Growth slowdown exposes labor market vulnerabilities

PHILIPPINES - Report 13 Jan 2026 by Diwa Guinigundo and Wilhelmina Manalac

The November 2025 Labor Force Survey points to increasing labor market vulnerability amid slowing economic growth. Unemployment rose to 4.4 percent from 3.2 percent a year earlier, employment growth weakened, labor force participation declined, and underemployment remained elevated—signaling not only job losses but also persistent income insecurity. These developments mirror contracting business activity, as reflected in the Purchasing Managers’ Index slipping into contraction territory.

Labor market pressures were intensified by severe weather disruptions and governance-related delays in public construction, which dampened growth and curtailed labor demand, particularly in services, tourism, retail, and construction. While seasonal year-end hiring provided temporary relief, the underlying outlook remains fragile. Sustained improvement will depend on restoring growth momentum, strengthening business and climate resilience, improving workforce skills, and—critically—addressing corruption, weak governance, and project implementation failures that have eroded business confidence and constrained the economy’s capacity to generate stable, quality jobs.

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