Workforce development in the Philippines

5 Mins read

(Part 1)

A recent report issued by the Philippine Business for Education (PBEd) in conjunction with the US Agency for International Development (USAID) shed a great deal of light on the challenge of developing a workforce that can readily respond to the dynamic shifts in the labor market, not only in the Philippines but also in the countries which are highly dependent on overseas Filipino workers such as Japan, Canada, South Korea, and a good number of European countries that are suffering from a serious ageing crisis because of very low fertility rates. Despite the hype about our transitioning to the so-called Industrial Revolution 4.0 (artificial intelligence, the internet of things, robotization, data analytics, etc.) the data show that the Philippines has still to complete not only the Green Revolution that is a pre-requisite to an industrial revolution in any large country with abundant agricultural resources (as England was during the late 19th century when the First Industrial Revolution occurred).

The Philippines is still very much in Industrial Revolution 1.0 which was the age of mechanization. It has hardly emerged from Industrial Revolution (IR) 2.0, the age of electrification and the chemical revolution. Vast areas of the archipelago still have to be endowed with an ample electricity supply and the country has the highest electricity costs, next only to Japan, in the Indo-Pacific region. It is most advanced in IR 3.0 — the electronic age, at least as regards the widespread consumption of electronic products and services, not necessarily in their production.

In 2022, it was found that the majority of Filipinos were employed in occupations involving basic and lower analytical skills. The Labor Force Survey of October 2023 reported that most Filipino workers remain in elementary occupations (27.1%) or are service and sales workers (24%), with most employed in the wholesale and retail trade, agricultural and forestry sector, and construction sector, among others. The survey also reported an unemployment rate of 4.7%, equivalent to about 2.09 million Filipinos who cannot find jobs.

Without neglecting the task of improving the quality of our institutes of higher learning, the bulk of our efforts to upskill and reskill our human resources must be focused on those who are in elementary occupations and in the service and sales sectors. This would imply greater resources invested in Technical Education and Skills Development Authority (TESDA)-type technical schools and in industry-academe skills training programs that need not lead to academic degrees. We still need a large supply of master gardeners, plumbers, electricians, masons, carpenters, hospitality workers, electro-mechanical workers — mostly in elementary occupations. The only difference now is that we must upskill and retool these workers in IT and digitalization.

As the USAID-PBEd report indicated, from a global perspective, the productivity of our workforce lags other countries in our region. Our 2023 World Talent Ranking of 60th out of 64 countries is a downgrade from the 2022 ranking of 54th out of 63 countries. Our talent competitiveness is 13th out of 14 countries in the Asia-Pacific region, better only than Mongolia. This lagging talent competitiveness reflects our inadequate investment in developing our workforce, the decreasing quality of our talent pool’s skills, and the declining capacity to attract foreign and retain local talents.

To compound the problem of the low productivity of the large majority of our workforce who are still very much in demand in the sectors related to IR 1.0 and IR 2.0, some of the industries in these pre-IR 4.0 sectors are seeing rapidly changing technologies which require even more upskilling and reskilling, especially in Information Technology in order to remain competitive in the job market. The World Economic Forum (WEF) Future of Jobs Report 2023 highlights the accelerating transformations brought about by technological transitions, the shift to green energy, and the changing worker and consumer expectations. This transformation, however, is coupled with a lack of access and opportunities to quality and relevant training and employment pathways. The changing job market keeps those individuals not in education, employment or training (NEET) and those without advanced degrees or recognized certifications from landing high-paying jobs and better employment opportunities.

In line with the announcement of President Ferdinand Marcos, Jr. in his last State of the Nation Address that there is need to tweak the K to 10 and K to 12 programs to orient more of the Filipino youth towards the skills needed by an economy that is still trying to complete IR 1.0 and IR 2.0 (the green revolution, mechanization and electrification), there must be an emphasis on giving greater access to quality Technical and Vocational Education and Training (TVET). While there is still a widespread mentality, even among poor households, that a college diploma is a sure pathway to employment, recent data show that more young people are following the TESDA route, especially as private initiatives like those of the Don Bosco schools, the MFI Polytechnic Institute, the Dualtech Institute, and the Center for Industrial Technology and Enterprise (CITE) are demonstrating that technical skills can fetch even higher incomes than knowledge-based professions. TVET is slowly being embraced by students and professionals who wish to have their skills upgraded to pursue new career opportunities or advance towards better employment. This shift is evidenced by a study of the Philippine Institute for Development Studies (PIDS) that shows that the majority of TVET graduates are college degree holders, and 50.1% of TVET graduates take TVET courses for upskilling or reskilling.

In addition to the challenge of developing inclusive training opportunities, socio-economic factors such as lack of funds, lack of information, and household responsibilities were found to have hindered people from pursuing TVET programs. Since TVET attracts relatively disadvantaged learners belonging to low-income families, the lack of access to skills development programs is exacerbated by their lack of access to information on these opportunities.

While TVET is gaining momentum, more work on communications is needed to promote TVET to attract investments and be perceived as a viable first option. This strategy will involve cooperation among government agencies (such as the Department of Labor and Employment and the Department of Trade and Industry), industries (such as construction, agribusiness and hospitality), and techvoc institutions (a role model is Dualtech). The collaboration should involve participation in designing training curriculums, training standards, and assessment tools that are aligned with the needs and expectations of the workplace. Employers have greater confidence in hiring graduates if they have been actively involved in the whole training program. Constant feedback from the potential employers about the actual skills needed in the market will go a long way in increasing the employment rate of those who have been trained.

The Philippine Congress must be complimented by coming out with laws which make it easier for the TVET to collaborate with industry. Examples of these recently enacted laws are the Trabaho Para sa Bayan (Republic Act No. 11962), the Tulong Trabaho Act (Republic Act No. 11230), and the First Time Jobseekers Assistance Act (Republic Act No. 11261). These laws have facilitated the training to employment transition of trainees and have helped meet demands for the appropriate skills.

(To be continued.)

Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is professor emeritus at the University of Asia and the Pacific, and a visiting professor at the IESE Business School in Barcelona, Spain. He was a member of the 1986 Constitutional Commission.