If I have any advice to the incoming administration, it’s this: let capitalism help save the Philippines.

I have already written about how capitalism can be a strong force in my essay on “Capitalism and Philippine development.”

However, allow me to explain further. I was spurred to write about how capitalism can save the Philippines in a discussion with my friend, fellow columnist, and fellow Foundation for Economic Freedom member, Boo Chanco, about Philippine demography. I told Boo that I am relatively optimistic about the Philippine economy because of its youthful demographic profile. While the average age in the Philippines is 23, neighboring countries are seeing precipitous aging and decline in replacement fertility rates. The average age in Japan, for example, is 48 years old, in Taiwan, it’s 42 years, and in Thailand, 40 years.

Boo countered that our large and young population isn’t an asset because a significant majority have few educational skills, made worse by the lockdowns caused by the pandemic. The Philippines is dead last in the PISA (Program for International Student Assessment) results.

However, I will tell Boo that there’s a fix, unlike declining fertility rates and demographic decline, which are almost impossible to reverse.

The fix is capitalism or letting the private sector provide the public goods.

I would let the private sector provide practical and useful training to high school and college graduates with an apprenticeship program. If our graduates lack math skills or language skills, let companies provide the training. If companies provide the training, they will know what skills are required and what is obsolete, unlike schools. They will also seek the most efficient way to train the apprentices because they want them to be productive in the shortest possible time.

This isn’t possible presently because the Labor Code limits an apprenticeship program to six months and to technical industries only.

Another way to catch up is for the private sector to get involved in mass public education from the primary to the tertiary level. Why? Because students from private schools perform significantly better than students from public schools. The 2018 PISA report showed that in reading, 39% of private school students were above minimum proficiency level, compared to only 21% of those from public schools. In math, private school students were 35% above minimum proficiency level versus 15% for public schools.

According to educators Dr. Vicente Paqueo and Dr. Victor Limlingan, the three international assessments (Program for International Student Assessment, Trends in International Mathematics and Science Study, and even our own Department of Education), concluded that “students from private schools performed significantly better than those from public schools.”

Unfortunately, the private education sector is in crisis. The state has been giving them unfair competition, raising public school teachers’ salaries, for example, without demanding accountability for performance. This has caused many teachers in private schools to transfer to public schools.

The lockdown has also caused many private schools to close. According to Drs. Paqueo and Limlingan, 865 private schools have closed and about half are considering closure.

At the tertiary level, the state has also been giving private schools unfair competition. One of the worst pieces of legislation that has come out from Congress is the Universal Tertiary Education or Free College Tuition Law, pushed by former Senator Bam Aquino.

That law subsidizes state universities and colleges to enable students to attend school without paying for tuition. It’s a terrible law because it rewards SUCs (State Universities and Colleges) whether they perform well or not in producing graduates and it provides free tuition to the rich as well as poor students. Instead of using the money to give scholarships directly to poor students and letting them decide which school to attend, the Free College Tuition law exacerbates inequality.

A recent study, “On the Income Advantage of Course Choices and Admissions: Evidence from the University of the Philippines” by Sarah Daway-Ducanes, Elena Pernia, and Vincent Gerald Ramos, provides evidence for an “income advantage” in the UP admissions systems: applicants coming from higher-income families have a higher likelihood of being admitted to the UP system and into their first-choice courses. In other words, higher-income students are likely to benefit more from the Free College Tuition Law than lower-income students.

This provides further proof of the contention of Dr. Babes Orbeta and Dr. Vicente Pacqueo that only 12% of poor-income households are likely to benefit from the free college tuition law given the composition of enrollees in SUCs, which are predominantly from high-income families.

Since the performance of the private school sector is much better than the public-school education system, the government should consider public-private partnerships in education. One way is to expand the Government Assistance and Subsidies to Education Act (RA 8545). Surveys also show that parents prefer to make the choice of which school their children go to, rather than being forced to attend a poorly performing public school.

The huge subsidy being given to SUCs under the Free College Tuition Law should also be scrapped and converted into a scholarship program for the poor if that is politically feasible.

However, Filipino students’ performance in international assessment tests is behind their Asian peers, whether from public or private schools. The problem is complex — from lack of school materials, poor school curriculum, overcrowding, and poorly written textbooks, to malnutrition.

Agricultural Economist Dr. Karlo Adriano says that there’s a clear association between protein intake and performance in the PISA tests, i.e., the lower the protein consumption, the lower the test scores in PISA. In other words, malnutrition is a leading cause of our students’ underperformance. If they go to school hungry, they will lack the concentration and energy to study and absorb.

Clearly, nutrition should be part of the solution to the country’s educational crisis. The solution would range from school or even pre-school feeding programs, to programs to make food more affordable to the poor. On the latter, there would be a need to liberalize the importation of corn, a key feed ingredient for pork and chicken production, but at the same time, to encourage bigger and better farms. Studies show that small-scale agriculture and small-scale livestock production are causes of low productivity and vulnerability to biosecurity threats, such as the African Swine Fever.

However, is the public education sector hopeless compared to the private education sector? No. The fact of the matter is that while private school students perform better than public school students, Filipino students, both public and private, still perform poorly in comparison to their Asian peers.

Aside from poor nutrition, part of the answer lies in our poorly-designed curriculum. One educator I talked to cited a SEAMEO (Southeast Asian Ministers of Education Organization) study on basic education in Southeast Asia. It found that: “The amount of time allotted for teaching social studies in the Philippines, under the term makabayan, is disproportionately high compared with those in the other countries (300 minutes per week in grades 1-3). Social studies is not taught in Brunei Darussalam and Malaysia until grade 4 while Singapore offers it for only 30 minutes per week. Starting from grade 4, under humanities, 60 minutes per week is allocated by Malaysia and 90 minutes per week by Brunei Darussalam and Singapore.”

In other words, Filipino children spend less time acquiring basic skills in literacy, numeracy, and communication than their Asian counterparts.

Our educational problems are daunting. Government can’t solve it alone. As with tackling the COVID-19 pandemic, the government must adopt a whole nation approach and partner with the private sector in solving our educational crisis.

I have always contended that the government should focus on education, rather than land distribution, as an equalizing reform. Unlike land distribution, which involves forcible dispossession of the landlord in favor of the tenant (hence, zero-sum), education is the only asset that won’t be resisted by the ruling class. Education is the only good when given away enhances the giver. Both become more productive with deeper interaction. Everybody wins.

In pushing for this equalizing reform, let us let capitalism help save Philippine education.


Calixto V. Chikiamco is a member of the board of IDEA (Institute for Development and Econometric Analysis).