by Valerie Mae Policarpio

The agriculture sector is the engine of the country and serves as the second-largest source of employment among major sectors. However, over the past decade, there has been a noticeable decline in the number of workers in this sector, despite rising daily wages nationwide. What could be driving this phenomenon?

The Philippines is a developing nation with three major sectors that have a considerable impact on its economic landscape. One of these is the agriculture sector, which encompasses farming, forestry, and fishing. This sector has long been vital for millions of Filipinos, providing food, employment, and livelihood. The raw materials produced by the agriculture sector are essential inputs for industrial production and also meet the needs of the services sector. Agriculture employs over one-third of the Filipino workforce, which helps to alleviate poverty and reduce inequality in disadvantaged rural regions (Philippine Statistics Authority, 2015).

An analysis of workforce distribution from 2013 to the first half of 2025 reveals a trend among the three major sectors. As illustrated below, the services sector has consistently increased its labor force since 2013, indicating that it now employs the largest share of Filipino workers. In contrast, the agriculture sector has experienced a steady decline in its employment share, decreasing from 31% in 2013 to 20.3% by early 2025. Although there have been some fluctuations, agriculture remained the second-largest sector until 2024, after which it began to shrink, closing the gap with the industry sector. This downward trend in agricultural employment merits concerns and even further investigation.

So, to gain insight into workforce distribution and identify regional disparities, the map below illustrates the regional distribution of agricultural workers comparing 2018,  2020, and 2022 data collected as of November. These figures reveal that Western Visayas, which includes the provinces of Aklan, Antique, Capiz, Guimaras, Iloilo, and Negros Occidental, consistently ranks among the top three regions for agricultural employment. This region is particularly noted for its production of key crops such as sugar, rice, corn, and coconut.

Following Western Visayas, there is also Northern Mindanao—which comprises Bukidnon, Camiguin, Lanao del Norte, Misamis Occidental, and Misamis Oriental, is recognized for its cultivation of bananas and pineapples. Meanwhile, the Davao Region, encompassing Davao de Oro, Davao del Norte, Davao del Sur, Davao Occidental, and Davao Oriental, is well-known for its production of Cavendish bananas, cacao, and durian. Additionally, SOCCSKSARGEN, which includes South Cotabato, Cotabato (formerly North Cotabato), Sultan Kudarat, and Sarangani, contributes to the agricultural landscape with its production of rice, corn, bananas, coffee, sugar, rubber, and palm oil. Overall, these regions contribute majorly to the agricultural sector. As opposed to regions like the National Capital Region (NCR) and Cordillera Administrative Region (CAR) that are among the lowest in the production of agricultural goods.

Comparison of labor climate between NCR and Northern Mindanao

In looking at the Gross Regional Domestic Product (GRDP) from 2022 to 2024,  Northern Mindanao is among the top three highest contributors in the agricultural sector’s GRDP. In contrast, the top region with the highest wage is the NCR, a region where agriculture is not their strong point, while the top-performing agricultural regions only receive average wages. From this analysis, a big question mark is evident between the wage given and the contributions of the mentioned regions.

Between 2022 and 2024, the minimum average wage in the agricultural sector increased by a significant 55 pesos, which is approximately 14.9% over these three years. It is important to clarify that the minimum wage represents the legally mandated lowest pay, which can be calculated on a daily or monthly basis. This average wage takes into account various regions and sub-sectors within the agriculture industry. However, these figures do not provide a complete picture; it is essential to consider inflation and regional disparities when interpreting them. Still, while this wage increase may have incentivized some workers to remain in the agricultural sector, the opposite trend has been observed, prompting the question of why this is the case.

Difference in the wage of agricultural and non-agricultural sector

Regionally, in Northern Mindanao, the minimum wage has increased from 331 pesos in 2018 to a range of 446 to 461 pesos, according to the latest memo from the Regional Tripartite Wages and Productivity Board (RTWPB). This represents an increase of 108 to 115 pesos. However, when compared to the National Capital Region (NCR), the wage growth in Northern Mindanao appears less significant. In NCR, the minimum wage was already 500 pesos in 2018 and is projected to exceed 608 pesos by the second half of 2025. Additionally, non-agricultural sector wages in NCR have risen from 537 pesos in 2018 to a projected amount of over 645 pesos in 2025.

In analyzing the minimum wage of agricultural workers in Northern Mindanao compared to the NCR, it is clear that significant regional disparities exist. A comparison in wages consistently shows that workers in the non-agricultural sector earn higher salaries than those in agriculture. Interestingly, within the agriculture sector itself, regions that do not primarily specialize in agricultural production tend to offer higher wages than provinces and areas that heavily depend on agriculture as their main source of income and have abundant land for crop cultivation. This trend suggests a perplexing situation that may contribute to the decrease in the observed agricultural workforce, and the possibility that non-agricultural jobs may be more desirable and offer more opportunities for workers.

The role of Purchasing Power Per Region (PPP) in the problem

 Despite existing disparities, it is essential to consider various factors, and one of them is the cost of living in each region. To assess the purchasing power of workers, below is the Purchasing Power of Peso (PPP) in each region considering inflation using the Philippine Consumer Price Index (CPI) data from the Philippine Statistics Authority from 2022 to 2024. This comparison reveals the difference between real and nominal gains, suggesting that real wages remain stagnant (Castillo et al., 2025), especially with the inflation averaged 3-5% annually. To clarify, PPP is the value of  100 pesos in the base year (2018) in today’s terms (Philippine Statistics Authority).

Clearly, the Northern Mindanao region has a higher CPI, which indicates a higher cost of living. In the Philippines, the CPI significantly influences minimum wage adjustments. A higher CPI generally leads to a corresponding increase in minimum wage. This relationship means that as prices rise (indicating a higher CPI), minimum wages must also rise to maintain workers’ purchasing power and standards of living. These factors are crucial for the National Wages and Productivity Commission (NWPC) when formulating wage policies. However, in reality, as inflation—measured by CPI—increases, real wages tend to decrease unless wages are adjusted upward.

Going back, although Northern Mindanao is known for its strong agricultural production, significant wage discrepancies exist when comparing the real wages and purchasing power of its workers to those in the National Capital Region (NCR). In 2022, the purchasing power of a peso in Northern Mindanao was about 0.86 or 86.18, meaning that the peso could only buy about 86% of what it could in the base year of 2018. For example, a basket of goods that cost 100 pesos in 2018 now costs 116 pesos. In contrast, the NCR had a purchasing power of 0.89 or 89.03, with a basket of goods that cost 100 pesos in 2018 now costing 112.3 pesos. In Northern Mindanao, the CPI increased by 11.38 pesos, while in the NCR, the increase was 10.09 pesos. As a result, the purchasing power of workers has decreased to 0.78 or 78.42 in Northern Mindanao and 0.82 or 81.69 in NCR—still, a relatively lower PPP in comparison.

However, it is concerning to note the trends in the Consumer Price Index (CPI) and PPP in both regions. The cost of goods and services is rising while the value of the peso and the purchasing capabilities of Filipinos are stagnant or even declining.

The silent crisis in the agricultural sector 

The  regional disparity between Northern Mindanao and NCR reveals an unequal distribution of opportunities and attention for workers in the agricultural sector. This situation could lead to a continued decline in the labor workforce, which may adversely affect the labor productivity and dynamics of the country.

Income inequality in the Philippines is higher than in most of its Asian neighbors, with spatial inequality contributing significantly to this issue. Unequal resources largely account for the urban-rural income gaps. The Philippines experiences relatively high levels of income inequality, along with disparities between rural and urban areas, as well as regional inequalities. Policies have tended to favor Luzon, especially Metro Manila and its surrounding regions (Chua et al., 2015). Although labor market forces should ideally close the urban-rural gap and reduce regional inequality, this has not occurred; some argue that this may be due to barriers to migration, such as minimum wage legislation, regularization policies, labor unions, urban immigration restrictions, land zoning rules, and other market interventions.

The differentiation of minimum wages across regions in the Philippines, influenced by RTWPB, economic priorities, and labor productivity, creates a cycle where wage growth and outmigration provide only temporary relief without addressing the core issues. In regions where agriculture is thriving, it is essential for the government to focus on improving wages and conditions for agricultural workers to help reduce the rapid turnover of careers and employers within the sector. Moreover, better regional wage policies and equitable allocation of economic resources and funds should be prioritized for the less developed areas in the Philippines.

Overall, the data collected has provided some insight into the economic situation in our country, particularly in the agriculture sector. It is essential to acknowledge that these issues have persisted for a considerable period. Despite the observed regional disparities, wage inequalities, and unequal opportunities, we must ask: do production figures and wages accurately reflect the regional disparities between Northern Mindanao and the National Capital Region (NCR)? Alternatively, are the workers themselves satisfied with this type of economic and labor distribution?

The data allows for only rough approximations, yet it opens up opportunities for deeper exploration and investigation from different perspectives. Numerous economic, political, and social factors will continue to influence the minimum wage in the Philippines. Therefore, the government must actively strive to prioritize the rights and well-being of all workers, regardless of their occupation.

References

Castillo, C. J., Montesa, A. J., & Velasco, B. (2025b). Measuring the impact of wage hikes on employment and inflation: Two new quantitative studies. UP Solair. https://solair.upd.edu.ph/impact-of-wage-hikes-on-employment-and-inflation/#:~:text=The%20impulse%20response%20of%20CPI,as%20raised%20by%20some%20quarters.

Chua, K. K., Limkin, L., Nye, J., & Williamson, J. (2015). Urban-rural income and wage gaps in the Philippines: measurement error, unequal endowments, or factor market failure?. Philippine Review of Economics (Online ISSN 2984-8156), 52(2), 1-21.

Philippine Statistics Authority. https://psa.gov.ph/