The 5.8% unemployment rate in January 2026 reported by the Philippine Statistics Authority (PSA) is the highest since June 2022. Underemployment dropped by 120,000 year-on-year, but temporary short-term or contractual jobs increased by 859,000. The 790,000 increase in unemployment is likewise the biggest year-on-year monthly increase in the country’s history outside of the pandemic.
These are among the alarming figures confirming the economy’s sharp deterioration, research group IBON said. The Marcos Jr administration needs to acknowledge and urgently address these problems, which cannot be reduced to last year’s corruption controversies and will only worsen as global oil shocks bear down in the coming months.
IBON said the adverse January 2026 Labor Force Survey (LFS) results are not merely seasonal but reflect deeper structural problems. Employment in backward agriculture remains highly volatile; the industrial sector, especially manufacturing, continues to fail in generating enough jobs; and the low-productivity service sector serves as a catch basin for those unable to find work elsewhere. These figures point to deep systemic stress in the labor market rather than a temporary fluctuation.
The group added that the reported 2.96 million unemployed would be even higher if discouraged workers—those who have stopped looking for work because of poor job prospects—were counted as unemployed instead of being included in the 2.1 million increase in those classified as not in the labor force (NILF). This is especially striking given that NILF had actually fallen by 1.9 million in the same period a year earlier.
IBON stressed that the 549,000 drop in employment reinforces an alarming trend of worsening job creation. Job generation had already sharply slowed last year, with only 172,000 jobs created—barely one-fourth of the historical average of around 700,000 annually over the past five decades. This was among the weakest outcomes in the last 25 years, surpassed only by the 90,000 increase in 2015 and outright contractions in 2017 and 2020.
The group added that rising youth unemployment is rooted less in “skills mismatch” or a lack of entry-level opportunities, than in the economy’s deeper failure to generate enough jobs in sectors that can productively absorb young workers.
IBON further explained that employment remains highly volatile because of the economy’s informal and services-heavy structure. Since 2017—excluding the period of pandemic restrictions from 2020 to July 2023—year-on-year changes in total employment in any given month have ranged from a contraction of 1.6 million (July 2025) to an expansion of 3.1 million (July 2024). Such extreme swings cannot be explained by seasonality alone.
Volatility is most pronounced among the self-employed, whose year-on-year numbers have fluctuated by as much as a 2.1 million decline (July 2025) and a 2.4 million increase (July 2024). This reflects chronic uncertainty from marginal livelihoods rather than stable job creation.
Instability is also evident in employment by hours worked. Part-time employment can fall by as much as 5.5 million (April 2024) or increase by up to 2.8 million (January 2025). Full-time employment, often assumed to be more secure, has also fluctuated sharply—from a decline of 1.1 million (November 2025) to an increase of 6.1 million (April 2024). This shows how employment volatility is rooted in informality and services-led growth rather than being confined to temporary shocks, IBON said.
These worsening labor figures highlight the limits of the country’s economic model and its over-reliance on consumption, remittances, and low-productivity services rather than strong domestic production. Addressing the jobs problem requires much more than short-term measures. Sustained job creation can only come from strengthening domestic growth engines through agricultural modernization and building Filipino industry. Absent progress in these areas – the economy will remain fragile and the labor market will remain overly vulnerable to global economic shocks.###
