Mabini Dialogue Explores the Potentials and Pitfalls of Industry 4.0 vis-à-vis Skills Development

FSI Director-General Claro S. Cristobal awards the Certificates of Appreciation to Mr. Jose Ronald Moya (left) and Dr. Sungsup Ra (right).

The Foreign Service Institute organized a Mabini Dialogue Series on Industry 4.0: Opportunities and Challenges for Human Capital Development on 21 February 2018 with Mr. Jose Ronald Moya as guest speaker and Dr. Sungsup Ra as reactor. Mr. Moya is the Deputy Director-General of the Employers Confederation of the Philippines (ECOP), while Dr. Ra is the Director of the Human and Social Development Division under the South Asia Regional Department of the Asian Development Bank (ADB).

Mr. Moya opened his presentation by describing briefly the state of employment in the country, which had a labor force of 43.29 million in 2016. Of this number, 40.65 million were employed while the remaining 2.64 million were unemployed. Two trends, namely, youth unemployment and the high rate of unemployment among the educated raised concern among stakeholders about the quantity and quality of the labor supply. He added that youth unemployment is on the rise due to slow school-to-work transition and prolonged periods when young workers are “not in education, employment, or training” (NEET). In the Southeast Asian region, the Philippines ranked second in terms of share of youth NEET (22.2 percent in 2016), trailing only Indonesia which had a 22.5 percent share in 2016.

Mr. Moya noted that the private sector is not actively involved in the initiatives of the education sector particularly on higher education; thus, a mismatch between the skills supply and labor demand occurs. Similarly, Dr. Ra explained that improving the skills of the labor force may be achieved through stronger partnerships between educational institutions, both public and private, and enterprises. Citing a study done by ECOP in partnership with the International Labour Organization (ILO) in 2015, Mr. Moya highlighted that the three primary causes of job-skills mismatch are weak labor market information system, low demand for specific jobs, and inadequate education, training, and guidance. He stated that firms respond to this issue by requiring on-the-job training programs and conducting their own technical training for new hires.

The government, for its part, has recognized the need to foster participation of the industry and other stakeholders in developing the country’s human resources. The Congress is presently working on the passage of the Apprenticeship Bill to address unemployment. Sen. Joel Villanueva filed the Senate Bill No. 1392, or the Apprenticeship Training System Act of 2017, to ensure the availability of human resource in critical and in-demand occupations. The bill also aims to promote youth employment and recognizes the role of private enterprises in training and development. However, ECOP views the strict procedures on apprenticeship very cumbersome for employers. Mr. Moya added that there is a low support for the bill among employers due to lack of incentives.

The advent of Industry 4.0 is presumed to have tremendous impacts to the quantity and quality of human capital in the country, according to Mr. Moya. A study done by the ILO in 2016 reveals that 49 percent of Philippine industries are at a high risk of being automated 20 years from now, with 80 percent of these firms coming from two sectors: business process outsourcing (BPO) and electronics and electrical products. To effectively address this phenomenon, employers are prompted to reskill, upskill, and retool workers vis-à-vis the new innovations available. Greater coordination among government, employers, and workers will likewise be vital.

Consequently, Mr. Moya said several companies and organizations in the Philippines have already initiated programs and activities to resolve the job-skills mismatch and adverse effects of disruptive innovations. At the regional level, Singapore may serve as an important reference on the subject of aligning skills development strategies towards Industry 4.0. He reiterated ECOP’s call for a stronger labor market information system as well as more spending on research and development. Deeper academe-industry linkages must also be pursued through the better involvement of the private sector in the curriculum design of educational institutions and incorporation of such linkages into the mission of industries. Greater incentives for enterprises to participate in academe-industry partnerships and the cultivation of a culture of trust among stakeholders are also essential factors.

In reaction to Mr. Moya’s presentation, Dr. Ra emphasized the significance of human capital development by depicting humans as creators of knowledge and producers of technological innovation. Furthermore, he enumerated a handful of trends and challenges that greatly influence the nature and supply of labor internally and externally. Notable among the observed trends is how technology effectively alters the nature of work as employment shares of both routine occupations and non-routine manual occupations declined in Southeast Asia and the Pacific over the period 2000-2013. In contrast, non-routine cognitive occupations in the region increased during the same period. In ASEAN, the Philippines ranked sixth in terms of skills development given its medium level of skills and medium growth capacity.

On challenges to skills development, Dr. Ra underlined the difficult task faced by countries in fostering skills which are linked to innovation and new production techniques and processes. He explained that firms should ensure that workers are capable enough to take full advantage of the new resources brought by foreign direct investments. More importantly, the prominence of weak institutional policy substantially influences the trajectory of skills development within a specific country. To address these challenges, Dr. Ra stressed the need to improve the delivery of quality, relevant, inclusive, and innovative education services, especially secondary education, technical and vocational educational training, and higher education. He likewise pinpointed the tremendous gains brought by integrating skills development as a crucial part of a country’s economic or industrial strategy. South Korea has exemplified this endeavor.

Dr. Ra added that it is also essential to nurture a flexible and open education system that is founded on multiple learning channels and “right mixes of general education and specific skills, soft and hard skills, and rocket scientists and basic skills.” Moreover, he said that upgrading the skills of the work force must take into consideration the level of technology adopted by firms. Lastly, Dr. Ra acknowledged the possibility for ASEAN Member States to effectively mitigate job-skills mismatch via the utilization of mutual recognition arrangements (MRAs).

Officials and staff of the Department as well as representatives from other government agencies attended the event.

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Download the presentations here:

Job Skills Mismatch in the Philippines
Opportunities and Challenges in Human Capital Development