Philippine unemployment rate rises to 4.3% in January

There were 2.16 million jobless Filipinos in January, up from 1.63 million unemployed in December as the wealth of seasonal jobs during the Christmas rush might have started to wane, the Philippine Statistics Authority (PSA) reported.

That was equivalent to an unemployment rate of 4.3 percent, worse than the 3.1 percent rate in December 2024.

At the same time, there were 6.47 million employed individuals who sought additional jobs or extra working hours in January to augment their income, higher than 5.48 million in the preceding month.

Philippine historical jobs data

That translated to an underemployment rate of 13.3 percent, worse than the 10.9 percent previously.

The unemployment rate also worsened from last year’s full-year average rate of 3.8 percent.

By broad industry group, services continued to be the top sector in terms of the number of employed persons with a share of 61.6 percent of total employed persons in January 2025. The agriculture and industry sectors accounted for 21.1 percent and 17.2 percent of the total number of employed persons, respectively.

Source: Inquirer

Philippine inflation eased to 2.1% in February

Inflation slowed to 2.1 percent in February from 2.9 percent in January on the back of easing price pressures from food, utilities and transportation, the Philippine Statistics Authority reported.

The latest reading was better than the median estimate of 2.6 percent in an Inquirer poll of economists last week. It was likewise lower than the 2.2 percent to 3 percent forecast range of the Bangko Sentral ng Pilipinas (BSP).

That price hikes had stayed within the 2 to 4 percent official target means the BSP has enough room to continue with its gradual easing cycle, which would help support economic growth.

Source: Inquirer and PSA

Tax and market reforms are transforming the economy

Over the past decade, the Philippine government has implemented pivotal tax and market reforms to drive economic growth, ensure fiscal sustainability, and enhance business competitiveness. Landmark legislation — including the Tax Reform for Acceleration and Inclusion (Train) Act, Corporate Recovery and Tax Incentives for Enterprises (Create) Act, Ease of Paying Taxes Act (Eopta) — all played a transformative role in modernizing the country's tax system and strengthening its financial markets.

Enacted in 2017 and implemented in 2018, the Train Act (Republic Act [RA] 10963) was the first package under the Comprehensive Tax Reform Program. The groundbreaking reform aimed to simplify taxation, promote equity, and generate revenues to fund infrastructure and social programs.

It led to higher disposable income for low- and middle-income earners by reducing personal income tax rates and exempting individuals earning P250,000 or less annually. Adjusted tax brackets lowered the burden on middle-income earners, resulting in higher take-home pay, increased consumer spending, and economic growth.

It also increased government revenue for development programs.

To offset lower income tax collections, Train imposed higher excise taxes on fuel, automobiles, sugary beverages, and cigarettes. The additional revenue funded major government initiatives such as the Build Build Build program, free college tuition, and universal health care.

Greater consumer spending and improved government infrastructure investments contributed to business expansion, enhancing logistics, connectivity, and overall economic activity. The introduction of a flat 6-percent tax rate on estate and donor's taxes, meanwhile, replaced the complex tiered system, making wealth transfers more efficient and equitable.

While Train improved revenues, however, higher excise taxes contributed to inflation, particularly in fuel and food prices. The government mitigated this through safety nets like the unconditional cash transfer program.

The law played a transformative role by balancing tax relief for low- and middle-income earners with enhanced government revenue. While inflationary concerns arose, the long-term benefits of fiscal sustainability, economic growth, and investment confidence positioned the country for further development.

To counteract the economic downturn from the Covid-19 pandemic, meanwhile, the Create Act (RA 11534) was enacted in 2021. The law provided tax relief to businesses while modernizing investment incentives.

Among others, it reduced the corporate income tax for large corporations to 25 percent from 30 percent, while that for micro, small, and medium enterprises with net taxable income of P5 million or less and total assets below P100 million was lowered to 20 percent.

Fiscal incentives were rationalized and modernized to be performance-based, time-bound, and targeted incentives. Also included in the law is an income tax holiday of four to seven years, a five-percent special corporate income tax for export enterprises, enhanced deductions for domestic and export enterprises and sunset provisions for existing incentives.

VAT exemptions and incentives, meanwhile, cover sales of medicines for cancer, diabetes, and kidney disease and a VAT zero-rating for exporters to maintain global competitiveness.

The minimum corporate income tax was reduced to 1 percent from 2 percent until July 1, 2023, easing the burden on struggling businesses, while the percentage tax for non-VAT registered businesses was lowered 1 percent from 3 percent, effective until July 1, 2023. Incentives were also provided for investments in less-developed regions and priority industries.

Create lowered corporate tax rates, bolstered business recovery, and improved the Philippines' attractiveness to investors. The restructured tax incentives encouraged strategic investments, fostering economic revival and job creation.

The Eopta Act (RA 11976), signed into law in 2024, modernized tax compliance by reducing administrative burdens and aligning tax processes with global best practices. Among others, taxpayers were categorized into small, medium, and large, streamlining compliance processes, and tax filing and payment were simplified via fewer forms, improved e-filing/e-payment systems and nationwide payment options.

It also streamlined the VAT system, ensuring refunds within 90 days, and VAT-exempt transactions were made clearer to reduce compliance complexities. Greater use of technology in tax processes was also mandated, reducing errors and improving efficiency.

The Eopta has made tax compliance more accessible, particularly for small and medium enterprises. By integrating digital solutions, it enhances efficiency, transparency, and global competitiveness.

Meanwhile, the anticipated Capital Markets Efficiency Promotion Act (Cmepa) seeks to modernize Philippine capital markets by reducing tax barriers, encouraging investment, and enhancing market liquidity.

Among others, it aims to lower the stock transaction tax to 0.1 percent from 0.6 percent in line with regional markets. The documentary stamp tax for original issuances will also be lowered to 0.75 percent from 1 percent and unit investment trust funds and mutual funds will be exempted from the tax, making them more attractive. The tax treatment of long-term deposits and investments will also be standardized, broadening the tax base.

Approval of the Cmepa law is expected to enhance market liquidity, encourage investment, and strengthen the Philippines' competitiveness in global financial markets. The coming years will reveal its effectiveness in expanding investor participation and deepening capital markets.

Train, Create, Eopta and Cmepa demonstrate the government's commitment to tax modernization, investment promotion, and ease of doing business. While each law addresses distinct aspects of economic development, together they create a comprehensive strategy for long-term growth.

As these reforms continue to evolve, businesses, investors, and taxpayers must stay informed and capitalize on emerging opportunities. Ultimately, these policy changes aim to build a more competitive, inclusive, and resilient Philippine economy that can navigate global challenges and sustain prosperity.

Source: Business World