It does not take an expert to see how important Filipino talent is to the nation’s economy. Remittances from overseas Filipino workers make up a significant share of the country’s gross domestic product, as much as 8.9%, or around $36.14 billion sent home from abroad, in 2022.
The Philippines has also become one of the world’s leading destinations for offshore business process outsourcing firms due to the country’s young, technically skilled, and English-proficient population.
This is why in a report published by the World Bank research on employment last March, the international organization urged the Philippines to create more and better opportunities for young people in order to restore the robust labor market it enjoyed before the coronavirus disease 2019 (COVID-19) pandemic and bolster economic recovery and long-term growth.
The report, titled The Philippine Jobs Report: Shaping a Better Future for the Filipino Workforce, found that before the pandemic, the country’s economy grew at an annual pace of above 6% on average, and that faster growth in higher-paying occupations and higher real wage growth both contributed to a decrease in poverty in the Philippines.
Some of this progress had been put to a halt in 2020, however, as high-productivity jobs were abandoned and low-paying ones were filled as a result of the pandemic. The research found that indicators of employment have seemingly recovered to their pre-pandemic levels along with the economy’s rapid recovery, but the quality of available jobs continues to be a cause for concern, especially among the young.
“The youth group was disproportionately affected by the pandemic shock on the labor market, and the scarring effect may stay long after the economic activities return,” said Ndiamé Diop, World Bank’s country director for Brunei, Malaysia, Thailand, and the Philippines.
“While conducive business environment policies will encourage quality job creation in the private sector, more targeted approaches to address youth challenges are urgently needed,” he added.
Before the pandemic, the working poverty rate was already higher among the country’s youth (ages 15-24), with over 60% of them not participating in the labor force. Despite a return to pre-pandemic levels across the board in the labor market in 2022, young employment remained dismal.
Investment in skills in growing green and digital sectors, as well as reforming labor legislation, are all mentioned as possible means to increase youth employment in the research.
“Active labor market programs including measures like skills training, job search assistance, wage subsidies, public works programs, and entrepreneurship promotion should be further strengthened,” said Yoonyoung Cho, senior economist at World Bank’s Social Protection and Jobs Global Practice.
“These can be complemented by modernizing labor regulations through simplifying labor rules and providing guidance on flexible forms of work arrangement; expanding social insurance; and modernizing inspection and compliance verification systems through digital tools.”
For their part, the National Economic and Development Authority (NEDA) says that the government will continue its efforts to improve working conditions and encourage the creation of good jobs moving forward.
The Philippine Statistics Authority recently reported that the number of employed Filipinos rose to 48.8 million in February 2023, an increase of 3.32 million over the 45.48 million figure reported in the same month in 2022.
The unemployment rate in the country has also dropped, from 6.4% in February 2022 to 4.8% currently.
“The most recent data on the country’s workforce suggests that the Philippine labor market is steadily recovering. The lifting of various restrictions that previously impeded employment opportunities has resulted in an increase in job prospects for Filipino workers,” NEDA Secretary Arsenio M. Balisacan said.
More encouragingly, the young unemployment rate, which covers people aged 15 to 24, has dropped dramatically, from 14.2% in February 2022 to 9.1% this year.
The labor force participation rate in the country increased from the previous year’s February (63.8%) to the current year’s February (66.6%). An additional 2.7 million Filipinos, including an additional 1.9 million women, have entered the labor field in the past year. There were large upticks in both the number of people who had completed at least until the eighth grade (+1.1 million) and the number of people who had completed high school (+1.6 million).
Improving the job market
Mr. Balisacan noted that although the labor market may be doing better, but there are still obstacles to enhancing the quality of jobs in all fields. Policy makers should keep making it easier for businesses to create high-quality jobs (on the demand side) and easier for employees to acquire new skills (on the supply side).
“On the demand side, the strategy to create high-quality job opportunities begins with attracting more investments especially in infrastructure and in improving the regulatory environment. These interventions will improve the competitiveness of the entire economy and result in greater investor interest in other industries. Our participation in the Regional Comprehensive Economic Partnership and the amendments to the Public Service Act pave the way for more high-paying job opportunities being made available to Filipinos,” Mr. Balisacan said.
“NEDA has recently published the Implementing Rules and Regulations of the amended Public Service Act. The next step is for the regulatory agencies to revise their regulatory processes accordingly,” he added.
In addition, he promised that the government will do more to inform workers of available resources for professional development.
Micro-credentialing, ladderized programs, and three-year diploma programs are all available now through the Technical Education and Skills Development Authority (TESDA).
Meanwhile, the Department of Information and Communications Technology (DICT) has formed alliances with a number of IT and Business Process Management (IT-BPM) firms with the aim of improving the skills of the workforce to meet the demands of the IT sector.
“On the supply side, there is a need to improve the dissemination of information and awareness campaigns to encourage workers to utilize the existing resources for upskilling and retooling,” said Mr. Balisacan.
“As we continue thriving towards a fully operational economy, the DoLE (Department of Labor and Employment) further intensifies its efforts to constantly initiate convergence with public and private stakeholders in enhancing access to labor market information, and improving service delivery, especially for programs that benefit the youth and other vulnerable sectors. Hence, we are rolling out our consultations for the finalization of the National Labor and Employment Plan,” DoLE Secretary Bienvenido E. Laguesma said in a statement in January.
“With the current and emerging challenges in the labor market, the government, in keeping with the Philippine Development Plan 2023-2028, is committed to strengthen its efforts to raise the quality of human resources and ensure that the current and future workforce can adapt to the changing demands of the labor market.”
“These efforts shall achieve our desired outcomes in terms of employment and mobility, and better respond to economic opportunities, which includes prioritization of upskilling and reskilling of the workforce to equip them with higher competencies by expanding lifelong learning opportunities,” he added. — Bjorn Biel M. Beltran