Why are Filipinos so poor if the labor market is so vibrant?

February 11, 2023

by Sonny Africa

The economic team immediately hailed the “vibrant” labor market when the latest labor force statistics for December 2022 came out this February. This is the latest in a steady stream of monthly adjectives used to describe the jobs market: bright (August), positive (September), improving (October), steady (November), strong (December), and resilient (January).

The Marcos Jr administration is telling the kind of “coherent” economic story that it felt compelled to tell economic journalists to do last year. The problem with mimicking their principal’s populist sunshine, however, is that their narrative becomes similarly disconnected from reality. A more thoughtful reading of the labor force surveys (LFS) of the Philippine Statistics Authority (PSA) tells a different story.


To be clear, this is not to say that the economic managers are lying in the way that Mark Twain said that there are three kinds of lies: “Lies, damned lies, and statistics.” It is to say that they are using the persuasive power of statistics to tell something that is less truthful than what a more honest reading of the statistics truly shows.

The most recent claim, for instance, that the labor market “continues to record positive gains as more Filipinos [attain] high-quality jobs” doesn’t withstand scrutiny. The most glaring fault is how the government’s press releases very oddly do not mention how the number of employed really fell by 704,000 from 49.7 million in November 2022 to 49 million in December 2022.

The biggest decline was of 509,000 in the number of wage and salary workers, including 336,000 less employment in private establishments. There was actually a 468,000 decline in employment in own family-operated farms and businesses (which includes some wage and salary workers). The 201,000 increase in self-employment – very likely irregular and low-paying – wasn’t enough to off-set employment losses elsewhere.

By hours worked, the reported 753,000 increase in full-time work (40 hours and over) may seem positive but probably shouldn’t be overstated. The more important question is if this increase in full-time work translated into higher family incomes. There are no signs that it did, and it seems that the contrary is the case.

The government unfortunately doesn’t give enough attention to high-frequency data on family incomes. However, the Social Weather Stations (SWS) did report that the number of families rating themselves as poor or borderline poor actually increased between June 2022 and December 2022 – the number of poor rose by 700,000 to 12.9 million (51% of total families) while the number of borderline poor stayed high at 7.8 million (31%). This combined 20.7 million (81%) is consistent with IBON estimates on Bangko Sentral ng Pilipinas (BSP) data that some 18.6 million or 70% of households did not have any savings as of the fourth quarter of 2022.

The relatively low unemployment rate of 4.3% in December 2022, increasing slightly from 4.2% in November, also shouldn’t be taken at face value. Reported unemployment doesn’t count jobless Filipinos who may have dropped out of the labor force after a long time of seeking but not finding work. As it is, the labor force actually declined by 661,000 and the labor force participation rate fell to 66.4 percent.

Amid a discouraging labor market, the decline in reported underemployment may not reflect more Filipinos content with their current work and earnings but rather Filipinos who stopped looking for better work that is nowhere to be found.

While decreasing slightly in December, the number of Filipinos in openly informal work is still very high at 21.2 million or 43.2% of total employment. This covers the self-employed (27.7%), those in family-operated farms or businesses (11.2%), and those who worked for private households (4.3%). This does not even count initial IBON estimates of perhaps 5.5 million more employed in informal or unregistered establishments. Taken altogether, informal work may account for some 36.1 million or 73.8% of total employment.


The government narrative plays up supposedly improving labor market conditions from the further reopening of the economy in 2022. This is lacking in context though and downplays how the economy should not have been locked down for so long to begin with; over two years of misguided restrictions gravely disrupted household incomes and livelihoods.

Work conditions in December 2022 shouldn’t be compared to December 2021 – by which time the economy should have already been long reopened – but to January 2020. This was the eve of the country’s interminable lockdowns because of the Duterte government’s refusal to prioritize more humane public health measures.

Taking this longer view shows a marked deterioration in the quality of work because of the lockdowns and despite over a year now since reopening started. Most work generated since then has been in part-time work. The share of those employed working less than 40 hours markedly increased from an already high 31.5% in January 2020 to 34.1% in December 2022 corresponding to magnitudes of 13.4 million and 16.7 million, respectively.

By class of worker, over that same period, those in openly informal employment rose from 39.4% of employed to 43.2% with magnitudes of 16.8 million and 21.2 million, respectively. These figures include a huge increase in the number of those employed but classified as unpaid family workers; this soared from 2.7 million or 6.2% of employed in January 2020 to 4.3 million (8.7%) in December 2022 (which is nearly double the 2.2 million officially reported as unemployed in the same month). Put another way, the number of officially unemployed and unpaid family workers has increased from 5.0 million in January 2020 to 6.5 million in December 2022.

In contrast, the share of those working in formal and informal private establishments fell from 51.5% (21.9 million) to 48.1% (23.5 million). According to the PSA’s List of Establishments (LE), employment in formal establishments actually fell from 8.9 million in 2019 before the lockdowns to less than 8.6 million in 2021, the latest year for when data is available – indicating that the increase in employment in private establishments in the LFS is mostly in informal establishments.

We can also draw meaning from where the jobs “created” since January 2020 are. There are reportedly 6.5 million more employed as of December 2022. However, 4.5 million or nearly 70% of this is in agriculture (2.1 million) and wholesale and retail trade (2.3 million). These are literally the two lowest-paying and -earning sectors in the economy, with among the worst informality. IBON for instance estimates that 98% of agriculture and 76% of trade is informal work.

Those two sectors are traditional catch basins of the economically displaced and the last resort of those unable to find work anywhere. Filipinos desperate for work have crowded into them so much since the lockdowns that sectoral labor productivity in both, measured as value-added in gross domestic product (GDP) divided by employment, is around 10% less in 2022 than in 2019 – which is an indirect indicator of how much average incomes in them have fallen even further.


Did the latest December 2022 LFS data at least show a turning point versus these adverse trends? Unfortunately, not. The number of employed fell and the only reason the number of unemployed did not rise more than it did – a 43,000 uptick to over 2.2 million – is probably because of discouraged jobseekers dropping out of the labor force. The number of wage and salary workers also fell.

Agricultural employment increased by 1.1 million but 757,000 or nearly 68% of this was merely part-time work. There were also smaller increases in administrative and support services (by 257,000 to 2.6 million) and construction (by 138,000 to 4.3 million) but all the other sectors either saw even smaller increments or saw employment decline.

The drop in manufacturing (by 585,000 to 3.8 million), wholesale and retail trade (by 387,000 to 10.9 million), accommodation and food service (by 240,000 to 2 million), and human health and social work activities (by 239,000 to 503,000) is particularly notable. Many of these should presumably have benefited from increased holiday spending and activities and the reopening of the economy.


The economic managers chronically downplay problems and prefer unfounded sunshine and smugness about the state of the economy. This hinders taking steps towards real solutions.

The lack of sufficient jobs and the poor quality of jobs are not mere labor issues to be fixed with individualized approaches of worker training, skills development and improving employability in the labor market.

The term “labor market” is in reality a misnomer. The Philippine economic structure is so underdeveloped that organized production and the formal labor markets for these – where labor power is sold to capitalists in a labor market – do not dominate. On the contrary, informality is stubbornly predominant.

Without bolder measures like comprehensive national industrial and technology policy to build Filipino manufacturing, for instance, the economy will never be able to create enough formal, productive and high-paying jobs for its growing work force and population. A better story for the economy can be told – but this is best done with a real reimagining of policy and really building the domestic economy, and not with misleading propaganda.