The Journey From Education To Unemployment

EXECUTIVE SUMMARY

The jobs-skills mismatch in the country has been in existence since 1965. It was observed by experts following an “imbalance of manpower training and manpower need’ (Bernardino, 1965, pp 3-4) and ” a great number of unemployed with college degrees” (Limcaco, 1965, p. 8). It was reiterated in the 1970 report of the PresidentiaCommission to Survey Philippine Education (PCSPE) that found a mismatch between students’ college courses and the training required by the world of work (Santamaria, 1979).

The prevalent mismatch between the educational system and the employment sector is a continuing concern in the country.

The conduct of the “National Manpower Summit” and National Human Resource Conference in 2006 and 2007 respectively, which were spearheaded by DOLE and attended by various stakeholders, identified the gaps between supply of the labor workforce and market demand. These yielded several recommendations. Through personal interviews with the top management of various stakeholders such as DOLE, ECOP, TESDA, PMAP and other companies and employers, the team was able to gather comparative data to reinforce the presence of the mismatch. The facts are supported by figures in the websites.

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The study recognizes that the aggregate supply of graduates is greater than the market demand thereby resulting to unemployment or underemployment. This is where the mismatch occurs. The study identified three levels of mismatch: 1) on the number of graduates vs. the number of jobs available; 2) on the quality of graduates vs. industry expectations; and 3) on the skills acquired vs. skills required.

The jobs-skills mismatch is greatly influenced by the macro environmental factors, namely; social, political, economic and technological. Included among the Social factors are high population growth and an increasing incidence of poverty. This high population growth cancels out the effect of economic growth particularly the creation of jobs to absorb the excess labor supply. As regards political factors, there is no central organization that brings all the stakeholders (Employers, Employees, Sector groups, NGO’s etc.) under one umbrella to make sure that all the stakeholders work together. Also, there is a lack of government program to inform the potential workforce on the requirements of the market (i.e. what courses to take, what skills are needed, etc.). On economic factors, higher levels of sustained economic growth is needed to reduce the unemployment and underemployment rate. And finally, technological factors, educational institutions should acquire modern advanced technology to match the requirements of the rapidly changing and the emerging industries.

This paper proposes short and long term possible solutions to address the mismatch. Some of these recommendations are the conduct of National conference involving employer groups such as ECOP and PCCI as well as captains of industries to draw up one united and uniform comprehensive plan; creation of Human Resource Development; Partnership between education institutions and industries; and creation of National Curriculum Research Institute that will constantly study and review current curricula, develop and recommend revisions among others.

In the evaluation of the education institutions and the industries, there is a significant mismatch between what the institutions produce and what the market demands. The jobs-skills mismatch is a major contributing factor in the unemployment rate in the country. Hence, addressing mismatch could remarkably decrease unemployment rate.

More active participation and stricter intervention of the government is needed to address the mismatch problem in the country.

OBJECTIVE OF THE STUDY

This study seeks to:

Examine the system of supply and demand of the labor workforce in the country;

Identify the causes and effects of the jobs-skills mismatch; and

Come up with recommendations in filing the gap between the supply and demand.

SCOPE AND LIMITATION OF THE STUDY

The scope of this study is limited to the mismatch in the Philippine’s job market. It focuses on the mismatch between the number of graduates in each course and the number of vacancies in each industry in the country.

For the purpose of this study, let us clearly define that the skill acquired is the vocational course or college while the skill required is the job vacancy.

METHODOLOGY

The sources of information of the study are composed of two methods – the primary and the secondary method. For the primary method, the team conducted interviews with the different key personalities of various stakeholders, i.e. Department of Labor and Employment (DOLE), the Employers’ Confederation of the Philippines (ECOP) and People’s Marketing Association of the Philippines (PMAP). The team used the same set of questions to test if the interviews will yield similar findings. For the secondary method, the team used company manuals, statistics and data gathered from the internet and other studies previously conducted by different individuals and groups on jobs-skills mismatch.

DETAILED REPORT

INTRODUCTION

The jobs-skills mismatch in the country has been in existence since 1965. It was observed by experts following an “imbalance of manpower training and manpower need’ (Bernardino, 1965, pp 3-4) and ” a great number of unemployed with college degrees” (Limcaco, 1965, p. 8). It was reiterated in the 1970 report of the PresidentiaCommission to Survey Philippine Education (PCSPE) that found a mismatch between students’ college courses and the training required by the world of work (Santamaria, 1979).

The conduct of the “National Manpower Summit” in 2006 and 2007 initiated by DOLE identified the gaps and made several recommendations. Government restructuring or the creation of a single government agency to address employment concerns is one of the common solutions recommended by various employment stakeholders. It is supported by the study of TESDA in their papers “Skills development and recognition in Asia and the Pacific”. An HRD Central Agency will be established to develop policies and programs for the establishment of a strong HRD sector in the government. According to the paper of Andrew Gonzales entitled “Higher Education, Brain Drain and Overseas employment in the Philippines-Toward a differetiated set of solution”, the Philippine case of mismatch between the manpower needs of the country and the output of the higher education system is an example of interlocking conflicts.

Data show concrete indication of the gap between our educational system and the employment sectors. In 2010 alone, only 82% of the new graduates are new hires, 18.5% of the college graduates are among the unemployed and as of 2010, the Department of Labor and Employment (DOLE) identified 54, 417 job vacancies.

One of the notable causes of mismatch is the lack of infomration by families and individuals in the labor market requirements. Because of this, institutions may have provided the graduates the skills that are not necessarily required by the market.

MAJOR STAKEHOLDERS

EMPLOYERS CONFEDERATION OF THE PHILIPPINES (ECOP)

The Employers Confederation of the Philippines (ECOP) is the single voice for the entire business community in the country on important national issues related to employment, industrial relations, labor issues and related social policies. ECOP was born on September 10, 1975. Before ECOP, the business sector and employers in the country were represented by two major business organizations, namely: the Chamber of Commerce of the Philippines (CCP); and the Philippine Chamber of Industries (PCI). The creation of ECOP made tripartism a reality, with the Trade Union Congress of the Philippines (TUCP) representing a labor sector, and the Department of Labor and Employment and the other agencies as the state instrumentality.

On May 1, 1978, the government through Presidential Letter of Instruction (LOI) 688 recognized ECOP as the single voice of employers, to be consulted by the government, together with labor, in the promulgation of a scheme which would promote and sustain an adequacy machinery for cooperation between labor and management at approapriate levels of the enterprise.

DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE)

The Department of Labor and Employment (DOLE) started as a small bureau in 1908. It became a department on December 8, 1933 with the passage of Act 4121. The DOLE is the national government agency mandated to formulate and implement policies and programs, and serve as the policy-advisory arm of the Executive Branch in the field of labor and employment. It consists of the Office of the Secretary, 7 bureaus, 6 services, 16 regional offices, 12 attached agencies and 38 overseas offices with a full manpower complement of 9,806. It operates on a current budget of Php 6.618 B and ranks 14th out of 21 departments.

The vision and mission are consistent with the “Platform and Policy Pronouncements on Labor and Employment” of President Benigno S. Aquino III’s administration, herein referred to as the 22-Point Labor and Employment Agenda, the DOLE is the lead agency mandated to develop the competencies and competitiveness of Filipino workers, to deliver employment facilitation services for full and decent employment, and to promote industrial peace based on social justice. It serves more than 38.51 million workers comprising the country’s labor force , including the 3.62 million temporary migrants working in about 215 destinations worldwide . The DOLE clients include trade unions, workers’ organizations and employers and/or employers’ groups (i.e., ECOP, chambers of commerce and industries, TUCP, FFW, etc). There are 123 existing Tripartite Industrial Peace Councils or TIPCs (13 regional, 44 provincial, and 66 city/municipal) and 128 existing Industry Tripartite Councils (46 regional, 48 provincial and 34 city/municipal) serving as mechanisms for social dialogue in addressing labor and employment issues. The DOLE also maintains linkages with non-government organizations (NGOs), government agencies, the academe, partner international organizations (e.g., ILO, IOM, IMO, UNDP, UNICEF), and with the international community, particularly the host countries where our OFWs are based.

DEPARTMENT OF EDUCATION (DepEd)

Education in the Philippines has undergone several stages of development from the pre-Spanish times to the present. In meeting the needs of the society, education serves as focus of emphases/priorities of the leadership at certain periods/epochs in our national struggle as a race.

The DepEd was transformed from the former Department of Education, Culture and Sports (DECS) to the Department of Education (DepEd) and redefining the role of field offices (regional offices, division offices, district offices and schools). RA 9155 provides the overall framework for (i) school head empowerment by strengthening their leadership roles and (ii) school-based management within the context of transparency and local accountability. The goal of basic education is to provide the school age population and young adults with skills, knowledge, and values to become caring, self-reliant, productive and patriotic citizens.

COMMISSION ON HIGHER EDUCATION (CHED)

The CHED was created on May 18, 1994 as an attached agency to the Office of the President for administrative purposes. The creation of CHED was part of a broad agenda of reforms on the country’s education system outlined by the Congressional Commission on Education (EDCOM) in 1992. Part of the reforms was the trifocalization of the education sector into three governing bodies. The CHED for tertiary and graduate education, the DepEd for basic education and the TESDA for technical-vocational and middle level education.

TECHNICAL EDUCATION AND SKILLS DEVELOPMENT AUTHORITY (TESDA)

The Technical Education and Skills Development Authority (TESDA) was established through the enactment of Republic Act No. 7796 otherwise known as the “Technical Education and Skills Development Act of 1994”, which was signed into law by President Fidel V. Ramos on August 25, 1994. This Act aims to encourage the full participation of and mobilize the industry, labor, local government units and technical-vocational institutions in the skills development of the country’s human resources.

The merging of the National Manpower and Youth Council (NMYC) of the Department of Labor and Employment (DOLE). The Bureau of Technical and Vocational Education (BTVE) of the Department of Education, Culture and Sports (DECS), and The Apprenticeship Program of the Bureau of Local Employment (BLE) of the DOLE gave birth to TESDA.

The fusion of the above offices was one of the key recommendations of the 1991 Report of the Congressional Commission on Education, which undertook a national review of the state of Philippine education and manpower development. It was meant to reduce overlapping in skills development activities initiated by various public and private sector agencies, and to provide national directions for the country’s technical-vocational education and training (TVET) system. Hence, a major thrust of TESDA is the formulation of a comprehensive development plan for middle-level manpower based on the National Technical Education and Skills Development Plan. This plan shall provide for a reformed industry-based training program that includes apprenticeship, dual training system and other similar schemes.

TESDA is mandated to:

Integrate, coordinate and monitor skills development programs;

Restructure efforts to promote and develop middle-level manpower;

Approve skills standards and tests;

Develop an accreditation system for institutions involved in middle-level manpower development;

Fund programs and projects for technical education and skills development; and

Assist trainers training programs.

At the same time, TESDA is expected to:

Devolve training functions to local governments;

Reform the apprenticeship program;

Involve industry/employers in skills training;

Formulate a skills development plan;

Develop and administer training incentives;

Organize skills competitions; and

Manage skills development funds.

Overall, TESDA formulates manpower and skills plans, sets appropriate skills standards and tests, coordinates and monitors manpower policies and programs, and provides policy directions and guidelines for resource allocation for the TVET institutions in both the private and public sectors.

Today, TESDA has evolved into an organization that is responsive, effective and efficient in delivering myriad services to its clients. To accomplish its multi-pronged mission, the TESDA Board has been formulating strategies and programs geared towards yielding the highest impact on manpower development in various areas, industry sectors and institutions.

PEOPLE MANAGEMENT ASSOCIATION OF THE PHILIPPINES (PMAP)

PMAP is strictly profesional, non-stock, not for profit organization of over 1,800 member companies and individual management executives engaged or interested in Human Resource Management and IR works.

UNIVERSAL ACCESS OF COMPETITIVENESS AND TRADE (UACT)

U-ACT is a private sector-led, non-stock, non-profit, advocacy and research think-tank, affiliated with the PCCI primarily focused on issues relating to trade policy making, trade negotiations and agreements, economic, sectoral and human resource competitiveness.

U-ACT is the driver of private sector in the conduct of trade policy and economic competitiveness activities by, analyzing trade policies and agreements, championing institutional reforms, and developing strategic interventions for economic, industry, and economic reforms and adjustment measures.

Through established linkages with industry, government and the academe, U-ACT is able to provide the policy and operational support to bring forth measures that enhances the competitiveness of local production networks resulting to economic reforms that will enable global market access of Philippine goods and services.

It also provides the structure to develop information and monitoring systems and capacity-building for trade negotiations, making private sector a better-informed group and take advantage of opportunities from trade liberalization.

U-ACT is an independent think tank providing proactive, credible, balanced economic and trade competitiveness advocacy, research and training services to Philippine private sector.

PHILIPPINE CHAMBER OF COMMERCE AND INDUSTRIES (PCCI)

The Chamber movement in the Philippines has been in a constant state of evolution for over a century. One can say that the eminent position now being enjoyed by the Philippine Chamber of Commerce and Industry (PCCI) in the business community traces its raison d’ etre from a history interwoven into our nation’s own history of economic, political and social upheavals.

The roots of the Chamber Movement can be traced to the 1890s with the formation of the Camara de Comercio de Filipinas. This organization was composed mainly of Spanish companies such as the Compania General de Tobacco de Filipinas, the Fabrica de Cervesa San Miguel and Elizalde Y Cia, among others.

This was followed by the creation of the Chamber of Commerce of the Philippines (CCP) in 1903, shortly after the country’s turnover to the United States. The rise of industries in the 1950s created the need for several industry groups to organize an association that would represent their interests and concerns amid the changing panorama of the economy. Thus, the Philippine Chamber of Industry (PCI) was formed.

In July 1978, the Chamber of Commerce of the Philippines (CCP) and the Philippine Chamber of Industry (PCI) merged to give birth to a single, unified private sector organization called the PHILIPPINE CHAMBER OF COMMERCE AND INDUSTRY (PCCI).

That same year, by virtue of Letter of Instruction no. 780, then President Ferdinand E. Marcos recognized the Philippine Chamber of Commerce and Industry as the “sole official representative and voice of the entire private business community.

MACRO ENVIRONMENT ANALYSIS

Social Factors attributing to mismatch

High population growth and increasing incidence of poverty are some of the main factors for the mismatch in job market. The problem is aggravated when the rate of economic growth is less than the rate of population growth. High population growth led to repeated pregnancy which lowers the women participation in labor force.

Higher number of children in a family with low-income level makes it difficult for the family to send all the children for higher education. Less dense populated provinces don’t have good schools which results in less skilled workforce.

Political Factors attributing to mismatch

There is no central organization which brings all the stakeholders (Employers, Employees, Sector groups, NGO’s etc.) under one umbrella and makes sure that all the stakeholders work together, are heard and have ownership. Also, there is a lack of government program to inform the potential workforce on the requirements of the market (i.e. what courses to take, what skills are needed, etc.)

Labor code and existing work-related laws have not been reassessed and reviewed to adapt to the changing times.

Government spending on Education is increasing (Annexure-Chart1) but major portion (approx 89%) of that goes to the maintenance of DepEd, wages etc. There is only small portion left for the improvement of infrastructure of existing schools or opening new schools.

Economic Factors attributing to mismatch

According to ECOP, the reduction of chronic unemployment and under- employment is not possible without higher levels of sustained growth. For families with low-income it is very difficult to send their children to attend costly courses. Further, low income individuals consider the duration of course as a major factor in the decision making as he can’t afford to spend couple of years without any income.

To ensure quality of learning, the quality of teaching must be met. Due to low salary, teachers of high quality choose to work abroad for higher salary. With low-quality of teachers one cannot produce quality workforce with proper skill set.

Chronic unemployment and jobless growth also add to the problem of mismatch.

Source: ECOP

Problem of shrinking/stagnant formal sector and expanding informal sector must be addressed in order to tackle the mismatch problem.

Source: ECOP

Technological Factors attributing to mismatch

In a fast changing world where technology and required skill-sets are changing very rapidly, it is very difficult for the schools and training institutes to match the requirement of the employers because they do not possess the modern advanced technology and the cost to invest in new technology infrastructure. Also sometimes the improvement in technology or processes in an organization led to reduction in the workforce.

SUPPLY – The Educational Institutes:

To effectively fulfill the current and future needs of the economy, human resources must be competitive and must possess updated skills. Qualified skilled human resources must be available at the right place, at right time and at the right quantity and quality to meet the changing demands of the economy.

Major Supply issues in Philippines are:

Jobs‐skills mismatch

English, Communication and Information Technology (IT) Skills Gap

Brain drain

Over supply of Nurses

Supply of Skilled Workers

Supply of Professionals

Deparment of labour and empolyment had publised below Statistics vide its publication Labour Market monitor:

For period 3rd Quarter of 2010, the cumulative total of professionals registered with the Professional Regulation Commission (PRC) stood at 3,090,120. The top professions consisted of the following:

By specific occupation, the top ten occupations in terms of the average number of registered applicants consisted of the following, accounting for more than three fourths (38.7%) of the total registrants during the reference period:

DEMAND – The Employers:

Major Demand issues are:

Retaining the best talents

Medical tourism to generate employment for nurses

Positioning The Philippines as a Creative Hub

As shown in the table below are the average numbers of occupational vacancy available with the percentage share:

The GAP between Demand and Supply:

According to DOLE, the following are the in demand and hard to fill occupations in key employment generators from 2010 to 2015:

INDUSTRY

IN-DEMAND

HARD-TO-FILL

1. AGRIBUSINESS

Animal Husbandry, Agriculture, Economist, Aqua-culturist, coconut farmer, entomologist (plant), farmer (fruit, vegetable and root crops

Feed Processor and Food Technician, Fishery technologist

2. CYBER SERVICES

3. HEALTH AND WELLNESS

Nurse, Horologist, Optician, Optometrist

Doctor, Physical Therapist, Pharmacist, Medical Technologist, Laboratory Technician

4. HOTEL AND RESTAURANT &TOURISM

Front Office Agent / Attendant, Baker /Food server /Waiter/Other House keeping

Cook

5. MINING

Geologist, Mining Engineer, Geodetic Engineer, Metallurgical Engineer

6. CONSTRUCTION

Fabricator/Pipe Fitter/Welder

Engineer (Civil, Electrical, Design)

7. BANKING AND FINANCE

Operations Manager/Teller

Accounting Clerks, Book Keepers, Auditors

8. MANUFACTURING

Electrical, Technicians, Food technologist, Machine Operators, Sewers

Chemist, Electrical engineer, Industrial engineer, IT specialist, machinist, Mechanical engineers, Mechanical Technicians, Chemical engineer

9. OWNERSHIP DWELLINGS AND REAL STATE

Building Manager, Construction Manager, Construction worker, foreman, Mason, welder, real estate agents/brokers, Marketer

Civil engineer, Mechanical engineer, Surveyor, Architect

10. TRANSPORT AND LOGISTICS

Checker, Maintenance mechanics, Stewards

Gantry operator, Ground engineer, Heavy equipment operator, Long haul driver, operator, Pilot, Transport and Logistics Machinery, operator, aircraft mechanic and other related skills.

Broadly, the DOLE survey defined hard‐to‐fill occupations as job vacancies for which an establishment has encountered difficulties in managing the recruitment process. Reasons may include no applicants, applicant’s lack of experience, skill or license, preference for working abroad, seeking higher salary or problem with location and other reasons. The in‐demand occupations refer to active occupations/job vacancies posted/advertised recurrently by and across industries/establishments.

DEMAND versus SUPPLY:

1. Agriculture and Fishery Sector

In‐demand occupations with limited supply of certified workers are horticulturists and fisherman.

2. Cyber services

Shortages of supply are seen in animators (clean up artists, 3D animators, multimedia artist among others) .This scenario on animators is attributed to the continuous flight of workers to overseas (Singapore, Australia, US etc.)

3. Health and Wellness

Nurses are shifting careers to become call centers agents because of the difficulty in finding jobs abroad, particularly in the United States, which has recently imposed visa restrictions. The United States will be more open to nurses because of its new law on expanded insurance coverage, which will drive the health care industry to create job opportunities for health workers like nurses.

4. Mining

The mining industry is currently showing potential for job opportunities. This sector requires intervention, particularly in the academic and technical areas. This is evident as hard‐to‐fill occupations for the sector is mostly professional. These include geologist, mining engineer, geodetic engineer, and metallurgical engineer.

5. Construction

The sector’s in‐demand occupations include fabricator, pipe fitter and welder. These welders are Shielded Metal Arc Welder (SMAW), Gas Metal Arc Welder (GMAW) and Gas Tungsten Arc Welder/TIG Welder (GTAW). However, very limited supply is seen in Submerged Arc Welder (SAW), Gas Oxy‐Acetylene Welder, and Flux Cored Arc Welder.

6. Banking and Finance

Under the sector of Health, Social and other Community Services is Banking and Finance. This sector listed in‐demand and hard‐to‐fill occupations from the professional group. Among the in‐demand occupations are operations manager and tellers which are graduates of Banking and Finance or Business Management courses. Hard‐to‐fill occupations include accounting clerks, bookkeepers, cashier, auditor, accountant, credit card analyst, finance analyst/specialist and risk management officer/manager.

7. Manufacturing

The manufacturing sector includes critical skills such as machine operators, lathe operators, bench workers/fitters, technicians, machinists, sewers, and tailors among others. Machine Operator (Press worker) also an in‐demand occupation has no available manpower supply.

8. Dwellings and Real Estate

The sector identified building manager, construction manager, construction worker, foreman, mason, welder and real estate agents/broker as in‐demand occupations. Professional occupations such as civil engineer, mechanical engineer, surveyor and architect are among the hard‐to fill occupations for the sector.

9. Transport and Logistics

The transport and logistics sectors which cut across construction and mining industries identified checker, maintenance mechanics and stewardess as in‐demand occupations. Maintenance mechanics with occupational title such as automotive senior technician, automotive air-conditioning technician, automotive electrician, and automotive LPG‐fuel technician among others have very limited supply of 21 certified workers.

10. Wholesale and Retail Trade

The wholesale and retail trade industry continues to thrive in the country as general economic outlook improves and consumer spending rises. As more wholesale and retail enterprises are established, more job opportunities are provided.

Problem arising due to mismatch

Skill mismatch makes labor market inefficient and imperfect. Job hiring and seeking become expensive. Many vacancies and job openings remain opened. This results in increased unemployment and also hampers the growth of business and the economy of the country.

CONCLUSIONS AND RECOMMENDATIONS

CONCLUSIONS

In the evaluation of the education institutions and the industries, there is a significant mismatch between what the institutions produce and what the market demands. The jobs-skills mismatch is a major contributing factor in the unemployment rate in the country. Hence, addressing mismatch could remarkably decrease unemployment rate.

One of the causes of the mismatch is the lack of coordination between educational institutions and industry leaders. As a result, institutions produce more graduates that are not needed in the market. The setting up of a department that would link the education institutions to the industry could be a big step in addressing the mismatch.

However, mismatch does not only happen when the labor workforce acquire skills that are not required by the market. Mismatch also occurs in the quality of skills that the graduates acquired vis a vis the demand of the industries. Graduates don’t usually possess other skills that industries require interpersonal, communication, and leadership.

More active participation and stricter intervention of the government is needed to address the mismatch problem in the country. The intention is simply to make the equation EDUCATION = EMPLOYMENT works.

RECOMMENDATIONS

After a careful review and analysis of available data, the team came up with the following recommendations:

Short Term:

In the short term, separate existing initiatives done in the area of addressing the mismatch by public as well as private entities can be consolidated with government taking the lead by way of bringing together various agencies like the Department of Education (DEPED), the Commission on Higher Education (CHED), the Department of Labor in Industry (DOLE), the Technical Education and Skills Development Authority (TESDA) to spearhead a national conference involving employer groups such as ECOP and PCCI as well as captains of industries to draw up one united and uniform comprehensive plan.

Long term:

1) A Department of Human Resource Development shall be established. This department will ensure linkage between the education and labor sectors. It shall formulate, among others, an employment plan which will serve as a guide for the education sector on what skills to produce to match the skills required by the industries.

2) Establishment of a central accreditation or re