Prior to the COVID-19 pandemic, the Philippines was experiencing its longest ever economic and job expansion.

There was remarkable growth in wage and salary employment (a measure of modern employment), growing at an average of 4.6% annually from 2015 to 2019.

This rapid expansion in modern employment was strong enough to pull workers away from the informal sector in such big numbers that total informal employment was shrinking for the first time ever in the Philippines.

Unfortunately, the pandemic reversed some of these gains, wiping out 1.7 million wage and salary jobs in the 12 months to January 2021.

In contrast, employment in the informal sector rose by about 435,000. The pandemic could create long lasting effects on employment. This temporary large shock to the economy might produce a persistently lower employment rate even after the economy has started to grow again. This phenomenon is known as hysteresis in employment.

There are three transmission channels of the pandemic on modern employment.

A version of this article appears in the print on June 7, 2021, of The Himalayan Times.