Speech
of
His Excellency Fidel V. Ramos
President of the Philippines
At the 17th National Conference of Employers organized by the Employers’ Confederation of the Philippines
[Held at the Shangri-La Hotel, Makati City, April 22, 1996]
The importance
of human capital
IN TAKING for its theme, “Harnessing Human Resources: The Ultimate Strategy,” this 17th National Conference of Employers is timely and to the point.
Today the prospects of a nation depend as never before on the quality and relevance of our human resources. Dr. Jose Rizal, in his time, opined that before nationhood, we must first have an educated citizenry.
Today nations are discovering that capital is embodied less in land, factories, tools and machines—and more in the knowledge and skills of human beings.
Human resources and globalism
According to economists and management analysts, two great forces are driving this new focus on human capital.
One is globalization—the integration of economies in world markets, especially with the onset of the GATT-WTO regime.
The other is liberalization—the emergence of economies from varying degrees of command structures to markets.
These forces have ushered vast changes in the labor markets of our day. This is especially true of the Asia-Pacific region today, which is home to the two fastest growing regions in the world: East Asia and Southeast Asia. While various factors have come to play in the economic dynamism of Asia-Pacific countries, most analysts see human resource development (HRD) as the most critical factor for success.
They point out that while in the past HRD policies in the Asia-Pacific region generally emphasized labor absorption, nowadays HRD policies seek to provide strong linkages between education and skills development and structural change in the economy. In a human resource-driven strategy, the competitive edge of the economy is based neither on commodities per se nor on low-wage labor—but on skills, entrepreneurship and research.
This strategy was initiated particularly by countries that did not have the advantage of ample natural resources. Japan blazed that trail and the first tier of industrializing countries in Asia followed suit, namely South Korea, Singapore, Hong Kong and Taiwan.
In the process of this shift, these economies not only experienced rapid growth but also effectively mopped up unemployment. In fact, these countries have emerged in varying degrees with labor shortages accompanied by a rising level of real wages.
It is within this matrix of purposive development that the Philippines today seeks to find its own future. Human resource development constitutes a major linchpin of our development strategy.
The Philippine strategy
Simply stated, the strategy is to create—within the shortest possible time—a world-class workforce out of our country’s abundant human resources so as to compete successfully in the world.
There is no other way. And we have no greater resource to draw upon than our people. To make our way in the emerging world order, we must improve in quantum terms the productivity of our economy.
Improved productivity requires not only capital investment but also a workforce that has the flexibility to acquire new skills for the new jobs emerging as the structure of the economy and occupations change.
Two factors may be considered prime determinants in the creation of a world-class workforce.
One is labor productivity, or the value of goods and services produced by a worker. The other is the flexibility of the workforce, or the ability of workers to move across sectors of the economy and between industries as the structure of the economy changes.
Increased productivity the good news
The higher we increase both our labor productivity and our labor flexibility, the more will our economy acquire and adapt the technology needed to produce better quality goods and services at lower cost and to shift the structure of production to new markets and products.
The good news now is that one of the significant fruits of our economic reforms is the increase in real terms of our labor productivity.
The effectiveness of skills training in both the public and private sectors is more crucial than ever in improving national competitiveness. To maximize our response, we must fully mobilize the training capacity and potential of employers and improve the efficiency and effectiveness of public training.
The challenge to us is the creation of nothing less than a new learning environment. Simply plodding along the old routes of educating and training our people will not do it for us in the extremely competitive world we want to enter.
The skills of reading and writing, calculation and problem solving are fundamental in achieving productivity in all forms and levels of employment. Virtually all skilled jobs require some level of competence in estimation, measurement and both written and oral communication. The value of these skills grows as new technologies and accompanying changes in the organization of work increase the level and complexity of jobs.
Literacy, numeracy and communications skills can be learned adequately at the level of good basic education. Good elementary education can provide an adequate foundation for much semiskilled work in small enterprises and traditional industries. However, secondary education is increasingly needed for skilled and technical work in the modern sector of our economy.
As an integral part of our comprehensive policy reforms, the Government has already adopted sweeping reforms in the structure of our educational system—to ensure, among other things, that the skills needed in a rapidly changing labor market are adequately and efficiently provided.
The Philippine education system now effectively consists of a three-layered structure, each layer represented by an institution with separate functions and objectives.
Middle-level manpower
At the apex of this structure—to oversee tertiary education—is the Commission on Higher Education, which was created by Republic Act 7722, or the Higher Education Act of 1994.
The base of the structure, which will be formally institutionalized by legislation into a functional Department of Basic Education, will administer elementary and secondary education.
Both the apex and base deal with formal education. The dynamic middle layer of the educational system has been institutionalized through the creation of the Technical Education and Skills Development Authority (TESDA) by Republic Act 7796, or the Technical Education and Skills Development Act of 1994.
Let me elaborate a little bit on what we envision with TESDA, because this lies on the cutting edge of your concerns in industry.
Under the TESDA Act, it is laid down as state policy to provide technical education and skills development of high quality to Filipino middle-level manpower responsive to national development goals and priorities. Middle-level manpower denotes those workers who have acquired practical skills and knowledge through formal or nonformal education and training equivalent to at least a secondary education—as well as skilled workers who have become highly competent in their trade or craft as attested by industry.
The national apprenticeship program
TESDA is governed by a multisectoral and tripartite board, composed of the secretary of labor and employment as chairman, and the secretaries of education, culture and sports and of trade and industry as vice-chairman; as ex-officio members, the secretaries of agriculture and of the interior and local government and the director-general of the TESDA secretariat; and as sectoral members, four representatives from the employers-industry sector, four representatives from the labor sector, and two representatives from national associations of private technical-vocational institutions.
TESDA is now the sole authority responsible for planning, setting standards and allocating government resources for technical, vocational and skills development. It has also taken over the implementation of the national apprenticeship program and the dual training system envisioned by Republic Act 7686 or the Dual Training System Act of 1994.
One of the most critical mandates of TESDA is the formulation of a comprehensive development plan for middle-level manpower based on a national employment plan. Upon approval by the President of the Philippines, it becomes the plan for technical education and skills development for the entire country within the framework of the National Development Plan.
The creation of TESDA does not merely integrate and merge technical and vocational education and training into one body, it also practically places them in the hands of the private sector. The complementary role of the public and private training institutions in technical education and skills development is facilitated through their representation on the TESDA Board. To realize a functional partnership between the public and private sectors, the law calls for the creation of technical and skills development committees at the regional and local levels.
Unemployment and mass poverty
Under the new setup, manpower development therefore ceases to be the sole responsibility and concern of the Government. You of the private sector, being the end users of trained middle-level manpower, are in the best position to determine and provide for the manpower needs of industry.
Our task would not be complex if our workers are already in the pool ready to profit from the combined facilities of our private and public training institutions. But in truth, a large number of our labor force are still outside the loop—especially in regard to the opportunities provided by industry and the services sector.
This brings us to the two major challenges we face in this country: unemployment and mass poverty.
While skills training can increase worker productivity and flexibility and thus economic growth and welfare, this is possible only if there is a market for such skills.
For the hundreds of thousands of the educated unemployed and underemployed, overseas employment offers an option of last resort. This chronic structural defect of our economy could be both the cause and the effect of the macroeconomic imbalances that are precisely being addressed by our ongoing structural reforms.
As the reforms take effect and produce the desired results, we shall experience the same process that all the industrializing economies have gone through—an expanding and dynamic modern sector that increasingly produces more of the nation’s wealth and absorbs more of its labor force.
It is in this sector where the close correlation and linkage between general and basic education and technical and vocational education are most important.
We cannot meet the challenge unless we meet it together. It is time for the Government and the private sector to come to terms on the financing and provision of training.
The Government and the private sector especially the employers must jointly address the poverty of the Filipino nation and the poverty of the Filipino family through the generation of jobs and livelihood opportunities. Human resource development and productivity are the connecting links that will make our campaign against poverty a success.
The private sector’s training role
A developing country like the Philippines faces two enormous challenges: first, improving productivity under severe resource constraints and second, responding to competing demands for public education and training resources, not the least of which is improving access to, and the quality of, basic education.
The most that Government can do effectively with its limited resources is selective public intervention, especially in areas where market imperfections limit the extent and quality of employer training. At its end, the private sector has to complement these actions of Government.
You the employers must do your part. You must face up to competition in the market, being the user and beneficiary of trained skills. To ensure the continued flow and quality of such skills, you have to help in filling training needs created by international competition and by the spread of new technologies and management processes.
Training by private employers can have both economic and institutional advantages.
Enterprises can effectively provide training as a complement to investments in plant and equipment or in support of changed management and production processes.
Moreover, investment by employers in the skills training and upgrading of employees is an investment in their own productivity and, hence, the profitability of the firm. On the other hand, when individuals decide to acquire some training, they do so in the expectation that it will help them improve their incomes, by enabling them either to enter employment or to move to higher-paying jobs in their current firm or with another employer.
Government’s approaches
In spreading the burden of training to the private sector, the Government has evolved a number of approaches.
The oldest structures that have been established under the mandate of the defunct National Manpower and Youth Council are the industry boards in a number of critical industries. These boards are nonstock, nonprofit technical foundations with a tripartite composition.
The industry boards are primarily responsible for the development and implementation of training schemes, trade skills standards, trade testing and certification in their respective sectors.
To date, nine industry boards have been established in the following sectors: automotive, apparel and textile, utilities, construction, land transportation, tourism, printing, metals and engineering, and furniture.
The market coverage of the industry boards totals 24,800 member-firms, with 3.1 million workers represented by 68 national organizations, 6 labor organizations and 26 Government bureaus and departments.
The Industry Capability Buildup Program (ICBP) directly addresses the manpower development requirements of the industrial sector and subsectors, the industry boards and the 15 export winners and growth areas identified in the Export Development Plan of the Department of Trade and Industry and in the Technology Manpower Development Plan of the Department of Science and Technology.
The ICBP is funded mainly by the World Bank Vocational Training Project II within a five-year time frame. It adopts trainer training as a central strategy in reaching out to at least 50 percent of the workforce in identified growth areas to make Philippine labor and management globally competitive.
Also, under a training assistance contract with TESDA, training institutions are given the opportunity to develop their capability to provide quality and cost-effective technical education and skills development programs and related opportunities. In this connection, a major component of the ICBP concentrates on the development of capability in the private sector—small, medium and large companies—to deliver training.
Bringing our people up to speed
Other schemes where more effective partnership and coordination is sought include trainer training, training technology development, entrepreneurship development, and trade training.
Under the new institutional framework, Government is now in a better position to catalyze increased private-sector participation in human resources development. But this can only bear fruit if you in the private sector are willing and ready to do your part.
Let me now summarize and conclude.
We now live in a world where the progress we get depends on the kind of human capital we have. The Philippines must develop higher skills among our people or forever remain in the backwaters.
Our one advantage is that we are a country with lots of human resources. But much of this capital is still untrained and unprepared for the requirements of competition in the global economy.
To bring our human resources up to speed —as you say in business—we have to build nothing less than a new learning environment in our country. We must match our people’s passion for education with institutions and systems that can enlarge their minds and their skills.
A new learning environment
We have to virtually turn our educational system on its head, and start afresh. And we must do this task together-Government by reforming the educational system and the entire institutional framework for education and training; the private sector by involving itself in the training of people for their specific needs.
In our folklore, it is said that the sky above the world is held up by many hands, and not just by the hand of Providence. I see progress also as a sky that must be held up. Government must do its part to hold it up. You in the private sector must do yours with even greater vigor and commitment.
Only in this way—each by doing what we must—will the sky of progress light our country and our lives.