By Erika Mae P. Sinaking, Reporter
THE PHILIPPINES’ unemployment rate jumped to the highest in four years in July, as the labor force expanded faster than employment, leaving 3.14 million Filipinos without jobs.
The unemployment rate rose for a third straight month to 6.01% in July, from 5.3% a year earlier and 4.9% in June, the Philippine Statistics Authority (PSA) said on Tuesday.
The ranks of the unemployed rose by 550,000 in July from 2.59 million in the same month a year ago.
“We have not seen this in quite some time,” National Statistician and Civil Registrar General Claire Dennis S. Mapa told reporters on Tuesday, noting that the last time the jobless rate breached the 6% level was in January and February 2022 when it hit 6.4% as the economy recovered from the pandemic.
The July unemployment rate was the highest since the 6.03% in June 2022.
For the January-to-July period, the jobless rate averaged 5.2%.
Mr. Mapa attributed the uptick mainly to a swelling labor force, particularly among the youth.
Around 3.7 million additional people joined the labor force in July, mostly young Filipinos transitioning from school to work, resulting in a lower employment rate of 94% from 94.7% a year earlier.
About 1.33 million of the new entrants were aged 15 to 24, many of them fresh from school and entering the job market for the first time.
“Not all of them were employed,” Mr. Mapa said, adding that this was especially evident in the National Capital Region (NCR), where 731,000 young people joined the labor force in July but only 532,000 were absorbed, leaving roughly 199,000 unemployed.
Mr. Mapa said the NCR’s unemployment rate has historically tracked close to the national figure, so the July reading was more likely tied to weather disruptions and the seasonal influx of new graduates.
PSA data showed Metro Manila had the highest unemployment rate among regions at 8.2%, followed by the Bicol Region at 8%, Ilocos Region at 7% and Central Visayas at 6.3%.
“We need to closely monitor where employment opportunities are growing and where gaps remain so that our employment programs and services can respond to the needs of workers and jobseekers,” Labor Secretary Francis N. Tolentino said in a separate statement.
Department of Economy, Planning, and Development in a statement said the government will strengthen support for workers and businesses following the mixed labor market results, while sustaining its push to generate more quality jobs.
“These figures show both progress and challenge. More Filipinos are participating in the labor market, which means that we need to intensify efforts to attract investments, especially those that create quality jobs,” Economy Secretary Arsenio M. Balisacan said in the statement. “The key is to continuously improve the ease of doing business in the country.”
Meanwhile, job quality improved as the underemployment rate eased to 12.9% in July from 14.8% a year earlier. However, it rose from the 12.1% in June.
About 6.33 million employed Filipinos wanted additional hours of work, another job or a job with longer hours.
For the first seven months, the underemployment rate averaged 12.8%.
The labor force participation rate in July rose to 63.6% from 60.7% a year earlier. This translated to a labor force of 52.36 million in July, significantly higher than the 48.64 million a year ago.
Among Filipinos aged 15 to 24, the labor force participation rate increased to 33.7% from 29.5% a year earlier, while the employment rate slipped to 81.4% from 81.9%. The share of young people not in education, employment or training fell to 15.2% from 15.9%.
SIGNS OF WEAKNESS
Chinabank Research said the latest jobs data is showing “clearer signs of weakness, with unemployment nearing pandemic-era levels.”
“The sharp deterioration in Metro Manila could have implications on upcoming wage-board decisions — lower minimum wage increases are warranted to minimize the risk of layoffs amid a challenging business environment,” it said in a note.
While courts have temporarily halted P85 wage hike in Metro Manila, Chinabank said the elevated unemployment figures could be an important consideration for wage boards’ decisions on wage hike petitions across regions.
“While the Bangko Sentral ng Pilipinas (BSP) has flagged minimum wage increases as an upside risk to inflation, we think the softer labor market will likely result in more modest succeeding wage hikes, reducing their potential inflationary impact and providing some offset to the BSP’s inflation concern for 2027. This reinforces our view that the BSP’s hiking cycle has ended,” Chinabank said.
Jose Ramon G. Albert, senior research fellow at the Philippine Institute for Development Studies, told BusinessWorld that the rising unemployment rate was less a surprise than a matter of arithmetic, as the labor force simply grew faster than the economy could absorb new entrants.
“We are adding work at the lower end of the productivity ladder and losing it in the segments that pay better and offer more stable arrangements,” Mr. Albert said via Facebook Messenger chat.
He noted that the largest annual employment gains were concentrated in agriculture and accommodation and food service activities, even as manufacturing and information and communication sectors reduced jobs.
PSA data showed manufacturing posted the biggest annual drop in employment, shedding 134,000 jobs in July. The information and communication sector cut 41,000 jobs, while professional, scientific and technical activities reduced jobs by 28,000.
On the other hand, agriculture and forestry posted the largest annual increase in jobs, adding 1.03 million in July. Accommodation and food service activities added 729,000, while wholesale and retail trade added 424,000.
Mr. Albert also noted that average weekly hours worked by an employee fell to 40.6 hours in July from 42 hours a year ago, which was a telling gauge of how much work the economy generated.
“Multiplying headcount by average hours, total labor input grew by roughly three percent even as the number of employed grew by close to seven percent,” he said, adding that the gap between the two figures better reflects the quality of jobs being created.
Mr. Albert also pointed to the NCR’s 8.2% unemployment rate, as a sign that the formal urban labor market was not generating enough entry-level positions for new graduates.
“It’s always bad news when unemployment increases as families will have a harder time making ends meet,” Benjamin B. Velasco, assistant professor at the University of the Philippines Diliman School of Labor and Industrial Relations said.
Mr. Velasco said the fallout from the Middle East conflict rippled through the Philippine economy and economies elsewhere, disrupting global supply chains and weighing on the labor market.
“Habagat and El Niño will impact agriculture and so it will add to loss of jobs and livelihood. On the other hand, manufacturing and services may add employment as production usually picks up during the ber months,” Mr. Velasco said.
Chinabank said disruptions due to bad weather and flooding likely weighed on the jobs market in August.
“With monsoon rains battering Luzon for over a month now, we expect softer labor data in August, particularly in weather-sensitive sectors like agriculture and construction as well as brick-and-mortar retail businesses that may be affected by reduced consumer mobility,” it said.
