THE first visible impact of the Middle East conflict on the Philippine labor market may be showing up not in outright job losses but in shrinking incomes and reduced work opportunities, as underemployment climbed to a nearly three-year high in April, economists said.
On Tuesday, the Philippine Statistics Authority (PSA) reported that 7.41 million of the country’s 48.89 million employed Filipinos were underemployed: these are workers who wanted additional working hours, another job, or a new job with longer hours.
This pushed the underemployment rate to 15.2 percent in April 2026, the highest reading since July 2023 when underemployment reached 15.9 percent.
Of the total, 4.21 million were visibly underemployed, or workers who rendered less than 40 hours of work a week and wanted additional work. Meanwhile, 3.2 million were invisibly underemployed, or workers who already worked 40 hours or more a week but still sought additional work or longer working hours.
‘Deteriorating conditions’
For University of Asia and the Pacific (UAandP) economist Marco C. Agonia, the rise in underemployment suggests that the ripple effects of the oil crisis are beginning to surface through ‘deteriorating labor market conditions.’
‘Factories may not be able to produce as much as they ought to, while transportation operators are forced to reduce hours due to lower margins,’ Agonia told the BusinessMirror.
PSA data showed 3.87 million underemployed workers were in the services sector, followed by 2.06 million in agriculture and 1.49 million in industry.
Within the services sector, wholesale and retail trade accounted for the largest number of underemployed workers at 1.14 million. This was followed by transportation and storage with 677,000, other service activities with 504,000, and accommodation and food service activities with 422,000.
Transportation and storage recorded one of the most notable increases in underemployment, adding around 160,000 workers from a year earlier. The increase was concentrated among passenger land transport workers, including jeepney drivers, taxi drivers, and bus drivers.
Former Socioeconomic Planning Secretary Dante B. Canlas said the increase in underemployment also reflects a labor market that had already been losing momentum amid slower economic growth before being hit by fresh external shocks.
Canlas noted that labor market conditions have softened since the start of the year as real economic growth slowed to 2.8 percent in the first quarter, while the geopolitical tensions and the temporary closure of the Strait of Hormuz added further pressure on businesses and workers.
‘As real wages stagnated from the Iran war, even employed workers were impelled to look for additional work, thereby swelling the ranks of the underemployed,’ Canlas told the BusinessMirror.
Job quality concerns
De La Salle University (DLSU) economist Ella C. Oplas said the latest figures also point to persistent concerns over job quality rather than simply the availability of work.
According to Oplas, many of the jobs being generated appear to be temporary, short-term, or otherwise insufficient to provide workers with adequate income-forcing many Filipinos to accept work while continuing to search for better-paying opportunities.
‘People would rather still get underemployed given the set up. People are desperate,’ she added.
Too early to tell
However, Ateneo de Manila University (ADMU) economist Ser K. Peña-Reyes cautioned against drawing a direct link between the rise in underemployment and the Middle East conflict.
He said the increase in underemployment is consistent with workers facing pressure on earnings and working hours, but it may also reflect a broader deterioration in job quality rather than a collapse in labor demand.
Peña-Reyes said a clearer picture will emerge in the coming months. If elevated oil prices persist and are accompanied by rising underemployment, shorter work hours and eventually higher unemployment, it would strengthen the case that the external shock is feeding through to the Philippine labor market.
‘The bigger near-term risk is weaker earnings and reduced working hours rather than a sharp rise in outright unemployment. This pattern would be consistent with the way the Philippine labor market has historically absorbed external shocks: income and hours tending to adjust before headcount does,’ he told the BusinessMirror.
Job creation
While underemployment has emerged as a growing concern, economists also warned that job creation could come under pressure in the months ahead.
‘We may expect a reduction in labor force participation as workers may decide to instead pursue further schooling or avoid the labor market altogether, if economic expectations deteriorate further,’ he said.
PSA data showed 2.41 million Filipinos were unemployed in April, higher than the 2.06 million recorded a year earlier, but lower than the 2.96 million posted in January.
Of the total unemployed, around 240,000 were new labor force entrants who had yet to find work.
‘Current economic stress may amplify the seasonal graduation effect, with laid-off workers forced to compete with a fresh intake of labor market participants,’ Agonia also said.
He added that firms facing higher costs and persistent uncertainty may become more cautious in hiring, potentially affecting both the quantity and quality of jobs created.
Peña-Reyes agreed, saying the greater risk is not necessarily a sharp increase in unemployment but a labor market that continues to generate jobs that offer fewer hours, lower pay, or less stability.
Building resilience
For his part, Department of Economy, Planning, and Development Secretary Arsenio M. Balisacan said the government is working to expand market access and attract investments in emerging and high-growth industries, including artificial intelligence, through stronger economic partnerships, and initiatives such as the Luzon Economic Corridor.
Balisacan also stressed the need for closer collaboration between government and industry to equip workers with skills demanded by a rapidly evolving economy and help workers transition into more stable and productive jobs.
‘These initiatives are essential to building a more resilient labor market that can withstand shocks while creating better opportunities for Filipino workers,’ Balisacan said.
The Department of Labor and Employment (Dole) likewise said it would continue expanding pathways to quality employment, strengthening workforce competitiveness and protecting labor rights.
‘These valuable efforts are part of the Department’s broader vision to build a future-ready workforce that can thrive in a changing economy while contributing to sustained, inclusive, and people-centered growth under the Bagong Pilipinas agenda,’ it said.