While the government remains obsessed with pursuing an extravagant infrastructure program and a violent campaign against suspected drug users and pushers, it appears to be reversing recent gains in preparing the nation’s workforce to become competitive in a modernizing global economy.
Results of a new study on human capital—“the knowledge and skills people possess that enable them to create value in the global economic system”—show the Philippines taking a substantial decline in its efforts to develop its people’s talent and creativity and use these to drive sustainable growth.
The newly released Global Human Capital Report 2017, using a unique index that measures people’s talent potential, shows the Philippines recording 64.36 points. This indicates that less than 65 percent of the Filipino working population’s combined capability is being utilized to contribute to economic growth. Viewed another way, the rating translates to the country’s failure to tap for productive use—“neglecting or wasting it”—around 35.6 percent of the available workforce knowledge and skills.
Its rating of 64.36 index points, in a scale where 100 points is the best performance achievable, puts the Philippines on 50th position among the 130 countries surveyed for the 2017 report. The rank represents a drop for the second year in a row—from 49 in 2016 and 46 in 2015. A further deterioration could put off investors who appear to be attracted these days to countries with better-performing workers and technology.
Lone decliner in region
In the Southeast Asian region, three other countries—Singapore, Malaysia, and Thailand—performed better than the Philippines in the human capital report produced by the World Economic Forum (WEF). Singapore scored 73.28 points that put it on 11th place, Malaysia tallied 68.29 points for 33rd slot, while Thailand had 66.15 points for 40th position.
Among other Southeast Asian neighbors, Brunei scored 62.82 points (58th position), Vietnam 62.19 points (64th), Indonesia 62.19 points (65th), Laos 58.36 points (84th), Myanmar 57.67 points (89th), and Cambodia 57.28 points (93rd position).
Only the Philippines fell in the rankings. All the other Southeast Asian nations improved their standings, with the biggest leaps posted by Laos (previously on 106th slot) and Cambodia (from 100th).
Overall, the top five positions in the 2017 list are occupied by Norway, with 77.12 index points, Finland 77.07 points, Switzerland 76.48 points, United States 74.84 points, and Denmark 74.40 points.
Generally, leaders in the annual Global Human Capital Report are high-income economies with a “longstanding commitment” to their people’s educational attainment, and that have placed correspondingly high importance on building their future human capital potential and deployed a broad share of their workforce in skill-intensive occupations across a broad range of sectors, the WEF explains.
Measuring human capital
The Geneva-based WEF says that how nations develop their human capital can be “a more important determinant of their long-term success” than virtually any other factor. Human capital, which is not defined solely through formal education and skilling, can be enhanced over time, growing through use—and depreciating through lack of use—across people’s lifetimes, the WEF points out. Thus, the index treats human capital as a dynamic rather than fixed concept, it adds.
In measuring human capital, the index developed by social scientists at the WEF, with the help of research data from the LinkedIn employment-oriented social networking service, takes into account four major elements. These are:
* Capacity: Level of formal education of younger and older generations as a result of past education investment;
* Development: Formal education of the next-generation workforce and continued upskilling and reskilling of the current workforce;
* Deployment: Skills application and accumulation among the adult population, and
* Know-How: Breadth and depth of specialized skills use at work.
Also, the index breaks down ratings according to age groups or generations. The system, WEF says, aims to capture the full human capital potential of a country, which can be used to assess progress within a country and point to opportunities for cross-country learning and exchange.
In many developing countries like the Philippines, human capital is often seen through the narrow perspective of “cheap labor” or hiring from “the best and the brightest” individuals. The WEF human capital index looks beyond these by recognizing “building up deep, diverse and resilient talent pools and skills ecosystems in their economies.”
The WEF notes, among many other outdated government thinking cited in the report, that most developing economies still pursue pathways to economic value creation based on cheap labor alone, by solely focusing on maximizing deployment of their people’s current human capital with little regard to skills diversification and acquiring more advanced know-how.
Technological changes brought about by the Fourth Industrial Revolution—a fusion of technologies in the physical, digital, and biological spheres—entail “a very real possibility of disrupting such economic development pathways beyond all viability,” the WEF warns.
The Philippines’ score
In its 2017 human capital performance, the Philippines got a big boost from a 78.8 points score in the “capacity” subsector, with very high ratings—all above 90 percent of population segments—in “literacy and numeracy” and “primary education attainment rate” across all age groups. However, the scores tapered off in “secondary education attainment rate” as the students got older. In the “tertiary education attainment” the scores fell below 30 percent, with the lowest (16.5 percent) in the 65+ age group.
In the three other subsectors, the Philippines scored 65.7 percent in “development” and 60.6 percent in “deployment”. The low performance rating in “development” resulted largely from low secondary and tertiary education enrolment rates, as well as in the “quality of education system” and “extent of staff training”.
The lowest score among the four groups was 52.3 percent in the “know-how” element of human capital, which was pulled down by low ratings in employment rate (both of high-skilled and medium-skilled labor), as well as a low availability rate of skilled employees and the level of “economic complexity” (a measure of the breadth and depth of specialized skills use at work).
These scores should now prompt Philippine policymakers that just having a large pool of young, English-speaking workers—a “demographic sweet spot” it is often referred to—is no longer enough to convince investors to locate productive capacities here.
‘Wealth of human talent’
Citing the “vast wealth of human talent” across the globe, WEF founder and executive chairman Klaus Schwab says in the report that such “ingenuity and creativity at our collective disposal provides us with the means not only to address the great challenges of our time but also, critically, to build a future that is more inclusive and human centric.”
“All too often, however, human potential is not realized, held back either by inequality or an unrealistic and outdated faith on the part of policymakers that investment in small sub-sections of highly skilled alone can drive sustainable, inclusive growth,” he says.
Schwab also hopes that the Human Capital Index could be used as a new benchmark for countries as a “catalyst for unified leadership by business, government and other stakeholders to positively shape the future, helping unlock a new golden age for human potential and progress.”
Disclaimer: The views in this blog are those of the blogger and do not necessarily reflect the views of ABS-CBN Corp.