The country’s unemployment rate held steady at the end of 2025, according to the Philippine Statistics Authority (PSA).

In a Friday morning report, the PSA said the unemployment rate in December 2025 remained essentially unchanged from November’s 4.4 percent estimate, translating to 2.26 million individuals.

The agency noted, however, that the total number of unemployed individuals rose marginally by around 10,000 from November. The 4.4 percent December figure marks a steep increase from the 3.1 percent recorded in the same month in 2024.

The PSA said the labor force participation rate (LFPR), with the labor force consisting of individuals aged 15 years and over who are either employed or unemployed, landed at 64.4 percent in December, a modest uptick of 0.4 percentage points from the previous month.

Underemployment, defined by the PSA as “employed persons who express the desire to have additional hours of work in their present job, or to have an additional job, or to have a new job with longer hours of work,” declined to 8.0 percent in December from the previous month’s 10.4 percent. The PSA said this translates to approximately 3.93 million of the 49.43 million total employed individuals who expressed the desire for additional sources of income.

Based on preliminary data from the PSA, the 2025 unemployment rate averaged 4.2 percent for the full year, with December’s figure settling slightly above the annual average and 0.4 percentage points higher than the 3.8 percent annual average in 2024.

The LFPR, meanwhile, averaged 64.1 percent for the year, slightly lower than the 64.4 percent average in 2024, indicating a yearly decline in labor force participation. Underemployment held steady at 11.9 percent annually in both 2024 and 2025.

By class of worker, wage and salary workers comprised the majority of the workforce in December 2025 at 64.2 percent. This was followed by self-employed workers without paid employees (27.4 percent), unpaid family workers (6.9 percent), and employers in their own family-operated farm or business (1.5 percent).

By sector, agriculture gained the most employed individuals with roughly 572,000, while the construction sector led job losses, shedding approximately 550,000 positions—possibly due to the contraction in public infrastructure investment. The PSA previously reported a 42 percent year-on-year decline in construction activity following the flood control scandal.

The Department of Economy, Planning, and Development (DEPDev) said the government remains committed to improving the labor market environment to generate quality jobs amid global and domestic headwinds.

“We will prioritize employment creation by restoring consumer and business confidence, reducing the cost of doing business, encouraging innovation, and expanding training and reskilling opportunities,” said DEPDev Undersecretary and Officer-in-Charge Rosemarie G. Edillon.

Unemployment is a key macroeconomic indicator closely linked to inflation, economic growth, and household consumption. While consumption remains a key driver of the economy and headline inflation remains low, gross domestic product (GDP) growth remains a concern.

Okun’s Law is an empirical relationship in macroeconomics that links changes in unemployment to changes in a country’s output or GDP. Named after economist Arthur Okun, it suggests that when economic output slows or declines, companies reduce hiring or lay off workers, increasing unemployment. The theory generally postulates that about a 1 percent increase in unemployment is associated with roughly a 2 percent decrease in GDP, varying by country and time period.

Recent data suggests this dynamic may be at play. The economy expanded by 5.7 percent in 2024, but growth slowed sharply to 4.4 percent in 2025, according to the PSA. Against this backdrop, the year-on-year rise in annual unemployment—from 3.8 percent in 2024 to 4.2 percent in 2025—reflects a pattern broadly consistent with Okun’s Law.

Edillon added that the government will facilitate the adoption of digital technologies to strengthen the capacity of high-productivity sectors, including IT-BPM and advanced manufacturing, to ensure sustainable job growth. She noted that supply-side measures will continue to be prioritized to support an inclusive, efficient, and dynamic labor market environment.

“If we can expand global capability centers and develop specialized digital services, we can generate high-value jobs and enhance the country’s competitive position in the global market,” she said.