Poor student literacy rates seen weighing on PHL economic growth

By Almira Louise S. Martinez, Reporter

The Philippines may experience an economic slowdown fueled by the low proficiency levels of students, as literacy rates in both local and international assessments decline.

“A decline in literacy weakens human capital, lowers workers’ ability to adapt to technology, and limits movement into higher-value jobs,” John Paolo R. Rivera, senior research fellow at the Philippine Institute for Development Studies (PIDS), told BusinessWorld in a Viber message.

“If this trend is not reversed, the Philippines risks slower long-term growth, weaker competitiveness, and deeper inequality, as more Filipinos remain trapped in low-skill, low-pay work while other countries move up the value chain,” he added.

The foundational learning crisis has been a long-term problem for the country for at least 30 years, according to the Second Congressional Commission on Education (EDCOM 2).

“If you see our curriculum for the past three decades, it’s very ambitious, it’s very aspirational. You go from so many types of literary texts, you study poems, short stories, extended essays,” EDCOM 2 Executive Director Karol Mark R. Yee told BusinessWorld in an interview.

“But (it) turns out our challenge was illiteracy and the lack of ability to comprehend complex texts,” he added. “We need a curriculum that adapts to the learner, and we need to strategize and prioritize because we can’t expect them to learn everything.”

Functionally illiterate Filipinos on the rise
Data from the agency showed that about 24.8 million Filipinos were functionally illiterate in 2025, nearly doubling from the 14.5 million in 1993.

The same concern was evident in the 2024 Functional Literacy, Education, and Mass Media Survey (FLEMMS) report by the Philippine Statistics Authority (PSA), which showed 18.9 million Filipinos aged 10 to 64 were considered functionally illiterate.

Functional illiteracy, as defined by the local statistics agency, is the ability to read, write, and compute, but lacks comprehension skills.

One of the most alarming markers flagged by Mr. Yee is the poor performance of elementary students, specifically in grades 1 to 3, where 85% are struggling to read, and only 15% can read according to their grade level.

“We need to focus on the foundation,” he said. “We really need literacy until grade 3 because without that, you cannot keep moving them up to further grade levels to learn the other complex tasks.”

The SEA-PLM 2024 report
In the 2024 Southeast Asia Primary Learning Metrics (SEA-PLM), Filipino grade 5 students were lagging in reading and mathematics within the region.

The study revealed that only 13% of learners were considered to have reached the minimum reading proficiency, while 14% have reached the minimum proficiency in mathematics.

“If you look at the global data, it is really declining, which is why we’re not the only ones saying there’s a crisis – almost all are facing their own crisis,” Mr. Yee said.

“Except that for us, because this is perhaps the first time that we are confronting this… It is clear to us that we are not alone. There’s a lot of us, and many have already succeeded,” he added.

Economic effects of the learning crisis
The decades-long learning crisis will have lasting implications for the country’s future workforce, Federation of Free Workers President Jose Sonny G. Matula said. “If literacy rates keep falling, the long-term risk is that the economy becomes locked into low value-added work.”

“That means slower productivity growth, weaker ability to absorb technology, reduced competitiveness in higher-skill manufacturing and services, and greater inequality because fewer workers can move up the skills ladder,” he added in a Viber message.

Mr. Matula noted that the industries that could be affected by workers lacking foundational literacy skills include manufacturing and production lines, construction, and OSH-sensitive work, logistics and inventory systems, customer handling and documentation services, and gig work where workers must navigate apps, terms, ratings, and digital pay systems.

“At the macro level, declining literacy undermines human capital – so GDP growth becomes harder to sustain, more fragile, and less inclusive because productivity improvements stall,” he said.

“A major gap is the tendency to treat literacy as a ‘school issue only’ when it is also a labor, economic, and social protection issue,” he added.

Leonardo A. Lanzona, an economics professor at Ateneo De Manila University, said that roughly one year of schooling can lead to a 7% increase in wages. “We can perhaps infer that illiteracy is close to losing 7% of wages per year.”

Analysts underscored that persistent low learning outcomes could lead to significant economic losses.

“Global studies suggest learning losses can cost countries several percentage points of GDP (Gross Domestic Product) over the long run through lower lifetime earnings, weaker productivity, and reduced tax revenues,” Mr. Rivera said.

“For the Philippines, persistent poor literacy could mean billions of pesos in foregone income annually, especially as the economy becomes more digital and skills intensive.”

Citing the data from the World Literacy Foundation in 2023, Ateneo Center for Economic Research and Development Director Ser Percival K. Peña-Reyes echoed similar worries, stating that lost earnings, reduced productivity, and limited employability caused by illiteracy could cost $4.72 billion or P277 billion annually.

He added that the United Nations Children’s Fund (UNICEF) also warned of a potential $17 trillion in lost lifetime earnings for the current generation globally without intervention.

“These numbers highlight the severe learning crisis in the Philippines, especially post-pandemic,” he told BusinessWorld in a Viber message.

By 2028, Mr. Yee said EDCOM 2 is seeking around 30% improvement in the reading proficiency of grade 3 students, raising the grade-level readers from 43% to 75% within three years.

Reforms underway
“Our proposal is that by 2028, we hope that 75% of all of our grade 3 students are reading at their grade level,” he said. “That will be a very good start because it means that we have seriously undertaken the reforms needed.”

The Department of Education (DepEd) aims to address learning gaps through different education reforms and initiatives, such as the ARAL (Academic Recovery and Accessible Learning) program.

The ARAL program, launched on Sept. 13, is mandated under Republic Act No. 12028 and aims to provide tutorial support for kindergarten to grade 10 learners in reading, mathematics, and science.

In the 2026 budget for education, P8.93 billion will be allocated to the ARAL program to ensure learning gaps are addressed by “adequately trained and fairly compensated” tutors.