Metro Manila (CNN Philippines) — The job market in the Philippines has improved significantly, with unemployment dropping to a 10-year low, government data showed.

Employment rose to 94.6% in July from 93.5% the year before, the latest Labor Force Survey read.

Only 5.4% of the country's working population was jobless, down from 6.5% the year before. This is the lowest unemployment has been since 2005.

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Underemployment — which accounts for those who want longer work hours or an additional job — eased to 17.3% in July from 21% a year ago. It was also a 10-year low.

"Our growing economy, which is largely driven by output expansion in the services and industry sectors, has created more and better jobs," Socioeconomic Planning Sec. Ernesto M. Pernia said in a statement on Friday.

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The national elections in May as well as the spate of infrastructure projects undertaken this year could also have driven the hiring spree, Ateneo de Manila University economist Alvin Ang said in an interview.

Despite the improvements, both Pernia and Ang agreed much still had to be done.

The report estimated that as much as 22% of young people were inactive — neither in school nor at work.

"[T]his still means that there are 4.3 million young Filipinos who are underutilized because their skills are not being enhanced by education, training or employment," Pernia said.

He said the government would strengthen its JobStart program, which helps young people find work.

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Vulnerable employment is also a concern. A third of employed Filipinos are self-employed or employed as unpaid family workers.

"These workers are less likely to have formal work arrangements and access to social protection. They are also more at risk during crises or shocks," Pernia said.

He explained that livelihood and entrepreneurship programs could offer these workers more stable employment. Better access to capital and links to market supply chains could also boost their income.

For Ang's part, the government should work on promoting small businesses — particularly agribusinesses — so they can drive employment once the election and infrastructure momentum die down.

More than a quarter of working Filipinos are employed in agriculture. The sector is crucial to distribute because it can absorb low-skilled workers and distribute income to the poor, he explained.