By Maria Eloisa I. Calderon
SINGAPORE — The Philippines rose 10 notches in a global ranking of 63 economies based on how well they develop, attract and retain talent — both foreign and local — in a sign the Southeast Asian nation is at the cusp of a demographic dividend.
The 2017 IMD World Talent Ranking — an annual survey of high-level executives globally conducted by Lausanne-based business school — put the Philippines at 45th place, up from 55th last year.
The latest survey was the fourth in a series, and now added two more countries in its coverage: Cyprus and Saudi Arabia.
“It’s [Philippines] not the most competitive economy in the region. Actually, it is in the bottom group countries together with Indonesia and India. They’re the least competitive economy in our sample,” Arturo Bris, IMD World Competitiveness Center director, said in an interview on the sidelines of the report’s launch here.
“But it has something that is very good,” Mr. Bris said.
“Despite the lack of investments in education and despite not being attractive to foreign talent, people are perfectly prepared for the labor market demand.”
Growth of the country’s labor force — by IMD’s reckoning that included not just Philippine government data — was 4.51%, allowing the Philippines to rank fourth in this indicator on this year’s list.
Against a backdrop of graying population in most of Asia, the Philippines’ demographics — young and highly skilled — at least in the past five years had been prophesied to be the additional boost to an economy that is growing at a pace almost matching that of China, Asia’s biggest economy.
The IMD gauged the economies based on three general metrics: investment in education, which includes state spending on this sector, pupil-teacher ratio, employee training and health infrastructure; “appeal” which includes quality of life, personal income tax rate, brain drain, remuneration and openness to foreign highly skilled workers; and “readiness” of its labor force skills-and-education wise.
The gains in that “readiness” metric was “massive and significant,” Mr. Bris said.
“That’s shocking… One explanation probably is that there’s recovery in Philippine economy in terms of employment and job creation. But I don’t think it will be sustained result, because growing at five percent annually is impossible. You don’t see that even in China.”
The Philippines also recorded gains in terms of appeal to foreign highly skilled professionals, with survey results putting the country on 34th place from last year’s 38th. But that’s the problem: Attracted by the quality of life here, foreign workers look to the Philippines for long-term employment, but they cannot.
The government has yet to issue a new negative list – so called because it enumerates the list of professions exclusive only to Filipinos. Not hiring foreign university professors, scientists and medical practitioners among others, the Philippines is far from going the way of financial hubs Singapore (13th) and Hong Kong (12th) whose liberal labor policies made them the only Asian countries that rounded out the top 15 on IMD’s list this year.
“The Philippines is not attractive yet to foreign talent,” Mr. Bris said.
Heavy reliance on foreign workers like Singapore’s model is not bad in itself. Neither is it entirely bad that the Philippines persistently opts for local talents. The bottom line is whether that model is sustainable such that the nation has a labor force “that the economy needs,” the IMD explained.
The Philippines’ another weak spot: public spending on education pales when taken as a percentage of gross domestic product (GDP). It’s no. 60 out of 63 economies ranked in terms of how much they invest in education.
That’s a double whammy if paired with brain drain. An economy that loses its best talents while not building enough pool from the younger generation is a red flag. “There’s more talent willing to leave Philippines than talent leaving Indonesia. That’s something that has to be prevented as well,” Mr. Bris said.
Indonesia came 47th in the overall talent ranking, Malaysia 28th, Japan 31st, Taiwan 23rd, Thailand 42nd and China, 40th.
Switzerland, home to multinational employers and whose investment in education is five percent of GDP while having a high school student-to-teacher ratio of 11.4 to one, remains the world’s best country for talents, according to the IMD list.