural monopolies that might
manipulate prices to the detriment of consumers. The government might be justified to intervene
by regulating the pricing system of these monopolies. Economies of scale usually occur in many
utility companies – such as electric and water supply since these are cheaper if produced in large
quantities. The government may intervene to make rising prices reasonable, something that can
be justified in terms of the cost of production and not just increase excessive profits for the firms.

Equity

In addition to these market failures or when the conditions of a perfectly competitive market do not hold,
another justification for government intervention is equity. Society considers it desirable that the
distribution of income and access to basic services are as equitable as possible. But the market system
can produce efficient results that might not be very equitable. The distribution of income, which depends
on the distribution and prices of resources that the households have – land, labor, physical capital, human
capital (their skills, knowledge and health) may be unequal or a certain amount of inequality in the
distribution is undesirable.

Government intervention is justified mainly to eliminate the undesirable aspects of existing inequality.
Government intervention is justified on two grounds:

1. Market failures – when the market system does not operate as efficiently because of the absence
of the assumptions; and
2. Equity promotion – since the market system does not promote equity, someone else has to do
the job and that is where the government can come in.

However, while there might be a justification for government intervention, this does mean that the
government has to intervene right away. The government should weigh that the benefits of correcting
market inefficiency is greater than the cost of intervention.

When should the government intervene?

1. Public intervention should be undertaken only when the situations in the private market yield
inefficient outcomes because of market failures and the cost of public interventions are less than
the benefits of correcting the situation.
 2. Public intervention should be undertaken only where the situations in the market produce
undesirable inequality and can be improved by public intervention at socially acceptable costs.

Sources of Public Sector Failures

If there are market failures, there are also sources of public-sector failures in promoting efficiency and
equity, these are:
1. Special-interest effect – Special-interest groups are well-informed, well-organized, with clear
objective of what they want and they want something badly because they see large benefits from
a particular policy. So they lobby before Congress to get a policy adopted.

That policy may not benefit the rest of the society and in fact, might lead to losses for the rest of
the population. Except that individually, the losses might be very small, many individuals may not
care: and because they are not organized, they are not heard.

Politicians are more likely to vote for measures that benefit these special-interest groups because
if they do not, they might lose their support.

2. Hidden Costs, Visible Benefit Concept – Usually, politicians or policymakers do not objectively
weigh costs and benefits of various programs to find out whether to support or reject them.
Instead, they support programs where the benefits are clearly visible for themselves and the rest
of the population, while the costs are hidden. Or they might disapprove certain programs wherein
although economically justifiable if one applies the cost-benefit analysis, the benefits are difficult
to see or discern, or they are long term, whereas costs are immediate and highly visible.

3. No selectivity – is another source of failure in the public sector choice. A politician represents a
bundle of social goods and services based on his platform – hospital, state university, low prices,
higher wages, and others. A citizen may want some items (issues) in his platform, but not all of
them. He might want lower prices but not state university and hospital. Yet, when he votes his
politician, he is saying that he wants the whole bundle of social goods that the politician promised
to deliver.

In other words, it is difficult to select, from an individual voter’s standpoint what goods and
services one wants when voting for politicians since they represent a bundle. In public sector, we
are not thinking of specific goods but a bundle of goods represented by a politician.

4. Bureaucrats Seek to Enlarge the Budget – In the private sector, there are a lot of incentives which
make them strive for efficiency – greater profits, less losses, etc. – because unless people in the
private companies are efficient they get kicked out.

ROLE OF GOVERNMENT IN FERTILITY DECISIONS OF COUPLES: AN APPROACH

Does the government have any business in the fertility decisions of couples? This has been the tug-of-
war between the Church and the State for more than 30 years. This has created a controversy between
the Church and the State. The Church claims that the government has no business in this area.

The economics of government intervention in the fertility decisions of couples is an application of welfare
economics. However, this is a special case.
Fertility decisions can also occur under a perfectly competitive market. There is a market because there is
a demand for children and there is a supply of children. Except that fertility decisions occur with
households – the same household demands and supplies children.

Fertility Decisions Under a Perfectly Competitive Market – If the conditions of a perfectly competitive
market hold and we dream that this will result in efficient allocation of resources, by relying on the
decisions of individual parents, then we can say that fertility decisions of individual couples would lead to
optimal results – the number of children born will be the optimal number of births.

If this is the case, the policy would be to let the situation be and allow couples decide on childbearing. We
can say that there is a principle to justify free choice – the principles under a perfectly competitive market.
However, there are also other important factors to be considered outside the conditions of a perfectly
competitive market – religion, culture, human rights, and other factors. Since perfectly competitive
markets do not usually exist in pure forms. Certain aspects of the fertility decisions of couples may not
lead to optimal results.

Fertility Decisions When the Market Fails

The following are market failures in fertility decision-making:

1. Imperfect information – Couples need full and complete information to make intelligent choices.
They need information such as on what the future will be like, the opportunities for their children
as well as information on the costs and effectiveness of various types of family planning methods,
etc.

Sometimes this information is difficult to obtain. It is not freely available in the market. This is
because once this information is obtained and known, it becomes available to everyone (a public
good) so nobody is going to pay for information when he knows that he can have access to it once
disseminated. Private markets are not likely to make a profit out of selling this kind of information.
Thus, they are not likely to provide them in adequate quantities. If this is the case, then there will
be underproduction of this kind of information in the private market. This situation provides
justification for government to intervene – that is intervention in the form of provision of
information only.

It is very difficult to provide information on future economic prospects and opportunities and how
number and spacing of children would affect (or would be affected by) those future economic
prospects and opportunities. Since these information will not be provided by the private market,
the government should provide such information, based on its vision of the future.

The vision of the government of what the prospects are will certainly affect the decisions of the
households including decisions on fertility. Thus, imperfect information regarding the
consequences of high or low fertility, which the private market may not provide, gives reason for
the government to intervene in the fertility decisions of couples.

2. Existence of externalities – As mentioned earlier, externalities exist when the decision of one
person imposes benefits and costs to others. Some people say that childbearing has externalities.
Childbearing affects other families other than the family that decides to have many children.
These externalities come different sources, namely:

a. Common property resources – these are resources that are collectively owned by society –
water, air, fisheries, forests, and some agricultural lands. Since common properly rights are
not well defined, everybody has access to these resources. In the absence of well-defined
property rights, these resources get rapidly exploited. Since the people do not own these
resources, they take as much as they can. People do not care whether these resources get
exploited or not. In fact, whether there is population growth or not, common property
resources are overused.

Thus, rapid population growth, aggravate degradation and destruction of these resources.
Rapid population growth puts pressure on our declining forests, fisheries and agricultural
lands. So a more rapid population growth imposes costs not only to those who bear children
but also to those who do not and to those who bear only a few.

This is a case of externalities and how rapid population growth can worsen these externalities
inherent in common property resources. In this regard, government intervention is justified.

b. Public Goods – Another source of externalities is in relation to the fact that the government
provides public goods – goods that everybody consume and enjoy at the same time. Examples
of these goods are transport system, water supply, electricity and national defense.

One view is that population growth has positive externalities. Population growth is useful in
creating economies of scale in production process – as more output is produced, the unit cost
declines.

For instance, in setting up transport system, the cost per person of building transport system
declines if there are more people in the area. However, if the area is not highly populated, it
does not make sense to build a transport system. But these transport system becomes cost
effective or economically justifiable if the population grows. In this sense, population growth
has a beneficial impact on the provision of these social good. And because these are public
goods, it will also benefit the economy. But these economies of scale can only go so far.

The experiences of developing countries with huge and dense population showed that instead
of further economies of scale, a more rapid population growth lead to congestion,
overcrowding and excessive demand for existing infrastructure and services.

This is true in urban areas. Since the costs of congestion are borne by the rest of the society
and not only by those who bear children, population growth has negative externalities. This
is an example in which fertility decisions of couples have external effects on other families.

c. Merit Goods – These are goods and services that individuals should have a minimum of
(minimum of education, minimum health services, etc.). Education and health services are
subsidized by the government either fully or partially. Health and education are good
examples of merit goods. Obviously, families with many children would benefit from these
education and health services than those families with few or no children at all. So a couple’s
 decision to have children imposes costs on all taxpayers since all of them have to pay for the
increasing educational and health care costs.

These externalities are seen in education. In spite of the large budget provided to education, there is lack
of textbooks, classrooms, teachers, and other school facilities. Due to rapid population growth, there is
an increasing number of students than our educational system can handle. As a result, the quality of
education deteriorates.

Fertility Decision When There is Inequity

Another possible justification for government intervention in fertility decision-making is equity, especially
equity in access to family planning supplies and education. Given the distribution of income, a large
proportion of the population who desire to use contraceptive methods to space or limit the number of
their children might be unable to do so because of their lack of access to family planning supplies and
information.

From equity considerations, not just market failures, government may be justified to publicly provide or
finance provision of information and services. The government can intervene only in the provision of
information and services. The basic decision as to the number and spacing of children still resides on the
couples based on their moral and religious convictions.

Legal Mandates
Population and Development

1. The 1991 Local Government Code (LGC) or RA 7160 – a number of sections imply the need for
the LGU’s to prepare a Socio Economic Profile (SEP) although none of the sections made explicit
provisions that SEP preparation is compulsory for LGUs:

1.1 Section 17 Basic Services and Facilities. (a) Local government units shall endeavor to be self-
reliant and shall continue exercising the powers and discharging the duties and functions
currently vested upon them. They shall also discharge the functions and responsibilities of
national agencies and offices devolved to them pursuant to this code. Local government units
shall likewise exercise such other powers and discharge such other functions and
responsibilities as necessary, appropriate, or incidental to efficient and effective provision of
basic services and facilities.

1.2 Section 106 provides for the creation of a local development council (LDC) that shall primarily
initiate the preparation of a comprehensive multi-sectoral development plan of the area.
Specifically, under section 109, the LDC functions are enumerated as follows:

 Formulates long-term, medium-term and annual socioeconomic development plans

and policies;
 Formulates the medium-term and annual public investment programs; and
 Appraises and prioritizes socioeconomic development programs and projects.
 1.3 Section 476 enumerates the functions of the Planning and Development Coordinator. Among
others, the following functions have been identified:

 Formulates integrated economic, social, physical, and other development plans and
policies for consideration of the local government development council;
 Conducts continuing studies, researches and training programs necessary to evolve
plans and programs for implementation;
 Integrates and coordinates all sectoral plans and studies undertaken by the different
functional groups or agencies; and
 Prepares comprehensive plans and other development planning documents for the
consideration of the local development council.

1.4 Section 287 provides for the appropriation of at least 20 percent of LGU internal revenue a
allotment (IRA) for development projects. A basic requirement is that the LGU shall furnish
the DILG a copy of its development plan.
 Formulates integrated economic, social, physical, and other development plans and
policies for consideration of the local government development council.

2. Memorandum Order No. 2 from the Office of the President – enjoins LGUs to prepare their
respective medium-term plan and investment program.

3. DILG Memorandum Circular 92-41 – instructs the LGUs to prepare an annual investment
program.

4. Republic Act 7279, otherwise known as “Urban Development and Housing Act (UDHA) of 1992”.
SECTION 37, Population Movements states that the local government units shall set up an
effective mechanism, together with the appropriate agencies like the Population Commission, the
National Economic and Development Authority and the National Statistics Office, to monitor
trends in the movements of population from rural to urban, urban to urban, and urban to rural
areas. They shall identify measures by which such movements can be identified to achieve balance
between urban capabilities and population, to direct appropriate segments of the population into
areas where they can have access to opportunities to improve their lives and to contribute to
national growth and recommend proposed legislation to Congress, if necessary.

The Population Commission, the National Economic and Development Authority, and the National
Statistics Office shall likewise provide advanced planning information to national and local
government planners on population projections and the consequent level of services needed in
particular urban and urbanizable areas. This service will include early warning systems on
expected dysfunctions in particular urban area due to population increases, decreases or age
structure changes.

5. Memorandum Circular from Malacanang – To all Local Government Units: Pursuant to the
recommendations arising from the Gathering on Human and Ecological Security: A Conference on
Population. Environment and Peace on 15-17 June 1995. LGUs are directed to undertake and
 prioritize human and ecological security concerns in the LGU’s existing and future community
development programs by:
 Taking into account the interrelatedness of population, environment, and peace;
 Promoting the use of environment-friendly technologies and discourages those that
are harmful to the ecosystems;
 Maximizing women’s contribution to and benefits from socio-economic development
effort;
 Reorganize accordingly at the Executive and Sanggunian levels to synchronize and
effectively address population, environment, and peace concerns, e.g.
maintain/strengthen population management offices, local water and sanitation
committees, resource protection committees, peace and order councils; and
 Provide at least 20% out of the 20% Internal Revenue Allocation (IRA) for
development projects to adequately fund programs that address human and
ecological security.

6. Social Reform and Poverty Alleviation Act of 1992, Section 2 – It is the policy of the Sate to adopt
on area-based, sectoral and focused intervention to poverty alleviation wherein every poor
Filipino family shall be empowered to meet its minimum basic needs of health, food and nutrition,
water and environmental sanitation, income security, shelter and decent housing, peace and
order, education and functional literacy, participation in governance, and family care and psycho-
social integrity.

Reproductive Health/Family Planning

1. DOH Administrative Order No. 50-A s.2001 (National Family Planning Policy) – under the
context of Reproductive Health approach, the population development and family planning is
a priority interventions in its vision of “Health for All” with the end-view of attaining better
quality of life for all Filipinos with special focus on the poor.

2. DILG Memorandum Circular 2003-204 (Integration of Standard Days Method (SDM) in the
Local Government Family Planning Program) – mainstreaming of natural family planning
methods into the overall family planning program of local government units (LGUs) thru the
use of standard days method or the necklace method. All the LGUs are enjoined to initiate
measures to effectively guide their constituents who wish to use the SDM method by way of:
 Training health and population workers, as well as community volunteers on the SDM;
 Integrating the SDM in existing natural monitoring activities;
 Ensuring the quality of SDM regular monitoring activities;
 Allocating resources on the installation of services and availability of trainings, IEC and
client materials; and
 Networking with NGOs, POs and other partner community organizations engaged in
development work.

3. DOLE Department Order No. 56-03, “Rationalizing the Implementation of the Family Welfare
program (FWP) in DOLE” – in line with the DOLE’s commitment to various international
commitments (such as ICPD, International Conference on Women, and others) as well as the
Philippine Population Management Program, the Directional Plan and the Philippine Plan for
Nutrition, shall provide family welfare services to workers using others the following
dimensions as guide: reproductive health and responsible parenthood, gender equality, value
formation and environmental protection as guide for determining the services.

This DOLE Order is also complying with the Labor Code provision under Article 134, which
states “establishments which are required by law to maintain a clinic or infirmary shall provide
free FP services to their employees which shall include, but not limited to, the application or
use of contraceptive pills and intra-uterine device (IUD). The implementing rules and
regulations (Rule XI-A, Book III) shall apply to all private establishments, which habitually
employ 200 or more employees.

A functional Labor/Management Coordinating Committee (LMCC) to be composed of two to

three representatives from labor and management sectors. The LMCC shall be responsible for
planning, implementing, coordinating and monitoring the FP program.