Labor mismatch, or what ails the PHL jobs market

^{New graduates and unemployed people wait to be interviewed during a job fair at the Mall of Asia on Labor Day. Photo by Danny Pata}

Graduates joining the labor force for the first time may have to brace themselves, for the road to professional success in the real world may not be the rose garden they have been expecting all along.
 

In the highly-competitive labor market, getting a degree is no longer an assurance to landing a job, especially with high rates of unemployment and underemployment staining the economic landscape.
 

While thousands of jobs are being generated to mitigate this problem, there is a parallel issue in the form of a mismatch between business demands and existing talent pool. 
 

According to the January 2014 Labor Force Survey, the Philippines registered an unemployment rate of 7.5 percent, while underemployment was pegged at 19.5 percent.
 

The Global Employment Trends report of the International Labor Organization published in 2014 also revealed that the Philippines registered an unemployment rate of 7.3 percent in 2013, the highest unemployment rate among members the Association of South East Asian Nations or ASEAN.
 

Job-skill mismatch

Dona May Nepomuceno, 24, had her plans all laid out when she took Industrial Engineering in college: work in an esteemed manufacturing firm and earn good that would allow her to live comfortably. 
 

But fate took its own course. 
 

Much of what she planned to do in the didn't actually actually out – except for the money part, which prompted the shift from manufacturing to information technology. She now works as a software engineer in a business process outsourcing company in Metro Manila.

 

“Life forces us to be practical… The reason why we study hard is for us to land a good job – the kind that would allow us to live comfortably. 
 

“Unfortunately, I was not able to get that in the field that I have originally studied for,” Nepomuceno said.
 

Thousands of young professionals are in the same boat as Nepomuceno who lives the reality of a job-skill mismatch. 
 

Transitioning from a specific course in school to a totally different field is made possible by in-house training, were and the willing of a job seeker to go with the flow is often triggered by a need for better pay and non-wage benefits apart from a merit-based progress in the corporate ladder, Nepomuceno noted.
 

Basic skills, specialization
 

Labor mismatch impacts the economy in such a way that the time spent pursuing a particular course in college becomes a futile exercise for the student and brings  about an oversupply of talents to a certain profession, said Alvin Ng, economist at University of Santo Tomas.
 

"A mismatch occurs because of the failure to generate the sufficient number of people needed by the economy," he said.
 

The problem is cultural mindset, of the need to become a professional with specialized skills regardless if there is an existing demand in the economy or none, he noted.

A manifestation of this mismatch is the oversupply of nursing graduates in the country.

Earlier reports have cited the alleged "exploitation" of nurses going for on-the-job training (OJT), citing hospitals hiring registered nurses as OJTs and not as regular employees.

In a 2011 Senate investigation on the issue, Senate health committee chairwoman Pilar Juliana Cayetano said some OJT nurses were being asked to pay P5,000 to P7,000 for their supposed training or certification. The rates they pay depend on the hospital and training duration, usually ranging from six weeks to eight months.

Cayetano noted registered nurses were "constrained" to work as OJTs in hospitals as they are required to comply with a minimum two-year work experience to be employed abroad. 
 

To mitigate this phenomenon, Ang said the labor force has to strike a balance between individuals with basic skills and those who posses special skills in certain professions. 
 

The implementation of the K+12 educational system –  the program meant to align the Philippines with the global 12-year basic education cycle – is "the first right step" to solve labor mismatch, the economist said. 
 

The assumption is that K+12 finishers can take care of basic jobs that do not need special skills.

But, given the "systemic" and "structural" nature of the issue, it will take years – even decades – for the functional nature of the newly introduced education system to gel with the situation and actually address the issue, Ang noted.

Youth unemployment

A study by the McKinsey Global Institute, “The world at work: Jobs, pay, and skills for 3.5 billion people (2012),” showed that young workers continue to suffer from the brunt of labor mismatch with the demand for low-skill labor gradually falling over time.
 

“Employers will need not just more workers with college degrees, they will need graduates with training in specific specialties, particularly in scientific and technical fields,” the study read.

Youth unemployment has become a global issue as 75 million young people are unemployed globally, or 38 percent of the world’s unemployed workers. Left unaddressed, this phenomenon could leave many advanced economies with a “lost generation” of workers, the study noted.

“We conclude that the forces that have caused imbalances in advanced economies in recent years will grow stronger and that similar mismatches between the skills that workers can offer and what employers need will appear in developing economies too,” it said.

“If these trends persist – and absent a massive global effort to improve worker skills, they are likely to do so – there will be far too few workers with the advanced skills needed to drive a high-productivity economy and far too few job opportunities for low-skill workers,” it added.

Industry-academe partnership

Love Basillote, Philippine Business for Education (PBEd) executive director, sees the need to bridge job-skill mismatch by fostering a collaboration between the business and education sectors.

“Our approach is through industry-academe partnership… We are trying to set the expectation to at least level up and get them to talk, eventually capacitating industries so they are able to take part in curriculum development,” she said.

On that note, PBEd has come up with Higher Education and Productivity Project (HEPP) to “solve the skills gap and mismatch problem by initiating industry-academe partnerships at the national and regional level.” 

The initiative is supported by the United States Agency for International Development (USAID) Philippines. 

The move has initiated a parallel review of the Policies, Standards and Guidelines (PSGs) of the suggested curriculum of the Commission on Higher Education (CHED) for the fields of Management, Information Technology, Hotel and Restaurant Management, and Electronics Engineering. 

The industries under review were chosen based on the Key Employment Generators (KEG) and Emerging Industries (IE) identified by the Department of Labor and Employment. KEG refers to the “industries or sectors with the greatest potential to generate employment,” while IEs are the “industrial sectors growing at a rate faster than the economy.”

This effort aims to define the relevant competencies that can make entry-level applicants employable and proficient members of the workforce, Basillote said. 

PBEd is set to submit the results of its PSG review to CHED on May 9.

Productive career choices

Filipino workers first need to develop fundamental skills in order to become employable in basic jobs, before venturing into specific professional specializations, UST's Ang said. 

“In terms of the demand side, people should know the plan of industries and of the government. This would make the plan clearer and would let schools adjust which courses to offer,” the economist said.

Basillote also cited the need to have a “good labor market information” to points the youth towards “productive career choices” in the future.

“We should invest in training and make sure industries, government, and schools communicate so that the curriculum is kept relevant, so that we train people with the right skills necessary for the work force,” Basillote added. – VS, GMA News