Commentary

Quality education and job creation go hand in hand

By Ching Jorge
Philippine Daily Inquirer
11:18 pm | Friday, February 22nd, 2013
0 74 24

Over the years there has been a mismatch between the quality of our graduates and the needs of
industry. There have been efforts by the private sector (e.g., preemployment training) and the government
(the K-to-12 system and Tesdas notable TVET framework of school-based, center-based, enterprisebased and community-based training), but these are not enough especially if these are not implemented
in congruence with a strategic national education master plan.
There is a clear need to scale up the education reform efforts that are demonstrably effective and with a
scope broad enough to give our student population the quality education that they deserve. Furthermore,
quality education and job creation work hand in hand. We are all aware that the level of an individuals
educational attainment is a coefficient to his/her gainful employment, but any discussion on education
quality has to address the social dimension as well. Thus, in pursuing meaningful education reform we
must make sure that positive civic values are inculcated in students as well, because a flourishing
economy and a progressive society are founded on a well-educated citizenry.
McKinseys Education to Employment report highlights the challenges faced globally by the youth and
industry today: high levels of youth unemployment and a shortage of people with critical job skills. The
findings of a survey conducted among the youth, educators and employers in nine countries show that
half of the youth are not sure that their postsecondary education has improved their chances of finding a
job, and almost 40 percent of employers say that a lack of skills is the main reason for entry-level
vacancies. The report also takes a look at innovative education-to-employment solutions, both from the
government and the private sector, to address this global challenge.
In the recent Higher Education Summit organized by the Philippine Business for Education (PBed), major
players in the private and public sectors as well as industry associations came together to begin to
address this issue. Detailed discussions and break-out groups were conducted on curriculum design,
faculty development, industry concerns and factors needed for an enabling policy environment for higher
education institutions. A common thread in the discussions was the emphasis on the need to enhance
entrepreneurship, leadership, work ethic, soft skills, and an appreciation for humanities and lifelong
learning among our graduates. Aside from the issue of employability, we cannot leave out the importance
of inculcating values and humanities as part of the overall cultivation of our graduates.
But the decision-making process for students and parents in selecting higher-education institutions (HEIs)
continues to be based on affordability rather than on quality. Although more private-sector investments
are being poured into higher education through privately managed institutions as well as through publicsector partnershipsthus providing more options for our studentsthe proliferation of diploma mills
continues to exert a negative impact on the overall quality of our graduates.
Significant steps have been taken by various industries, especially the semiconductor and business
processing/outsourcing (BPO) sectors, to address skill requirements. But a more institutionalized
partnership with industry should still be developed, specifically in curriculum design and development and
teacher training. Industry can also play a part in setting standards by initiating a ranking system for
schools based on how employable their graduates are and how well they perform in the world of work.
McKinsey cites the for-profit organization IL&FS Education and Technology Services in India as an
example of a privately led development program. IL&FS conducts selection tests to match students to
occupations, develops curricula in cooperation with industry, conducts pretraining mobilization of youth
and post-training monitoring, and secures hiring commitments from industry before student enrollment.
Clearly, the need to improve on our education-to-employment systems will need a sustained collaboration
among HEIs, the government and the private sector. Over the next 10-15 years, globalization and

technology will further shape the kind of skills required by industry from our graduates. What is the vision
we have for higher education in our country? Are our HEIs ready to provide the education needed by
students and industry? Are our students equipped with the education foundation needed to learn a higher
set of skills? The implementation of K-to-12 will hopefully provide a better foundation for our students, not
just to be ready to take on possible vocational tracks but to better prepare them for higher education.
The PBEd summit created shared optimism for a brighter future for higher education in the country. This
will hopefully lead to a better policy environment for HEIs, more access for our students to quality schools,
and better guidance for students in career development and learning paths. It will hopefully lead as well to
heightened collaboration with industry in curriculum development and teacher training, and, for highereducation executives and policymakers, a clearer understanding of job market and industry concerns.
Ching Jorge (chingjorge@gmail.com) is the executive director of Bato Balani Foundation and the lead
convenor of Young Public Servants.

Social Climate

Joblessness and underemployment

By Mahar Mangahas
Philippine Daily Inquirer
11:19 pm | Friday, February 22nd, 2013
1 34 17

This week (2/18/2013), Social Weather Stations reported that adult joblessness was 24.6 percent in its
survey for the fourth quarter, done on Dec. 8-11, 2012. It was the lowest joblessness rate of 2012, having
been 29.4 percent in August, 26.6 percent in May, and 34.4 percent in March.
The strong drop in joblessness by about 10 points from March to December should be noted. It is
important for such movement to continue, so that joblessness can return to the relatively benign levels of
15 percent or less, where it was prior to 2004. Joblessness has been at least 20 percent for close to a
decade now.
(In this piece, the term joblessness refers exclusively to SWS statistics, where the jobless are survey
respondents who say they have no job at present, and are looking for one. The terms unemployment
and underemployment will refer to the official statistics; the distinctions will be clarified later.)
I would not attribute the recent drop in joblessness to seasonality, since joblessness does not always fall
in the fourth quarter of a year. In fact, joblessness rose in the fourth quarters of both 2011 and 2010.
Prior to 2012, however, joblessness did fall in the fourth quarters of 2004 to 2009. In the entire SWS data
series of 1993-2012, joblessness dropped 13 times, and rose eight times, from the third to the fourth
quarter of the year.
It is rare for the joblessness rate of the fourth quarter to be the lowest rate of the year; it happened only
four times during 1993-2012. Thus the low joblessness at the close of 2012 is relatively special.
Those looking for a job for the first time were only 3 percent of the adult labor force in the fourth quarter of
2012, compared to 5 percent in the second and third quarters, and 6 percent in the first quarter. The new
3-percent jobless rate of first-timers ties the lowest rate since 2009. It had reached as high as 7 percent
three timesin September 2009, March 2010, and March 2011. It is encouraging to see the first-timers
jobless rate trending generally downward over the last few years, and all throughout 2012 itself.
The most distressed among the jobless are those who lost their jobs involuntarily, due to some form of
retrenchment. These retrenched-jobless totaled 10 percent in December 2012; they consisted of 7
percent whose work contracts expired and could not move into new ones, 2 percent whose employers
closed, and 1 percent who were laid off. The retrenched-jobless previously totaled 13 percent in August,

11 percent in May, and 12 percent in March. It is also encouraging that 2012 closed with the retrenchedjobless at its lowest level.
Most of the time, the plurality of the jobless are those who voluntarily left their old jobs, and are hence
looking for better ones. They totaled 11 percent in December 2012, compared to 12 percent in August, 10
percent in May, and 15 percent in March. These are people who chose to be temporarily jobless, while
searching for work that is better paying, or more convenient to personal/family circumstances, or less
hazardous, etc.
***
A typical SWS survey has two respondents: (a) an adult randomly drawn from among the adults, i.e.,
persons aged 18+, of the household, and (b) the head of the household. The random adult and the
household head are sometimes the same person. Questions about labor-force status are addressed to
both the random adult and the household head, providing jobless figures for both. SWS regularly reports
the adult joblessness, since it can be analyzed together with optimism/pessimism, satisfaction with
governance, and the many other core SWS indicators.
SWS classifies persons as having a job if they affirm that they have trabaho sa kasalukuyan. The time
frame for having a job is the time of interview. The jobless are those who say they have no job, and are
presently looking for a job. Those with no job, but not looking for one, are outside the labor force. The
jobless-rate is taken as a proportion of the labor force (those with a job + the jobless).
The official Labor Force Survey (LFS), on the other hand, considers as employed those who worked for at
least one hour during the past week. The time frame for being officially employed is the week prior to
interview. The officially unemployed are those who (a) were virtually idle in the past week, and (b) were
looking for work when interviewed. Since April 2005, there has been a third official criterion for
unemployment: (c) being available for work should an opening come about within two weeks. (The SWS
measure of joblessness has never changed. If immediate availability for a job is also considered, the
SWS joblessness rate for December 2012 becomes 16.5 percent.)
The idleness-criterion tends to make official unemployment unrealistically low. Fortunately, the LFS also
counts the underemployed, i.e., those looking for work even though not idle in the past week. Such
persons, unhappy with whatever work they recently had, would probably call themselves jobless if
interviewed by SWS.
The official underemployment rates are very largedouble or even triple the unemployment ratesyet
are hardly publicized. In the latest LFS of October 2012, official unemployment was 6.8 percent, and
official underemployment was 19.0 percent (www.nscb.gov.ph/secstat/d_labor.asp).
Regardless of source, the message is clear: One of every four laboring Filipinos wants a real job.
***
Contact SWS: or mahar.mangahas@sws.org.ph.

Corporate News

Posted on March 04, 2013 11:06:15 PM

By Ann Rozainne R. Gregorio, Reporter

McDonalds to open 50 stores

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THE LOCAL UNIT of fastfood chain McDonalds Corp. plans to open up to 50 more
branches this year, with most outlets to be located outside Metro Manila to reach
more customers.
The countrys strong economy has prompted the local unit of fastfood giant McDonalds to open more branches this year.

This year, we should open around 40-50 more outlets nationwide, said Kenneth S. Yang, president and
chief executive officer of Golden Arches Development Corp., in an interview at the sidelines of the Arangkada
Philippines Forum in Makati City last Feb. 26.
Golden Arches Development Corp. is the local franchiser of McDonalds.
Meryl Adiel M. Timbol, Golden Arches Development public relations and communications manager, in the
same interview said: The expansion will mostly be outside Metro Manila.
We are seeing more opportunities outside Metro Manila as we are confronted with more demand in the
provinces, she added.
McDonalds currently has 376 fastfood outlets nationwide after it
added 49 branches last year.

RELATED STORIES

Mr. Yang said the companys optimism to grow its operations in the
country is on the back of a strong economy and the strong demand
from the private sector.
He noted that McDonalds new branches will be a mix of companyowned and franchised outlets.

McDonalds to expand into tourist

sites

Of the new branches, around 60% will be company-owned and 40%

will be franchised, Mr. Yang said.
The investment cost for a franchised store is around P35 million-P40 million. With the increase in the
number of branches is the rise in the number of employees, Ms. Timbol noted. We have around 27,000
employees at present and each branch would entail some 30 employees, she said.
The hamburger chain, Mr. Yang said, is continuing to renovate its branches to create a more homey feeling
for customers.
Moreover, Mr. Yang said, the firm is looking at implementing a slight price increase this year. There would
be some price increase to match the higher price of goods and the increasing operating cost in relation to
the increase in prices of utility, he said.
We would see around 3-5% price increase, he added.
Ms. Timbol said the price increase will take effect in the fourth quarter. To cushion the increased prices of
some products, we will still be offering McSavers meals, which is priced around P50, she added.

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Economy

Posted on February 28, 2013 10:15:20 AM

By Cliff Harvey C. Venzon, Reporter

Multinationals dominate world trade: study

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THE GLOBAL production network of multinational firms now dominates world trade,
with developing countries benefiting from this international value chain, the United
Nations Conference on Trade and Development (UNCTAD) noted in a recent report.
Transnational companies now contributes 80% in world trade, UNCTAD said. Global investment and trade
are inextricably intertwined through the international production networks of firms investing in productive
assets worldwide and trading inputs and outputs in cross-border value chains of various degrees of
complexity, the report said.
Such value chains (intra-firm or inter-firm, regional or global in nature, and commonly referred to as Global
Value Chains or GVCs) shaped by TNCs (transnational companies) account for some 80% of global trade, it
added.
Developing countries have benefited in the development, posting doubled share in value added trade in the
past two decades.
The majority of developing countries, including the poorest, are increasingly participating in GVCs, it said.
INCREASING SHARE
The developing country share in global value added trade increased from 20% in 1990 to 30% in 2000 to
over 40% today, according to UNCTAD. Again, the role of TNCs is instrumental, as countries with a higher

presence of FDI (foreign direct investments) relative to the size of their economies tend to have a higher
level of participation in GVCs and a greater relative share in global value added trade compared to their
share in global exports, it added.
The Philippines, for instance, ranked eighth among the top 25 in terms of the Global Value Chain
participation rate among developing economy exporters.
The country posted 56% participation rate as of 2010, higher than the Southeast Asian regions 18%
average participation rate. In the same report, the Philippines ranked 17th among the 25 countries in terms
of domestic value added trade shares of the top developing economy exporters.
IMPORTANT ROLE
The UNCTAD report noted the global value chain in developing countries can play an important role in
economic growth.
Domestic value added created from GVC trade can be very significant relative to the size of local
economies, it said.
In developing countries, UNCTAD said, value added trade contributes some 28% to countries GDP on
average, as compared with 18% for developed countries.
Furthermore, there appears to be a positive correlation between participation in GVCs and GDP per capita
growth rates, UNCTAD said.
Economies with the fastest growing GVC participation have GDP per capita growth rates some two
percentage points above the average the UN agency further said.

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Top Story

Posted on March 03, 2013 10:44:20 PM

By Diane Claire J. Jiao, Senior Reporter

Population boom a new kind of people power

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THE PHILIPPINES is enjoying a new kind of "people power" with a booming

population ensuring a steady labor force, robust consumption and resilient flow of
remittances, the Bank of America (BofA) Merrill Lynch said.
After the People Power Revolution ended a dictatorship in 1986, "a more literal form of people power is
taking root," the financial services giant said in a report last week.
The Philippines has the highest fertility rate in the region, with an average of 3.1 children born per woman.
The countries with the next highest fertility rates are Malaysia and India, both with 2.6, while Indonesia has
2.1 and Myanmar, 2.0. Others have considerably less: Vietnam (1.8), Thailand (1.6) and Singapore (1.2).
This has led to a Philippine labor force that is estimated to grow by
31.3% from 2010 to 2020, also the highest in Asia. Singapore has
augmented its low fertility rate with immigration, for a labor force
growth of 22.4%. Behind are Malaysia (18.7%), India (12%),
Indonesia (11.2%), Vietnam (10.2%), Myanmar (10%) and Thailand
(7.6%).
The Philippines also enjoys the lowest old age dependency ratio, with
people aged 65 years old and above comprising only 5.9% of the total
working population. The next lowest is 7.4% for both Malaysia and
Myanmar, while the ratio goes as high as 12.2 and 12.6% for
Singapore and Thailand, respectively.

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Something to look forward to after

Valentines?

Population ratios favorable for the

Philippines

"Chinas working-age population peaked last year, shrinking by 3.45

million. That turning point has raised questions about what this implies
for Asia and how the rest of Asia stands in terms of their demographic
peaks and profiles," BofA Merrill Lynch said.
Population management needed to
spur growth
The Philippines neighbors will also hit their demographic peaks earlier.
The Philippines is expected to see its working age population peak
only in 2077, compared to the Asia average of 2032 and the
Population count at 92.34M
Association of Southeast Asian Nations 2042.
"Some of these favorable demographic dynamics have shown up in
transmissions such as remittances, which have grown strong in the
case of Philippines and Vietnam," BofA Merrill Lynch said.

Issues raised in population boom

Overseas remittances hit another record high in 2012, totaling

$21.391 billion, 6.3% more than 2011s $20.117 billion and breaching
the central banks 5% target. In December alone, Filipinos working and living abroad sent home $1.975
billion, the highest monthly record yet, despite the persistent global economic slump.
With more than a tenth of the population abroad, remittances are a critical pillar of economic growth, BofA
Merrill Lynch said. It fuels consumption, which made up more than 70% of the economy last year, and
shores up the current account.

"This people power has provided a steady capital inflow, which has supported the peso and closed the
external financing gap. Economic cycles have become less volatile and external financing pressures have
dissipated compared to the past," it said, adding that remittances will likely remain healthy as the Philippine
labor force expands and others in Asia dwindle.
"Ageing demographics across many other countries, including Asia, suggests that the demand for foreign
workers will remain high," it said.

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Business Matters

Game plan for competitiveness

By Guillermo M. Luz
Philippine Daily Inquirer
11:19 pm | Friday, February 22nd, 2013
0 12 4

Its one of the key measures of our competitiveness and a report titled The Ease of Doing Business,
prepared by the International Finance Corp. (IFC, a part of the World Bank Group), measures precisely
that for the last 10 years. The report tracks the ease of doing business across 10 important processes or
transactions which any business must undertake with a government agency or agencies. The key
measures are the number of steps, the amount of time (measured in days), and the cost of going through
these transactions. In some cases, it simply measures the presence or absence of a mechanism that
offers investors some protection or access to information.
The Philippines overall rank in this report is No. 138 out of 185 countries in the world. We are now No. 8
out of nine in Asean, just ahead of Laos but behind Cambodia, Indonesia, Vietnam, Brunei, Thailand,
Malaysia, and Singapore. Moreover, our position in the world has remained unchanged for the last three
years. We have carefully analyzed this situation and created what we call a game plan for
competitiveness.
The Doing Business report tells us exactly where we rank in 10 different government processes. I call the
report a measure of the efficiency or inefficiency of the bureaucracy. I also call it a direct measure of the
amount of red tape that businesses need to cut through to get a permit or license.
The 10 processes and their respective ranks are: 1) How to start a business, No. 161; 2) Dealing with
construction permits, No. 100; 3) Getting an electricity connection, No. 57; 4) Registering property, No.
122; 5) Getting credit information, No. 129; 6) Protecting investors, No. 128; 7) Paying taxes, No. 143; 8)
Trading across borders, No. 53; 9) Enforcing contracts (through our courts), No. 111; and 10) Resolving
insolvency (filing for bankruptcy and shutting down a company), No. 165.
To create the game plan, we benchmarked ourselves against each of our competitors in Asean in each
process to see what it takes to get to the top levels of Asean for each particular activity. For instance, to
incorporate a business here, it typically takes 16 steps and 36 days, as against three steps and six days
in Malaysia and three steps and three days maximum in Singapore (where we have seen companies
incorporated in a matter of hours). In the Philippines, paying taxes can take as many as 47 transactions a
year, as against only five in Singapore, 13 in Malaysia, and 22 in Thailand.
The National Competitiveness Council (NCC) has set up a task force to analyze all the steps, time, and
cost per transaction. After this was done, we reported to the Economic Cluster of the Cabinet and
contacted every government agency responsible for each part of a whole transaction. For instance, in

Step No. 1 (How to start a business), one must work with at least six agenciesthe Department of Trade
and Industry, Securities and Exchange Commission, Social Security System, Bureau of Internal Revenue,
PhilHealth, and Pag-Ibigplus the local government unit where a business is located.
We work directly with IFC Manila and set up video-conference calls with the IFC Washington office to
allow us to have conversations with the analysts in charge of each indicator. These video-conferences are
useful for digging deeper into the details of each process and transaction. They also give us an
opportunity to personally update the IFC on the latest reforms in the Philippines, which we feel it may not
capture accurately in its reports.
To cover all the bases, the Philippine Embassy in Washington under Ambassador Jose Cuisia is also in
close contact with the IFC Washington office. A constant exchange of information between our NCC staff
and the Philippine Embassy ensures that we are all on the same page with respect to our strategy and
game plan for competitiveness.
Finally, we have met with all the audit firms, law offices, consultants, and government agencies who need
to submit information to the IFC for the Doing Business report. This helps ensure that the right information
is getting to the right people so that the report will accurately reflect what is going on in the Philippines. At
the same time, these meetings allow us to solicit suggestions from the private sector to streamline and
improve government processes to make these more business-friendly.
As all these pieces come togetheragencies, processes, solutionsto make doing business in the
Philippines easier, we will actively track the progress and make it public through an online dashboard
which Microsoft is creating for us. This will allow work teams to collaborate and track their work online and
enable the public to track the progress of each team. The public will also be able to provide suggestions
online on how to improve work processes.
You may be wondering why all this matters when the Philippines can exhibit high growth rates in spite of
low rankings. The main reason is that there appears to be a high correlation between higher rankings
(which reflect greater ease of doing business) and the ability to attract investments and generate
consistent growth. Improving the ease of doing business will certainly help us in the long run.
Guillermo M. Luz is the private-sector co-chair of the National Competitiveness Council. E-mail
gm.luz@competitive.org.ph for comments and feedback.