What the Philippines' falling underemployment rate means for your retention strategy

Business leaders in the Philippines are dealing with two opposing trends. First, employee attrition is expected to reach 20% in 2025, the highest in Southeast Asia. At the same time, the government is celebrating a record-low 11.9% underemployment rate, calling it “unprecedented progress.”

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Although these trends seem to conflict, they are closely linked. As underemployment drops, more Filipino workers are getting stable, full-time jobs. This gives employees more power to leave roles they don’t like, which puts new pressure on companies to keep their staff.

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For APAC leaders, the link between low underemployment and high attrition shows that the fight for talent is changing. Companies now need to focus less on just hiring and more on offering career growth, a strong culture, and a clear employee value proposition (EVP).

The government’s narrative, championed by the National Economic and Development Authority (NEDA), interprets falling underemployment as a sign of improving job quality. The logic is simple: underemployed persons are those who want more hours or a second job. If that number falls, it must mean more people have secured stable, full-time roles.

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However, a closer look at the labor market shows a more uncertain and risky situation.

The narrative of "progress" is challenged by a structural wage crisis.

According to research from Manila-based think tank Ibon, the average daily nominal wage in the Philippines is approximately Php 465. The Family Living Wage (FLW) required for a family of five to survive is estimated at Php 1,224 per day.

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The gap means the average wage covers only 38% of a family's basic survival needs.

The reported improvement hides a large shift in the workforce. In 2024, there were job gains in transportation and construction.

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But these gains happened alongside a loss of 2.3 million jobs in agriculture. Many workers are leaving part-time or unpaid farm work in rural areas for full-time, low-wage jobs in cities, which are still unstable.

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This leads to what’s called a “Full-Time Precarity” model. Workers are now fully employed on paper, but many are still struggling financially. They feel little loyalty to their employers and have every reason to look for better opportunities. This shift sets the stage for a retention crisis.

Also Read: Why a paycheck dictates the global talent war

This labor situation helps explain why keeping employees in the Philippines is now such a big challenge. The 20% attrition rate makes sense when so many workers are always looking for something better.

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The numbers are clear. A 2025 Aon study found that 64% of Filipino professionals are either changing jobs or planning to do so this year. Even more striking, 80% said they would move abroad for a better opportunity, showing a serious risk of brain drain.

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While this problem is most severe in the Philippines, it’s not limited to one country. The whole APAC region is struggling to keep talent. Across ASEAN, employers say the main reasons people leave are low pay (55%), better benefits elsewhere (46%), and few chances for career growth (43%).

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For HR leaders, it means the most “stable” employees—those who have full-time jobs but are still struggling with the 38% wage gap—are now the most likely to leave.

The new market reality makes passive, “good enough” retention plans obsolete. The challenge requires a clear shift from active recruitment to aggressive, proactive retention. These are some of the most impactful employee retention strategies you can adopt:

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Compete on wages, not just market rates. The old model of benchmarking compensation against competitors is insufficient. Companies may want to apply this simple question: How does your wage package compare not to another company, but to the Family Living Wage? If your salary fails to provide a meaningful cushion above the survival line, your company will be viewed as a “desperation job,” unable to offer a long-term career. 

In a market of full-time precarity, employees will leave for a marginal 5% increase elsewhere because it has a material impact on their survival. The only way to earn loyalty is to lift employees out of precarity altogether.

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Kill the ‘dead-end job’ with aggressive growth. The third-biggest driver of attrition in ASEAN is the lack of career advancement. For an employee stuck in a precarious role, a "dead-End job" is a financial threat.

A visible, tangible career path is a sign of stability. The implication is that upskilling and reskilling are now core retention tools. Companies must fund “future-fit” skills and implement clear career-pathing frameworks. Funding these programs demonstrates an investment in an employee's long-term career, which builds genuine loyalty. In a market where people are fleeing instability, the clearest sign of safety is a visible future.

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Lessons from Singapore’s ‘pressure cooker.’ Your employee value proposition must be redefined. To see why, look at Singapore. Singapore’s labor market presents a different kind of paradox: a “job hugging” phenomenon. Official data shows record-low monthly resignation rates, falling to 1.1% in Q2 2025. 

Singapore's low resignation rate, however, appears to be driven by fear, not loyalty. Involuntary turnover (layoffs) is high, so employees are “hugging” their jobs for security. Beneath the surface, they are deeply dissatisfied. A KPMG report found the top reasons employees would resign are “organizational culture” and “career progression.”

Singapore is a pressure cooker. The workforce is unhappy but afraid to move. The moment market confidence returns, employers who have neglected culture will face catastrophic, delayed turnover.

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The lesson for all APAC leaders is to treat the non-financial EVP as a critical business strategy. Flexibility, mental wellness benefits, and a culture of respect are essential for releasing the pressure before it explodes.

Also Read: Why Malaysia's doctors are leaving

The trends in the Philippines represent an early look at the pressures emerging across the APAC region. The Filipino workforce, with its high mobility and acute awareness of the wage gap, is simply responding to these pressures first and most dramatically.

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Ignoring this signal creates a severe operational risk. Companies that fail to adapt their retention models will unintentionally become “training grounds” for their competitors. They will bear the high costs of recruitment and onboarding, only to lose their best-developed talent to organizations that offer a clear path out of precarity, creating a cycle of high turnover and low morale.

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This workforce dynamic is also a symptom of a larger economic challenge identified by the World Bank: the middle-income trap. Without a structural shift to genuine high-value, high-wage jobs, the “Full-Time Precarity” model will persist. For corporations, this means the problem of a desperate, hyper-mobile workforce is not a temporary trend but the new, permanent operating environment.

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The rise of AI and automation will further polarize this labor market. As executives increasingly prioritize AI expertise, the war for high-skilled talent will intensify, inflating their salaries. It will widen the gap between them and the larger pool of low-skilled workers, potentially stranding millions. Retention strategies must therefore become two-pronged: one for high-demand tech talent and another for the essential service workforce.

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The Philippine labor market trends 2025 are sending a clear signal: the focus must shift aggressively and permanently from talent acquisition to talent retention.