AN interesting Facebook post has made the rounds of the Internet recently. An anonymous entry, this post dares to ask an eyebrow-raising question: “We’re more worried about the fact that Ateneo is a top university, so why aren’t its graduates getting snapped up like lechon at a fiesta?”
Its smug and self-entitled tone notwithstanding, this post does raise a valid concern regarding employability in general. It might be good to take stock of employability issues and reflect on how to deal with them.
Basic economics defines production as the process of combining and processing inputs to create useful output. Together with land and capital, labor is a production input for which there is a market. Typically, in a market for goods and services, firms are sellers while households are buyers, but in a labor market, these roles get switched. Firms are the ones who demand labor from households that supply labor, and the price of labor is the wage rate.
Professor Mantz Yorke of Lancaster University defines employability as a set of achievements that make graduates more likely to gain employment and be successful in their chosen occupations, which would benefit themselves, the work force, the community and the economy. In large measure, employability pertains to the matching of workers’ skills, knowledge and personal attributes with industry needs.
In its 2014 report on the subject, the World Economic Forum (WEF) notes that skills are critical assets for individuals, businesses and societies. The importance of skills becomes even more pronounced in a fast-changing, globalized environment. Skills mismatch occurs when workers have either fewer or more skills than what jobs require. As the WEF explains, some mismatch is inevitable, as the labor market involves complex decisions by employers and workers and depends on many external factors. Nevertheless, high and persistent skills mismatch could be costly for employers, workers and society at large.
A casual review of data reveals that employability issues can be observed not only in the Philippines but also in other countries. In a previous Eagle Watch article, Dr. Alvin P. Ang focused on the Philippines and cited data from the 2013-2014 Integrated Survey on Labor and Employment. Out of 753,000 job vacancies recorded from January 2013 to June 2014, about 128,000 were difficult to fill, and the most frequently cited reasons for difficulty in filling such vacancies were lack of competency/skills (29.9 percent) lack of applicants (26 percent) and lack of experience (16.8 percent).
According to Dr. Ang, the demand side continues to face challenges in absorbing graduates. While there is capacity to absorb more, quality remains a critical issue that needs to be addressed at the supply side. Indeed, there are strong indications of a mismatch between what the education system produces and what industries need.
Providing an international perspective, the WEF notes that imbalances between skills demand and supply are largely due to low basic skills in many developing and low-income countries. While imbalances in the form of overqualification are prominent in advanced countries, underqualification is an issue in low-income countries. Low educational attainment in these economies results in poor literacy and numeracy, low productivity growth and low potential for economic diversification.
This lack of basic schooling is a major reason for skills shortages and skills gaps in the work force. In fact, based on recent trends, the goal of universal primary education could be missed by a wide margin. The gross enrollment rate in formal secondary schooling—the most effective path for young people to develop the foundational skills needed for work and life—was just 52 percent in low-income countries in 2010. Moreover, in the same year, 775 million adults could not read or write; half of them were in South and West Asia, and over a fifth in sub-Saharan Africa.
So, how can society deal with employability issues? Beyond economics, others have taken to psychology to convince the youth to purge themselves of tendencies for self-entitlement and to adopt a growth mind-set that would encourage them to seek mentorship that would open doors to acquiring new skills. Indeed, these are helpful pieces of advice, but employability issues are likely to persist due to systemic imbalances, most notably in academe-industry linkages. Ultimately, systemic problems require systemic solutions, particularly in the form of investments in education.
In its 2010 Philippine Skills Report, the World Bank has offered some general recommendations aimed at improving the responsiveness of the supply of skills to labor- market needs: 1) more international benchmarking of institutions and students; 2) strengthening generic/life skills in the curricula of all education and training levels; 3) better articulation of the different pillars of the skill-supply system; 4) more flexibility in curriculum and academic decisions, with continuous private-sector participation; 5) closer linkages between postsecondary/tertiary education and industries; and 6) better and more complete business and labor-force surveys.
Ser Percival K. Peña-Reyes is a faculty member of the Ateneo de Manila University Economics Department.
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