Filipino Youth Labor Market Experience: School-To-Work Transition

7/28/2019 Filipino Youth Labor Market Experience: School-To-Work Transition

1/33

Filipino Youth Labor MarketExperience: School-Work-

Kelly Bird

Principal EconomistSEPF

The views expressed in this presentation are the views of the authors and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or itsBoard of Governors, or the governments they represent. ADB does not guarantee the accuracy of the data included in this paper and accepts no responsibility for anyconsequence of their use. The countries listed in this paper do not imply any view on ADB's part as to sovereignty or independent status or necessarily conform to ADB's

terminology


2/33

Contents Overview of Filipino Youth School-to

Work-Transition (STW)

Role of Labor Regulations and Policies

affecting STW Transitions

Going Forward


3/33

Findings Philippines does have a significant employment problem

Insufficient demand in a labor surplus economy, structural impediments (skills

mismatch) and restrictive labor regulations (minimum wage, employmentprotection)

At risk youth are those with high school qualifications or less and from lowereconomic-social groups - -

The gender bias in the LM: Mainly shows up in earnings differences

But education narrows the gap considerably

Females may also respond differently to certain LM signals compared with males Returns to education, lifecycle factors etc

Labor regulations such as employment protection legislation restrictsemployment opportunities


4/33

Agenda Going Forward Trade off between job security and employment

Policy should focus on improving lifetimeemployability of youth rather than job security Labor policy reform is necessary

mobility Create market-based incentives to change behavior

of youth and employers

Better targeted youth employment programs

ADBs Support DOLEs MyFirstJob initiative


5/33

School to Work Transition

School-to-work transition of a young personcomprises a series of events towards finding a

n in l in r h ivi ll f

unemployment, short term vocational skillstraining, and even periods of inactivity.

The better the links between school and the labormarket in preparing young persons job readiness,the faster will be the transition from school to work


6/33

Youth School-to Work-Transition

2008 ADB household survey in Manila and Cebu2008 ADB household survey in Manila and Cebu

500 households and over 1500 individuals (15 to500 households and over 1500 individuals (15 to65 years)65 years) Construct transition indicators of young personsConstruct transition indicators of young persons

x ri n fr m h l w rkx ri n fr m h l w rk

Median time to find a jobMedian time to find a job Time path of this transitionTime path of this transition How fast is this transitionHow fast is this transition Quality of this transitionQuality of this transition Where do young find jobsWhere do young find jobs Ease of mobility between formal and informalEase of mobility between formal and informal Factors that influence this transitionFactors that influence this transition


7/33

Main Findings The school to work transition is characterized by

a lot of uncertainty for young Filipinos The transition to work is particularly slow for

those with high school qualifications or less

Especially for younger females with high schooleducation or less

Females with college education tend to behave

differently from other females in that they areless likely to be unemployed or inactive


8/33

Median Time to Find a Job All youthAll youth 2 years to find any job and 3 years to find2 years to find any job and 3 years to find

a wage joba wage job High school or lessHigh school or less 3 years to find any job and 43 years to find any job and 4years to find a wage jobyears to find a wage job

At least some college educationAt least some college education 1 year to find any1 year to find any

job and 2 years to find a wage jobjob and 2 years to find a wage job MalesMales 3 years to find any job and a wage job3 years to find any job and a wage job

FemalesFemales 2 years to find any job and 3 years to find2 years to find any job and 3 years to finda wage joba wage job

OECD median is 1.1 years to find a wage job, withOECD median is 1.1 years to find a wage job, withAustralia, US, Finland with less than 1 year and Italy,Australia, US, Finland with less than 1 year and Italy,Greece and Spain recording 2.3 years or moreGreece and Spain recording 2.3 years or more


9/33

School-to-Work Transition Time Path

(Youth employment rates 1, 5, and 8 years sinceleaving school)

80

100120

0

20

40

1yr 5yrs 8yrs

Number of years after leaving initial education

All youth High school graduates College graduates


10/33

School-to Work Transition Speed

(Ratio of adult employment to youth employmentRatio of adult employment to youth employment

rates, 1, 5 and 8 years since leaving school)rates, 1, 5 and 8 years since leaving school)

3.5

4.0

0.0

0.5

1.0

1.5

2.0

2.5

.

1yr 5yr 8yr

All youth High school graduates College graduates


11/33

Factors that Influence STWTransition - Statistical analysis

Education is the most important influence onSTW but differences exist between femalesand males

Overall ouths with hi h school education or

lower have slower transitions to work comparedto college graduates and college dropouts But males with completed high school have similar

paced transitions compared with male college

graduates Whereas females with high school education have

much slower transitions compared to females withcollege education


12/33

Factors that Influence STW Transition -

Statistical results Education(estimated coefficients on school dummies with

college grads as control group)

Males

Some elem = +0.94*

Females

Some elem = +1.03*

Elem = +0.99* Some HS = +0.32*

HS = +0.11

Some college = +0.07

Elem = +0.78* Some HS = +0.50*

HS = +0.23*

Some college = 0.23


13/33

Factors that Influence STWTransition - Statistical results

Some evidence that STW transition for males is slowerwhere family incomes are higher

Some evidence that STW transition for females is fasterif the household head is self-employed

At risk youth are those with high school education or less and

from less well off families Strengthening the links between school and labor market are

critical to address the slow transition to work Labor market programs should target younger school leavers and

drop outs with focus on improving job readiness of this group Should be proportionate representation of young women in the

programs.


14/33


15/33

Inactivity Rates by Age and Gender

40.0

50.0

60.0

70.0

0.0

10.0

20.0

30.0

15

17

19

21

23

25

27

29

31

33

35

37

39

41

43

45

47

49

51

53

55

57

59

61

63

65

Male 2008 Female 2008


16/33

Unemployment, Education and Gender

Statistical AnalysisEstimated probabilities of unemployment by education andgender with some elementary schooling as control group

0.3

0.4

0.5

0.6

0.7

-0.3-0.2

-0.1

0

0.10.2

Elementary Some Hgh School High School Some College College

Males Females


17/33

Inactivity, Education and Gender

Statistical AnalysisEstimated probabilities of inactivity by gender andeducation with elementary schooling as the control group

0.5

1

1.5

-1

-0.5

0

Elementary Some Hgh School High School Some College College

Male Female


18/33

Inactivity, Gender and Family Size

Statistical analysisEstimated probabilities of inactivity by gender and numberof children with being single as the control group

0.2

0.4

0.6

-1

-0.8

-0.6

-0.4

-0.21 to 2 3 to 4 5 or more

Males Females


19/33

Jobs Found by Young Filipinos by

Gender Wage Employment Self Employment

60

70

80

60

70

80

0

10

20

30

40

1

5

1

8

2

1

2

4

2

7

3

0

3

3

3

6

3

9

4

2

4

5

4

8

5

1

5

4

5

7

6

0

6

3

Males Females

0

10

20

30

40

15 18 21 24 27 30 33 36 39 4 45 48 51 54 57 60 63

Males Females


20/33

Jobs Found by Young Filipinos by

Gender Unpaid Family Business Private households

40

50

60

30

35

40

0

10

20

30

15 18 21 24 27 30 33 36 39 4 45 48 51 54 57 60 63

Males Females

0

5

10

15

20

15 18 21 24 27 30 33 36 39 4 45 48 51 54 57 60 63

Males Females


21/33

Factors Influencing Jobs Found Education

71% of college grads find wage employment 52% of high school graduates find wage

employment

37% of high school drop outs find wage employment Social status of families

Some evidence that children from better off families

have wider social networks, access to jobinformation, and better job search techniques thatincreases the chances of finding wage employment


22/33

Job Mobility First job matters in influencing future

employment opportunities If your first job is in the formal sector, then you have aIf your first job is in the formal sector, then you have a

50% chance of finding your next job in the formal50% chance of finding your next job in the formalsectorsector

If you first job is in self employment, then you have aIf you first job is in self employment, then you have a12% chance of finding a job in the formal sector12% chance of finding a job in the formal sector

Temporary wage contracts are a bridge to formalTemporary wage contracts are a bridge to formalemployment for many young personsemployment for many young persons 30% of first time temporary contract workers find formal,

regular employment


23/33

Earning Differentials There is an earnings gap between females and

males The gap narrows considerably with post-high

school education with little earnings difference

graduates

Policy implications Education is most important for narrowing earnings

differentials between females and males Skills development and programs to improve job

readiness of less educated females are necessary


24/33

Earnings By Age and Education

Level

600

700

800

900

0

100

200

300

400

1

5

1

7

1

9

2

1

2

3

2

5

2

7

2

9

3

1

3

3

3

5

3

7

3

9

4

1

4

3

4

5

4

7

4

9

5

1

5

3

5

5

5

7

5

9

No HS HS Some College College


25/33

Earnings Differentials By

Education, Age and Gender

High School Dropouts

200

250

High School Graduates

250

300

0

50

100

150

15-20 21-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60 61-65

Male Female

0

50

100

150

15-20 21-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60 61-65

Male Female


26/33

Earnings Differentials By

Education, Age and Gender

Some College Education

300

350

400

Collage Graduates

500

600

700

0

50

100

150

200

15-20 21-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60 61-65

Male Female

0

100

200

300

400

15-20 21-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60 61-65

Male Female


27/33

Determinants of Earnings Statistical

Analysis

Males earn 17% more than females after

controlling for education, age, sector,occupation, worker status etc

Colle e raduates earn 44% and colle e

drop outs earn 15% more than high schoolgraduates.

Female college graduates earn 46% and

college drop outs earn 17% more thanfemale high school graduates


28/33

Labor Policies and Regulations that

Impede the STW Transition

Minimum wages

In the Philippines, MW are set relativelyhigh compared to market wages with the

Enforcement becomes costly

Some evidence that MW may hurt wage

employment opportunities of workers withhigh school education or less


29/33


Impede the STW Transition Employment protection legislation (EPL)

In the Philippines, EPL is relatively restrictivewith the primary goal of securing tenure; Limited probation period (6 months) and restrictions

contracts) Restrictions on use of temporary work contracts and

use of manpower placement agencies

Severance payments are relatively high compared toregional neighbors (3rd highest behind Indonesia andThailand)


30/33


Impede the STW Transition

EPL resulted in:

Increased job insecurity of young persons(about 27% of workers are employed for lessthan one ear

Disincentives by employers and workers toinvest in long term skills development


31/33

Reforms Going Forward Less Regulation is Better

Allow longer probation periods

More flexible long term contract arrangements

unemployment savings accounts

Active Labor Market Programs

Target at risk youth such as high schoolleavers and dropouts from less off familiesand young women


32/33

Going Forward MyFirstJob pilot project funded by ADB and

CIDA Pilot in 4 LGUs Target 1,600 at risk youth

plans, vouchers for technical training and work placeexperience with private sector employers

Selection of participants through a lottery to allow fora randomized impact evaluation (different pools for

males and female participants) Intention to scale up nationally


33/33

Thank You

Filipino Youth Labor Market Experience: School-To-Work Transition

Documents

Transcript of Filipino Youth Labor Market Experience: School-To-Work Transition