WHAT IS THE REAL MEANING OF UNDEREMPLOYMENT?

WHAT IS THE REAL MEANING OF UNDEREMPLOYMENT?

When we talk about jobs, we often reduce the conversation to a simple question: Are you employed or not? But in real life, it is not that simple. There is a gray area between employment and unemployment, and there is an even grayer area called underemployment.

My late brother, Ambassador Roy V. Seneres, used to define underemployment as being forced to work in a job that is below one’s qualifications. That is what economists now call “skills underemployment.” But that is only one face of the problem, and new “faces” have come to light since then.

In reality, underemployment has at least three faces.

First is economic-underemployment—when a worker wants full-time work but is given only a few hours. A person who works two or three days a week is technically “employed,” but financially struggling.

Second is skills-underemployment—the “overqualified” trap. Imagine an engineer driving a tricycle or a licensed teacher selling online products because no permanent job is available. The country invested in their education, yet their skills are underutilized.

Third is income-underemployment—when someone works full-time in their profession but earns wages far below the market rate or below what is needed for decent living. You may be fully employed on paper, but underpaid in reality.

According to the Philippine Statistics Authority (PSA), the unemployment rate in late 2025 and early 2026 hovered around 4.4 percent, equivalent to about 2.2 million Filipinos. The underemployment rate, meanwhile, was about 8 percent, or nearly 4 million workers. These numbers come from the monthly Labor Force Survey.

At first glance, those figures seem encouraging. But here is the question: What exactly are we measuring?

Under international standards of the International Labour Organization (ILO), a person who worked at least one hour during the reference week is already considered “employed.” One hour. That means someone who worked for just a single hour is statistically counted the same as someone who worked 40 hours.

Is that logical?

This is why underemployment is often called “hidden unemployment.” It hides the real weakness of the labor market. A low unemployment rate can coexist with widespread dissatisfaction, low wages, and job mismatch.

To its credit, the PSA tracks underemployment. But I believe there is merit in unbundling the data more clearly before reporting it. Instead of presenting one consolidated underemployment rate, why not publish three separate headline figures: economic underemployment, skills underemployment, and income underemployment?

If the problem is lack of hours, then the solution may be business expansion and more investments.
If the problem is skills mismatch, then we must revisit education, training, and industry alignment.
If the problem is low wages, then we need to examine productivity, labor standards, and even regional wage boards.

There is no “one size fits all” solution because we are not dealing with one problem. We are dealing with three.

Underemployment is essentially a mismatch between a worker’s capacity and the job they currently hold. When people earn less than what they are capable of earning, the entire economy suffers. Lower income means lower spending, lower savings, and lower tax revenues.

More importantly, there is a psychological toll. It is difficult to stay motivated when you feel stuck or undervalued. Over time, skills deteriorate. Confidence erodes. Ambition fades.

So what is the real meaning of underemployment? It is a waste of human potential.

If we truly want inclusive growth, we should stop celebrating employment numbers alone. We should ask deeper questions: Are our people working enough hours? Are they using their skills? Are they earning fairly?

Until we answer those questions honestly—and measure them properly—we may be congratulating ourselves too soon.

If anyone has practical ideas on how to address this job mismatch problem, I would be very interested to hear them.

RAMON IKE V. SENERES

www.facebook.com/ike.seneres iseneres@yahoo.com senseneres.blogspot.com 09088877282/04-18-2027

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