Most micro, small and medium enterprises in the Philippines continue to rely on informal hiring practices despite significant financial and security risks, according to a joint study by the Department of Trade and Industry and Boston Consulting Group.
The research found that local businesses primarily recruit through walk-in applicants, social media posts and employee referrals. Formal channels like employment programs, online job portals, university partnerships, local agencies and print advertisements remain underutilized.
This reliance on informal methods carries a high price tag. Jobstreet by SEEK reported that a single wrong hire can cost an enterprise an average of P740,000, representing a major burden for businesses operating on limited resources.
Beyond financial loss, informal recruitment increases exposure to fraudulent applications involving fake degrees, falsified experience and fabricated credentials. Experts project that one in four job applications could be fake by 2028.
“Fraudulent hires have long been a challenge for many companies, and it hurts businesses, especially MSMEs that operate on limited resources. We encourage hirers to leverage professional employment channels and free, easy-to-use job platforms with wider talent pools to minimize the risks of hiring mismatched candidates, or worse, fraudulent applicants,” said Jobstreet by SEEK managing-director Dannah Majarocon.
To address these vulnerabilities, Jobstreet by SEEK launched the SMEasy sa Jobstreet campaign. The initiative provides entrepreneurs with practical hiring strategies and tools designed to simplify recruitment while connecting them to verified, qualified candidates.
The campaign highlights success stories from local entrepreneurs who have transitioned to structured hiring. Crusted Pizza owner Jas Marfil, SmarTrade executive Eduard Lumbre and Jethro Cerezo executive team head Jethro Cerezo credited formalized recruitment processes for building more resilient teams.
Data suggest that while 99 percent of Philippine businesses are classified as MSMEs, many remain vulnerable to the rising sophistication of application fraud. Industry leaders continue to push for the adoption of digital platforms to bridge the gap between small businesses and the professional labor market.
