Executive summary

The Philippines is a dynamic and growing economy that has performed better than a number of its peers in Southeast Asia on a number of economic and social indicators. From 2008-14, GDP growth has averaged 5.4%, outperforming both the OECD average and a number of ASEAN economies. The Philippines has a relatively young population, which will be a key source of future growth and competitiveness. However, youth unemployment sits at 16% with many young people facing a number of challenges in finding work after they leave school. Another labour market challenge relates to the large informal sector in the Philippines. The latest estimates available show that 10.4 million people were working informally, and in 2014, 38.6% of workers were in a vulnerable form of employment.

Skills represent a key driver of development and growth in the Philippines. Educational attainment of the Filipino population has steadily increased in recent decades, but while the country is regionally successful, it has yet to reach the standards of more developed countries. The Filipino rate of enrolment in tertiary education was higher than in most ASEAN countries in 2013, with the exception of Thailand and Malaysia. Yet it was still only around half of the average rate in OECD countries. Furthermore, issues of skills mismatch remain frequent with 36% of firms reporting that the lack of pertinent skills was the main reason why they found it hard to fill vacancies in 2012.

This OECD report looks at the implementation of employment and skills development programmes in a sample of cities in the Philippines: Taguig City, Cebu City, and Davao City. Local governments in the Philippines have an active role in the management of employment and skills programmes through Public Employment Service Offices (PESOs). These offices are responsible for the implementation of a number of nationally regulated policies and programmes. All three cities are making a number of investments in education, skills, and economic development initiatives. Each city is implementing the JobStart Program in an effort to better link youth to local employment opportunities.

Going forward, the following recommendations should be considered to boost employment, job creation and productivity:

Overall recommendations to guide national policies in the Philippines

  • Promote the establishment of one-stop PESOs which combine employment and training services under the management of one office: Public employment services in the Philippines are in various stages of being institutionalised across the country. Building on the model of Cebu City, the Department of Labour and Employment should actively seek to work with local PESOs across the country to integrate services under a one-stop model.

  • Develop an evaluation framework to measure the success of the JobStart Program and continuously improve its delivery over the long-term: Comparable indicators should be established and collected across all PESOs implementing the Job Start Program to take into account deadweight effects and further understand how best to target efforts to match youth to good jobs.

  • Introduce work-based training programmes which network employers and promote skills development opportunities: Incentives should be offered to employers to increase investments in skills development opportunities, particularly in firms that traditionally do not offer training, such as SMEs.

Recommendations for Taguig City

  • Launch youth entrepreneurship programmes to promote job creation: The city should work with local universities to embed entrepreneurship education into teaching and curriculum as well as provide more coaching, advice and mentorship opportunities.

  • Establish an employer officer within the PESO to build stronger engagement and mine job vacancies: Local PESOs should appoint an official within the employment office who would be responsible for building local contacts with employers and understanding their needs.

Recommendations for Cebu City

  • Make stronger use of the Chamber of Commerce (and other employer forums) as an advisory body on the relevance of policies and programmes: The city and local PESOs should aim to establish a formal partnership with the Chamber focused on workforce development and productivity improvements.

  • Promote the better use of skills to boost innovation and productivity: While much is being done to support the BPO sector in the city, there is a need to work with the manufacturing and shipping sectors on skills development programmes, which move the city into higher value-added production and services.

Recommendations for Davao City

  • Establish a workforce development board, which would bring together local employment, training, and economic development actors with employers: Such a board should be established to formalise partnership working and advise the Mayor on key employment and skills issues.

  • Expand scholarship programmes to other sectors of the local economy: Building on strong initiatives already underway in the BPO sector, scholarship programmes should also be offered within the retail, services, and hospitality sectors.