ECO403 Assignment 1 Solution Fall 2012
Monday, November 19, 2012 Edit ThisWith the help of above data, calculate Togo’s:
Nominal GDP : Y = P x y
y = quantity
P = price
a) Nominal GDP for year 1986
b) Nominal GDP for year 1987
c) Real GDP for year 1987
Real GDP y = Y/P
Where we multiple each year’s Quantities (y) with the previous year’s Prices (P)
d) GDP deflator for the year 1987
GDP Deflator = (Nominal GDP/Real GDP) x 100
e) Labor force for year 1986 and 1987
Labor force = employed + unemployed
1986: 90 lac employed and 7 lac unemployed
Labor Force = 97 lac
1987: 87 lac employed and 11 lac unemployed
Labor Force = 98 lac
Real GDP = Nominal GDP/CPI*100
Nominal GDP = ∑ ptqt
Source: Labor force survey 1986
Figure 6. Employment by Sector, 1987
Source: Based on information from United States, Department of State, Bureau of Public Affairs, Background Notes, El Salvador, Washington, November 1987, 1.
The Salvadoran labor force has been traditionally characterized as industrious, motivated, and reliable. Of new entrants to the labor force in 1986, it was estimated that 4 percent possessed executive, technical, or professional skills. Some 25 percent of all job seekers were classified as semiskilled , while 71 percent were unskilled laborers. The labor force was young, reflecting the demographic profile of the population; in 1985 more than 52 percent of workers were less than thirty years of age (see table 5, Appendix). The labor force remained largely agrarian and rural in the late 1980s (see fig. 6).
Labor suffered because of a variety of economic and institutional circumstances: real wages declined, unemployment rose, and efforts to unify the fragmented labor movement were thwarted by the failure of President Duarte to implement promised labor reforms and by the polarization of union leadership (see Interest Groups , ch. 4). The negative trend for labor continued in 1987. The legal real minimum wage fell by 28 percent, and average real private sector and public sector wages dropped by 13.3 percent. Between 1983 and 1987, real wages declined by about one-third.
The Salvadoran Constitution details the right to organize unions and associations, but the establishment of "closed shops" (enterprises employing only union workers) was forbidden by law. The law also required the use of collective bargaining, conciliation, and arbitration before a strike could be called.
In 1986 there were approximately 150 recognized unions, employee associations, and peasant organizations, which represented 15 percent of the total work force. Although union membership stabilized in the 1980s, union activism fluctuated with prevailing economic and political conditions. For example, in 1982, while membership remained fairly constant in relation to past years, the number of workers involved in strikes fell from 13,904 in 1981 to just 373. In 1984 the number jumped to 26,111.
In 1987 the labor movement vocalized its frustrations as economic conditions stagnated and the civil conflict dragged on. Such frustrations were exacerbated by the perception that Duarte failed to implement the labor reforms he had promised during the 1984 presidential campaign. Labor leaders protested Duarte's failure to fulfill his end of the "social pact" after labor had put its weight behind him in exchange for pledges of increased inclusion of union members in the government and greater responsiveness to labor and peasant issues.
Between 1978 and 1984, private employment fell from 147,000 to 122,000, a 17 percent decline. Employment in the construction industry suffered the most during this period, declining almost 75 percent (see fig. ). Employment opportunities in 1987 continued the downward trend that began with the country's civil conflict. Although no official unemployment rates were available for 1986 or 1987, it is likely that counterbalancing forces stabilized the rate during these two years at the 1985 level, or 33 percent. First, the civil conflict continued to displace many workers and to limit employment growth. Second, the agricultural sector grew by 3.1 percent, recouping losses experienced in 1986. Finally, an estimated 2.5 percent economic growth rate in 1987 was insufficient to reduce the unemployment rate.
The impact of El Salvador's civil conflict was demonstrated in the evolution of the unemployment rate between 1978 and 1985. Over this period, the rate rose almost tenfold, from 3.1 percent to 33 percent. Labor's situation would have been even more grave without the emigration of an estimated 500,000 Salvadorans to the United States between 1978 and 1985. Remittances from workers abroad totaled US$350 million officially in 1987, although some estimates were as high as US$1 billion or more.
Data as of November 1988
