Scars and deeper wounds in the labor market

On Aug. 6, 2020, at the height of the pandemic, we reacted in this space to the article of Richard Baldwin of Geneva’s Graduate Institute which was published by the Chicago Booth Review. Baldwin called for a reduction in “economic scar tissues” and sustained spending in order to flatten the epidemiologic curve.

We found Baldwin’s exhortation a little premature because reducing economic scar tissues means we have already healed from the pandemic, something that came only after a year or so, growth-wise. Even then, pre-pandemic output level was restored only in 2022. The health shock that hit us did not dissipate quickly and with the mortalities, our workforce was dented quite severely.

At about the same time, the International Labor Organization (ILO) published its own take on the initial impact of COVID-19 on the Philippines’ labor market based on labor force survey data from April 2020. Its fearless forecast then was that “one quarter of total employment in the Philippines is likely to be disrupted by the impact of COVID-19 on the economy and labor market.”

This was expected to happen through reduced earnings and working hours, or complete job loss.

Adding to the layers of pandemic risks, technological transformations could expose some 7.2 million workers to a possible double-tiered risk of job disruption. Yes, digitalization is the future, and its adoption was expected to help us survive the pandemic, but its joint impact with the pandemic on the labor market could render as much as two-thirds of the 10.9 million Filipinos at risk of losing their jobs or reducing their pay. Destructive digitalization is the ugly side of technological transformation.

To us, the most important focus of the ILO report was its commentary on youth labor market dynamics. Youth unemployment was cited by the ILO as having spiked from 12.9% before the pandemic to 31.6% in April 2020. The ILO was correct in its observation that “many young people in the Philippines face multiple labor market risks” including severe disruptions in their education and training activities, employment and incomes, as well as worsening job search constraints.

These are the prospective economic scars on the Philippine youth, that, after being challenged in their learning and training activities during the pandemic, they would be disadvantaged when they start looking for jobs.

The ILO also noted that the Government, through the Commission on Higher Education (CHED), decided to promote a “flexible learning arrangement” in universities and colleges and use learning management systems for assessing alternative learning tools. This was also the basic tack followed in the elementary and secondary schools which were all dependent on the students’ access to laptops, tablets, and smart phones to enable remote learning.

We recall that the World Bank recently issued a similar assessment but of course with the benefit of the actual labor market statistics before and after, if we might use this term, the pandemic crisis. It recognized that young Filipinos were the biggest victims of the labor market shock and therefore to secure economic sustainability, better jobs should be generated for them.

Speaking through its country director for Brunei, Malaysia, Thailand, and the Philippines Ndiamé Diop at the launch of the Philippine Jobs Report, the World Bank observed that youth employment rate remained low last year even as the labor market appeared to have recovered to pre-pandemic levels. It raised concern about the long-term scarring it has seen in previous crises. For the multilateral institution, the Filipino “COVID generation” actually suffered triple shocks: a learning crisis due to the extended school closure, higher poverty incidence, and difficult labor market conditions.

Which is why the news on page 2 of another broadsheet two Wednesdays ago (“Job hunt tough for grads of ‘pandemic generation,’” Inquirer, April 12), could only be disconcerting. The recent situational report released by the Commission on Human Rights indicates that new graduates find it harder to find jobs as many of them lack “soft skills” — or those related to empathy, creativity, and communication — and other practical job skills that could have been best imparted and sharpened during face-to-face classes.

This is an affirmation of the economic consequences of the prolonged lockdown of both business and schools.

Unlike the reports of the ILO and the World Bank, the Commission’s report is based on actual focus group discussions with officials of the national government, prospective employers, schoolteachers, administrators and principals, and the young people themselves.

Disadvantaged by several inadequacies, our young graduates experienced “culture shock” because their expectations were different from what they absorbed during their remote learning. Employers found them lacking in “soft skills.” Employers affirmed that “hard skills” are important, but “soft skills” are equally important.

Another cause of job-hunting difficulty is fierce competition, according to the Employers Confederation of the Philippines (ECOP). Laid-off workers are prioritized over the new graduates for obvious reasons. Experience is preferred. Those who graduated from face-to-face learning environments are also preferred because they are presumed to have the social skills in navigating the workplace.

The Commission also observed that official public policies in education and training “are focused on providing basic education and skills training and not on developing effective communication, teamwork and critical thinking.” Some graduates are also lacking in what the Commission called “job readiness.” Internships were done on a remote basis. There was a disconnect between book learning via remote and the actual workplace requiring actual practical skills.

An excellent example is the experience of some agriculture students who were supposed to assist in pig farrowing. With the pandemic, they had to make do with watching how the teacher guided the hog in giving birth. This must have serious consequences when medical students are involved.

Mismatches in teachers’ experiences and skill sets were also noted by the Commission. Some biology classes had to be dropped in one school because the teacher in charge majored in English. Career guidance was sorely lacking in many schools resulting in some students graduating from courses with very little market demand.

Was there some convergence among the policy prescriptions offered by the ILO, World Bank, and the Commission?

The ILO’s proposals covered the pursuit of economic stimulus to sustain job opportunities; supporting some key enterprises, jobs, and incomes; protecting workers in the workplace; and conduct of social dialogues to achieve ownership of these policy recommendations.

The World Bank urged the Philippine government to target support to young Filipinos because they are crucial in achieving higher growth path. Good labor market regulations on wages and unemployment insurance are favored, while international migration should remain an option to domestic employment while new areas on green finance and digital jobs should be stressed in the curriculum. Skills training, wage subsidies, and job search assistance are indispensable.

For the Commission, establishing partnerships with industries and human resource executives to provide direct links to job opportunities is very important. A good assessment of the faculty is also critical in ensuring quality education and training. A review of the curriculum against industry demand is also found to be useful.

Perhaps a better way to secure a more permanent solution to finding good jobs in the market is to make sure our young students are not only taught the basic skills, but also soft skills including how to be creative and how to think critically. Basic skills are just that, basic, and unless poor families are supported in more ways than just through cash assistance, the Philippines’ young people will continue to dwell in the cellar against their counterparts.

The latest 2018 finding of the Program for International Student Assessment (PISA) illustrates that Filipino 15-year-old students “scored lower in reading, mathematics and science than those in most of the countries and economies that participated in PISA 2018.” PISA also reported that 80% of Filipino students failed to reach a minimum level of proficiency in reading!

PISA traced this unfavorable result mainly to inadequate public support. Expenditure per student in the Philippines is one of the lowest among the participating countries. This is a challenge to both the education and budget departments. This is a challenge to Congress to trim the fat and invest in the future of this country.

PISA also believed that our school system is far from being inclusive; there is so much bullying reported. Many Filipino students believe that their intelligence may no longer improve. This mindset is associated with a high fear of failure. In PISA, those with the lowest scores like the Filipino students are those with fatalistic attitude, those with high fear of failure. This is a challenge to the new leadership to drill down to the bottom of our educational system.

The job-hunting problem is only a symptom, an economic scar of a deeper wound.

Diwa C. Guinigundo is the former deputy governor for the Monetary and Economics Sector, the Bangko Sentral ng Pilipinas (BSP). He served the BSP for 41 years. In 2001-2003, he was alternate executive director at the International Monetary Fund in Washington, DC. He is the senior pastor of the Fullness of Christ International Ministries in Mandaluyong.