Labor Futures Under Artificial Intelligence: Scenarios for the Philippine Economy

Rapid advances in generative artificial intelligence (AI) are reshaping the nature of work worldwide, yet their labor market implications remain highly uncertain and context-dependent. This paper examines the likely impacts of AI on labor in the Philippines through a prognostic, scenario-based approach that moves beyond deterministic forecasts. Drawing on three complementary evidence bases—task-level evidence on what generative AI can already do in practice, occupational exposure and complementarity analysis using Philippine labor force data, and firm- and worker-level evidence on AI adoption—the study develops an integrated framework linking AI capabilities, occupational structure, and institutional mediation. The analysis shows that while a significant share of Philippine employment is exposed to AI—particularly in service-sector and BPO-related occupations—most exposed jobs also exhibit high complementarity, suggesting substantial scope for augmentation rather than immediate displacement. Observed adoption patterns to date are cautious, with limited job loss but growing task reconfiguration and emerging skills gaps. Building on these findings, the paper develops three policy-contingent labor market scenarios for the period 2025–2035: an Augmented Services Economy characterized by inclusive productivity gains, a Dual-Speed Labor Market marked by polarization and uneven adjustment, and a Disruptive Automation Shock involving significant displacement and social strain. The paper argues that AI’s labor market impacts in the Philippines are not technologically predetermined. Instead, outcomes will depend on policy choices related to skills development, governance, social protection, and innovation. The Philippines faces a narrow but real window to steer AI adoption toward inclusive upgrading rather than disruptive adjustment.