AI and the Future of Work in the Philippines: Preparing for a Changing Job Market

The IMF report highlights AI’s transformative impact on the Philippine labor market, with one-third of jobs highly exposed, particularly in the BPO sector. While AI poses displacement risks, strategic investments in digital infrastructure, education, and regulation can help maximize its benefits and ensure workforce adaptability.

A groundbreaking report by the International Monetary Fund (IMF), in collaboration with the Bangko Sentral ng Pilipinas (BSP) and the Philippine Statistics Authority (PSA), examines the impact of artificial intelligence (AI) on the Philippine labor market. By analyzing labor force survey data and AI exposure metrics developed by Felten et al. (2021) and Pizzinelli et al. (2023), the study maps which occupations are most vulnerable to automation and which may benefit from AI-driven productivity enhancements. The findings highlight that while AI presents risks of job displacement, it also offers opportunities for efficiency gains, particularly in sectors like business process outsourcing (BPO), where automation is already transforming traditional roles. This research aims to provide valuable insights for policymakers to prepare the workforce for AI’s growing influence.

Who is at Risk? Understanding AI Exposure in the Workforce

The study finds that approximately one-third of Filipino workers are in jobs highly exposed to AI, meaning that many of their tasks could be automated. However, within this group, 61% work in roles where AI is more likely to complement human efforts rather than replace them. These workers, particularly those in managerial, professional, and technical positions, could see productivity boosts rather than job losses. The remaining 14% of highly exposed workers, mainly in clerical and administrative support roles, face a higher risk of displacement since their tasks are more easily automated.

Demographic analysis reveals that college-educated, young, urban, female, and well-paid workers are the most exposed to AI, largely because they work in occupations where AI adoption is increasing. However, these same groups are also more likely to have jobs with high AI complementarity, meaning they can integrate AI tools to enhance their work. Older workers, by contrast, tend to hold managerial roles that require decision-making skills, making them less susceptible to direct AI replacement. The education sector stands out as an example where AI exposure is high, but so is complementarity, suggesting AI can be a tool for educators rather than a threat.

The BPO Sector: Biggest Risk or Greatest Opportunity?

The Philippine BPO industry, which contributes 7.4% to the country’s GDP—comparable to the value of remittances—is identified as the sector most at risk from AI. Call center jobs, which account for a significant portion of BPO employment, are particularly vulnerable to automation as AI-powered chatbots and virtual assistants become more sophisticated. Studies suggest that a large portion of customer service, back-office support, and transcription services could be automated in the coming years.

However, the study also highlights that AI is not just a threat but also an opportunity. Companies that strategically integrate AI into their workflows could enhance efficiency while shifting workers to higher-value roles such as AI supervision, quality control, and data management. If the BPO sector evolves to offer more knowledge-based services, the industry could remain a crucial pillar of the Philippine economy despite automation challenges. Employers and policymakers will need to invest in workforce training to help employees transition into roles that require critical thinking, creativity, and AI-assisted decision-making.

Challenges in AI Adoption: Infrastructure, Regulation, and Skills Gap

Despite the opportunities AI presents, several barriers limit its full-scale adoption in the Philippines. The country faces gaps in AI regulation, digital infrastructure, and workforce preparedness. While the National AI Strategy Roadmap (2021, updated in 2024) provides a vision for AI integration, there is still no comprehensive legal framework to govern AI use, data privacy, and ethical considerations. Without clear policies, concerns over algorithmic bias, cybersecurity risks, and labor market disruptions remain unresolved.

Another major challenge is inadequate digital infrastructure. Internet speeds in the Philippines lag behind regional peers, and unreliable electricity supply in some areas complicates AI implementation. AI-driven industries, particularly in the tech and outsourcing sectors, require strong and stable digital infrastructure, but the current network limitations hinder their growth. A report by the Philippine Institute for Development Studies (PIDS) also highlights the country’s skills gap, with 90% of Filipinos lacking basic ICT skills. While AI can create new jobs, many workers lack the digital literacy needed to transition into these roles.

Policy Recommendations: Preparing for an AI-Driven Future

To harness AI’s potential while mitigating its risks, the study outlines key policy recommendations. First, significant investments in digital infrastructure are necessary. Expanding internet access, improving electricity grids, and supporting AI research and development will help the country remain competitive in the global AI economy. Public-private partnerships could play a role in bridging infrastructure gaps, particularly in rural areas.

Second, workforce reskilling is essential. The government must update educational curricula to include AI literacy, coding, and data science at all levels, from primary education to university programs. Training programs for professionals should also be expanded, helping workers adapt to new AI-driven job requirements. The Trabaho Para sa Bayan Act is a step in the right direction, aligning education with industry demands, but further initiatives are needed to support continuous learning and upskilling.

Third, regulatory frameworks should be strengthened to ensure ethical AI deployment and worker protection. AI-specific laws should be developed to address concerns over data privacy, bias, and transparency. Policymakers can look to global models, such as the European Union’s AI Act, to develop best practices. Additionally, social protection measures like unemployment insurance and retraining subsidies should be expanded to support workers transitioning out of AI-displaced jobs.

Finally, businesses must be encouraged to adopt AI responsibly. The government could introduce financial incentives such as tax breaks and subsidies to encourage AI investment, particularly for small and medium enterprises (SMEs) that may lack the capital to implement AI-driven solutions. Increased government funding for research and development (R&D) is also necessary—currently, the Philippines spends less than 0.2% of GDP on R&D, far below the global benchmark of 1%.

The report underscores that while AI will undoubtedly reshape the Philippine labor market, its effects will be uneven across industries and job types. Some jobs will disappear, while others will evolve, and new AI-driven roles will emerge. The BPO sector, which is highly exposed to AI, must adapt by shifting to higher-value services. Policymakers must act swiftly to address regulatory gaps, improve infrastructure, and invest in education to prepare the workforce for the AI revolution. Strengthening social protections, such as unemployment insurance and retraining programs, will also be essential.

With proactive policies, the Philippines can turn AI-driven challenges into opportunities, ensuring inclusive economic growth in an increasingly digital world. By fostering AI adoption while protecting workers, the country can maintain its global competitiveness and create a labor market that thrives in the age of intelligent automation.