The Philippines’ young population offers the country an opportunity to accelerate its economic growth, but the potential gains of the ‘demographic dividend’ risk being wasted unless government can encourage the creation of more quality jobs for youth, the Asian Development Bank (ADB) said.
In a report, the Manila-based multilateral lender said despite the historically low 5.8 percent unemployment rate in January this year, the jobless rate of young people aged 15 to 24 years old remains much higher at 14.4 percent.
The rate of underemployment is also high at 19.7 percent, it added.
ADB cited a survey that found Filipino college graduates took about a year to find work, and high school graduates took up to three years, which often leads them to acquire low-quality jobs.
“Many drift into informal work, often part time and poorly paid, or remain unemployed. One in four young people is neither working nor pursuing education or training,” the report said.
The lender noted the Philippines has a relatively young population, as half of all Filipinos last year were younger than 25 years, and the median age was estimated at 23.
“This offers an opportunity to raise potential economic growth, but the demographic dividend can be realized only if young people are employed in productive jobs,” it said.
ADB pointed out a number of factors that keep youth unemployment high.
“On the demand side, the number of jobs generated each year falls short of what is needed to both absorb new entrants into the labor force and the 2.5 million unemployed, half of them young people,” it said.
For instance, the lender noted that almost 80 percent of new jobs in the past six years have been generated by the service sector, particularly business process outsourcing, tourism, and the retail trade.
Meanwhile, industry contributed about 20 percent of the new jobs, while employment in agriculture declined overall.
ADB said stronger employment generation would require more broad-based growth driven by productivity gains across all sectors.
“Mismatches between the education and skills young people acquire and the needs of the labor market are a constraint,” it said.
The lender recommended improving the relevance and quality of technical and vocational training programs and strengthening certification frameworks to help overcome the skill mismatches.
It further said that more programs are needed to provide employment services, such as career guidance and coaching for young people when they leave school.
For example, ADB cited the JobStart Philippines program of the government, which aims to provide a full range of employment services to help students who have at least
completed high school become job ready and find decent employment.
“These services include life skills and technical training, career guidance, and on-the-job training or internship. Other measures cover improving the quality of labor market databases to reduce job search costs and enable students and jobseekers to make more informed decisions,” it said.
The lender said the effective implementation of these initiatives would require strengthening the capacity of local government employment offices and boosting their budget resources.
Improving policies on the national apprenticeship program, temporary work agencies, and labor dispute resolution will also be needed to help young people gain longer-term and better paying jobs, rather than temporary ones, it concluded.