The unemployment rate rose to a three-month high in June. — PHILIPPINE STAR/EDD GUMBAN

By Abigail Marie P. Yraola, Researcher

THE UNEMPLOYMENT RATE rose to a three-month high in June as the quality of jobs deteriorated, the Philippine Statistics Authority (PSA) reported on Wednesday.

Preliminary estimates of the PSA’s latest Labor Force Survey (LFS) showed the unemployment rate, or the share of the jobless Filipinos to the total labor force, edged up to 4.5% in June from 4.3% in May.

Year on year, the jobless rate was lower than the 6% seen in June 2022.

This translated to 2.33 million unemployed Filipinos in June, up by 159,000 from May. However, this was 663,000 lower than the 2.99 million jobless in June 2022.

June’s unemployment rate matched April’s figure and marked the highest unemployment share in three months or since the 4.7% in March 2023.

For the first half, the unemployment rate averaged 4.6%, lower than the 6.1% in the same period a year ago.

At the same time, job quality worsened in June as the underemployment rate went up to 12% from 11.7% in May. However, it was lower than the 12.6% underemployment rate in June 2022.

In June, there were 5.87 million Filipinos who were employed but sought additional work or longer working hours in June, up by 214,000 from 5.66 million underemployed individuals in May.

Year on year, the number of underemployed fell by 13,000.

PSA data showed the June underemployment rate was the highest in two months or since the 12.9% recorded in April.

Year to date, the average underemployment rate was 12.5%.

The employment rate, on the other hand, eased to 95.5% in June from 95.7% in May but higher than the 94% in June last year. The employment rate represents the share of the employed population to the total working force.

This was equivalent to 48.84 million employed Filipinos in June, an increase of 581,000 from the 48.26 million employed individuals in the prior month. Year on year, 2.25 million Filipinos were added to the workforce.

In the first semester, employment averaged 95.4%.

“We can see there was a slight increase in the underemployment rate month on month because there was a big increase in labor force participation,” PSA Undersecretary and National Statistician Claire Dennis S. Mapa said.

The labor force size in June increased by 741,000 month on month to 51.17 million. It also grew by 1.59 million from last year’s 49.58 million.

As a result, the labor force participation rate (LFPR) — the proportion of the working-age population (15 years old and over) that is part of the total labor force — increased to 66.1% in June, higher than the 65.3% in the previous month and the 64.8% in June last year.

This marked the highest LFPR in four months or since February when it stood at 66.6%. Year to date, the average LFPR was 65.6%.

As the LFPR goes up, Mr. Mapa said the number of unemployed and underemployed also increases since not all workers will be hired on a full-time basis.

He also noted some workers may remain unemployed not because of the lack of job opportunities but because of the job-skill mismatch.

New entrants to the workforce reached 543,000 in June, an addition of 99,000 from the month prior but 437,000 fewer than 980,000 seen in June 2022.

“As the number of young workers continues to expand, the Marcos administration is exerting efforts to focus on training and upskilling to improve their employability for high-quality and high-paying jobs,” said National Economic and Development Authority Secretary Arsenio M. Balisacan in a statement.

Robert Dan J. Roces, chief economist at Security Bank Corp., said the June data suggest the labor market is still recovering.

“The uptick in underemployment and unemployment suggests potential challenges ahead,” he said in an e-mail.

By sector, the services remained the top employer in June with an employment rate of 58.2%, followed by agriculture at 23.8% and industry at 18%.

On a monthly basis, higher employment was observed in construction (up 488,000); agriculture and forestry (up 469,000); administrative and support service activities (up 308,000); public administration and defense; compulsory social security (up 128,000); and accommodation and food service activities (up 104,000).

Month-on-month job losses, on the other hand, were noted in fishing and aquaculture (down 575,000); transportation and storage (down 205,000); arts, entertainment and recreation (down 124,000); real estate activities (down 99,000) and professional, scientific and technical activities (down 97,000).

Wage and salary workers still had the largest share of the labor force with 61.5% in June.

In June, an employed Filipino worked an average of 40 hours per week, slightly lower than the 40.3 hours in June 2022. However, this was higher than the 39.3 hours per week in the prior month.

“While the overall trajectory seems positive, careful monitoring is crucial to address potential structural issues in the economy,” Mr. Roces said.

Capital Economics’ Emerging Asia economist Shivaan Tandon said he expects the labor market to soften in the next few quarters as domestic and foreign demand weakens.

Julius H. Cainglet, vice-president for Research, Advocacy and Partnerships at the Federation of Free Workers, said the unemployment and underemployment numbers will surely increase as the fresh graduates enter the labor force.

“Workers have yet to feel the impact of what the government has described as foreign investments that would create millions of jobs,” Mr. Cainglet said in an e-mail.

He noted the delay in the release of new wage orders in some regions will likely worsen underemployment as workers cope to make ends meet.

“With less employment available, coupled with the increase in fuel prices and global uncertainty brought about by the Russia-Ukraine war that has yet to end, (job) growth will be expected to slow down,” Mr. Cainglet said.

The latest LFS was conducted from June 8 to 28, with a total of 11,028 sample households.