Education and our Global Competitiveness in the Job Market

"Education and our Global Competitiveness in the Job Market"
by Dr. Edgar Gabay Agustilo

Over the last two decades or from 1990 to 2010, the World Bank reported some trends in skills demand and supply insights into ways to build and use the critical skills needed to sustain global competitiveness of the Philippine economy.

According to this view (World Bank Report No. 50096-PH: Philippine Skills Report. Human Development Department, East Asia and Pacific Region, March 2010), there is a dramatic increase in educational attainment in just less than two decades, reflected in higher shares of workforce with higher education levels.

At the same time, however, there are initial indications that demand for skills has kept on growing and that there may be emerging skills gaps, suggesting that skills are becoming a constraining factor for the economy.

The report has three main areas: the characteristics of the demand for skills in the Philippines; any evidence of emerging skill gaps; and the extent to which the education and training sector provides the skills required by the economy.

It pays particular attention to the “functional” skills that workers need to be equipped with to be employable and support firms’ competitiveness and productivity, and to the role of the education and training system in providing them.

Skill demand has been growing and changing in the Philippines related to changes in output and employment structure across and within sectors, openness to new technology and pressures of international competition.

Demand for skills is growing driven by the service sector. Education upgrading is less evident and focused on less highly skilled workers in manufacturing although the service sector may reflect a need for higher academic, generic and technical skills, but also, possibly some “education inflation”.

As the service sector continues to develop and modernize and grow in terms of both overall GDP and employment, we can expect demand for skills to continue changing and growing in the country.

Other significant determinants of demand for skills are export orientation and access to technology. The relation between exports and skills in the service sector together with the evidence on the education and occupation profile of Filipinos before emigration suggests that emigration is another driver of demand for skills.

There are interactions between domestic and overseas demand. Beyond responding to the needs of the demand, adequate skills are central for improving the long-term innovation potential and competitiveness of the Philippines economy.

In this context, a number of critical skills stand out as crucial for the Filipino workforce.

The World Bank’s analysis shows strong needs for critical skills with focus on:

1. A combination of job specific and generic skills. Critical skills include the capacity to work independently and communicating effectively, as well as practical knowledge of the job, across all sectors and occupations; problem solving and leadership for managers/professionals; teamwork, time management and better grounding in theory for skilled production and sales staff.

2. Higher level skills applicable to the service sector – including the continuous provision of some key careers such as business and finance (also provided at the post-secondary level), as well as high level academic and behavioral skills particularly applicable to the sector, such as excellent literacy levels and client-orientation skills, including communication and foreign language (foreign language is currently under-estimated by employers but latest findings on English skills are suggesting that this is an area with long-term implications for development which needs more attention).

3. Skills supporting a more competitive manufacturing sector - including skills such as problem solving and creative thinking – particularly important in the manufacturing and export sector -, as well as sufficient supply of technical skills and some technologically advanced fields, at both an intermediate and higher level, to help manufacturing firms adapt technological innovations, face international competition and, ultimately, improve their productivity and competitiveness.

Unfortunately, many of these skills are under-provided: the economy is facing emerging skill gaps. Causes for emerging skill gaps are multiple, including reasons related to overall skill supply (quantity-quality) and labor market.

Quality and relevance of education and training is the most preeminent constraint across the board, much more than overall quantity constraints. What are the main skill gaps?

The quality of employed graduates is better than the one for the overall population –where even basic academic gaps are noticeable – but weaknesses persist.

Weaknesses include gaps in critical generic skills abovementioned and, to a lesser extent, gaps in some job-specific/technical skills.

The evidence for the service sector points to skill mismatch related to lack of relevant education fields, and insufficient quality of higher (and secondary) education, with persistent gaps in some key generic skills.

The evidence for the manufacturing sector points to largely labor related issues for managers and professionals, and quality and relevance related issues of postsecondary vocational education for skilled production workers.

Some of the skill gaps also have particularly strong implications for longer-term competitiveness and innovation.

Finally, the report also point to youth employability issues with several possible underlying reasons and remedies.

Weaknesses of Skill Supply and Main Policy Directions

There is clear potential for improving the quality and relevance of higher education, in particular vis-à-vis the needs of the service sector.

Although the coverage of the system has quite drastically increased, performance remains mixed.

Similarly, there is potential to improve the quality and relevance of post-secondary Technical Vocational Education Training or TVET education vis-à-vis the needs of the manufacturing and, as needed, service sector.

While there are promising signals on the relevance to labor market needs of non formal secondary education, there are still some unresolved critical issues:

Post-employment training could also be further improved in both its coverage and Quality

General Policy Recommendations

(1) The need for more international benchmarking of institutions and students.

(2) The need for strengthening generic, or life, skills in the curricula of all education and training levels, including putting an increased emphasis on pedagogical practices which shape work habits; while making sure job-specific skills receive the due importance with particular focus on the continuous development and strengthening of practical skills through adequate pedagogical practices and school-industry linkages.

(3) The need for better articulation of the different pillars of the skill supply system through better overall governance, a strengthened skills certification and education and training quality assurance system and appropriate pathways and bridges across different types of institutions.
(4) The need for more flexibility in curriculum and academic decisions and continuous participation of the private sector (under an improved quality assurance framework).

5) The need to support closer linkages between post-secondary and tertiary education and industries by intensifying collaboration in curriculum design, training and Research and Development or R&D.

(6) The need for improving the quantity and quality of the information on the labor market (with for instance better and more complete business and labor force surveys).

Specific Policy Recommendations

I Higher (and Basic) Education
• Improve funding and incentives for upgrading faculty qualifications
• Improve university facilities
• Improve pre-college preparation to improve tertiary outcomes. The Philippines could consider expanding the current 10-year basic education system to the more internationally-accepted 12-year system, as Mongolia has recently done. International evidence has shown that better prepared students perform significantly better at the tertiary level. More analysis and evidence on this issue is however needed before taking a decision.
• Institutionalize and systematize accreditation to promote quality of institutions and programs. • Consolidate or close non-performing institutions and publish and disseminate information on performance
• Related to quality assurance, although outside the direct sphere of action of higher education, revise certification policies to improve the match between professions and labor market needs. • Foster university-industry linkages by institutionalizing and accrediting On-the- Job Trainings or OJTs.
• Foster university-industry linkages by gathering more information and subsequently strengthening consultative mechanisms between industry and academia.
• Foster university-industry linkages by including industry input into curriculum design for relevant fields, promoting use of university labs by industry, promoting joint R&D projects, and licensing of university-held patents.
• Undertake a thorough set of tracer studies to follow graduates to learn lessons about the relevance of their education.
• Improve funding mechanisms to expand access.
II Technical and Vocational Education
• Induce greater participation of the private sector to reduce government expenditure while improving efficiency.
• Continue supporting community-based programs while reviewing the efficiency of some school-based ones.
• Reduce government costs through the rationalization of Technical Vocational Education Training or TVET providers.
• Develop appropriate performance standards for TVET providers.
• Update and enforce accreditation standards.
• Foster closer school-industry linkages, in particular for school-based programs, to improve the relevance of curriculum to labor market needs (School-based programs have lower employment rates than other programs).
• Increase industry participation in the Technical Education and Skills Development Authority or TESDA Board.
• Improve targeting of financial assistance for TVET.
III Alternative Learning System or ALS
• Prioritize ALS efforts to young, functionally illiterates.
• Adopt IT instruction on a larger scale.
• Establish an effective planning and coordinating authority for ALS sub-sector.
• Establish an information system to monitor and evaluate performance of ALS graduates.
• Devote a larger proportion of the education budget to Bureau of Alternative Learning Systems or BALS (in combination with evidence of improved effectiveness)
• Support closer linkages with industry.
IV In-Service Training
• Improve access to finance to support higher training coverage.
• Provide more incentives for employees to pursue outside training on their own.
• Plan the training courses around the job-specific skills weakly provided by the education sector.
• Improve quality and relevance of public training institutions. There is an urgent need to make pedagogy more interactive and provide more materials and equipment.
• Make private training institutes more affordable.