Chapter 3. Local Job Creation Dashboard findings in the Philippines
This chapter highlights findings from a policy implementation assessment tool that was applied in the Philippines. The findings are discussed through four thematic areas examined by the OECD: 1) better aligning policies and programmes to local economic development; 2) adding value through skills; 3) targeting policy to local employment sectors and investing in quality jobs; and 4) being inclusive.
Results from the assessment tool
As part of this OECD Review on Local Job Creation policies, in-depth fieldwork and research was undertaken to assess local employment and economic development practices using a policy implementation assessment developed by the OECD. The assessment is divided into four thematic areas of analysis, which look at a range of policy and programme measures to understand implementation practices on the ground. A value of 1-5 is assigned to each indicator based on the strengths and weakness of the policy approach. This section of the report presents the four thematic areas sequentially, with a full explanation from the fieldwork undertaken in Taguig, Cebu, and Davao.
Co-ordination between employment, skills and economic development policies
Under this thematic area, local practices were analysed to look at the degree to which: 1) there is flexibility in designing and implementing programmes; 2) programmes are integrated between employment, skills, and economic development portfolios; 3) there is utilisation of local information and data in policy making; and 4) there are strong capacities within employment services at the regional and local level.
Degree of flexibility in designing and implementing policies and initiatives
The OECD defines flexibility as “the possibility to adjust policy at its various design, implementation and delivery stages to make it better adapted to local contexts, actions carried out by other organisations, strategies being pursued, and challenges and opportunities faced” (Giguère and Froy, 2009). Flexibility refers to the latitude that exists in the management system of the employment system, rather than the flexibility of the labour market itself. The achievement of local flexibility does not necessarily mean that governments need to politically decentralise (Giguère and Froy, 2009). Rather, flexibility refers to the latitude given to local actors the areas of designing policies and programmes, managing budgets, setting performance targets, deciding on eligibility, and outsourcing services.
Looking at the case study areas, there is a high level of flexibility in the implementation of programmes and initiatives. At the national level, the Department of Labor and Employment (DOLE) is the policy-advisory and co-ordinating body of the executive branch of the Philippine government. The DOLE is mandated to formulate and implement policies and programmes pertinent to the national labour market agenda. The DOLE has 18 regional offices, 83 field offices with four (4) satellite offices, 38 overseas posts, 5 bureaux, 7 staff services, and 11 agencies attached to it for policy and programme supervision and/or co‐ordination.
Both private and public operators run employment services in the Philippines; however, as highlighted previously, the bulk of the country’s employment services consist of publicly operated facilities known as Public Employment Service Offices (PESOs), which are found in almost every province, city, and municipality in the country. The PESO serves as a non-fee charging multi-employment service facility to achieve full employment and equality of employment opportunities for all. Accordingly, PESOs aim to strengthen and expand the existing employment facilitation service machinery of the government, particularly at the local level.
PESOs are community-based and maintained largely by local government units (LGUs), NGOs or community-based organisations (CBOs) and state universities and colleges (SUCs). Local government units, such as Taguig, Cebu, and Davao, are responsible for financing human resources and operations, and maintaining the PESOs within their jurisdiction. The DOLE supports setting up and facilitating PESO operations through its regional offices; it monitors and supervises the performance and programmes of PESOs while providing technical assistance in personnel training, report generation, and inter-agency co-ordination, among others.
The PESOs are linked to the regional offices of the DOLE for co-ordination and technical supervision. The Bureau of Local Employment links PESOsto the DOLE central office to convene the national employment service network which is convened by the national PESO Managers Association of the Philippines (PESOMAP).
Degree of integration between employment, skills and economic development
The benefits of better aligning employment, skills and economic development policies are increasingly apparent in the context of the knowledge economy. Increasingly, one of the key advantages that a locality or region can offer a business is the quality of its human capital. In recognition of this, local economic development officials can benefit significantly from working with employment offices and using workforce development as an instrument to attract new firms and stimulate local economic development. At the same time, labour market policy makers are increasingly dependent on other local stakeholders and actors to achieve their own goals.
Partnership approaches and joined-up local strategies can help to promote effective solutions to local problems, particularly where local employment and training agencies have the flexibility to alter their policies and programmes to meet objectives agreed in partnership (Giguère and Froy, 2009; Froy and Giguère, 2010).
Looking at co-ordination within the case study areas, the Davao Region through the DOLE has been mandated by the Regional Development Council (RDC) to put together a Human Resource Development Plan (HRDP) from 2016-22. The plan involves a number of local stakeholders and will consider projections of specific skills requirements, including future market demand over the coming six years. This is influenced by investments that may be made in the Davao Region and what skills would then need to be developed. For example, the Plan is considering projected labour market demand to determine which skills for jobs in the construction industry should be developed. It is also considering strategic sectors, such as the banana industry, to prepare for eventual jobs in this sector.
Under this plan, Davao aims to cover training and policies at the local level including influencing curriculum offerings within colleges, universities and trainings institutions. A concept paper and a design of the strategic planning exercises have already been completed. There is a partnership with the University of South Eastern Philippines and DOLE.
In Taguig City, the local government unit requires agencies with proposed employment and skills projects to seek prior consultation. They are required to present their proposed projects, and changes are made if the project has objectives that are not aligned with the existing policies of the local government unit. A Memorandum of Agreement is typically signed if there is alignment between the objectives and policies for the benefit of LGU constituents. In terms of identification of beneficiaries, projects and programmes introduced under the PESO are done in co-ordination with DOLE.
Degree of utilisation of local data in evidence-based policy making
The DOLE, through its Bureau of Local Employment, maintains a labour market information (LMI) system that primarily utilises administrative data. The LMI System – or LMIS – refers to the set of institutional arrangements, procedures and mechanisms put in place to co-ordinate the collection, processing, storage, retrieval, and release of labour market information.
The DOLE has a large LMIS due to the generation of information through a variety of databases by its organic units and attached agencies. The BLE also consolidates LMI through PhilJobNet, its centralised job and occupational information portal. LMI is being disseminated through various channels, including the portal, mobile application and Job Search Kiosk of PhilJobNet and even through print publications.
A new feature of the SRS is the 21st century skills assessment through the Philippine Talent Mapping Initiative (PTMI) by the DOLE and its partner company, the SFI Group. The PTMI identifies and examines the current trends and issues that both academia and industry face in terms of workforce development. The competences (i.e. innovation, creative problem solving, problem sensitivity, critical thinking, planning and organising, decision making, multi-tasking, work standards, math functional skills, English functional skills, English comprehension, self-motivation, stress tolerance, social perspective, and teamwork) of the participants are assessed and evaluated through the PTMI’s standardised assessment and survey. Key strengths and weaknesses of learners (students and trainees) and the workforce (employed and unemployed) in terms of their preferences, career prospects, and must-have workplace competences can then be identified.
The DOLE’s administrative data on the Filipino labour force forms part the Skills Data Warehouse. It consolidates other pertinent administrative data from other concerned agencies of the Philippine government. It is capable of performing online verification of applicant information on skills certification and accreditation, licensing, and local and overseas employment data from government data hubs. Over time, the following features will also be included in the Skills Data Warehouse: workers, tech-voc training and assessments/certifications, professional licensures, maritime professions, higher education, health professions, science, technology, engineering, and mathematics (STEM) professions, and the reintegration of overseas Filipino Workers (OFW).
It is expected that the study could provide evidence of the gaps in foundational career readiness skills. The data can be used as the basis for fine-tuning school and training curricula to be more responsive to the needs of industry. Teachers will be encouraged to guide students to engage in a more targeted learning approach through the practical application of the concepts and theories discussed in the classroom. Likewise, guidance counsellors and career advocates will have a framework to develop a robust career guidance programme to improve the career readiness skills of students or the participants. The initiative will provide relevant information for developing targeted career pathways. They will have the career assessment results on their strengths and weaknesses which they can improve to attain the skills required by local and global industries.
A final channel for the dissemination and translation of LMI includes the conduct of studies by the DOLE that are subsequently translated into research and publications. Examples of these include the Career and Employment Guides; Industry Career Guides, which provide industry outlook and career information on key employment generating industries (including agribusiness, business process outsourcing, construction, health and wellness, hotel, restaurant and tourism, mining, and transport and logistics); Career Information Pamphlets that provide basic information on the nature of the job, basic educational requirements, skills and competences, attributes, employment opportunities, and the cost of education and training.
For example, the JobsFit LMI Report 2013-2020 is a biennial labour market signalling report that enumerates the corresponding skills requirements of the industries dubbed key employment generators (KEGS) (major industry groups with the greatest potential to generate employment and absorb the bulk of the workforce in the coming years) and emerging industries (major industry groups that are growing at a faster rate than the economy and exhibiting the potential to grow and prosper).
The JobsFit Report outlines 13 KEGS and 2 emerging industries. From the list of KEGs and emerging industries, 275 occupations are identified as in-demand, while 102 are listed as hard-to-fill. In-demand occupations are job vacancies that are advertised recurrently and have high turnover rates, (meaning almost always available), while hard-to-fill jobs are job vacancies in which employers experience difficulty in hiring people due to a lack of adequate skills or no takers at all. In addition, 43 cross-cutting occupations were classified as both in-demand and hard-to-fill such as Accountants, Civil and Electrical Engineers, Systems Analysts, and Pharmacists, among others.
Looking at the case study areas, Taguig City has introduced an impressive data and information system to track individuals living the city and measure the effectiveness of government services (see Box 3.1). While some efforts are made in Davao and Cebu to collect more localised information, more work needs to be done to develop integrated employment and skills databases, which can effectively measure the role that government programmes and services play in helping people find jobs. In Davao City, a Skills Registry System (SRS) is conducted in every barangay and data are being collated to determine different skills needs. However, it is unclear to what extent this system informs future programming and policies. Furthermore, the evaluation culture in both Davao City and Cebu City is under-developed relative to Taguig City.
The TCISS integrates and standardises the way Taguig City collects data, processes and analyses data so that the various departments in the city are able to share information and look at the solutions in a more integrated way. The City is doing the third round of TCISS with about 211 questions for households (census type) and information is collected at the barangay level.
Questions in this survey focus on population demographics and other pertinent information that the LGU needs to be able to formulate target-focused and context-based programmes and services. The latest survey was conducted in the last quarter of 2014 and completed in December 2015. Out of the 446 639 residents who are at least 15 years old and above, 238 244 were employed. Approximately 53% are with work and livelihood while 46% are without work or livelihood. This does not include those who did not specify if they have work or not. A total of 647 966 residents of those surveyed are part of the database. This does not include those who were not available and refused to be interviewed.
The data is broken down by age groups, such as 15-17, 18-21, 22-30, 31-40, 41-50, and then for 56 and above, Almost half of Taguig City’s workforce are working for private organisations, followed by 21% who are self-employed. Among those employed, most are high school graduates, followed by 27% who are college graduates. Either tertiary or technical level graduates comprise 34% of the total employed population. The data allows specific groups to be targeted for employment and skills training programmes.
One of the reasons for this survey is that the City aims to put in place a metric-based system to measure the local government’s effectiveness in delivering services, e.g. how many were trained, how many got new jobs because of interventions of the local government.
All the households and structures in Taguig City have been geo-tagged and linked with the overall database. For instance, when the City introduced a programme for persons with disabilities, the database helped locate individuals who were willing to do encoding work who were trained and completed one year of employment in the local government as data encoders. They eventually were able to become mapping technicians, be hired in the private sector and earn high wages.
Capacities of employment services at the regional and local level
At the national level in the Philippines, focus has been placed on professionalising and institutionalising public employment services to help unemployed people find jobs. Institutionalisation means permanency of the office and staff with adequate funds coming from the Local Government Unit. The government’s goal is to institutionalise the PESOs to give them the required formal status that will assure the sustainability and efficacy of the delivery of employment services across the country. Looking the case study areas, the capacity in the delivery of employment and training programmes varies across the regions. Each region is in various stages of professionalising its PESO.
In Cebu, the city has transformed the PESO into a department with a regular budget of PhP 25 million. The PESO has 57 employees, 20 of whom are permanent while 37 are casual. The department has two (2) major programmes: 1) the PESO, which provides employment services; and 2) TESDA’s skills training and the employment through the DOLE. It has 3 main divisions: 1) Labor and Employment Division, 2) Training Division, and 3) Support Division which is the Administrative Division. While it adheres to regulations established by the DOLE and TESDA, the Cebu PESO essentially operates its own employment and training programmes and services and is a pioneer of a professional institutionalised PESO within the Philippines. This PESO integrates services across employment and training programmes in a single one-stop shop for unemployed individuals who require employment services or skills development programmes.
The labour market intermediation role of the PESO has been bolstered by the signing of the Republic Act No. 106911 in October 2015. The new law provides that PESOs shall be established in all provinces, cities, and municipalities, and shall be operated and maintained by LGUs. The PESO shall be under the office of the governor, city or municipal mayor. The PESO shall be initially organised by and composed of a PESO manager potentially a labour and employment officer (LEO) as determined by the LGU. Upon the request of accredited NGOs or educational institutions (Els), the DOLE may enter into a memorandum of agreement for the NGO and EI to establish, operate and maintain a PESO and a job placement office, respectively. To harmonise the provision of employment services in a given territorial jurisdiction, the PESO at the NGOs and the job placement office in Els shall co-ordinate their activities with the appropriate LGU PESO (Republic Act No. 10691).
The LGU shall establish a monitoring system wherein establishments operating in the locality shall report the following relevant labour market information to the concerned office of the LGU: 1) present number and nature of jobs; and 2) projection of jobs that the establishment will provide or offer in the next five (5) years. The information shall be submitted to the PESO for job matching and career guidance of the students (Republic Act No. 10691). It shall be the responsibility of the concerned LGU to: i) operate and maintain the PESO; ii) ensure compliance with the operational standards set by the DOLE; iii) extend such assistance and services as may be necessary in the promotion of employment within the area of jurisdiction; and (iv) submit to the DOLE periodic: performance and accomplishment reports (Republic Act No. 10691).
Creating productive economies – Adding value through skills and avoiding the low skills trap
Under this thematic area, local practices were analysed to look at the degree to which: 1) training programmes are available and adaptable; 2) employers are engaged in the development and delivery of programmes; and 3) there are specific supports to SMEs in strengthening their HR and workforce development practices.
Extent to which training is available in a broad range of sectors, flexible and accommodating the needs of workers and unemployed individuals
Skills are increasing in demand in today’s knowledge-based economy. Good generic skills come from a strong school education. At the same time, local people need to be able to access employment and training systems throughout their working lives to build more specialised skills and respond to changing skills demands through systems of “life-long learning”. In practical terms, life-long learning means opening up education and training systems to new target groups (working adults, older people) and ensuring that it is accessible to those with other demands on their time (e.g. heavy workloads and family responsibilities) (Froy and Giguère, 2010). Local training and education institutions in the Philippines need to be adaptable to the changing need of businesses so as to ensure they can equip both current staff and new entrants with relevant skills to fuel new job growth. At the same time, local employers need to support themselves and upgrade the skills of their own employees.
In the Philippines, the National System of Technical Vocational Education and Training (NSTVET) provides training opportunities for the unemployed as well as the currently employed who want to upgrade their skills. The TESDA compendium of institution-based providers lists 20 329 programmes offered by 4 609 institutions as of July 2015 (PIDS, 2016). Table 3.1 shows that enrolment in TVET programmes has risen significantly over the last decade. A recent survey of TVET graduates found that the main reasons for taking a TVET course was to find employment (45% of respondents) and to gain skills (38%) (TESDA, 2013). The most popular fields for TESDA certification are Information and Communication Technology (ICT) (26.7%); tourism (24.2%); manufacturing (21%); and health, social and other community development services (12.4%) (PIDS, 2016).
In 2014, the vast majority of TVET graduates had followed either community-based (50.1%) or institution-based programmes (46%) (PIDS, 2016). Only 3.2% of graduates had followed an enterprise-based programme, of which 25% were apprenticeships and 36% were traineeships. Enterprise-based programmes were mostly found in the health, social and other community development services (31.9%), tourism (26.9%) and construction (9.4%) sectors. This broadly reflects the country’s primary growing sectors, with the exception of ICT (0.8%). While few students undertake such type of programme, those who do are much more likely to find employment 6 months after graduation (Figure 3.3).
* Share of graduates who found employment 6 months after graduation.
Source: TESDA IES 2012.
For six years, Taguig City has been focusing on education scholarship programmes. The City started providing scholarship programmes with a pilot project of PhP 5 million. By 2016, the City is providing PhP 600 million for scholarship grants because of the rapid growth in not only the Bonifacio Global City (BGC) but several other areas of Taguig City. The Mayor recognises that education is key to enabling youth and the unemployed to find labour market success. The scholarship programme also focuses on higher level skills, including both undergraduate and post-graduate programmes.
In Davao City, company in-house training is available that caters to basic skills and technical knowledge. Graduates are trained in school, but they have difficulty getting employment because the technical skills they have learned are outdated. On-the-job training (OJT) programmes, where the students are trained for 2-3 months in specific companies, could enable companies to absorb students as employees. These programmes enable the school to engage with particular companies to allow students training before their actual employment. There is also a scholarship programme in Davao City that aims to develop stronger skills in the local economy, but this is only available in the ICT sector. Career coaching is also available for students and seeks to inform them about the most in-demand jobs in the local area as well as the courses, which are required for employment in that area.
In Cebu City, the training division is directly integrated within the PESO office and provides a one-stop shop of skills development opportunities for both unemployed and employed individuals to participate in skills development opportunities. This is a best practice model in the Philippines. Local city officials recognise the importance of building a skilled workforce to promote economic development and job creation. Local PESO officers are quite active in assessing whether employment and training programmes are providing individuals with a good level of skills to find and maintain employment.
Degree of employer engagement in orienting skills development to demand and extent to which training meets business needs
Empowering businesses to grow and hire workers is at the heart of the processes underpinning job creation. Ensuring firms can access the skilled workforce and the financing they need is critically important, and there is scope to better incorporate the local and regional dimension into these efforts. An advantage of a bottom-up approach is that institutions can adapt both the mix of provision and curricula to local needs, including local employer demands (Kuczera, 2013). Better aligning the employment and training system with employer demand will help to reduce potential skills mismatches and make more efficient of the use skills being produced by the education system.
In Taguig, the City aims to prepare graduate for the needs of local business. The administration is exploring city-wide data to study matches and/or mismatches that exist between skills supply and demand in the labour market. Local city stakeholders such as the PESOs, economic offices, business permits and licensing organisations, manpower and livelihood training providers, have been clustered to meet regularly to get an overall picture of the situation. Universities are also involved in this process so they can develop and teach courses for skills needed by emerging industries, for instance, by the BPO industry. The City is using a software programme that matches people to jobs based on skills (the SRS). Business needs are programmed and people with relevant skills are matched.
Taguig City is also creating an office through which job vacancies might be communicated and qualified people matched. In 2016-17, the City will meet with industries, starting with restaurants, to seek out manpower needs, which will then be programmed and matched with thousands of names in the PESO database. Thereafter, the resumés of those whose skills match the employer’s requirements will be shared with the local employers. Mismatches, if any, will be addressed through training. Housekeeping, commercial cooking, bartending, electrical engineering, and carpentry (because of construction work in BGC) are skills that have been pinpointed through this system. The City is also approaching various barangay units to look for those lacking skills but interested in training opportunities.
The city is also surveying employers. The City aims to collate data and present them to employers in meetings by clusters and industries. The City will determine if it has people in its registry who could be immediately referred to employers for employment. Through its experience with the JobStart Programme, the City realises the importance of skills training to build confidence and relationships with employers. The aim is to enable trainees to develop and practise important life skills. A proposal has been made to incorporate these into the curriculum of the City University and public schools. This might include teaching youth to begin considering courses demanded by the labour market.
With regard to employment services, the PESO in Taguig City conducts a regular employers’ forum. They use the Taguig City Integrated Survey System to share information about skills needed by employers and skills available as determined from the database. Getting employers to participate in these forums and articulate their skills needs was identified as a challenge by city officials during the OECD study visit.
In Davao City, the IT-Business Process Management (IT-BPM) sector is a key employer in the local area. Many of the IT-BPM companies are located outside of Davao City in Davao del Norte (DdN). One of the biggest challenges facing the sector is finding an adequate supply of skills. In Davao Del Norte, there are no training programmes to enhance communication skills and improve the employability of local residents in this emerging industry. During the OECD study visit, local stakeholders noted that a training programme is under development. Other initiatives are being undertaken in co-operation with the IT-BPM sector (see Box 3.2).
In Davao, the BPO sector is working with local universities to offer free language training and provide graduates with a better understanding of the job opportunities available in the sector. The BPO sector is also planning to establish a K-11-12 programme to provide more skills development opportunities to individuals in Davao. It is envisioned that this programme would have wider benefits than just the BPO sector. The BPO sector is one of the major partners of the JobStart Programme and is developing a programme/module/training plan for university graduates for three months. This programme would provide language training and other skills required by BPOs.
The IT-BPM sector is also a major employer in Cebu City. Many courses and trainings have been organised to provide skills development opportunities to local individuals who can then find work in this sector. While this sector provides a high level of wages relative to other industries in Cebu, employment in the sector can be precarious. Many local employers within the BPO sector close operations without adequate notice of employment termination.
On a case-to-case basis, the PESO will organise trainings directly in line with the needs of local employers. Such programmes have been launched in cloud technology or advanced fashion based on employer demands. The PESO provides the training by industry in response to local employer demands. Companies sponsor the staff to be trained to teach the skills for the particular course to be delivered. For this type of employer-demanded training, there could be specialised/shorter programmes that the PESO does not usually conduct regularly. For example, the city government invested PHP 3 million in a programme for call centre training. The programme is designed with local employers in this industry. The programme provides grants to students to undertake language training so that they can work in this sector. Grants are only provided after the trainees have completed the programme.
Degree of support to employers/SMEs in maximising skills utilisation, improving work organisation, human resource management, workforce planning and skills development
Investing in the skills of a particular locality may not be enough, if these skills are not effectively matched to local jobs, and if young people do not find it attractive to stay and work in the area. Local policy makers need to focus not only on the supply of skills but also on skills demand. Matching skills to jobs is a particular challenge in areas where a significant proportion of jobs are not of a sufficient quality to attract local people. In some regions, employers operate a policy of employing low-skilled people at low wages, reducing the demand for skills, and negatively impacting on local productivity.
In relation to training programmes in Taguig City, there is collaboration among the PESO, TESDA and LGU to bring employers and jobseekers closer. The manpower office conducts training and has trainers who are provided and certified by TESDA. Last year, some TESDA trainings on cellphone repair, carpentry, masonry, welding, and vulcanising were conducted. The focus was not only on unemployment per se but also on capacity building for SMEs. The office also partners with businesses and their Corporate Social Responsibility (CSR) Programme. For example, Coca-Cola has the Star programme through which it has trained around 100 or 200 sari-sari store owners on how to run their businesses more profitably.
In one CSR programme, for example, Aboitiz Foundation asked for 20 jobseekers that it planned to send to Don Bosco School for an 18-month higher level automotive training. Aboitiz Foundation approached Taguig City and the City found 52 jobseekers that met the employer’s training criteria. In respect to management issues in Davao City, there is the Industry Tripartite Council for BPO, construction, academia, the banana industry, and tourism. There are meetings with workers and employers to discuss management and labour relation issues. The PESO sits in the council as a regular member.
Supporting entrepreneurship and economic development – Targeting policy to local employment sectors and investing in quality jobs
Under this thematic area, local practices were analysed to look at the degree to which: 1) policies and programmes are adapted to business characteristic; 2) policies are in place to support the internationalisation of SMEs; and 3) there are efforts in place to support entrepreneurship, cluster development, and ecosystems of innovation.
Extent to which programmes and services are adapted to local business demographics and profiles, addressing SME needs
There are areas of the economy in the Philippines which are projected to grow in the coming years in response to global trends, and local communities would be wise to prepare their workforce for growing employment in these fields. These include jobs requiring green skills, the services sectors and health/social care.
In Taguig City, hotels typically have their own in-house training programmes. As part of company initiatives, hotels co-ordinate with TESDA to give opportunities to their employees for additional training. For example, a housekeeping room attendant is able to attend trainings through TESDA, such as culinary arts. Hotels try to cultivate a culture where there is always room for skills development. Several programmes in Taguig City aim to create pathways for people at entry level positions to upgrade skills and move to higher positions, and are supported by the hotel industry.
In Davao City, there are many initiatives within the BPO sector as highlighted earlier. Furthermore, Davao in the process of developing a long-term Human Resources Plan to 2022, which aims to conduct projects on the specific skills that will be needed in the labour market of the future. They have commissioned a study in partnership with the higher education sector on forecasting skills needs. The plan is that this forecast would guide the development of a range of programmes and policies.
Policies to support and internationalise SMEs
Small and medium enterprises (SMEs) comprise 99.6% of all registered business in the Philippines and employ 70% of the workforce. Providing access to finance for SMEs is key towards their business development and survival. Challenges in accessing finance are often a significant barrier to growth for many SMEs. An analysis of the geographic distribution of enterprises throughout the Philippines indicates a high concentration in the National Capital Region (NCR), which accounts for 24.4% of all establishments and 40.1% of all employees (Department of Trade and Industry, 2015). SMEs account for 25% of the Philippines’ total exports revenue. It is also estimated that 60% of all exporters in the country belong to the SME category (Department of Trade and Industry, 2015). SMEs are able to contribute in exports through subcontracting arrangements with large firms, or as suppliers to exporting companies.
All lending institutions are required to lend at least 6% of their total loan portfolio to small enterprises and at least 2% to medium-sized enterprises. The Republic Act 6977 enacted in 1991 (the Magna Carta for Small Enterprises) required 10% more to be diverted to SMEs. Then, it was amended in 1997 under the Republic Act 8289 to extend the applicable period to 2007 and lower the minimum level to 6% and 2%. The Bangko Sentral ng Pilipinas is mandated by law to monitor this initiative.
Tradeline Philippines is an online database service that provides product search listings of thousands of manufactured and exported Philippine products complete with product specifications. It also functions as a business search that allows users to contact Philippine exporters, suppliers and local/foreign buyer details and the products they provide and export. The Bureau of Export and Trade Promotion’s (BETP) Export Assistance Network (EXPONET) helps exporters and prospective exporters’ access information and resolve specific problems related to exporting.
Exponet provides information on export seminar schedules, export organising, export procedures and documentation, import facilities for exporters, buyer linkages, export financing and incentives, product raw material sourcing and other statistical information. The agency also assists exporters in export-related problems and trade complaints.
The Philippines has a large section of SMEs within the informal sector with little or no access to organised markets, credit institutions, educational or training centres or public services. Although efforts are being made by the government to formalise employment arrangements, the nature of this sector makes means that it is difficult to gather and process reliable statistics.
SMEs must be able to respond quickly and efficiently to international market signals to take advantage of trade and investment opportunities and reap the benefits of the international trading system (OECD, 2004). As discussed previously, many SMEs in the Philippines operate within the informal economy and do not have access to any institutionalised services that would enable them to access international markets. Despite this large informal sector, some initiatives have been launched in the case study areas.
Taguig City government tries to ease regulations for SMEs to get them operating in the formal economy. To this end, they have a one-day release process for business permits. The LGU has several training programmes targeted to SMEs in subjects such as accounting, making business plans and other trainings that can help SMEs grow. An office will be set up on the 10th floor of SM Aura particularly for SMEs. It will be a GoNegosyo, one-stop-shop type. Capacity building will include livelihood trainings to promote SMEs. The LGU tries to partner with other businesses so they can transfer their knowledge to SMEs.
Degree of development of local entrepreneurial/innovation ecosystems, and extent of knowledge-sharing
Taguig City markets itself based on good governance and ease of doing business. This is coupled with partnerships with private developers, particularly in the BGC. Their development plan has several marketing campaigns, including the “I love Taguig” brand which aims to promote the city as a place to live and work.
There are special economic zones in Taguig City, which led to the influx of BPOs and related industries. As to business incubation, the Go Negosyo programme of Senator Bam Aquino is being considered. Talks with the Securities and Exchange Commission and DTI have begun so that services could be provided at the SM Aura. One of the rooms is already reserved for incubator programmes. Part of Go Negosyo is that a mentor is assigned to help start the business.
Entrepreneurship skills are critical to support new job creation and new businesses. Employment and training agencies can play a role in boosting these types of skills by injecting entrepreneurship training into existing courses as well as through offering self-employment programmes, which provide youth with opportunities to develop their own business. Davao City has launched a youth entrepreneurship programme through its local university in partnerships with the DOLE through the YES programme. These types of youth entrepreneurship programmes were not observed in Taguig City or Cebu City.
Ensure growth is inclusive – seizing economic and skills development opportunities to strengthen the vulnerable in the labour market
Under this thematic area, local practices were analysed to look at the degree to which: 1) policies and programmes are in place to support the integration of disadvantaged groups; and 2) there are specific supports in place to connect young people to jobs.
Extent to which effective policies are in place to support the labour market integration of disadvantaged groups and degree of flexibility in adapting programmes to different target groups
Tackling exclusion from the labour market is an area where employment and training organisations cannot work alone. In order to create real change, employment and training organisations need to adapt their own services and programmes, while also contributing to more strategic area-based initiatives to reduce the barriers that can act to exclude people from the labour force over generations. The DOLE has introduced the Integrated Livelihood and Emergency Programme (DILEEP). The DILEEP is the DOLE’s contribution to the governments’ agenda of inclusive growth, which aims to generate jobs, reduce poverty and benefit poor, vulnerable and marginalised workers.
There is also the Information System for the Vulnerable Sectors (ISVS). This is an integrated Information System for vulnerable workers, such as Child Labourers, Informal Sector Workers, DOLE Livelihood Beneficiaries, Kasambahay, Young Workers, Persons with Disability and others. The Social Amelioration Programme, which is implemented by DOLE and BWSC, provides additional maternity and death benefits for workers in the Sugar Industry. The amount of cash benefits was increased from PhP 2 000 to Php 5 000 for maternity benefit, and from PhP 7 000 to PhP 10 000 for death benefits.
The DOLE Kabuhayan (DK) Starter KITS Project is a livelihood formation strategy that is intended to improve the socio-economic well-being of workers in the informal economy, in groups/sectors with special concerns, and displaced wage workers (local and overseas) and their families. The project will provide a package of services that will enable the target beneficiaries to quickly start a livelihood undertaking and become self-employed. It aims to engage them in sustainable self-employment through easy-to-learn livelihood undertakings.
TESDA Courses are offered to women to better prepare them for the world of work. Some of the courses included automotive servicing, bartending, cookery, Consumer Electronics Servicing, Assembly/disassemble Electronic Products and System, Dressmaking, Food and Beverage Services, Gas Metal Arc Welding and Housekeeping among others.
In Taguig City, the City government tries to move informal SMEs into the formal economy. One of the businesses in the informal sector is “carinderia,” vendors that cook and sell food on the streets. The LGU has pilot-tested food safety training in one barangay training for such vendors, so they can sell their food safely. Similarly, financial literacy training is a priority because informal vendors and store owners often mix their business earnings with personal money. Another example is the Star programme for sari-sari stores. The Star programme is conducted by Coca-Cola, which trains sari-sari store2 owners to run their business, e.g. inventory, how to professionalise their accounting. This enables the LGU to attract them into the formal sector by offering business licenses and registration. The proportion of informal settlers in Taguig City is around 5%.
In Davao City, the City Planning Office has specific programmes and projects pertaining to transitioning the informal to formal sector. There is negotiation with the Negosyo Centre in the city – a convergence of local offices of the city – which provides suggestions and zoning information to newly established businesses.
Extent to which there are evidence-based tools used to measure disadvantage on the labour market and support multi-stakeholder approaches to tackling youth participation in the labour market
A major focus across Taguig City, Davao City, and Cebu City was the JobStart Programme, which is targeted to youth from 18-24 years old who are unemployed, and neither studying nor undergoing training at the time of registration and with less than one year of work experience. As highlighted earlier, the programmes include full employment facilitation services such as registration, client assessment, life skills training with one-on-one career coaching, technical training, job matching, and referrals to employers either for further technical training, internship, or for decent employment. An employer is allowed to take in JobStart trainees up to a maximum of 20% of its total workforce, for a period not longer than three months or 600 hours, with a commitment to pay at least 75% of the applicable daily minimum wage. Participating employers shall receive an amount per month per trainee to cover administration costs for managing the trainee, which is determined by DOLE. The local government units of Taguig, Davao, and Cebu, through the PESOs, serve as the implementing agents of the programme at the local level.
The Mayor of Taguig City agreed to the implementation of the JobStart programme in 2014. Feedback on the programme has been positive, with overall, placement rates around 70%. The City would like scale up the programme to cover more areas, which would further engage the local PESO. In terms of employers engaged in the programme, there are 20 in Taguig City from the Hotel and Tourism industry. The City is exploring partnerships with the ITBPO industry to see if coverage could further expand for this policy measure.
In Davao City, the JobStart Programme is in the early stages of implementation. They are targeting local employers within the services and BPO sector to participate in the programme. A number of employers have already pledged to participate in the programme. During the OECD study visit, local stakeholders noted the importance of the program in providing job-specific training to youth and helping them to find sustainable employment.
In Cebu City, there is a similar situation regarding the JobStart Programme. The city is in Phase 1 of finalising the implementation of the programme. It has gone through the recruitment, LST and matching of job starters. There are a few more modifications yet to be done. A Memorandum of Agreement with DOLE needs to be signed but it was anticipated that it would be completed by the end of 2016.
At the national level, there is the Special Programme for Employment of Students (SPES), which is implemented by the Bureau of Local Employment within DOLE. The programme assists poor students and out-of-school youths intending to pursue their education by encouraging employment during summer, or any time of the year for students in the tertiary, technical, or vocational level.
The DOLE has also introduced the Youth Employment Project which provides young people with tuition fee advances to pursue a post-secondary course while undergoing formal workplace experiences using DOLE-prescribed topics on proper work attitudes and ethics. The programme aims to inculcate youth with work values including hard work, patience, honesty, savings, self-reliance, self-discipline, respect for the rights of others, work safety and health, housekeeping, efficient use of meagre resources and productivity.
TESDA has partnered with DSWD in implementing the Cash for Training Programme. The programme provides free trainings for the youth to gain employment. The beneficiaries are individuals determined eligible under the expanded Government Internship Programme of the DWSD. Each scholar-beneficiary will receive a total of PhP 20 000, which covers tuition, starter tool kit, and a transportation allowance.
References
Department of Trade and Industry (2015), MSME Statistics, available at www.dti.gov.ph/dti/index.php/resources/sme-resources/sme-statistics.
Froy, F. and S. Giguère (2010), “Putting in Place Jobs that Last: A Guide to Rebuilding Quality Employment at Local Level”, OECD Local Economic and Employment Development (LEED) Working Papers, No. 2010/13, OECD Publishing.
Froy, F., S. Giguère and A. Hofer (eds.) (2009), Designing Local Skills Strategies, https://doi.org/10.1787/9789264066649-en.
ILO (2015), “Philippine Employment Trends 2015. Accelerating inclusive growth through decent jobs”, www.ilo.org/wcmsp5/groups/public/---asia/---ro-bangkok/---ilo-manila/documents/publication/wcms_362751.pdf.
Kuczera, M. (2013). “A Skills Beyond School Commentary on Sweden”, OECD Reviews of Vocational Education and Training, OECD, Paris, www.oecd.org/edu/skills-beyond-school/ASkillsBeyondSchool CommentaryOnSweden.pdf.
OECD (2012), Better Skills, Better Jobs, Better Lives: A Strategic Approach to Skills Policies, https://doi.org/10.1787/9789264177338-en.
OECD (2004), Promoting SMEs for Development, background paper prepared for the 2nd OECD Conference of Ministers Responsible for SMEs, available at www.oecd.org/cfe/smes/31919278.pdf.
PIDS (2016), “The National System of Technical Vocational Education and Training in the Philippines: Review and Reform Ideas”, Discussion Paper Series No. 2016-07, Philippine Institute for Development Studies, March 2016.
TESDA (2013), Impact evaluation study of TVET programs.
Notes
← 1. An act defining the role of the Department of Labor and Employment (DoLE), the local government units (LGUs), and accredited nongovernment organisations (NGOs) in the establishment and operation of the Public Employment Service Office (PESO), and the operation of job placement offices in educational institutions (Els), amending for the purpose Sections 3, 5, 6, 7 and 9 of Republic Act No. 8759, otherwise known as the “Public Employment Service Office Act of 1999.”
← 2. A neighborhood variety store/convenience store found in the Philippines.