Workforce development in the Philippines: The role of MSMEs

The task of upskilling, reskilling, and retooling workers is even more critical among micro, small and medium enterprises (MSMEs) since they are usually the ones that can afford to attract only workers with less formal education. They usually recruit from among those who are underemployed or even unemployed. Organizing MSMEs to increase their participation in different levels of Industry Boards could be an opportunity to strengthen industry engagements with the LGUs. There should be a serious effort to encourage these MSMEs to join their respective chambers of commerce.

In 2022, the Philippine Statistics Authority (PSA) reported that 99.59% of the total business enterprises operating in the country were MSMEs. The top five industry sectors based on this data were:

1) wholesale and retail on the repair of motor vehicles and motorcycles;

2) accommodation and food services activities; 3) manufacturing;

4) other services activities; and,

5) financial and insurance activities.

Just imagine, for example, the great increase in productivity if we can supply those involved in the repair of motor vehicles and motorcycles with better qualified electro-mechanical workers the likes of which are the products of such high-quality technical-vocational education and training (TVET) schools like those of the Don Bosco schools, the Dualtech Insititute, the MIF Polytechnic Institute, and others. Also think of the great productivity and quality improvements of MSMEs involved in the hotel or restaurant businesses if they are able upskill or reskill their workforce through partnerships with such technical schools as the Punlaan Institute in San Juan, Metro Manila, the Anihan Technical Institute in Calamba, Laguna, or the Banilad School in Cebu.

The industry chambers could also play a role in ensuring that different government agencies work toward the same direction.

The perfect example of the government’s right hand not knowing (or ignoring) the left hand is that of tax policies issued by the Bureau of Internal Revenue (BIR) clashing with the objective of having a better trained workforce. Unclear tax incentives and regulations have discouraged industries from participating in work-based training programs such as the Dual Training System (DTS) and other similar apprenticeship programs. Despite having generous incentive schemes, recent changes on tax regulations due to certain amendments brought about by the Republic Act No. 11534 (called the Corporate Recovery and Tax Incentives for Enterprises Act or CREATE Act) has caused some reluctance for industries to participate in work-based training programs. While there have already been clarificatory discussions between Technical Education and Skills Development Authority (better known as TESDA) and the BIR, industries would be more likely to participate in training programs if there are clearer guidelines on how to avail of tax incentives for enterprises partnering with training institutes.

The Philippine Chamber of Commerce and Industry (PCCI) could be an effective forum to clarify the role of tax incentives. Fortunately, the present leadership of the PCCI is fully committed to playing a very active role in the upskilling, reskilling, and retooling of the Philippine workforce through all possible modalities. These include partnerships with colleges and universities in addressing the mismatch between the products of our institutions of higher learning and the demand for knowledge workers in industry; the strengthening of TVET through close cooperation with TESDA schools in dual training or apprenticeship programs; the commissioning of research by think tanks and faculties of universities on the constantly changing industry demand and supply for both technical and professional workers; and working closely with EDCOM 2 (the Second Congressional Commission on Education) and Philippine Business for Education in addressing both the short-term challenge of bridging the supplydemand gap in certain rapidly growing sectors such as IT-BPM, hospitality, health, renewable energy, construction and agribusiness, and the long-term need for highly qualified workers that will be needed in greater numbers by the so-called Industrial Revolution 4.0 (artificial intelligence, data analytics, internet-of-things, etc.).

As one of its major initiatives to help in the development of the Philippine workforce, the PCCI will be holding a major forum on April 11 that will bring the Government, industry and the academe together. It is called the “IGNITE Asia Pacific Conference: Bridging the TechVoc Gap for Future-Ready Workforces.”

Spearheading this major initiative is Antonio Sayo, Chairman of the TVET Committee of the PCCI and Vice-President and Chairman of the Skills and Education Committee, Employers Confederation of the Philippines (ECOP). Mr. Sayo will deliver the Welcome Remarks which he entitled “Workplace Learning for TVET Learners in a Rapid Technological/Digital Transformative Context.”

He is recommending that TESDA be integrated with the Department of Labor and Employment.

He will also examine the pros and cons of elevating TESDA into an independent department. In transitioning to an independent status, TESDA would have to ensure it maintains strong collaborative ties with other education and labor agencies to preserve a cohesive approach to workforce development. Establishing cross-agency advisory committees and joint initiatives could mitigate the risks associated with operating in a more siloed manner.

In this regard, as I have discussed in the previous two articles in this series, the concern for the rapid technological/digital transformation must always be related to the harsh reality that the Philippines is still struggling to complete the First Industrial Revolution (the age of machines); the Second Industrial Revolution (the age of electricity and the chemical revolution); and the Third Industrial Revolution (the Electronic Age) as it is simultaneously facing head on the Industrial Revolution 4.0.

I will deliver the Keynote Address on the “Future of Philippine Education in Bridging the Skills Gap for a Thriving Asia-Pacific Workforce.” In addition to the issues, I have already raised in the first two articles of this series, I will echo the very valid comments in a recent article of one of the top experts in the economics of education, Dr. Victor Limlingan, retired professor of AIM and a fellow of the Foundation for Economic Freedom.

According to Dr. Limlingan, we do not have a Philippine education crisis. We have a public education crisis. Philippine private education is doing fine, thank you very much. He cites the very scholarly study of Drs. Vicente Paqueo and Aniceto Orbeta of the Philippine Institute for Development Studies (a government think tank). Filipino private school students performed above par in the PISA 2018 Survey compared to other countries of the same economic level. The ones who did poorly were the students from Philippine public schools. Furthermore, the Education Sector Team of the Ateneo Economics Department reports that in PISA 2022, the gap in performance between private and public schools widened.

Related to this harsh fact is also the low quality, with a few exceptions, of our state colleges and universities (SCUs) which for political reasons we have allowed to proliferate.

A better solution to address the problem of making higher education accessible to the children of poor households is to have a generous voucher system funded by public funds that will enable the deserving youth from the lowerincome groups to obtain scholarships to study at the best private schools. Such a scheme would guarantee quality education for the deserving children of the poor, allow the Government to reduce the number of poor-quality SUCs, and prevent high-quality private schools from closing because of lack of enrollment.