PH Labor Market Gains Signal Stronger Domestic Demand

The Philippine labor market posted strong gains in February 2025, signaling rising domestic demand and offering a buffer against global uncertainties and escalating trade tensions, according to the Department of Finance (DOF).

Finance Secretary Ralph G. Recto said the improvements across employment indicators are a promising sign of economic resilience as the country faces headwinds in international trade.

“This is a very encouraging development,” Recto said.

“A strong and growing workforce means rising incomes, greater spending power, and sustained job creation. This fuels consumer demand and pushes our economy forward,” he added.

The Philippine labor force participation rate (LFPR) rose to 64.5% in February, up from 63.9% in January 2025, indicating more Filipinos are either working or actively seeking employment.

The unemployment rate improved to 3.8%, down from 4.3% in the previous month, while the underemployment rate also declined significantly to 10.1% from 13.3%, showing that more workers are securing full-time and higher-quality jobs.

Nearly two-thirds of the employed population are now wage and salary workers, a signal of an expanding middle class and improving job quality across sectors.

Recto emphasized the importance of domestic consumption in sustaining growth, particularly as global trade becomes more volatile.

“We must continue to boost domestic demand, especially in these uncertain times marked by brewing trade wars. A strong and resilient domestic market is our best defense,” he said.

The services sector remained the country’s largest employer, accounting for 61.6% of total jobs in February, followed by agriculture at 20.1% and industry at 18.3%.

Among sub-sectors, accommodation and food service activities recorded the highest annual employment growth, reflecting stronger consumer spending and the easing of inflationary pressures.

To sustain and enhance labor market gains, the government is pursuing key reforms to attract job-generating investments and foster innovation-led growth.

These include the implementation of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act, which aims to draw in foreign investors adjusting to new global trade realities.

The law is expected to support job creation by providing more competitive tax incentives and encouraging the relocation of global businesses to the Philippines.

Additionally, the government will strengthen public-private partnerships to align training programs with industry needs through the Enterprise-Based Education and Training (EBET) Framework, aimed at upskilling workers and enhancing productivity.

These labor market developments support the Marcos administration’s broader economic strategy to build a resilient domestic economy amid an unpredictable external environment.