The Philippine Statistics Authority (PSA) reported a 3.8 percent unemployment rate in February 2025, a figure that sounds like a milestone. But the same period recorded an underemployment rate of 10.1 percent, affecting 4.6 million Filipinos who had jobs but wanted more hours or better-paying work. By May 2026, the unemployment rate had climbed to 4.8 percent, with 2.50 million people out of work, while underemployment stood at 12.2 percent. These numbers tell a more complicated story than a single headline rate can capture.
Unemployment and underemployment are related but distinct problems. A person is unemployed if they are actively looking for work but cannot find any. A person is underemployed if they have a job, but it does not provide enough hours, income, or match their skills. The second group is far larger in the Philippines, and it reveals more about the actual health of the labor market.
How the Labor Force Breaks Down
The services sector dominates employment, accounting for 63.5 percent of all jobs in February 2026, according to the PSA Labor Force Survey. Wholesale and retail trade alone employs one in five workers. Agriculture and forestry, which lost 905,000 jobs year-on-year by May 2026, remains a major source of employment but also a major source of instability. The developing El Niño conditions likely contributed to those losses, as the PSA noted.
What Makes the Numbers Misleading
A low unemployment rate does not automatically mean most workers are doing well. Economist Fernando T. Aldaba of Ateneo de Manila University pointed out that the 3.8 percent figure from early 2025 is misleading because it fails to account for job quality. Many Filipinos are employed in low-quality roles, including unpaid family workers, part-timers, and those earning minimal income. The BusinessMirror reported that over 30 percent of the population in lower-middle-income countries like the Philippines are either missed entirely or insufficiently supported by existing social protection programs.
The political and economic environment adds another layer. Economists cited by the BusinessMirror warned that domestic political turbulence and international uncertainties could deter foreign investment, potentially leading to job losses. The impeachment trial of Vice President Sara Duterte and shifting US trade policies were flagged as factors that could impact investor confidence. These are not abstract concerns — they directly affect whether businesses expand or contract their hiring.
Structural Issues That Keep People Underemployed
Underemployment is not just a cyclical problem that goes away when the economy grows. It is rooted in structural mismatches between the skills workers have and the jobs available. Economists like Leonardo Lanzona have stressed that the government’s inability to address climate change and leverage digital transformation hampers job creation in emerging sectors. Without a strategy to incorporate these issues into labor market planning, the risk of underemployment is likely to increase.
The data supports this. In May 2026, agriculture and forestry lost 905,000 jobs year-on-year, with palay alone shedding 734,000 jobs and corn losing 428,000 jobs. Services lost 442,000 jobs year-on-year, driven by a 461,000 drop in domestic services. Meanwhile, administrative and support service activities added 329,000 jobs, mining and quarrying added 184,000, and human health and social work activities added 173,000. The jobs being created are not always in the same sectors or locations as the jobs being lost, leaving many workers with few options that match their experience.
Average weekly hours worked rose to 41.1 hours in May 2026, up from 39.8 hours a year earlier. Around 34.36 million Filipinos worked more than 40 hours a week. That sounds positive, but it also means that a large portion of the workforce is putting in full weeks without earning enough to escape underemployment status. The distinction between visible underemployment (working fewer than 40 hours) and invisible underemployment (working full hours but still wanting more) matters here. Visible underemployment decreased by around 664,000 year-on-year, but the invisible category remains a persistent drag.
What This Means for Different Workers
The experience of unemployment and underemployment varies significantly by age, sector, and location. Youth workers aged 15 to 24 face a particularly difficult environment. In July 2025, the youth labor force participation rate was just 29.5 percent, down from 34.2 percent a year earlier. The youth underemployment rate rose to 13.7 percent, and the proportion of youth not in education, employment, or training (NEET) climbed to 15.9 percent. These figures suggest that young Filipinos are either dropping out of the labor force entirely or taking jobs that do not meet their needs.
For workers in agriculture, the situation is tied to climate and seasonal factors. The 734,000 jobs lost in palay farming alone represent a massive disruption to rural livelihoods. Workers in wholesale and retail trade saw 240,000 fewer underemployed year-on-year, which is a genuine improvement, but the sector still lost 141,000 jobs overall. Construction added 168,000 jobs, and fishing and aquaculture added 170,000, offering some relief in regions where those industries are concentrated.
The minimum wage increase in Metro Manila, whose first tranche took effect in mid-July 2026, may shift some of these dynamics. The PSA will monitor its impact on employment and prices. But the May labor force survey does not yet capture that effect, so it is too early to say whether higher wages will reduce underemployment or lead to fewer jobs in certain sectors.
What Workers and Job Seekers Can Do
Track Sector Trends Before Making a Move
Not all industries are shrinking. Administrative and support service activities added 329,000 jobs year-on-year by May 2026. Mining and quarrying added 184,000, human health and social work added 173,000, and construction added 168,000. Job seekers who can pivot toward growing sectors — or who are willing to relocate to areas where those jobs are concentrated — will have an easier time finding stable work. The PSA’s Labor Force Survey releases provide sector-level data that can inform these decisions.
Check Your Social Protection Coverage
Many workers in the Philippines remain outside formal social protection systems. The Universal Health Care Law has expanded basic coverage, but economist Fernando T. Aldaba noted that many workers are excluded from the Social Security System, Government Service Insurance System, and Pag-IBIG Fund. If you are self-employed or working in the informal sector, you can voluntarily register with these agencies. The Asian Development Bank has called for better-coordinated delivery systems and integrated social registries, but for now, the onus is on individual workers to ensure they are enrolled.
Consider Upskilling for Digital and Green Jobs
Economists have pointed out that the government’s failure to leverage digital transformation is hampering job creation in emerging sectors. That does not mean individual workers cannot act. Online platforms, technical-vocational courses, and certifications in fields like renewable energy, data analytics, and healthcare support are accessible and align with the sectors that are actually hiring. The 173,000 jobs added in human health and social work activities suggest that healthcare-adjacent roles are a growing area.
Frequently Asked Questions
What is the difference between unemployment and underemployment? ▾
Why does the unemployment rate seem low if so many people are struggling? ▾
Which sectors are losing the most jobs? ▾
Which sectors are hiring? ▾
How does the minimum wage increase affect employment? ▾
Are young workers worse off than older workers? ▾
What is “invisible underemployment”? ▾
Where can I find official labor data? ▾
The headline unemployment rate has improved, but it masks a labor market where millions of Filipinos are working without enough hours, income, or security. Underemployment, not unemployment, is the more persistent challenge. The sectors that are hiring — administrative services, healthcare, mining, construction — offer clues about where the economy is headed, but they do not automatically absorb workers displaced from agriculture and retail. The most useful step for anyone navigating this market is to track sector trends, secure social protection coverage, and invest in skills that match growing industries. If this was useful, you might also want to read the business case for investing in workplace charging infrastructure for electric vehicles.
Sources
Eco-friendly commuting and the impact of electric vehicles on sustainable transportation — Explores how shifts in transportation and energy sectors are creating new job categories and skill demands in the Philippines.
Unemployment rate masks the challenges in PHL job market. BusinessMirror, February 2025.
Unemployment and underemployment in May 2026. Rappler, 2026.
PSA Labor Force Survey — February 2026 release. Philippine Statistics Authority.
Behind the numbers: The unseen struggle of Filipino workers. BusinessMirror, April 2025.
Philippine unemployment rate jumped to 5.3% in July 2025. Manila Standard, 2025.
