Effects of the COVID-19 Pandemic on Employment and Wages in the Philippines

This study examines the impact of the COVID-19 pandemic on the Philippine labor market, focusing on employment and real wages and their respective outcomes across sectors and various worker characteristics. To analyze the pandemic’s impacts on employment outcomes at various stages of the crisis, we estimate changes in the probability of employment through a set of logit and multinomial logit regressions and measure changes in daily working hours using ordinary least squares (OLS) regressions. We also estimate the effects on real daily wages through OLS regressions on subsamples of wage and salary workers. The empirical analyses reveal several important observations. First, the immediate impact of the pandemic crisis was much larger on employment than on real wages, in contrast to findings for previous crises, which found the reverse to be true. Second, workers in contact-intensive sectors experienced the worst effects in terms of wage declines and employment losses. As many of these sectors were male-dominated, male workers—especially older men with less education and in middle-skill jobs—suffered the most initially. Third, the recovery a year into the pandemic was uneven in terms of employment. Real wage trends during this period were generally less favorable for women, particularly young females and those in middle-skill and high-skill jobs. In contrast, male workers saw a recovery in real daily pay a year after the lockdowns, with the increase largely driven by outcomes in the rural sector—reflecting an uptick in real wages in agriculture. Our findings provide support for active labor market policies such as worker reskilling and training programs for the unemployed, as well as for social protection for vulnerable workers. The heterogeneous labor market effects of a crisis such as the pandemic also highlight the need for a focused fiscal response, targeting sectors and worker subgroups who are most likely to face the harshest impacts. Comments to this paper are welcome within 60 days from the date of posting. Email publications@pids.gov.ph.