13 Most Common Causes of Unemployment Rate in the Philippines

Having a high unemployment rate in the Philippines is a major issue, and there are many reasons for it. Filipinos looking for work can find themselves unemployed due to several factors, including education, location, technology, and more specific job market issues like labor market frictions or seasonal factors. Of course, the causes of unemployment are not all in your control—some are related to economic cycles and other structural issues—but there are things you can do to improve your chances of finding employment if you’re currently out of work.

Also Read: 12 Tips for Domestic Helpers: How to Stay Long with One Employer

Having a lack of available good-paying jobs in the Philippines is one of the reasons many Pinoys choose to become Overseas Filipino workers and work abroad. But what are the other reasons why there are not a lot of job opportunities in the country? Here we share more details on other causes of unemployment.

Common Causes of Unemployment in the Philippines

What are the Common Reasons of High Unemployment Rate in the Philippines?

Unemployment is a serious issue in any country, but it is particularly acute in the Philippines. There are a number of factors that contribute to high unemployment rates in the country. One of the most significant is the lack of available jobs. Although the Philippine economy has been growing in recent years, job growth has not kept pace.

This means that there are simply not enough jobs to go around, leaving many Filipinos without work. Here are some of the most common reasons for unemployment in the Philippines:

1. Lack of Decent Employment Opportunities

Common Causes of Unemployment in the Philippines

In addition to this, you need to be aware that there is a shortage of respectable career prospects in the Philippines. This indicates that there are not enough jobs to go around, and it is possible that even individuals who possess the necessary abilities will have a difficult time finding employment. The few employment that are available typically pay little and have unfavourable working conditions.

Also, if you are looking for work that is not in your area of expertise or training, you may have a difficult time finding any work at all. This is because employers are often picky about who they hire based on applicants’ resumes and other qualifications, rather than simply accepting anyone who applies for a position.

2. Lack of Relevant Skills and Competencies

Common Causes of Unemployment in the Philippines

One of the most prominent factors contributing to unemployed people in the Philippines is a deficiency in essential skills and abilities. It is not necessarily your fault if you are unable to find employment because your skills do not match what employers need; rather, it is a sign that you lack adequate education or training for a certain role. If you are unable to find employment because your skills do not match what employers need, it is not your fault.

It’s possible that you’re having trouble finding work because you don’t have enough relevant work experience or because you just got out of college and haven’t had time to complete any relevant training yet. In addition to the fact that applicants who have not obtained training from professional institutions, such as universities and colleges, are not suitable for specific positions, many employers prioritise applicants who have received such training.

They feel that having these kinds of qualifications guarantees higher levels of productivity on the job because graduates have previously been taught how vital it is to follow instructions in accordance with the norms of the business without making any mistakes (e.g. incorrect punctuation).

3. Geographic Mismatch and Mobility

Common Causes of Unemployment in the Philippines

One of the most prominent contributors to unemployment in the Philippines is the fact that the location of available jobs and available employees do not always coincide with one another.

There are a lot of people in the Philippines who are hesitant to move away from their hometowns because they are concerned that they will not be able to find work there. This is especially true in rural areas. There are also a great number of people who would like to relocate but are unable to do so because they do not have access to education and training programmes, health services, transportation, or information about job openings in their desired location.

4. Poor Education System

The Philippines’ high unemployment rates are partially attributable to the country’s subpar educational system. There are several variables that contribute to this issue, some of which include the low quality of teachers, a high dropout rate, a lack of competitiveness and relevance, limited access to information technology resources, and inadequate school infrastructure.

Scholarships and grants are made available by the government to people who are interested in pursuing higher education but do not have the financial means to do so. However, these programmes do not cover all pupils who need them; as a result, a significant number of Filipinos continue to be unemployed due to their lack of education and experience earned from attending school or college.

5. Labor Market Frictions and Rigidities

Common Causes of Unemployment in the Philippines

These are the consequences of rules and regulations imposed by the government. For instance, mandating that businesses either recruit union members or pay rates that have been previously agreed upon might lead to an increase in unemployment by decreasing the number of people who are prepared to work for any given wage and so driving up expenses for businesses.

6. Technology

Common Causes of Unemployment in the Philippines

One of the primary contributors to the high unemployment rate in the Philippines is the rapid advancement of technology. The demand for unskilled labour is decreasing as a result of the increased use of automation and artificial intelligence, which are progressively replacing workers.

In order for the nation to maintain its competitive edge, it is necessary to recruit highly trained employees who are able to seize the opportunities presented by the rapid advancement of technology. Education is the best method to prepare for the future because it can provide people with essential skills that will enable them to adapt fast and compete effectively in a professional climate that is becoming increasingly complex.

As mentioned, education is another important area where we lack significantly as a nation. This is critical to address if we are to the alleviate poverty and unemployment in the Philippines. The lower an individual’s degree of education is in comparison to that of their contemporaries, the greater the likelihood that person will either not have a job or will not earn enough money from the job they do have (i.e., having low income). For instance, if a person has a bachelor’s degree but no relevant experience in their chosen field — such as computer science — they may find it difficult to find employment after graduation. This is the case unless the individual possesses other qualities such as leadership abilities, which help employers see past any lacking due solely to education level alone!

7. Inflation

When there is a rise in the total amount of money in circulation, a monetary phenomenon known as inflation can be expected to take place. Inflation is the reverse of deflation, which is when there is a drop in the amount of money available and hence an increase in value. Inflation occurs when there is an increase in the amount of money available.

When the quantity of money in circulation grows or when the demand for goods and services exceeds the available supply, inflation results. As a result, prices go up—and so does unemployment. Although many economists believe that the relationship between inflation and unemployment only exists during periods of recession or depression, this relationship is actually a constant factor throughout periods of economic growth as well. This is due to the fact that it is related to several other factors in addition to growth rates, such as:

  • The patterns of behavior that are exhibited by customers (demand)
  • The different cost structures that producers must contend with (supply)

8. Seasonal Factors

It is usual for there to be a certain amount of unemployment during specific times of the year, and this should be anticipated. However, seasonal unemployment can be alleviated to some degree by increasing the number of staff you have at any given time. Because of this, you’ll be able to keep your current workforce operating at full capacity while at the same time satisfying your demand for more workers during peak seasons.

9. Overpopulation

One of the primary contributors to the high rate of unemployment in the Philippines is the country’s high population. In this part of the article, we are going to talk about how it affects the economy as well as other parts of society.

The condition known as overpopulation is characterised by an abnormally high population density relative to the amount of land or other resources that are available to sustain it. It is essential to keep in mind that “too many people” is not necessarily the same thing as “overpopulation.” Even if every member of the population has access to sufficient resources, the population nevertheless might be too large (e.g. food). This is due to the fact that a larger population means that there will be a greater amount of competition for those resources; there are simply more mouths to feed than there are supplies that can satisfy all of them.

When looking at these two factors—labor supply and demand—it is possible to observe the consequences that overpopulation has on unemployment.

10. Contractualization

One factor has been blamed for causing mass unemployment in the Philippines – contractualization.

The Department of Labor and Employment (DOLE) defines contractualization as “the practice of an employer replacing his workers with contractors or service providers without transferring them to the latter’s payroll, so that the workers are deprived of important benefits and protections under existing labor laws.”

Contractualization is a form of disguised employment. This means that there is no direct employment relationship between an employer and employee. Instead, the former hires a third party – usually another company – to provide services on a temporary basis. These companies can either be local or foreign-owned, but they may or may not have any connection with their clients.

While contractualization does not directly affect how much a worker gets paid or how many days he works for his employer, it does mean that he has no access to his basic worker rights like Social Security System (SSS) contributions and mandatory maternity leave benefits because he is not considered as having been hired directly by his boss.

Contractualization has been blamed for causing mass unemployment in the Philippines because it creates an environment where businesses have no incentive to invest in long-term employment. This is especially true in industries where labor costs are a large percentage of total costs. In these industries, businesses will often resort to hiring workers on a contractual basis in order to avoid the costs associated with traditional employment.

This has led to a situation where many workers are employed on a short-term basis and do not have the security of long-term employment.

Few months ago, the issue of “endo” or end of contract, which is commonplace across various workplaces in the country, has been tackled and considered a hot topic, particularly because of the Duterte government’s efforts to pass a law that aims to end it for good. Here’s a short video clip on this topic:

11. Insufficient Infrastructure

The Philippine Statistics Authority (PSA) reports that the nation’s unemployment rate increased from 5.1 percent in April 2019 to 5.3 percent in May 2019. This represents a month-over-month increase of 0.2 percentage points. This constitutes a rise of 0.2 percentage points from the previous survey.

It was noted in the public service announcement (PSA) that one of the reasons why there is unemployment in the Philippines is because the country does not have sufficient infrastructure. The agency claims that this is due to the fact that there are not sufficient transportation facilities, there are power outages, and there is congestion on the highways.

The public service announcement also noted that there is a higher number of unemployed Filipinos who have already completed their school but are unable to find work in their field of competence. This is a significant problem in the Philippines.

According to the PSA, nearly one million Filipinos continue to be unemployed after having completed their education because they are unable to locate employment opportunities that are a good match for their skills and interests.

12. Corruption

The problem of corruption is not unique to the Philippines; rather, it is a problem that affects people all over the world. Corruption can result in officials accepting bribes from businesses that want them to overlook violations of environmental regulations or labour laws.

This makes it more difficult for honest businesses to compete with less scrupulous businesses and increases unemployment by forcing people out of work because their employer has been caught breaking the law. Corruption also makes it more difficult for consumers to distinguish between businesses that are honest and those that are not.

13. Slow Economic Growth

Because of the slow rate of economic expansion in our nation, one of the most evident reasons why there are so many people looking for work in our country today is because our economy is not growing quickly enough. Many domestic companies have been driven out of business and others have closed their doors because they were unable to compete with their international counterparts, who can sell their products at lower prices because of the lower cost of labour in other countries.

If our economy expands at a quicker rate, then more jobs will be generated, and more individuals will have the opportunity to discover career possibilities that they can use to provide for their families.

Video: PH Unemployment Rate Pushes 2021 Tally to 3.7M

OFWs are an important source of income for many families in the Philippines. According to government statistics, there were around 2.2 million overseas Filipino workers (OFWs) as of January 2019 — making up about 10% of the country’s total population of 105 million people.

One of the main reasons we have Filipinos leaving the country is unemployment in the Philippines. We’ll highlight the most common causes of unemployment in the country in the following sections, so make sure to read until the end to learn more.

According to the video, the Philippines’ unemployment rate has reached its highest level in over a decade, with 3.7 million people out of work in 2021. This is a big jump from 2020, when there were 2.9 million unemployed people, and it’s a bad sign for the economy of the country. The Covid-19 pandemic and the lockdowns that followed are the main reasons for the high unemployment rate. These lockdowns caused many businesses to close. The problem has gotten worse because the government has taken too long to help people who have lost their jobs.

With this in mind, one may think of better alternatives for them to keep themselves and their families financially afloat during these hard times. And as borders across the globe  continue to open, the trend of Filipinos leaving for work overseas appear to be very promising in this regard.


There are a number of factors that contribute to unemployment in the Philippines; however, the most prevalent ones are a subpar education system, a lack of relevant skills and competencies, an absence of decent employment opportunities, a geographic mismatch and mobility issues, and labor market frictions and rigidities. If the administration of this country wants to bring the unemployment rate down to a more manageable level, it needs to address these issues as quickly as humanly possible.

Another major factor is the prevalence of low-paying jobs. Many jobs in the Philippines offer little in the way of wages or benefits, making it difficult for workers to make ends meet. As a result, many Filipinos are forced to take on multiple jobs just to survive. Finally, corruption also plays a role in high unemployment rates. When officials accept bribes from businesses, they often favor those businesses when it comes to awarding contracts or handing out permits. This creates an uneven playing field that shuts out small businesses and makes it difficult for new businesses to get started. All of these factors contribute to high unemployment rates in the Philippines.

It is essential to keep in mind that the aforementioned reasons for unemployment are not the only ones that contribute to the problem of unemployment. It is also crucial to note that not all unemployed persons are jobless for the reasons that were described above. People who are unemployed may be having trouble finding work for a variety of reasons, including that they do not want to work, that they have been unsuccessful in previous employment opportunities that they have pursued, that they are struggling with health issues, or that their previous jobs have been eliminated.

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