Oil Price Surge Worsens Philippine Economic Woes, Fuels Unemployment Fears

The escalating tensions in the Bab Al Mandab Strait are inflicting further economic pain on the Philippines. Crude oil prices have risen by two to three percent, reaching between $107 and $108 per barrel for Brent crude and $102 to $103 per barrel for West Texas Intermediate as of September 15. This translates to an increase of P5.60 per liter for gasoline and P4.30 per liter for diesel for Filipino consumers, straining household budgets. Moreover, this price hike could exacerbate the unemployment problem, as warned by Global Source Partners. A report by former Bangko Sentral ng Pilipinas official Diwa Guinigundo and Wilhelmina Manalac, titled “Unemployment surges as growth loses momentum,” indicates that signs of this process are already emerging. Although the number of employed persons increased year-on-year, the average weekly hours worked declined to 40.6 hours in July 2026 from 42 hours in July 2025, suggesting that employment should not be judged solely by headcount but also by the amount of work available. The composition of employment reveals that services continue to account for the largest share at 62.8 percent, followed by agriculture at 19.7 percent and industry at 17.5 percent. Significantly, manufacturing saw a year-on-year decline of 134,000 employed persons in July. While the manufacturing Purchasing Managers’ Index (PMI) has shown improvement, factors such as supply-chain disruptions, rising input costs, and weak business confidence are impacting manufacturing employment. Headline inflation eased slightly to 6.2 percent in July from 6.4 percent in June, but remains significantly above the previous year’s 0.9 percent. Food inflation stood at 5.3 percent, and transport inflation, though easing, was still elevated at 11.9 percent. This presents a challenging policy environment where the economy is slowing but inflation remains too high. Furthermore, the substantial proportion of young people among the 3.14 million unemployed Filipinos and the 6.33 million underemployed Filipinos (who desire additional hours or a better job) highlight structural issues. The challenge is not merely to create jobs, but to create productive, adequately paid, and sufficiently stable jobs of quality. Regional disparities in unemployment are also evident, with the National Capital Region registering an unemployment rate of 8.2 percent, followed by the Bicol Region at eight percent. The report suggests that government emphasis on investments, skills development, and innovation should be complemented by stronger focus on immediate demand conditions facing businesses. Weak investment constrains the economy’s capacity to absorb a growing labor force. While the Philippine economy is growing, the pace may no longer be sufficient to comfortably absorb a rising labor force. The combination of slowing GDP growth, contracting investment, quality of employment issues, and elevated inflation suggests a broader weakening in economic activity. A sustained rise in unemployment in the coming months would strengthen this view. The ultimate test of economic performance lies in whether growth creates enough productive opportunities for Filipinos willing and able to work, the report concludes. Source: Philstar Business