MANILA, July 15, 2025 - Strategic reforms that enhance foundational investments in connectivity and human capital, promote smarter regulations and competition, and mobilize private investments for stronger job creation could propel the Philippines closer to a 7-percent growth trajectory, transforming it into a middle-class society by 2040.
Running Uphill: Growth, Jobs, and the Quest for Productivity, the Philippines Country Growth and Jobs Report released by the World Bank today argues that a new playbook focused on creating more and better-paying jobs is increasingly urgent as the country confronts a new global context characterized by global uncertainty; rapidly evolving technologies with significant implications for jobs, such as artificial intelligence; and recurrent climate shocks.
"Employment is not merely an economic indicator; it' s a cornerstone of social stability and individual dignity. Jobs offer individuals the opportunity to lift themselves out of poverty, support their families, contribute to their communities, and help build a prosperous country," said Zafer Mustafaoğlu, World Bank Division Director for the Philippines, Malaysia, and Brunei.
To achieve its goal of becoming a middle-class society, the Philippines needs to sustain annual growth of 6-10 percent for decades. Implementation of the recommendations in this report could help raise annual GDP growth to 6.8 percent; and create over 5.1 million additional jobs by 2040 and raise real wages by 12.9 percent, driven by wage increases in the manufacturing and services sectors.
Over the past 15 years, the Philippines experienced robust economic growth, achieved record-low unemployment, and doubled its GDP. Growth was also more spatially balanced than it had been (with low- and medium-income regions contributing significantly to overall GDP growth), and the real incomes of the bottom 40 percent grew at a faster rate than the incomes of the wealthiest 20 percent. Underpinning this progress were improved labor outcomes, including a shift from self-employment (primarily in agriculture) to wage employment (mainly in services), driven by higher public investment (mainly in connectivity infrastructure) and reforms that helped increase private investment.
"The Philippines has demonstrated that investment-led growth can be inclusive. However, to secure a prosperous, job-rich future, the country must now double down on reforms that unlock productivity, empower regions, and connect to global markets. The next leap is within reach,"said Gonzalo Varela, World Bank Lead Economist.
Despite progress, challenges remain. Significant gaps persist across regions, and the Philippines still underperforms its peers in Asia and the Pacific. Productivity has not been a large contributor to growth, limited competition in key sectors constrains the growth and job creation of top-tier firms, and complex permitting processes in enabling services dull the effects of past reforms. The economy's increasing inward orientation-less exporting and participation in global value chains-constrains future growth and the creation of quality jobs. Despite investments in connectivity infrastructure, infrastructure gaps remain, making transport costs high.
The report emphasizes that technology adoption among firms is critical for productivity, innovation, growth, and quality job creation. "Technology adoption is no longer optional", said Jaime Frias, Senior Economist. "It is essential for firms to grow, compete, and create better jobs. The Philippines must invest in digital skills and foster an innovation ecosystem that empowers businesses to harness the full potential of emerging technologies."
To address these challenges, public policy needs to ensure adequate investment in three pillars of development: physical and digital infrastructure and human capital; a business-enabling policy environment that reduces barriers to entry and promotes competition; and smart, targeted interventions to mobilize private capital, particularly, in sectors that produce goods or services that can be traded across regions and international borders, including agriculture, manufacturing, tourism, and business services.
