Human Side Of Economics


(Part 2)

If we have the goal of transitioning from being an upper middle-income economy to a high-income economy (with a per capita income in today’s prices of over $13,000, about three times the present amount), it is imperative that we address our poor quality of basic education in the next five to six years.

The children who are in the primary and secondary levels of education today are the ones who will be the knowledge workers needed 15 to 20 years from now in an economy that, if it is to be First World, must compete with the rest of the world in the so-called Industrial Revolution 4.0 in which the predominant technologies will be Artificial Intelligence, the Internet of Things, Big Data, and Robotization, among others. It is obvious that we will not have a workforce fit for such a technology-intensive economy if our grade school and high school students today continue to perform very poorly in reading comprehension, math literacy, and science know-how. The present Administration has a tremendous responsibility to the generations of the future. It is imperative that our leaders today, working with the State, exert every effort to arrest the deterioration of the quality of our basic education.

On the other hand, we cannot ignore the present problem of continuing to reskill, upskill, and retool the existing labor force who have already acquired some basic education and a good number of them tertiary education, no matter how poor in quality. These are the human resources who will help the country transition from upper-middle income to high-income in the next 10 or so years.

According to the Philippine Statistics Authority, in July 2022, there were 47.39 million employed persons, 2.6 million unemployed, and 6.54 million underemployed (those who are employed but still express the desire to have additional hours of work in their present job or to have an additional job, or to have a new job with longer hours of work in order to make both ends meet). The vast majority of those employed or underemployed workers are far from being in the sector referred to as Industrial Revolution 4.0. They straddle IR 1.0 (working with simple machines), IR 2.0 (electricity-driven), and IR 3.0 (electronic products). In fact, some 23% of them are still struggling to increase their productivity in what should have preceded our industrial revolution, the so-called Green Revolution that our country missed because of erroneous and failed economic policies of past Administrations.

To get an idea of the occupations in which most Filipino workers are employed, data from the Philippine Statistics Authority show that more than one-fourth (26.1%) are laborers and unskilled workers; 16.1% are officials of Government and Special Interest Organizations; corporate executives, managers, managing proprietors and supervisors; 15% are service workers and shop and market sales workers; 13.5% are farmers, forestry workers, and fishermen; 7.9% are trades and related workers; 6.3% are plant and machine operators and assemblers; 5.7% are clerks; 5.3% are professionals; 3.8% are technicians and associate professionals; and 0.2% are special occupations. These workers, mostly in the age range between 25 to 50 years have also been generally products of mediocre education in the past 20 years, like the present generation of the youth who are doing poorly in international tests in reading comprehension, mathematical literacy and science literacy. We can assume that the officials of Government and Special Interest Organizations, the corporate executives, managers, managing proprietors, and supervisors; the professionals and the technicians and associate professionals (a total of 25.2% of the labor force) have been the ones who proceeded to tertiary education and got above-average quality education. The rest, especially the laborers and unskilled workers, farmers, forestry workers and fishermen, clerks, trades and related workers — whether employed or underemployed —are the ones who can benefit from continuing programs of upskilling, reskilling and retooling that can be given by the Government, the business sector and educational and training institutions in non-degree programs.

Instead of fretting too much about the long-term challenge of improving the quality of the education we give to our children and youth, let us give special attention to training programs that can improve the skills or give new skills to those who are already in the labor force, with special emphasis on the 6.54 million workers who are underemployed. The very fact that there are more than 10 million OFWs who also did not exactly get a world-class education but are being praised for their skills and work habits abroad should encourage us to consider ways and means of reskilling and upskilling those who are already in the workforce, especially in the occupations that are suffering from serious shortages such as those in construction, healthcare, and hospitality.

For this to happen, we should all be liberated from our obsession with college degrees and diplomas. The group of business leaders, academics, and other concerned citizens who have banded together under the Philippine Business for Education have been very vocal about companies getting to focus on job competencies rather than on college degrees during their recruitment process. Even Secretary of Trade and Industry, Alfredo Pascual, has been appealing to business enterprises to hire more graduates of the K-12 program instead of making a college diploma a pre-requisite to employment.

As reported by Revin Mikhael Ochave of BusinessWorld, Secretary Pascual gave the following advice to potential employers: “When you check the job descriptions nowadays, almost all require college degrees. This should change because we already have the K-12 program. But it’s not to say that having the program is enough. We need to prove that the K-12 program is able to produce holistically developed individuals. The mindset of people is that you cannot fully prepare for work when you don’t have a college degree, which is totally an erroneous mindset.”

In this regard, it was a wise move on the part of President Ferdinand Marcos, Jr. to issue Executive Order 5 transferring the Technical Education and Skills Development Authority (TESDA) to the Department of Labor and Employment (DoLE). TESDA was created by RA 7796 to be the primary agency responsible for the formulation of technical education and skills development policies, plans, and programs, taking special consideration of the task of improving linkages between industry, labor, and government in the crafting of any national-level plan. With the signing of RA 7796, TESDA replaced and absorbed the powers and functions of the then National Manpower and Youth Council and the apprenticeship program of the Bureau of Local Employment under DoLE. With TESDA under the management of DoLE, there can be this direct link between programs for upskilling, reskilling, and retooling existing workers that will directly result in employment.

Our educational sector has been very notorious for producing graduates who do not have the skills and aptitudes required by industry. There has been a terrible mismatch, mainly because of the obsession with college degrees and not with the actual competencies required by the workplace. Instead of producing too many accounting, business administration, and political science bachelor’s degree holders, we should have been producing many more carpenters, plumbers, mechanics, electricians, brick layers, and others who are now needed in our Build, Build, Build program.

In this regard, it was also good news to learn that the Department of Agrarian Reform (whose reason for existence should be seriously re-examined) is launching a program that will upskill and reskill farmers and farm workers belonging to agrarian reform beneficiary organizations (ARBOs) on new farming technology via a network of demonstration farms. This should be the equivalent of what TESDA will be doing under DoLE. In fact, it might be a good idea to convert DAR into a technical training arm of the Department of Agriculture so that it can focus on the training of farmers, farm workers, fisher folk and other workers in the rural areas.

There are about 7,500 ARBOs nationwide which DAR can tap to improve the productivity of the human resources in the agricultural sector, focusing especially on the numerous school drop outs in the rural areas, most of whom are either unemployed or underemployed. The President, who is also the Secretary of Agriculture, should really rely on DAR (whose name can be changed) to mobilize ARBOs and implement demonstration farms under the Farm Business School project. There are a good number of NGOs with which DAR can partner in developing different forms of family farm schools that can be patterned after the schools for the children of farmers that were successfully developed by the French and the Spaniards in the last century, which schools contributed significantly to the progress of the countryside in these countries.

(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.