PHILIPPINES: Reforms in Higher Education Key to Growth and Competitiveness

March 1, 2012

MANILA, MARCH 1, 2012—The Philippines has achieved impressive gains in expanding access to higher education among Filipinos but there remains a need for suitable skills that will enable the nation’s workforce to become more competitive and help bolster economic growth, according to World Bank Lead Economist Emanuela di Gropello.

Speaking before participants of a higher education workshop organized by the Commission on Higher Education ( CHED) and the World Bank (WB) at the Edsa Shangri-la Hotel in Mandaluyong City, Ms. Gropello cited the increasing importance of building skills in science, technology, engineering and mathematics—the “STEM” disciplines—in raising workforce productivity and capacity for innovation essential to overall economic expansion.

“Employers in both manufacturing and services in the East Asia and the Pacific region including the Philippines are looking for problem-solving, communications, management and other skills that will support higher productivity. Yet employer perceptions and wage skill premiums point to gaps in these skills in newly-hired professionals” said Ms. di Gropello who presented the highlights of a recent WB study titled “Putting Higher Education to Work: Skills and Research for Growth in East Asia.”

The Report says that the Philippines—along with other low- and middle-income countries in the East Asia and the Pacific Region—has started climbing the technology ladder and assimilated important technologies by becoming more open, developing infrastructure and improving its manufacturing industry. Nevertheless, the country needs to further improve its capacity for innovation in order to sustain its climb in the income ladder.

The Report says that skills gaps are particularly large in the service industry, export sector, and technologically-intensive sector representing a very serious bottleneck for innovation and productivity in the Philippines. Employers and employees alike find these gaps to be particularly severe in creativity, leadership, and problem-solving skills, the report says.

“The evolving links between higher education systems and the business sector are becoming a major focus of policy as the role of technology in development expands. Not only do they impart education, but universities are viewed more and more as sources of industrially valuable technical skills, innovation, and entrepreneurship,” said Mr. Prateek Tandon, World Bank Economist, and co-author of the report.

According to Dr. Patricia B. Licuanan, CHED Chairperson, the government is currently pursuing important reforms to make the country’s higher education system more responsive to the country’s development requirements.

These reforms include rationalizing higher education through measures such as a moratorium on new colleges and universities, improving quality and standards by phasing out and closing substandard programs, complying with international standards, as well as developing research and development centers and world-class universities.

“CHED is also developing student financial assistance programs as well as poverty alleviation scholarships for poor but deserving students to promote greater social equity in the country,” said Dr. Licuanan.

“There is no question that Philippine universities and other tertiary institutions have been key channels for economic and social development,” said World Bank Country Director Motoo Konishi, who gave the opening remarks. “Around the region, there is an increasing recognition that higher education is critical for sustained growth. It can lift productivity and competitiveness by providing the high level skills demanded by the labor market and also by launching the kind of research needed for innovation and growth.”

“Government efforts to reform higher education therefore are important steps in the right direction. These efforts require continued cooperation among all of us – the government, higher education institutions, industry, researchers, civil society, and development partners,” said Mr. Konishi.

Why isn’t higher education in the region fulfilling its potential? The main reason identified by the report is that higher education institutions have been managed as “disconnected” individual institutions. Governments have a fundamental role in making higher education work as a system where individual institutions are well connected among themselves and to firms, research institutions and earlier levels of education.

For the Philippines to grow faster and achieve continued technological deepening, two main priorities are evident for higher education, according to the Report:

  • Address skills gap by maintaining coverage and improving the quality of higher education graduates, and;
  • Increase research relevant to economic needs in universities or departments.

Given its challenges and constraints, the report says the Philippine Government can use the following policy levers to address these priorities:

  • Improve the use and allocation of public resources (more focus on STEM and equity; move from historically negotiated budgets to performance-based allocation);
  • Complete the process of granting autonomy to universities (with particular focus on staffing and finance) and strengthen the role and functions of university boards;
  • Improve the quality of private higher education through better information; and
  • Encourage selected university-industry linkages to improve curriculum relevance, support entrepreneurship, and help with technological upgrading (build on the positive examples of some existing university partnerships with firms in skills delivery).
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