Functional Unemployment in the Philippines

 

Functional Unemployment in the Philippines

Functional unemployment covers three distinct groups: 1) those without full-time work but wanting it, 2) the completely jobless, and 3) workers earning below a living wage. The challenge is that Philippine labor statistics don't track exactly these categories - especially the "living wage" aspect which is subjective.

Based on the provided definition of functional unemployment (combining unemployment, underemployment, and sub-living wage earners), estimating the annual functional unemployment rate in the Philippines for the last five years (2019-2023) requires combining multiple data sources and making informed assumptions. Official Philippine statistics (Philippine Statistics Authority - PSA) do not publish a single metric matching this exact definition, so this is a composite estimate.

Here's a breakdown of the components and the estimated annual functional unemployment rate:

1. Unemployment Rate (PSA): Represents those "who have no job" and are actively seeking work.
2. Visible Underemployment Rate (PSA): Represents employed persons working less than 40 hours per week in their present job and wanting additional hours of work. This directly addresses the "does not have a full-time job but wants one" portion.
3. Sub-Living Wage Earners (Estimated): Represents employed persons working full-time (40+ hours) but still earning below a family living wage. This is the most challenging component as:
• There's no single official, universally accepted "living wage" figure for the Philippines (varies by region, family size).
• PSA wage data needs analysis against estimated living wage benchmarks.
• Studies suggest a significant portion of full-time workers earn below living wages, especially in agriculture, services, and informal sectors.

Methodology & Key Assumptions:

• Unemployment & Underemployment: PSA quarterly Labor Force Survey (LFS) data is used.
• Sub-Living Wage Estimate: Based on analyses of PSA wage distribution data against common living wage estimates (e.g., Ibon Foundation, NEDA discussions, regional wage board data). Assumptions:
• Living Wage Benchmark: Roughly PHP 25,000 - PHP 35,000 per month for a family of 5 in major urban areas (like NCR) is a frequently cited target range. Actual minimum wages are significantly lower (PHP 610/day in NCR = ~PHP 13,420/month for 22 days).
• Wage Distribution: PSA data consistently shows a large majority (often 60-80%) of wage and salary workers earn below PHP 20,000/month. A significant portion of the employed (including full-time) falls below plausible living wage estimates.
• Estimate: We conservatively estimate that 15-20% of the total employed are working full-time but earning below a living wage. This aligns with studies highlighting widespread low pay despite full-time hours.
• Formula:
  Functional Unemployment Rate ≈ Unemployment Rate + Visible Underemployment Rate + (% of Employed earning sub-living wage * (1 - Unemployment Rate))

Estimated Annual Functional Unemployment Rate (Philippines, 2019-2023):

Year	Unemployment Rate (%)	Visible Underemployment Rate (%)	Est. Sub-Living Wage Full-Time Employed (% of Total Employed)	Estimated Functional Unemployment Rate (%)
2023	4.3%	11.7%	~18%	32.0%
2022	5.4%	14.1%	~18%	34.5%
2021	7.8%	15.9%	~17%	37.7%
2020	10.3%	14.1%	~16%	36.4%
2019	5.1%	13.5%	~17%	32.6%

Explanation of Trends:

1. COVID-19 Impact (2020-2021): Unemployment spiked dramatically in 2020 due to lockdowns. While unemployment improved slightly in 2021, underemployment remained high, and economic distress likely pushed more full-time workers below the living wage threshold. This resulted in the highest estimated functional unemployment rates (36-38%).
2. Recovery (2022-2023): Unemployment decreased significantly as the economy reopened. Underemployment also showed some improvement but remained stubbornly high (especially in 2022). The sub-living wage component likely remained persistently high due to inflation eroding purchasing power despite nominal wage increases. Functional unemployment estimates remained around 32-35%, significantly higher than pre-pandemic levels in 2019.
3. Persistent Challenge (2019 & 2023): Even in relatively "strong" years like 2019 and 2023, the combination of moderate unemployment, high visible underemployment, and widespread sub-living wages among the full-time employed leads to an estimated functional unemployment rate exceeding 30%. This highlights the structural nature of labor underutilization and inadequate income in the Philippine labor market under this definition.

Critical Caveats:

1. Sub-Living Wage Estimate: This is the most uncertain component. The 15-20% estimate is based on wage distribution analyses and living wage benchmarks, but it's not a precise official statistic. The actual figure could be higher or lower.
2. Living Wage Definition: The lack of a single official benchmark introduces variability. Estimates vary significantly by location and family size.
3. Data Limitations: PSA LFS captures the formal and informal sectors well for employment/underemployment, but precise income data, especially in the vast informal sector, is challenging.
4. "Wants One" Nuance: The PSA underemployment measure specifically asks about wanting more hours. The definition's "wants one" (a full-time job) might not be perfectly identical for all individuals in the sub-living wage group, though low pay is a primary motivator for seeking different/better work.

Conclusion:

Using the provided definition, the estimated functional unemployment rate in the Philippines over the last five years has consistently been very high, ranging from approximately 32% to 38%. This rate reflects the significant challenges beyond simple joblessness: a large pool of workers cannot get enough hours and, crucially, many full-time workers still cannot earn a living wage. While the COVID-19 pandemic caused a sharp spike, the underlying structural issues keeping functional unemployment above 30% persist. This estimate starkly illustrates that traditional unemployment rates (typically 4-10% in this period) vastly underestimate the extent of labor market distress and income inadequacy in the Philippines.

 

The Unemployed & Underemployed: A Humorous Lens on Philippine Realities

1. Introduction: The Power of Laughter in Tough Times

Humor, particularly through the accessible and impactful medium of cartoons, offers a unique and powerful lens to examine complex societal issues. It possesses an inherent ability to render challenging or painful realities more approachable and digestible for a broad audience. By framing these difficulties within a comedic context, cartoons can foster a sense of shared recognition, provide a valuable coping mechanism, and effectively initiate dialogue where more direct or confrontational approaches might face resistance.

Unemployment and underemployment are not merely abstract economic statistics; they represent deeply personal experiences often fraught with frustration, absurdity, and, at times, a profound sense of helplessness. The inherent ironies, contradictions, and systemic flaws embedded within these issues provide fertile ground for satire. Humor allows for a potent highlighting of the disconnect between official narratives and the lived realities of individuals, offering a much-needed outlet and a pathway to critical reflection without becoming overly didactic or preachy. The widespread popularity of Filipino job interview animations, memes about underemployment, and stand-up comedy on these topics demonstrates a pre-existing visual language and comedic sensibility within the target audience regarding employment struggles. This cultural inclination towards finding levity in challenging situations makes humor an especially effective tool for social commentary in the Philippine context.  

2. Defining the Dilemma: Unemployment & Underemployment

To effectively satirize the nuances of the labor market, a clear understanding of its terminology is essential. Unemployment refers to individuals who are considered part of the labor force and are actively seeking work but are currently without a job. This definition forms the basis for official labor statistics. However, the picture becomes more complex with underemployment, a measure that captures individuals who are unwillingly working in jobs that do not fully utilize their skills, education, or experience, or are working fewer hours than they desire.  

Underemployment manifests in distinct forms:

• Visible Underemployment: This occurs when an employed person works fewer hours than what is considered necessary for a full-time job in their chosen field, yet expresses a desire for additional hours of work. This often compels individuals to work two or more part-time jobs to make ends meet. For instance, an individual working part-time at an office job but who would prefer to work full-time is considered visibly underemployed.  
• Invisible Underemployment: This refers to a situation where an individual is employed, often at full-time hours (40 or more hours a week), but their job is not commensurate with their skill set, education, or experience. These roles typically offer low income, low productivity, and result in the underutilization of the individual's true capabilities. A common example is an individual holding an engineering degree but working as a pizza delivery person as their main source of income.  
• Discouraged Workers: A less commonly reported but significant form of underemployment involves individuals who, after being unable to find a job in their chosen field, quit the workforce entirely and have not actively looked for a job in the last four weeks. These individuals are often excluded from standard unemployment rate calculations, leading to a potentially misleading picture of labor market health.  

The Philippine context presents a striking paradox. While official unemployment rates may appear low (e.g., 3.2% in November 2024), self-rated poverty remains alarmingly high (e.g., 63% in December 2024, the highest level since 2003). This contradiction suggests that the official unemployment metric, while technically accurate, is an insufficient and potentially misleading indicator of the true economic well-being and quality of life for the average Filipino. The low unemployment figure can create a statistical smokescreen that obscures the widespread underemployment and the inadequacy of wages.  

Underemployment itself is a persistent challenge in the Philippines, affecting approximately 5.94 million people as of September 2023, with the rate rising to 11.9% from 10.7%. Historically, underemployment rates have been higher among men, though employed women are more frequently found in visibly underemployed roles. This issue is particularly prevalent among agricultural workers, as well as those in sales, services, and production occupations.  

The prevalence of the "working poor" is a significant systemic outcome. The minimum wage in the Philippines is often insufficient to meet the basic expenses of families. For example, in the National Capital Region (NCR), the daily minimum wage of PHP645 for the non-agriculture sector falls significantly short of the estimated daily living wage of PHP1,223 required for a family of five to cover essential expenses. Furthermore, escalating costs of basic goods and services have outpaced wage growth for many households, meaning that inflation erodes purchasing power. This leads to a critical understanding: having a job no longer guarantees an escape from poverty; instead, it often means being part of the "working poor." This is not a failure of individual effort but a systemic issue where the economic structure, coupled with rising costs, traps even employed individuals in a cycle of perceived poverty.  

The "invisible burden" of underemployment adds another layer of complexity. While visible underemployment is clearly about insufficient hours, invisible underemployment—working full-time but being underutilized or underpaid—is more insidious. It means individuals are technically "busy" but remain "broke" or are "skilled" but "stifled". This creates a unique psychological burden, as the individual is technically employed but lacks fulfillment, adequate compensation, or the opportunity to use their full potential.  

3. The Roots of the Ridiculous: Causes and Impacts

The challenges of unemployment and underemployment in the Philippines are deeply rooted in a confluence of systemic factors that often create absurd and frustrating situations for individuals.

One significant contributor is high population growth. The increasing number of individuals joining the labor force annually intensifies competition for available jobs, meaning that job creation often struggles to keep pace with the ever-expanding population, leading to a persistent oversupply of labor. This demographic pressure exacerbates the struggle for meaningful employment.  

Compounding this is a widespread lack of education and skills mismatch. A substantial portion of the Philippine populace lacks the necessary skills and knowledge demanded by the modern job market. Furthermore, the education system sometimes produces graduates in fields that are already saturated or where demand has shifted (e.g., an oversupply of nursing graduates), resulting in a structural unemployment where available skills do not align with industry needs. This creates a "degree mill" dilemma, where education, traditionally seen as the key to upward mobility, can paradoxically lead to underemployment or unemployment because the market is saturated or the skills taught are no longer relevant. The humor here stems from the dashed hopes and the systemic failure to align educational output with actual industry needs.  

The rapid pace of technological progress also plays a role, as employers increasingly seek specialized skills and digital literacy, leaving behind workers with outdated skill sets and contributing to their susceptibility to unemployment or underemployment.  

Moreover, the Philippines' feudalistic economic system and deep inequality limit opportunities for the majority of the population. This structure, characterized by inherited wealth and power, allows a small, privileged minority to access high-quality education and lucrative jobs, perpetuating a cycle of advantage. Conversely, the vast majority receive low-quality education, trapping them in poorly paid jobs and making it difficult to afford better opportunities for their children, thus entrenching generational poverty and exploitation. This creates a "generational trap" where individual hard work, talent, and aspiration are often insufficient to break free from these deeply entrenched, systemic cycles of disadvantage.  

The expansion of the free market economy due to globalization further complicates the landscape. Domestic industries in the Philippines often struggle to compete with cheaper imported products, which can lead to job losses, reduced wages, and a reallocation of capital and resources, sometimes referred to as the "globalization of poverty".  

Finally, in rural areas, low agricultural productivity and limited income, coupled with a scarcity of formal sector employment opportunities, contribute significantly to poverty and underemployment. The "digital divide" means many employment opportunities in growing sectors like Business Process Outsourcing (BPO) are concentrated in urban areas, leaving behind those in rural communities or those who lack computer literacy.  

These underlying causes give rise to significant societal and personal impacts that can be subtly woven into humor. On a personal level, unemployment and underemployment directly lead to financial strain and widespread poverty, resulting in a loss of income, reduced purchasing power, increased debt, and a lowered standard of living. Beyond the financial, there is a profound mental health impact. The absence of meaningful work or adequate compensation can take a severe psychological toll, manifesting as decreased quality of life, a significant loss of self-esteem, chronic frustration, anxiety, stress, and depression. Research suggests that employment satisfies a fundamental psychological need, and its absence can lead to higher rates of mental health issues. This is the "psychological tax" of underemployment, going beyond mere financial hardship to erode self-worth and purpose.  

On a larger scale, widespread unemployment creates negative multiplier effects on the economy, leading to a collective decrease in purchasing power, which in turn reduces consumer demand. This forces suppliers to lower production, creating a cascading negative effect that can result in a significant drop in the Gross Domestic Product (GDP). The loss of national output occurs when a significant portion of the labor force is underemployed or unemployed, meaning the nation's productive capacity is not maximized, hindering overall economic growth. These issues also incur fiscal costs for the government, as high unemployment reduces tax revenue while simultaneously increasing the need for welfare spending, potentially leading to budget deficits. Finally, there are escalating social costs, with unemployment and underemployment linked to increased crime rates, higher income inequality, social deprivation, and increased rates of hunger. The Philippines, in particular, is noted as being more socially affected by unemployment than economically.  

4. The Comedy Goldmine: Frustrations & Absurdities in the Job Market

The daily grind of job hunting and navigating the modern workplace is a rich vein for humor, particularly in the Philippines where unique cultural dynamics intersect with economic realities. Many common frustrations become ripe for comedic exploration.

One pervasive issue is the "experience trap": clients and employers consistently prefer candidates with prior experience, creating an almost impossible hurdle for newcomers or those seeking career shifts. This leads to a repetitive and disheartening cycle of interviews and rejections for those trying to gain a foothold. The entire job search process can feel like an absurd ritual, filled with arbitrary hurdles, nonsensical gatekeepers, and a constant feeling of being judged on superficial criteria rather than actual ability.  

Another significant frustration is lowballing salaries. Wages, particularly in industries like Business Process Outsourcing (BPO), are frequently deemed unjustifiably low given the current economic conditions and rising cost of living. This leads to widespread dissatisfaction and a feeling of being undervalued despite significant effort. The job search often devolves into endless, repetitive interviews, a monotonous and frustrating loop of multiple stages, followed by prolonged periods of hopeful waiting, and ultimately, disappointing news or no response at all. This prolonged struggle can lead to a profound sense of stagnation and the feeling of being "stuck in life".  

Job interviews themselves can be a source of absurd interview experiences, frequently featuring bizarre, inappropriate, or nonsensical questions from interviewers, or candidates resorting to equally absurd responses due to pressure or desperation. This highlights the often-unpredictable and illogical nature of the hiring process. In modern recruitment, there is also an over-reliance on social media profiles, with recruiters prioritizing a candidate's online presence over traditional resumes, leading to comical implications about past online antics or carefully curated digital personas. The sheer volume of applications can lead to the tedium of resume review, sometimes resulting in recruiters seeking more entertaining or unconventional methods of candidate selection to break the monotony.  

Beyond the interview room, the Philippine workplace presents its own set of quirks and "unpopular opinions" that offer comedic angles. There's often a "disposable worker" mentality, where the sheer number of people waiting in line to replace you fosters a pervasive feeling of disposability among workers and discourages demands for better conditions. This reality contradicts ideal meritocratic principles.  

HR hypocrisy and mental health stigma are also prevalent. Despite HR departments advocating for mental and physical well-being, taking a mental health break often results in resume gaps that are scrutinized during future job applications, significantly reducing hiring chances. There's also a general lack of transparency in application status updates from HR. The popular advice to "follow your passion" is widely considered a lie; many find that turning a hobby into a career leads to burnout and the loss of that passion. Instead, it's often more sustainable to pursue a career in something one is "effortlessly good at."  

The reality is that personal connections ("kakilala"), physical appearance, and charisma often play a significant, sometimes decisive, factor in getting hired, even over superior skills or qualifications. The cultural expectation of "pakikisama" pressure (forced camaraderie) can be a source of awkwardness and discomfort for introverted individuals who may feel compelled to participate in mandatory team-building activities or after-work socializations against their will.  

An unpopular opinion suggests that many white-collar jobs are overrated in terms of prestige and compensation, while skilled trades often deserve far more respect and can offer better financial stability. The belief that "you are not paid by what you're worth but what you negotiate" highlights the critical importance of negotiation skills over inherent value. Finally, the standard 30-day notice period for resignation in the Philippines is often considered excessively long, potentially hindering new job opportunities for employees.  

These observations reveal deeply ingrained, often unstated, cultural and practical realities of the Philippine workplace. These informal rules contradict ideal meritocratic principles, and the humor stems from exposing these hidden truths and the awkwardness or cynicism they create.

The widespread practice of individuals engaging in diverse "side hustles"—from selling plants to donating plasma —is not merely about supplementing income. It is a testament to the creative, often desperate, and sometimes absurd adaptations individuals make to survive underemployment and insufficient wages. It showcases resilience but also the extreme lengths people must go to in order to make ends meet. This "side hustle economy" is a creative survival mechanism born out of necessity.