Labor market experiencing fallout from infra scandals

UNRESOLVED governance issues and slow public investments that continue to weaken the economy are now weighing on the labor market, GlobalSource Partners said.

In a commentary dated Jan. 13, GlobalSource Country Analysts Diwa C. Guinigundo and Wilhelmina C. Mañalac noted that the ongoing flood control corruption scandal has led to weaker labor force participation and higher unemployment, especially in construction.

“These labor market outcomes are consistent with the broader slowdown in economic growth observed in the third quarter of 2025,” the GlobalSource analysts said. “Growth decelerated primarily due to reduced public construction activity linked to unresolved issues surrounding flood control projects.”

In November, the jobless rate climbed to 4.4% from 3.2% a year earlier — a development the Department of Labor and Employment said was unprecedented as the year-end holiday season typically boosts hiring.

However, Mr. Guinigundo and Ms. Mañalac said the slowdown reflects lingering governance concerns and still-sluggish public spending during the period.

“The slowdown highlights how governance bottlenecks and delayed public investment can transmit directly to employment outcomes, especially in construction and related sectors with strong multiplier effects,” they added.

Last year, extensive flooding uncovered substandard or non-existent flood control projects across the country, triggering investigations that linked government officials and private contractors to corruption.

The economy thus slump to its weakest growth in over four years — 4% in the third quarter. In the first nine months, gross domestic product growth averaged 5%, undershooting the government’s 5.5%-6.5% target.

GlobalSource said the weak labor market likewise shows weakening business conditions, noting the over four-year low S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) reading of 47.4 in November.

“These developments point to subdued labor demand, particularly in sectors that traditionally absorb a large share of the workforce,” Mr. Guinigundo and Ms. Mañalac said.

However, the PMI also indicated that factory activity recovered to 50.2 in December.

Meanwhile, GlobalSource said the job market may remain vulnerable without meaningful government reforms to revive economic growth.

“These governance challenges have eroded investor confidence and constrained the economy’s capacity to generate stable, quality jobs,” Mr. Guinigundo and Ms. Mañalac said. “Without credible reforms, labor market vulnerabilities are likely to persist, leaving workers increasingly exposed to growth slowdowns and external shocks.” — Katherine K. Chan