Fuel costs hit job quality despite drop in joblessness

By Erika Mae P. Sinaking, Reporter

RISING fuel prices are tightening employment conditions in oil-dependent sectors even as the Philippines’ overall unemployment rate declined in February, underscoring uneven labor market pressures tied to higher energy costs, analysts said.

“Higher fuel costs directly raise operating expenses, which can lead firms to cut back on hiring, reduce working hours or delay projects,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, told BusinessWorld via Viber.

“In agriculture and fisheries, it also affects production costs, which can translate into lower margins and more informal or seasonal employment,” he added.

Preliminary data from the Philippine Statistics Authority (PSA) showed the unemployment rate eased to 5.1% in February from 5.8% in January, but remained higher than 3.8% a year earlier.

“The more immediate risk may not be outright job losses, but rising underemployment and weaker job quality,” Mr. Rivera said. “If cost pressures persist, we may see workers taking on fewer hours or shifting to lower-paying, less stable jobs.”

Employment trends diverged across sectors. Transportation and storage recorded a year-on-year increase of 486,000 employed people in February, while construction posted an annual decline of 484,000 jobs. Agriculture and forestry shed 523,000 jobs.

The average number of unemployed people in the first two months of 2026 rose to 2.8 million from 2.05 million a year earlier, reflecting mounting external risks to economic activity. In January to February, the average unemployment rate rose to 5.4% from 4% a year earlier.

Analysts said oil-dependent industries such as transportation, construction and agriculture remain vulnerable as fuel costs rise amid the protracted conflict in the Middle East.

Analysts said the uneven performance reflects the differing ability of sectors to absorb fuel‑related cost pressures, with construction and farming more exposed to higher diesel and gasoline prices. Energy costs form a large share of total expenses for these industries, affecting both hiring decisions and the pace of projects and production.

Jose Sonny G. Matula, president of the Federation of Free Workers, said persistently high oil prices could weigh not only on employment levels but also on working conditions.

“If global oil prices remain elevated, the likely result is not only possible job losses, but also wider underemployment — fewer trips, fewer workdays, delayed projects, lower incomes and weaker labor demand,” he said in a Viber message. He added that many workers could remain employed “on paper” while earning less and working fewer hours in practice.

February labor force data showed underemployment rose to 11.8% from 10.1% a year earlier, affecting 5.84 million Filipinos seeking additional work or longer hours. Average weekly hours worked declined slightly to 40.9 hours in February from 41.1 hours a year earlier, indicating softer labor use.

Research group IBON Foundation said the reported increase in employment needs to be viewed alongside job quality indicators. Total employment rose by 1.5 million year on year to 49.4 million in February, but much of the increase came from unpaid family work, which climbed by 1.4 million to 3.4 million.

“These numbers are misleading,” it said in a report last week. It noted that the surge in unpaid family labor does little to improve household incomes or economic security and masks weakness in the creation of stable, better‑paid jobs.

The group added that about 21.4 million Filipino families, or roughly 84% of the population, remain exposed to unstable employment and the effects of higher prices linked to rising oil costs. It said labor market conditions had already been weakening even before the March uptick in global oil prices.

Mr. Matula said government support measures could help cushion the impact on minimum wage earners, citing transport service contracting in the National Capital Region as an example of indirect relief.

“When fares are reduced or rides are free, the worker gets relief before payday instead of another burden before boarding,” he said.

IBON said broader measures are needed to shield workers and small firms from fuel‑driven cost pressures. It called for the removal of value‑added tax (VAT) and excise taxes on fuel and the expansion of emergency cash assistance for affected sectors.

“Immediate steps should include removing VAT and excise taxes on fuel as rapid relief, alongside significantly expanding emergency cash transfers for distressed transport workers, fisherfolk and farmers,” the group said.

It added that small businesses should receive tax relief, wage subsidies and liquidity support to help them remain operational and retain workers.

The of Labor department did not immediately reply to a Viber message seeking comment.

Beyond short‑term measures, IBON said longer‑term policies should focus on generating stable and decent jobs by strengthening local agriculture and building domestic industries less exposed to external price shocks.