DRAFT *DO NOT CITE WITHOUT THE PERMISSION OF THE AUTHOR*

The Emigration State: Labor Export as Development Policy

Paper prepared for the 2007 Annual Meeting of the American Political Science Association, Chicago, Illinois, September 1, 2007

Neil G. Ruiz1 MIT & The Brookings Institution 1775 Massachusetts Avenue NW

Washington, DC 20036 nruiz@brookings.edu

Abstract Economists and political scientists, often dazzled by the cases of the four Asian Tigers, overemphasize the centrality of education to economic success. In the aftermath of World War II, the Philippines had an educational infrastructure comparable to those of most developed countries and the country appeared to be on the verge of a new era of prosperity. But despite achieving high educational attainment rates, the Philippines was unable to absorb its educated population. Instead, the Philippine government focused on building institutions to facilitate the export of this surplus labor. This paper argues that the Philippine state built the labor export industry as it sought to appease the interests of the business elites who owned many of the private higher educational institutions while creating jobs to ease the political pressures coming from the educated unemployed.

1 Neil Ruiz is a Research Fellow in Global Economy and Development at The Brookings Institution and a Ph.D. candidate at the MIT Department of Political Science specializing in the fields of political economy and comparative politics. This paper is based on a chapter in a larger dissertation project titled “Made for Export: Labor Migration, State Power, and Higher Education in a Developing Society.”

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“We have provided jobs for our people not only in our new and expanding industries but also in the world labour market. Filipino talents and skills are becoming ubiquitous in many parts of the world.”2 I. The Problem In the 1950s, many development scholars predicted that the Philippines would be the

model for economic development in Asia. When examining a number of indicators, the country

looked like it was on the path towards developmental success. On the human capital dimension,

the Philippines was ranked second only to the United States in terms of enrollment rates in

higher education.3 Table 1 illustrates how the Philippines had an even much higher enrollment

ratio in 1960 compared to some of the Asian “success” stories such as South Korea, Singapore,

and Malaysia.

[INSERT TABLE 1]

Plenty of foreign capital flooded the Philippines with promising aspirations that it would provide

fuel for the promising economy. From post-World War II to the late 1960s, the Philippines was

the second largest economy in Asia and it was growing the fastest. A high literacy rate was

achieved early on with the adoption of free universal primary education and many thought that

Asia’s first democratic country would be the model for political and economic development. But

despite all of these projections, the Philippine economy stalled in the middle of its climb, and

dwindled to a path of bumps as it continues to struggle towards stable economic growth. By the

1970s the Philippines had a difficult time producing enough jobs in the labor market to absorb its

educated population. Social unrest and protest heightened in the early 1970s and President

Ferdinand Marcos declared martial law in 1972 in order to obtain power to control the political

and economic climate. Using his newly acquired powers under martial law, Marcos attempted to

control areas that has been traditionally dominated by the private sector—higher education and

industrial policies. There was recognition by President Marcos that educational advances in the

Philippines have led to an overproduction of degree holders who were unable to be absorbed into

the domestic labor market. Marcos and his advisors also saw the great potential for managing

2 Speech by President Ferdinand Marcos cited in Catholic Institute for International Relations, The Labor Trade: Filipino Migrant Workers around the World (London: Catholic Institute for International Relations, 1987) 120. 3 UNESCO, The Literary Situation in Asia and the Pacific: Country Studies (Bangkok, Thailand: UNESCO, 1984).

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the exodus of the surplus labor to overseas labor markets. Failing to utilize its highly educated

labor force in the domestic economy, the state focused its attention on exporting its workers by

creating a set of elaborate institutions to facilitate overseas employment. The Philippine

government created a well developed infrastructure for credentialing and processing workers

before they are deployed overseas and provides a network of services for them through their

consulates in migrant-destination countries. The government also regulates recruitment agencies

and has a government recruitment agency that not only finds positions abroad for Filipinos, but

also markets Filipinos to governments and private companies around the world. As a result of

this effort, currently over 8 million Filipinos live abroad in over 190 countries and about 2,700

leave daily.

Today, the Philippines is considered the largest organized labor-exporting country in the

world. Although a substantial proportion of the Filipinos abroad are permanent emigrants (most

of whom settle in the Americas), the majority of overseas Filipinos are contract or temporary

workers, officially called overseas Filipino workers or OFWs. Figure 1 provides an overview of

the astonishing growth of land-based and sea-based OFWs from 1974, when the government

initiated its labor export policy, to 2006.4

[INSERT FIGURE 1]

Now after three decades of labor export, Philippine independent national polls show that 3 out of

every 10 Filipinos would leave the country if they were given a chance and about 47% of

children ages 10-12 years old said they want to work abroad when they grow up.5 The

Philippines has transformed from a promising development state into an emigration state—not

only in terms of its economic and political institutions, but also in terms of society’s favorable

reaction to overseas labor markets. The economic development policies of the Philippines has

continued to “push” labor abroad, especially among its most educated populations who find it

difficult to get absorbed into the domestic economy. Why did the Philippine government

develop institutions for exporting labor rather than focus its energy on building the domestic

economy?

4 This only includes Filipinos who depart on overseas contracts which accounts for about almost half of all Filipinos world-wide, but is currently the biggest flow of Filipinos since the 1974 labor export policy. 5 Pulse Asia, "Pulse Asia's July 2006 Ulat Ng Bayan Survey," (Manila, Philippines: Pulse Asia Inc., 2006).

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II. Theory of the Labor Exporting State The goal of this dissertation is to use the Philippines as a case to generate a theory for

why countries create institutions for exporting labor. This dissertation will investigate the

intimate connections between state control of education and migration on the one hand, and

economic development on the other that led to the initiation and eventual institutionalization of

labor export as part of Philippine development policy. Using historical methods, it first focuses

on explaining the various causal links between human resource development and economic

development policies that led to the initiation of the labor export policy in 1974. Secondly, it

explains the various policies and programs that the government developed to export labor and

then show how Philippine society—the Filipino population, government, and the private

sector—became increasingly dependent on labor export and led to the eventual

institutionalization of labor export. This section gives an overview of the theory developed in

the larger dissertation project.

Labor Export Initiation

This dissertation argues that the initiation of the Philippine labor export policy was part

of Marcos’ attempt to shift the power of human resource development and employment

generation from private non-state actors to the state. Because of the heavy influence of private

elites who wanted to industrialize and prevent major redistribution of their disproportionately

high ownership of land, the Philippines adopted conflicting economic policies that attempted to

build modern industries at the expense of the agricultural sector on the one hand, and at the same

time trying to export agriculture on the other. These policies had a dislocating affect on the

Filipino population who quickly had to move from an agrarian to modern industrial society.

Education became the key that opened the door for Filipinos who aspired to join the modern

labor force. They easily adopted the promise of education since the United States, the colonial

patron, implanted its own ideals and structures to the Philippines. The US believed that

education was important for Philippine society to become both politically and economically

independent.

These ideals transplanted itself to an overly abundant demand for education—universal

publicly-funded primary, private-public mix at the secondary-level, and a predominantly private

sector at the tertiary level. Demand for education continued to rise as a result of the dislocation

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effects from broad economic shifts from agriculture to industrial, rural to urban, and the failure

of these economic policies. Enrollment in higher education institutions (HEIs) became the ticket

for Filipinos to enter the urban, modern, and industrial work force. With rapid movements of

people from the rural to the urban center and with a major shift in the structure of the economy to

rapidly favor the industrial over the agricultural sector, formal education became a key strategy

for the population to distinguish themselves in an increasingly competitive domestic labor

market. On the supply side, higher education easily adopted to these market forces because the

government has placed large incentives (high autonomy in terms of curriculum development

requirements, low capital requirements, tax benefits for owning higher education schools and

allowing them to organize as for-profits). The combination of these two major forces—the

increase demand for education together with government-induced incentives for private sector

participation in higher education resulted in a Filipino population with a large number of tertiary-

level degree holders that were unable to be absorbed by the domestic labor market.

Labor export was an opportunity for the Philippine government to control the problems

associated with industrialization and human resource development by providing two immediate

goals: (1) employment generation for the excess supply of tertiary degree holders that are mostly

being produced by private HEIs, and (2) a method for the state to obtain the financial capital it

needed to sustain the economy from the dislocating forces of both the import substitution

industrialization (ISI) strategy and the export-led development strategy that President Ferdinand

Marcos and future Presidents adopted. Figure 2 concisely summarizes the first argument of the

dissertation.

[INSERT FIGURE 2]

Formation of a Labor Exporting State

The second purpose of the dissertation focuses on explaining how labor export became

institutionalized from a temporary to a permanent part of Philippine development policy. This

dissertation argues that the same dislocating political and economic forces that produced the

labor export program made the private market, government, and Filipino population increasingly

dependent on labor export. Specific demands by these three actors laid the conditions for the

labor export industry to grow. These social and economic responses to labor export include: (1)

the rising demands for higher education by the Filipino population to target overseas jobs and the

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supply-side response of private education in meeting these demands, (2) the reliance by the

Philippine government for foreign exchange from remittances to help deal with its balance of

trade problems and also to continue to find employment for the educated unemployed and

underemployed, and (3) the rise of the interests of Philippine businesses that were involved in

remittances, overseas recruitment agencies, and the supply of higher education. Figure 3

illustrates the second part of the dissertation on why labor export became institutionalized as part

of Philippine development policy.

[INSERT FIGURE 3] 1. Filipino Population Increasing Demands for Education and Overseas Employment

Government incentives for private sector participation in higher education made it easy for

private schools to meet the demands for education by the Filipino population who were

increasingly responding to new demands for obtaining education in specific programs to increase

their chances of getting a job in the overseas labor market. Tax and organizational incentives for

private sector participation, a lack of government regulation on quality, and the ease of private

institutions to make their own curriculum and organize as for-profits made it easy for them to

respond to market demands. Because of the lack of quality control, these educational institutions

drove down the capital costs of running these institutions by employing low-quality instructors,

enroll large number of students, and focused on degree programs that were cheaper to run (e.g.

business commerce/law/teacher training versus science and engineering that had higher

equipment costs). This eventually led to an overproduction of degree holders in specific fields

who were unable to be absorbed into the domestic labor market, thus increasing the demand for

overseas jobs.

2. Dependence by Philippine Government for Foreign Currency and Unemployment Relief

Specific conditions in the Philippine political economy led to the growth of labor export. The

need for remittances (from balance of payment problems and the increase in debt) and lack of

employment generation in the domestic labor market led to more dependence by the Philippine

government on exporting labor. The benefits of labor export—remittances and employment

generation—helped the government deal with its problems and led to the further

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institutionalization of its policy. After several years from the initiation of the labor export policy

in 1974, the government began to see the benefits of overseas labor and created more institutions

and incentives for private sector participation to these benefits. It also became a way of avoiding

population control—a controversial issue that the government has been unable to form because

of the strong opposition from the Philippine leaders of the Roman Catholic Church.

3. Philippine Businesses Increasing Participation in Labor Export Industry

Both the increase dependence by the Filipino population and the Philippine government on labor

export, led to a rise of private sector involvement in the labor export industry. Private banks and

money transfer agencies sparked throughout the Philippines to enter the remittances business.

With changes in government bans, other private recruitment agencies became an alternative to

the Overseas Employment Development Board (OEDB), to help fill the increasing demands for

overseas jobs and the inability for the state to monopolize the entire recruitment industry.

Private educational institutions also were responding to the demands by Filipinos to become

trained for overseas positions. Overall, the labor export policy of 1974 increased private sector

involvement in labor export since the government increasingly relied on them to satisfy the

demands by Filipinos for overseas employment that it could not fulfill on its own.

These three responses to labor export made the state increasingly dependent on labor

export and led to the institutionalization of labor export in its development strategy. The

government created policies that would promote, rather than dissuade the production of

graduates for the export market and at the same time to provide incentives for private

participation in the process of exporting people and related businesses. The Philippine state

continued to depend on the foreign currency that came from migrant remittances to help the

country relieve its balance of payments crisis and this allow the state to continue its debt-driven

export-oriented development strategy. Labor Export also became institutionalized because the

private sector saw the benefits from creating businesses in the industry—not only in terms of

remittances, but other services related to overseas employment such as training and education,

the recruitment process, and banking facilities.

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III. Theoretical Implications This dissertation draws from the theoretical literature on economic development and

international migration, as well as to the scholarship on state institutional creation and

educational systems in developing countries. It cuts across several academic disciplines—

comparative education studies, migration studies, and studies on the role of the state in economic

development in political science and economics. This section will discuss how this dissertation

contributes to the debates within them.

Bringing the State Back into Migrant Sending Societies

International migration scholars from various academic disciplines have recently began to

explore the migration phenomenon from the mignrat-sending country’s perspective. These have

ranged from studies on how to reduce the costs for migrants to remit money to their home

countries6, how technology transfer is taking place between immigrant networks in Silicon

Valley and business development in their home countries7, how to create a system for taxing the

brain drain8, about the changing nature of citizenship9, concerning the relationship between

migration and economic development10, and how migration effects the foreign policy and

security of both sending and receiving countries.11 Because of the diverse academic approaches

and variety of policy concerns to this phenomenon, no work exists that systematically looks at

the role sending-states play in capturing the benefits of migration. As the international migration

scholar Douglas Massey states, “few analysts have considered the role of the state in immigrant-

6 See Manuel Orozco, “Remittances to Latin America and the Caribbean: Comparative Statistics,” (Washington, DC: Inter-American Development Bank, May 2001) and Neil G. Ruiz, et al., “Enhancing Efficiency of Overseas Workers’ Remittances,” (Manila: Asian Development Bank, forthcoming). 7 See AnnaLee Saxenian, Local and Global Networks of Immigrant Professionals in Silicon Valley (San Francisco: Public Policy Institute of California, April 2002), and Devesh Kapur, “Diasporas and Technology Transfer,” in Journal of Human Development, vol. 2, no. 2 (2001), pp. 265-286. 8 See Jagdish N. Bhagwati and John Wilson (eds.), Income Taxation and International Mobility (Cambridge: MIT Press, 1989), and Mihir Desai, Devesh Kapur, and John McHale, “Sharing the Spoils: Taxing International Human Capital Flows,” Paper for NBER-NCAER Conference on India’s Economic Reforms, December 2000. 9 See Michael Jones-Correa, “Under Two Flags: Dual Nationality in Latin America and its Consequences for the United States,” International Migration Review, Winter 2001 and Y.N. Soysal, “Citizenship and Identity: Living in Diasporas in Post-War Europe?” Ethnic and Racial Studies, 23, 1 (January 2000), pp. 1-15. 10 See Demetrios G. Papademetriou and Philip L. Martin (eds.), The Unsettled Relationship: Labor Migration and Economic Development (New York: Greenwood Press, 1991) and Patrick Weil, “Towards a Coherent Policy of Co-Development,” International Migration, 40, 3 (2002), pp. 41-55. 11 See Myron Weiner (ed.), International Migration and Security (San Francisco: Westview Press, 1993), Yossi Shain, Marketing the American Creed Abroad: Diasporas in the U.S. and their Homelands (Cambridge: Cambridge University Press, 1999), and Tony Smith, Foreign Attachments: The Power of Ethnic Groups in the Making of American Foreign Policy (Cambridge: Harvard University Press, 2000).

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sending societies.”12 In order to understand the role of migrant-sending states, it is important to

understand how and why state institutions develop for emigration.

Traditional international migration scholars would argue that the mass exodus of labor to

overseas markets is simply an outcome of high unemployment and the need for foreign currency

by the sending state. Other explanations focus on other demographic factors such as lack of

population control. But there is no holistic explanation for why a state would deliberately

facilitate their “out-migration” through a government overseas employment program. When the

state is “brought back” into the center of analysis, these explanations are not sufficient since

other macro-economic and political factors play a role in the decision making process. As Saskia

Sassen has shown in her work, traditional push factors for explaining emigration are not

sufficient. She illustrates how other state economic development policies such as “foreign

investment and job creation should have acted as a deterrent rather than inducement to

emigration.”13 Sassen says that the expansion of both export manufacturing and agriculture that

are directly related to foreign direct investment from highly industrialized countries “mobilized

new segments of the population into regional and long-distance migrations.” Therefore, state

policies in other arenas (in this case on economic development policies) are directly affecting the

sending state’s emigration policies.

Education Creates a Dual Labor Market in a Developing Society

Governments incentives for private higher educational institutions (HEIs) in the

Philippines has inadvertently produce a surplus that the domestic market could not absorb. The

Philippine HEI system failed because of small internal markets and mismatches between the

degrees graduates were obtaining and the jobs available in the domestic labor market. This

structural problem is based on a dual labor market that is created through the higher educational

system. Standard human capital theory has assumed that there is an elastic relationship between

education and wages in the domestic labor market. Figure 4 illustrates a hypothetical scatter plot

of this situation that has been advanced by economists Gary Becker and Theodore Schultz.

[INSERT FIGURE 4]

12 Douglas Massey, “International Migration at the Dawn of the Twenty-First Century: The Role of the State,” Population and Development Review, vol. 25, no. 2 (June, 1999), pp. 303-322. 13 Saskia Sassen, The Mobility of Labor and Capital: A Study in International Investment and Labor Flow (Cambridge: Cambridge University Press, 1988) 94.

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Within the realm of a single labor market, labor is rewarded with higher wages because of the

increased accumulation of knowledge, skills, and training from formal education. Contrary to

the standard human capital theory, the dual labor market theory advanced by Michael Piore,

argues that labor market is split into two segments—the primary and secondary labor markets.

Applied mostly to industrialized countries, the primary labor market consists of jobs that do

reward people who have accumulated human capital with higher wages. On the other hand, the

secondary labor market consists of positions that have the same wage rate regardless of the

person’s skills and training. This results in an inelastic relationship between education and

wages in the secondary labor market. Figure 5 depicts a hypothetical scatter plot of the primary

and secondary labor markets under this dual system.

[INSERT FIGURE 5]

Piore advanced this theory to show that there is something inherent about industrialized countries

that create a high demand for migrant labor to fill jobs in the secondary labor market since

natives are usually unwilling to fill them because of their lack of upward mobility.14

The dual labor market theory also applies to developing countries like the Philippines that

have a highly developed educational system. Graduates entering the domestic labor market that

have privately invested in higher education gravitate towards more prestigious positions and

higher-paying jobs. This educated population is unwilling to take low-paying jobs that require

manual labor. But in a primarily agrarian economy that achieved high literacy and education

through various educational policies, a particular type of labor force is produced in the

Philippines that makes it a major supplier for migrant labor. In a country with a higher

educational system producing more degree holders than jobs the country can absorb, a specific

problem occurs that is reflected in both the educated unemployment and underemployment rates.

Although education is viewed by many as a way of uplifting or upgrading an economy, the

Philippine case shows that there could be detrimental effects where the educated labor force are

only willing to work in specific jobs—occupations in the primary labor market that they view as

worthy of their educational background. Even though the quality of this education can be

questionable, the credential itself gives that person a certain social status and higher set of

expectations that limits the jobs that he or she seeks and is willing to take. 14 Michael J. Piore, Birds of Passage: Migrant Labor and Industrial Societies (Cambridge: Cambridge University Press, 1979).

10

The temporary nature of the migration flow that the Philippine state created through its

labor export policy opened the labor market for its educated class to seek higher returns for their

education. The contract labor system—jobs that are for two year contracts with a set departure

and return to the home country creates market that draws a sharp line between two identities that

have been identified by Piore in his explanation for the character of temporary migrants to

industrial countries—the social identity from the place of origin and an asocial more

instrumental role of work in the destination country.15 Basically, those participating in the

overseas labor market are separated from their local social setting and work exclusively for

money. The money earned abroad and the occupation as an “overseas” worker provides the

participant with a higher prestige that can only be matched with a high paying position and high

status white collar position in the domestic labor market.

By creating an overseas labor market through a government labor export program, the

Philippines provided not only a safety-valve, but an avenue for those investing in education to be

employed with both high social and financial returns to their education. Even though many

Filipinos obtain overseas occupations that are in the secondary labor market in the destination

countries, the high pay relative to what can be achieved in the sending country’s labor market

elevates the overseas Filipino workers’ status in the home country and makes it a worthwhile

endeavor. Figure 6 illustrates a hypothetical scatter plot of the relationship between education

and wages in the dual labor market in a labor exporting economy such as in the Philippines.

[INSERT FIGURE 6]

With an increase in education feeding the Philippine economy, the labor force increasingly

becomes more unwilling to take jobs in the domestic secondary labor market. They either chose

to become unemployed for a longer period, accept a job in the secondary labor market and

become underemployed (seeking more hours or a second job), or seek jobs in the overseas labor

market (exit the domestic labor market for higher financial returns in the overseas secondary and

primary labor markets where there will be higher returns to their education). The dual labor

market in the Philippines ends up perpetuating the problem and increasingly dependency on an

overseas labor market. This project advances the dual labor market theory to developing

15Ibid. 52-59.

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societies by illustrating how education produces pressures for the state to seeking ways for the

educated population to obtain higher returns from the overseas labor market.

IV. From Human Capital Accumulation to Educated Unemployment

In the 1960s, some scholars believed that the strategy for human capital development

adopted by the Philippines would be highly beneficial to the economy. One scholar said that

“farsighted educational policies adopted by American officialdom in the Islands prepared the

way for rapid industrial growth at a later time by helping to create a labor force equipped by

training and outlook to man modern industrial establishments.”16 He believed, as many others

did, that the emphasis on developing the educational infrastructure of the Philippines would

result in a flourishing economy. With these promising characteristics, many have praised the

Philippines as “the Asian nation most likely to succeed.”17 But instead the Philippine economy

has been unable to grow enough to absorb those obtaining higher education. Both the tertiary

educational system and the structure of the economy are two inter-related domestic factors

producing the educated unemployment problem.

The Dominance of Private Tertiary Educational Institutions

Higher education in the Philippines has historically been dominated by private

institutions. It began with the development of private sectarian schools created during the

Spanish colonial era. In 1611, Dominican Friars in Manila established Asia’s first university, the

University of Santo Tomas that was modeled after the University of Salamanca in Spain and the

University of Mexico. Other private sectarian universities were also developed in the city of

Manila and Cebu City that were all founded by Catholic religious congregations.18 The Catholic

Church also played a major role in primary and secondary school during Spanish colonialism.

Public education in the Philippines did not begin until 1901 during American colonialism with

the establishment of the Department of Public Instruction. Between 1901 and 1902, more than a

thousand American teachers, known as the “Thomasites,” arrived from the United States on the

16 Carl H. Landé, "The Philippines," in Education and Political Development, ed. James Smoot Coleman (Princeton: Princeton University Press, 1965), 325. 17 Philip L. Martin, "Migration and Trade: The Case of the Philippines," International Migration Review 27, no. 3 (1993): 644. 18 Mona Dumlao-Valisno, "A Study of Private Higher Education in the Philippines" (paper presented at the UNESCO-PROAP and SEAMEO-RIHED Second Regional Seminar on Private Higher Education: Its Role in a Globalized Knowledge Society, Bangkok, Thailand, 19-22 June 2001).

12

S.S. Thomas. They taught in English and instilled in Filipinos a deep faith in the general value

of education at the primary level.

Education began reaching the masses when the Philippine Assembly declared in the 1935

constitution that “the government shall establish and maintain a complete and adequate system of

public education and shall provide at least free public primary instruction and citizenship training

to adult citizens.”19 When the Philippines became an independent nation in 1946, this mandate

evolved to universal primary schooling for all Filipinos. This expansion of primary education

resulted in a large demand for higher education. The University of the Philippines, the first

public institution of higher education that was opened in 1908, was not capable of

accommodating the large amount of applicants. The state commitment to free elementary

education for the masses left the state with little resources to invest in higher education. A new

generation of non-sectarian private tertiary institutions that were owned and founded by

prominent Filipino families and businessmen emerged to fill this gap.20 These private venture

colleges multiplied after the passage of the 1917 Private School Law (Act No. 2706). This

American-sponsored law gave private colleges and universities full autonomy both in funding

and control.21 This allowed many of these private venture colleges to operate as for-profit

institutions that eventually became highly profitable joint stock companies.22

This dominance of private tertiary institutions was a blessing in disguise. Even though it

did fill the gap in demand for higher education, the autonomy left to these institutions for

funding and control over curriculum allowed private schools to be more concerned with

monetary gain and less concern about quality. For example, in 1985, of the private tertiary

schools, one-third were classified as non-profit, while two-thirds functioned as for-profits.23

Figure 7 illustrates the large number of private tertiary institutions in education compared to

public ones.

[INSERT FIGURE 7]

19 National Economic and Development Authority, Philippine Yearbook 1977 (Manila, Philippines: National Census and Statistics Office, Republic of the Philippines, 1977). 20 Landé, "The Philippines," 315-16. 21 Charisse Gulosino, "Evaluating Private Higher Education in the Philippines: The Case for Choice, Equity and Efficiency," in Occassional Paper No. 68, National Center for the Study of Privatization in Education, Teachers College, Columbia University (New York City: 2003), 5-6. 22 Landé, "The Philippines." 23 Rebecca Marlow-Ferguson, ed., World Education Encyclopedia: A Survey of Educational Systems Worldwide, 2nd ed. (Detroit: Gale Group/Thomson Learning, 2002) 1060.

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From 1945 to 1974, there is a complete dominance of private tertiary education because

of the encouragement for private contributions to education by the government and the

incentives provided by the 1917 Private School Law. According to an Asian Development Bank

study, by the 1990s about 81 per cent of the institutions are privately owned and managed

without subsidies by the Government.24 Figure 8 shows this growth from 1946 to 1952 and then

after 1987. This was also accompanied with other changes among private schools. First, private

institutions that initially specialized in one academic field expanded into other disciplines. For

example, Arellano University that was founded in 1938 was originally a school of law, but later

reopened after the war to include programs in education, commerce, foreign service, and arts and

sciences. Second, affluent families and prominent educators responded to the need for a higher

education institution in the rural areas and invested in education in different provincial capitals.

Thirdly, a popular scheme known as “study-now-pay-later plan” was adopted by private schools

that allowed students enrolled with minimal down payments. This financial scheme made

private tertiary enrollment more affordable.25

Despite the accessibility of private higher education to Filipinos, there was a lack of

quality control. When examining the licensure exam passage rates by public versus private

higher educational institutions (HEIs), public schools clearly do better in preparing students for

the domestic labor force. Table 2 clearly shows that public school graduates perform

significantly better than private school graduates in licensure exams.

[INSERT TABLE 2]

This becomes a problem if majority of students are enrolled in private HEIs since their chances

of obtaining their professional licenses are much lower than if they attended a public school. It

also indicates that there are plenty of private HEI educated graduates who are unable to practice

what they trained for in college.

The Philippine government attempted to tackle this problem of the poor performance of

private HEIs. During the Marital Law period, 1972-1983, there was an increase in public tertiary

schools that was a result of the reorganization of the education system (Presidential Decree 6-A)

that created 13 political regions and the Philippine Development Plan that “mandated the

24 Richard K. Johanson, "Higher Education in the Philippines," in Philippine Education for the 21st Century: The 1998 Philippines Education Sector Study (Manila, Philippines: Asian Development Bank, 1999). 25 Gulosino, "Evaluating Private Higher Education in the Philippines: The Case for Choice, Equity and Efficiency."

14

‘training’ of manpower of middle level skills required for national development. In the context

of this plan, new technical skills were needed for the export industrial zones to be set up in the

country, and for the eventual policy of exporting technician labor for overseas contract work.”26

As part of this plan, the national government decided to expand to other state universities beyond

the University of the Philippines. This growth in public tertiary institutions is reflected in Figure

1 between 1974 and 1979. This educational reform cost over US$700.53 million that was 35

percent funded by loans from the World Bank and Asian Development Bank (ADB) and 65

percent from the Philippine government. During that period, this was considered the largest loan

for an education project in the world.27 But despite these reforms, tertiary education continues to

be dominated by the private sector.

When looking at the share of private tertiary enrollment, the majority of students are

studying in private institutions. Table 3 illustrates this dominance of private schools with 96

percent of all students enrolled in private schools in 1955 and in 1999 private schools still have a

large share of enrollment at 75 percent. Despite the growth of public tertiary schools from

Marcos’ educational reform program, private institutions are still educating the majority of

students.

[INSERT TABLE 3]

When looking at overall enrollment in education, the Philippines reached levels

comparable to the most advanced economies. As early as the 1970s, the country achieved 100

percent gross enrollment rate at the primary level, about 50 percent at the secondary and 25

percent at the tertiary level.28 In higher education, an ADB study claims that the Philippines is

second in the world only to the United States in the number of higher education institutions.

Examining the growth of tertiary enrollment alone does not give a full picture of the type

of training students are receiving. Table 4 provides the distribution of higher education

graduates by program in the Philippines to give a better picture of the type of industries they are

preparing to enter.

[INSERT TABLE 4] 26 Ma. Luisa C. Doronila, "A Research and Development Approach to the Delivery of Comprehensive Functional Education and Literacy in the Philippines" (paper presented at the Asia Literacy Regional Forum, Manila, Philippines, 5-9 May 1997), 9. 27Ibid. 28Edita A. Tan, "Labor Market Adjustments to Large Scale Emigration: The Philippine Case," Asian and Pacific Migration Journal 10, no. 3-4 (2001): 394.

15

From 1951 to the 1970s, there were a high proportion of students enrolled in teacher training that

reflected responses to the demand for teachers during the period of rapid expansion of primary

education. But this led to problems in the 1960s when there was an excess supply of teachers

who were unable to find teaching positions. This later led to a dramatic drop to 9 percent in

enrollment in teacher training by the mid-1970s. Teacher training eventually went up in the late

1980s when salaries for public school teachers increased.29 The largest growth of higher

education graduates has been in commerce and business administration which was only 9.3

percent in 1951, but grew to 55.4 percent in 1974. This also dropped during the 1980s at the

height of the anti-Marcos movement and the slow growth in the economy during that period. For

an agrarian society, the share of higher education in agriculture is low. Data is not available for

earlier years, but from the data in the 1980s and 1990s, only 3 percent of tertiary graduates

studied in programs related to agriculture. Engineering and technology grew from 6.2 percent in

1974 to 17.9 percent by 1986, reflecting the demand created from Marco’s national development

plan for training manpower for export-oriented industrial zones. The other observable growth

has been in the medical sciences which does not disaggregate between those who graduated as

medical doctors and nursing. This growth from 5.8 percent in 1974 to 15 percent in 1990

reflects responses to overseas employment in nursing.

The majority of tertiary graduates in the Philippines are trained to be in professional or

administrative jobs, even though it is only a small percentage of the total employment positions

in the country. This means that students are graduating in fields that are preparing them for jobs

that are not necessarily available in the domestic labor market. It implies that tertiary graduates

either take positions that do not match their training, become unemployed, or seek positions

outside of the domestic labor market.

Limited Employment Opportunities

The Philippine economy has gone through several stages of development that produced a

limited amount of employment opportunities for those pursuing higher education. Under

Spanish colonialism, the Philippine economy was an agrarian society that was characterized by a

two-class structure composed of a handful of big landlords and a vast majority of small peasants,

with an extreme inequality in the distribution of wealth between the two classes. It was not until

after 1898 during the American colonial and commonwealth periods that Philippine 29 Ibid.

16

industrialization began to take place. Due to free trade with the United States, the Philippines

initially developed an economy dependent on the United States for about 70 percent of its

foreign trade. In preparation for national independence with the establishment of the

Commonwealth in 1935, efforts at industrialization among Filipinos were promoted in

anticipation of the withdrawal of the preferential trade arrangements. After independence in

1946, the country embarked in full-scale import-substitution industrialization that brought

significant changes in the employment opportunities. To begin with, there was a growth in

entrepreneurship in the manufacturing sector. While there were entrepreneurs belonging to that

sector who had Chinese commercial capital origins and the professional backgrounds, it was

dominated by the landed class who produced cash crops for export and at the same time was

attempting to diversity into manufacturing.30 Furthermore, the percentage of agricultural

workers in the economy declined from 72 percent in 1952 to 57 percent in 1967, reflecting the

growth of the middle and industrial working classes.31

During the authoritarian regime of President Ferdinand Marcos, a new policy of export-

oriented industrialization coupled with the provision of incentives for foreign capital was

adopted. With the declaration of Martial Law in 1972, Marcos’ technocrats instituted an

ambitious development strategy emphasizing agricultural export, some industrialization in

manufacturing, mining, construction and public utilities, and foreign borrowing that favored the

politically well-connected.32 Marcos attempted to undermine the economic basis of the

traditional political and economy elite by putting their enterprises under the control of his

cronies.33 In addition, many government corporations were set up to undertake various

development projects sponsored by the government and put under the management of the same

group of who Marcos relied for patronage. During this process, many members of the traditional

elite maintained their positions by yielding to Marcos’ side with some new entrepreneurs

emerging. The economy during the Marcos regime can be characterized as one with a grand

vision that failed to take off into rapid economic growth due to corruption and inefficiency

30 Emmanuel S. de Dios and Paul D. Hutchcroft, "Political Economy," in The Philippine Economy: Development, Policies, and Challenges, ed. Arsenio Balisacan and Hal Hill (Manila: Ateneo de Manila University Press, 2003)Paul D. Hutchcroft, Booty Capitalism : The Politics of Banking in the Philippines (Ithaca, NY: Cornell University Press, 1998). 31 Masataka Kimura, "The Emergence of the Middle Classes and Political Change in the Philippines," The Developing Economies XLI-2 (2003). 32 Rob Vos and Josef T. Yap, The Philippine Economy: East Asia's Stray Cat? (New York: St. Martin's Press, 1996) 13-19. 33 Hutchcroft, Booty Capitalism : The Politics of Banking in the Philippines.

17

brought about by crony capitalism. Marcos’ government relied heavily on foreign borrowing

from official and private lenders to finance both agricultural and industrial growth. This reliance

led to the rise of external debt from $360 million in 1962 to $28.3 billion by 1986, making the

Philippines one of the most heavily indebted countries in the developing world.34

As an outcome of these political and economic outcomes, the Philippine labor market

experienced limited growth in employment opportunities for the highly educated. From the

1950s to present day, the structure of the Philippine economy has consistently maintained only

one eighth of its labor force in the manufacturing sector.35 Manufacturing never grew to absorb

the decreasing share of employment in the agricultural industry that decreased from 60.6 percent

in 1961 to 37.4 percent by 2000. Instead of being absorbed by the manufacturing industry,

workers who would normally be in employed in the agricultural sector tend to be absorbed by

services.36 This is attributable to the growth of traditional activities such as wholesale and retail

trade, community, social and personal services.

When looking at the share of those employed in professional occupations there was a

small increase from 2.8 percent to 6.2 percent in 1990. Also, the share of those entering

occupations in administrative, executive and managerial occupations was the highest at 4.6

percent in 1956 and decreased to 0.9 percent of total employed person by 1985. The statistics for

these two occupational groups is important since these are where many graduates of tertiary

educational institutions aspire to enter.

This problem of limited employment opportunities for the highly educated is better

illustrated when looking at the ratio of college graduates to the growth of employment. Table 5

shows that the ratio of graduates to the change in graduate employment rose from 1.1 in 1961-

1965 to 1.87 in 1981-1986 and 3.43 in 1991-1995. This ratio was calculated by dividing the

number of college graduates over the period with the employment of college graduates. This

figure is even worst when taking into account employment in professional and administrative

positions. The ratio in 1961-1965 was 1.35 but grew to 2.53 during the 1976-1981 and was as

high as 9.83 in 1981-1986. This means that the chances of a college graduate of obtaining a

34 James K. Boyce, The Philippines: The Political Economy of Growth and Impoverishment in the Marcos Era (Honolulu: University of Hawaii Press, 1993) 10. 35 Martin, "Migration and Trade: The Case of the Philippines," 644. 36 Alejandro N. Herrin and Ernesto M. Pernia, "Population, Human Resources, and Employment," in The Philippine Economy: Development, Policies, and Challenges, ed. Arsenio Balisacan and Hall Hill (Manila, Philippines: Ateneo de Manila University Press, 2003).

18

profession or administrative position became harder in the 1970s and extremely difficult during

the 1980s during the height of the anti-Marcos movement. Even after the mid-1980s, it is still

difficult for a college graduate to obtain professional and administrative employment.

[INSERT TABLE 5]

As one can see the political and economic structure of the Philippines created a small labor

market for college graduates that created a growing educated unemployment problem.

The Educated Unemployment Problem

As shown in the previous section, higher education institutions end up producing an

abundance of graduates who are unable to find employment to match their educational skills. A

recent Asian Development Bank study claims that “the Philippines may be suffering from having

too many colleges and universities.”37 The strategy for tertiary educational development through

the 1917 Private School Law led to the growth of non-sectarian private institutions that are

“diploma mills” who earn a profit by producing jobless or underemployed graduates.38 The lack

of control by the state over the supply of tertiary education and its limited ability to create

employment opportunities in the domestic labor market are two major factors contributing to the

educated unemployment problem.

In the Philippines, unemployment is common among young and educated workers. In the

1970s and early 1980s, most of the unemployed were in the 15-24 year age group and had been

educated to the secondary level.39 However, a large proportion of the unemployed also possess a

tertiary education. The percentage of total unemployed with at least some college education

increased from 27.4% in 1980 to 33% in 2000. Even more telling was the proportion with a

college degree, which rose from 8.5% in 1980 to 14.8% in 2000.40 Table 6 takes into account the

unemployment rate by educational attainment.

[INSERT TABLE 6]

37 Dona Pazzibugan, "British Council: Rp Has Too Many Universities," Inquirer News Service, 27 January 2005. 38 Marlow-Ferguson, ed., World Education Encyclopedia: A Survey of Educational Systems Worldwide 1065. 39 E. Reyes, E. Milan, and T. Sanchez, "Employment, Productivity and Wages in the Philippine Labor Market: An Analysis of Trends and Policies," in Philippine Institute for Development Studies Working Paper Series (Makati: 1989). 40 C. Manning, "Labour Markets and the Financial Crisis in East Asia: Context, Oucomes and Strategies for the Future" (paper presented at the Coping with the Social Impact of the Crisis, Singapore, 6-8 June 2000).

19

It shows that in 1961 and during the years 1980-1983, the highest unemployment rate has been

among the most educated at 18.7 and 9.3 respectively. On the other hand, the lowest

unemployment rate was 4.0 for those who did not complete a year of school in 1961 and it was

2.7 was among those who only attended elementary school in 1980-1983. Due to a lack of data

on the break down of the labor force by educational attainment for other years to compute

unemployment rates, table 7 shows the total number and percent distribution in select years from

1980 to 2003.

[INSERT TABLE 7] Although not entirely accurate since we do not understand the actual unemployment rates as

shown in figure 8, it does show that the number of unemployed persons who have attended

college has increased substantially from 231,000 in 1980 to 1,279,000 in 2000. The number of

unemployed with a high school background has also increased dramatically from 297,000 in

1980 to 1,675,000 in 2003. But comparably, unemployed persons with elementary backgrounds

only increased from 302,000 in 1980 to 850,000 in 2003 implying that those with less education

experienced less growth in unemployment between 1980 and 2003.

The unemployment problem among the educated was a problem that the state was forced

to deal with. Problems associated with the “educated unemployed” included pressures on

government officials to find jobs for their supporters. Here’s what a journalist in the 1959 had to

say about this problem:

no fewer than half a dozen parents—friends of ours—have come to us during the last couple of weeks and requested us to help their sons and daughters--who have just graduated from college—to find employment.

But if there's any group of people who are being swamped these days with requests for letters of recommendation to government offices, business establishments, industrial plants and various other firms, it is members of Congress. At a recent informal party in the house of a mutual friend, a congressman told us of the "unusually big number" of young college and high school graduates who have been making a bee-line to his office..."Approximately how many job-seekers among high school and college graduates request letters of recommendation daily?", we inquired. "An average of 50," was his quick reply....A Visayan congressman...had this to say: "Believe it or not, one fourth of my entire time, during weekdays, is spend in contacting government and private offices to see if there are jobs available."...Confessed a bureau director to this writer: "To tell you frankly, I sometimes do not feel like reporting to work during office hours because of so many telephone calls from members of Congress, asking me to 'accommodate' their recommendees because they [the lawmakers]

20

are 'personally interested' in the applicants...." (from Philippine Free Press, March 28, 1959, pp. 4, 65).41

If this was already a problem in the Philippines in 1959, the government faced even more

political pressure from the educated unemployed during the 1960s and 1970s. As part of global

problems surrounding the 1960s, student unrest on university campuses was widespread

throughout the Philippines.42 During this time there was a strong communist party that was

opposed to the Marcos government and the Philippine government’s close alliance with the

United States. This movement from the left, as well as opposition from the landed-elite who

were opposed to Marcos’ populist approach to politics, were some of the main reasons why

Marcos declared Martial Law in 1972.43 This was his method of taking control of the state so

that he can find solutions to problems facing the economy and the growing educated

unemployment problem. The main solution to this problem was to create a comprehensive

overseas employment program.

V. Creating the Emigration State

With limited employment opportunities, and inability of the state to control the private

tertiary educational system, the Philippines produced a large educated unemployed population

that could only find jobs in overseas labor markets. The educated unemployment problem

became a political problem for the Philippine government as social unrest increased in the early

1970s. Several interviews with key government officials in the early 1970s suggested that

President Marcos understood how the problem with the educated was problematic for political

stability.44 Even though Marcos had the powers of martial law, he chose not to close down

poorer performing private tertiary educational institutions since many of them were owned by

political and business elites who would object to the state’s intrusion on private education.45

Instead, Marcos focused on employment generation policies: (1) expansion of government

bureaucracy, (2) investing in public works, and (3) a national economic development plan with

41 Justus M. Van Der Kroef, "The Educated Unemployed in Southeast Asia: A Common Problem in India, Indonesia, and the Philippines," Journal of Higher Education 31, no. 4 (1960): 184. 42 Justus M. Van Der Kroef, "Asian Education and Unemployment: The Continuing Crisis," Comparative Education Review 7, no. 2 (1963): 178. 43 Carl H. Landé, "The Political Crisis," in Crisis in the Philippines: The Marcos Era and Beyond, ed. John Bresnan (Princeton: Princeton University Press, 1986), 126-39. 44 Interview with Blas Ople, former Secretary of Labor and Employment and Secretary of Foreign Affairs, and the main architect of the 1974 labor export policy, June 25, 2003. 45 Interview with Minda Sutaria, former undersecretary of Education, July 12, 2006.

21

loans and foreign aid from major international financial institutions. Since these plans were still

not enough to absorb the large educated population, pull factors from abroad, especially in the

oil-producing economies of the Middle East, became an opportunity for the state to explore

another strategy—labor export.

In 1974, President Ferdinand Marcos issued a presidential decree creating three

government institutions within the Ministry of Labor to facilitate the export of workers: the

Overseas Employment Development Board (OEDB), the Bureau of Employment Services

(BES), and the National Seamen Board (NSB). This gave the Philippine government control of

all aspects of overseas employment and formalized a labor export policy.

Absorbing the Educated

The overseas employment program was able to absorb those who were educated. When

looking at the educational backgrounds of the OFWs, the majority of them have college

backgrounds. Figure 8 shows that over 55 percent of OFWs in 1975 have college degrees

compared to 23 percent who attended only high school and 7 per cent with only an elementary

school background.

[INSERT FIGURE 8]

Even though the majority of OFWs have college-educated backgrounds, the type of occupations

that they take abroad is dominated by jobs as production process workers, transport equipment

operations, laborers, and service workers. Figure 9 shows the various occupations OFWs take

outside the country that is dominated by these types of jobs labeled type 7 and type 5. Appendix

I provides a more detailed description of the types of jobs falling within each category. This

might be illustrating that higher education gives a person a higher probability of obtaining

overseas employment, but not necessarily a position matching their educational backgrounds.

It may also reflect educated Filipinos willingness to go abroad to take jobs that pay higher

salaries, rather than match their skills backgrounds.

[INSERT FIGURE 9]

Professional occupations (type 1) is the third most popular type of positions for OFWs. Initially

in the 1970s up to the mid-1980s, professional occupations had a high proportion of OFWs. But

22

after the mid-1980s, it stayed steady between 100,000 and 150,000 OFWs, while type 7 and 5

occupations became up to three times more than professionals. Although government policy

initially focused on exporting professionals, OFW occupations abroad have diversified over time

to include factory workers, construction workers, and service workers, such as care givers and

domestic helpers.

In addition to being a solution to the educated unemployment problem, the benefits of

overseas employment came from the foreign currency that was coming back to the country as

remittances. Table 8 shows the amount of remittances coming from OFWs from 1975-2005.

[INSERT TABLE 8]

It shows that remittances from OFWs became a large proportion of export earnings from 4.5

percent in 1975 to 28 percent by 1995. Given the large debt incurred by the Philippine

government, remittances became an important source of foreign currency for the central

government.

The Philippines continues to be the largest organized labor exporting country in the

world. The number of OFWs has increased almost 25-fold over the past 20 years (as shown in

Figure 1), with nearly 1.2 million registered deployments to over 190 countries in 2006 alone.46

Most OFWs go to the Middle East and East Asia, as highlighted in Figure 10, but the numbers

have recently been increasing in Europe as well. Seafarers make up a significant proportion of

OFWs with almost a quarter of a million deployed annually, and they compose 30 percent of all

seafarers in the world.

[INSERT FIGURE 10]

VI. Overall Structure of the Dissertation

This paper outlined the theoretical argument of the dissertation, provided some of its

theoretical implications, and provided some evidence of how the Philippines became an

emigration state. In order to generate a theory about the labor-exporting state, this dissertation is

organized to show the intricate connections between economic development policies, the

educational system, the educated unemployment problem, and the labor export program.

Chapter 2 provides an overview of the political and economic context of the Philippine labor 46 Philippine Overseas Employment Administration, Global Presences, 52.

23

market and it discusses the magnitude of labor migration both before and after the labor export

policy was implemented in 1974. The chapter argues that several economic policies adopted by

the Philippine government had a dislocating affect on the Filipino population and created a

movement from the rural to urban and agricultural to industrial sectors. This led to a large

competition within the labor market for the urban industrial jobs. The past economic

development policies adopted by the Philippine government reflected the conflicting interests of

industrial and agricultural elites. The inability of the state to control private interests over the

economy had a large dislocating affect on the Filipino population at-large that placed new

pressures for generating employment.

Chapter 3 analyzes the connection between the Philippine educational system and the

unemployment problem. The chapter argues that the private higher educational institutions

(HEIs) have not only helped the Philippines become the second highest educational, but

combined with several other factors, they have contributed to the problem of creating a large

educated but unemployable population. Together with factors such as rapid urbanization, high

population growth, and low economic growth, the high educational attainment rates made it

difficult for the domestic labor market to meet the expectations of graduates of HEIs. Even

though the laissez-faire system of higher educational should self-correct itself if there are over-

subscribed programs with low job prospects, it had dire consequences for the Philippine labor

market and contributed to the high unemployment rates. When looking at the types of programs

tertiary students enrolled in compared to the jobs available in the labor market, many degree

programs were over-subscribed and produced too many Filipino degree holders who were

unemployable or underemployed. This chapter argues that the high autonomy and lack of

regulation by the Philippine state on the curriculums and programs that are adopted by private

HEIs as well as the financial organization of HEIs (non-profit versus for-profits status), led an

oversupply of graduates in many fields. It also shows how the lack of quality control of private

HEIs has led to an overabundance of school owners who are profiting from the high expectations

of their job prospects of their students.

Chapter 4 argues that the Philippine state adopted two policies that appease the interests

of the private suppliers of higher education and the demands from Filipino society—the 1974

labor export policy and the expansion of public universities with a policy of focusing on state-

run initiatives such as the National Youth Manpower Council and vocational education. These

24

new policies gave the state more control over areas that it had the least capacity to do with

autonomous private HEIs and low job market prospects because of the state’s inability to control

private sector labor market creation—creation of jobs for the educated population and a new

supply of graduates who can be absorbed into the domestic labor market.

Chapter 5 argues that the Philippine state became increasingly dependent on the labor

export strategy with the rise of the private market in the labor export process. Private

recruitment agencies, banks involved with remittances, the need for foreign exchange by the

government for accumulating debt, have all contributed the institutionalization of the 1974 labor

export policy into the Philippines’ national development plan. The Philippine government

became increasingly involved in the labor export process and sparked private sector involvement

into this large market.

The final chapter revisits the theory developed in chapter one and summarizes the main

arguments of the dissertation of how and why the Philippines became a labor exporting state. It

then draws on the general theoretical implications of the dissertation and posits a theory of the

labor exporting state. This theory can potentially be tested in future studies of other labor

exporting and non-labor exporting states to see if state control of human resource development—

human capital accumulation and employment generation—in countries affect whether or not a

state would deliberately export labor.

Bibliography

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Inc., 2006. Authority, National Economic and Development. Philippine Yearbook 1977. Manila,

Philippines: National Census and Statistics Office, Republic of the Philippines, 1977. Boyce, James K. The Philippines: The Political Economy of Growth and Impoverishment in the

Marcos Era. Honolulu: University of Hawaii Press, 1993. de Dios, Emmanuel S., and Paul D. Hutchcroft. "Political Economy." In The Philippine

Economy: Development, Policies, and Challenges, edited by Arsenio Balisacan and Hal Hill, 45-73. Manila: Ateneo de Manila University Press, 2003.

Doronila, Ma. Luisa C. "A Research and Development Approach to the Delivery of Comprehensive Functional Education and Literacy in the Philippines." Paper presented at the Asia Literacy Regional Forum, Manila, Philippines, 5-9 May 1997.

Dumlao-Valisno, Mona. "A Study of Private Higher Education in the Philippines." Paper presented at the UNESCO-PROAP and SEAMEO-RIHED Second Regional Seminar on Private Higher Education: Its Role in a Globalized Knowledge Society, Bangkok, Thailand, 19-22 June 2001.

Gulosino, Charisse. "Evaluating Private Higher Education in the Philippines: The Case for Choice, Equity and Efficiency." In Occassional Paper No. 68, National Center for the Study of Privatization in Education, Teachers College, Columbia University. New York City, 2003.

Herrin, Alejandro N., and Ernesto M. Pernia. "Population, Human Resources, and Employment." In The Philippine Economy: Development, Policies, and Challenges, edited by Arsenio Balisacan and Hall Hill, 283-310. Manila, Philippines: Ateneo de Manila University Press, 2003.

Hutchcroft, Paul D. Booty Capitalism : The Politics of Banking in the Philippines. Ithaca, NY: Cornell University Press, 1998.

Johanson, Richard K. "Higher Education in the Philippines." In Philippine Education for the 21st Century: The 1998 Philippines Education Sector Study. Manila, Philippines: Asian Development Bank, 1999.

Kimura, Masataka. "The Emergence of the Middle Classes and Political Change in the Philippines." The Developing Economies XLI-2 (2003): 264-84.

Landé, Carl H. "The Philippines." In Education and Political Development, edited by James Smoot Coleman, 313-49. Princeton: Princeton University Press, 1965.

———. "The Political Crisis." In Crisis in the Philippines: The Marcos Era and Beyond, edited by John Bresnan, 114-44. Princeton: Princeton University Press, 1986.

Manning, C. "Labour Markets and the Financial Crisis in East Asia: Context, Oucomes and Strategies for the Future." Paper presented at the Coping with the Social Impact of the Crisis, Singapore, 6-8 June 2000.

Marlow-Ferguson, Rebecca, ed. World Education Encyclopedia: A Survey of Educational Systems Worldwide. 2nd ed. Detroit: Gale Group/Thomson Learning, 2002.

Martin, Philip L. "Migration and Trade: The Case of the Philippines." International Migration Review 27, no. 3 (1993): 639-45.

26

Pazzibugan, Dona. "British Council: Rp Has Too Many Universities." Inquirer News Service, 27 January 2005.

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Relations, Catholic Institute for International. The Labor Trade: Filipino Migrant Workers around the World. London: Catholic Institute for International Relations, 1987.

———. The Labour Trade: Filipino Migrant Workers around the World. London: CIIR, 1987. Reyes, E., E. Milan, and T. Sanchez. "Employment, Productivity and Wages in the Philippine

Labor Market: An Analysis of Trends and Policies." In Philippine Institute for Development Studies Working Paper Series. Makati, 1989.

Sassen, Saskia. The Mobility of Labor and Capital: A Study in International Investment and Labor Flow. Cambridge: Cambridge University Press, 1988.

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Van Der Kroef, Justus M. "Asian Education and Unemployment: The Continuing Crisis." Comparative Education Review 7, no. 2 (1963): 173-80.

———. "The Educated Unemployed in Southeast Asia: A Common Problem in India, Indonesia, and the Philippines." Journal of Higher Education 31, no. 4 (1960): 177-84.

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27

TABLES

Table 1 School Enrollment Ratios in Selected Countries, 1960.

Source: McGinn, et al., 150-151; Seth, 79; National Center for Education Statistics (2005). Note: Enrollment ratios are based on the percentage of school-age population enrolled in the first grade of each level. This ratio was calculated by dividing the total enrolled in the first-level enrollment as a percentage of the total population in the customary age range for first-level schooling. This percentage can exceed 100 when children outside of the customary age are enrolled. The validity of comparisons is limited by differences in school system.

Country Primary Schools

Secondary Schools

Higher Education

Philippines 91 29 10.8 United States 99.5 90.3 38.4 Ecuador 81 11 2.6 Egypt 58 16 4.7 India 61 17 1.2 Iran 39 11 0.9 Iraq 51 19 2.0 Korea 96 29 4.7 Malaysia 93 16 1.2 Morocco 39 5 0.5 Pakistan 34 9 1.4 Paraguay 62 10 2.6 Peru 81 18 4.1 Singapore 111 33 6.3 Thailand 84 13 1.9 Turkey 67 14 2.9 Venezuela 100 23 4.0

28

Table 2. Licensure Examination Passage Rates by Discipline, 1994-1998.

Public HEIs Private HEIs 0 Discipline Number of Number of % of Number of Number of % of Difference

Examinees Passers Passing Examinees Passers PassingPublic-Private

Chemical Engineering 683 427 62.52 4,762 1,453 30.51 32.01 Chemistry 771 401 52.01 1,005 346 34.43 17.58 Dentistry 190 190 100.00 22,992 5,711 24.84 75.16 Environmental Planning 30 24 80.00 12 4 33.33 46.67 Forestry 3,429 1,481 43.19 439 123 28.02 15.17 Geodetic Engineering 80 68 85.00 2,016 779 38.64 46.36 Geology 83 67 80.72 49 17 34.69 46.03 Landscape Architecture 43 32 74.42 9 3 33.33 41.09 Library Science 451 298 66.08 1,072 519 48.41 17.66 Medicine 1,678 1,529 91.12 12,147 8,866 72.99 18.13 Metallurgical Engineering 93 73 78.49 78 24 30.77 47.73 Mining Engineering 8 6 75.00 188 70 37.23 37.77 Occupational Therapy 81 72 88.89 965 394 40.83 48.06 Pharmacy 307 306 99.67 10,166 6,594 64.86 34.81 Veterinary Medicine 1,042 598 57.39 790 181 22.91 34.48 Source: Professional Regulation Commission, 1994-1998

Table 3. Share of Private Higher Education (% Total) 1955 1965 1975 1985 1995 1999

Institutions 93 94 83 72 79 81 Students Enrolled 96 89 86 85 75 75 Source: Commission on Higher Education and Richard K. Johanson, “Higher Education in the Philippines”

(Manila: Asian Development Bank, 1999)

Table 4. Percent Distributions of Higher Education Graduates by field.

Source: Philippine Statistical Yearbooks, various years and Tan, Labor Market Adjustments

29

Table 5. Ratio of College Graduates to Growth of Employment, 1961-65 to 1991-95. 1961-65 1976-81 1981-86 1986-91 1991-95

Graduates

∆ Employment in professional administrative and executive 1.35 2.53 9.83 3.86 3.85

Graduates

∆ Employment of college graduates 1.1 1.21 1.87 2.6 3.43

Source: Department of Labor and Employment, Yearbook of Labor Statistics, 1998, 1995, 1994, 1984, 1980, as cited in Tan, “Labor Market Adjustments”

Table 6. Unemployment Rate by Educational Attainment, 1980-1983 average

Educational Attainment 1961 1980-1983

average

Total

8.5 5.4

No grade completed

4.0 2.8

Elementary

7.5 2.7

High School

15.35 7.5

College

18.7 9.3 Source: Yearbook of Labour Statistics, 1980, 1981, in Tan and Canlas, “To the Gulf and Back”

Table 7. Unemployed Persons by Educational Attainment (in thousands and percent distribution)

Number Percent Number Percent Number Percent Number PercentTotal 865 100.0 2054 100 2425 100 3900 100No Grade Completed 33 3.8 67 3.3 54 2.2 97 2.5Elementary 302 34.9 550 26.8 602 24.8 850 21.8High School 297 34.4 779 37.9 1008 41.6 1675 42.9College 231 26.6 654 31.8 749 30.9 1279 32.8No Reported 7 0.8 4 0.2 11 0.5

1980 1990 1995 2003

30

Table 8. Remittances of Overseas Filipino Workers, 1975-2005.

Source: Central Bank of the Philippines as reported by the Philippine Overseas Employment Administration

Ratio of Remittances to:

YearRemittances (in US dollars)

Export Earnings

Export Earnings (%) GNP %

1975 103.0 2294 4.5 0.71980 421.0 5788 7.2 1.21985 687.2 4629 14.8 2.31990 1181.1 8186 14.4 2.71995 4877.5 17447 28 6.42000 6795.0 8.72005 10689.0 46985 23 13.0

FIGURES

Figure 1. Number of Overseas Filipino Workers, 1975 to 2006 (in thousands)

Number of Overseas Filipino Workers, 1975 to 2006 (in thousands)

0

200

400

600

800

1000

1200

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

Year

Num

ber o

f OFW

s (in

thou

sand

s)

TotalLand-basedSeafarers

Source: Philippine Statistical Yearbooks, various years; Philippine Overseas Employment Administration.

Figure 2 Theory of Philippine Labor Export Initiation

A B C D Private Higher Education Overproduction of Unemployment/ Political Effect Government Response: (autonomy given to them and Degree Holders Underemployment 1. Public HEI Expansion Lack of control) 2. Employment Generation 3. Labor Export

Figure 3 Theory of Philippine Dependence on Labor Export

A B C 1974 Labor Export Policy Demands for HEI in Overseas Skills Supply of HEI Programs for Overseas Higher Demand For Jobs Overseas

A B C 1974 Labor Export Policy 1. Reliance on Remittances (Gov’t for 1. Increased Remittances Businesses Higher Demand Exchange Needs due to Balance of For Labor Export Trade Problems and Family Income Source) 2. Employment Generation 2. Generated employment

A B 1974 Labor Export Policy Dependence by Filipino Population (#1) + Philippine Government (#2) Rise of Private Sector in Labor Export Industry

i. Remittances ii. Recruitment iii. Education

Figure 4 Hypothetical Scatter Plot of

Standard Human Capital Theory

Figure 5

Hypothetical Scatter Plot of a Dual Labor Market in an Industrial Country

Wage

Education

Wage

Primary Labor Market

Secondary Labor Market

Education

34

Figure 6 Hypothetical Scatter Plot of a

Dual Labor Market in a Labor Exporting Economy

Figure 7. Number of Post-Secondary Schools in the Philippines, 1945-1993

Number of Post-Secodary Schools in Philippines

0

200

400

600

800

1000

1200

1400

1600

1800

1945

1947

1949

1951

1953

1955

1957

1959

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

School Year

Num

ber o

f Sch

ools

(by

type

) PublicPrivate

Source: Philippine Statistical Yearbooks 1946-1995

Education

Wage

Domestic Secondary Labor Market

Domestic Primary Labor Market

Overseas Secondary Labor Market

Overseas Primary Labor Market

35

Figure 8. OFWs by Educational Attainment, 1975-2000 (as percentage of total OFWs)

Source: Philippine Statistical Yearbooks, various years.

Figure 9. OFWs by Occupational Type Abroad, 1975-2000.

OFWs by Occupational Type Abroad, 1975-2000

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

Year

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

Year

Num

ber o

f OFW

s (in

thou

sand

s)

Type 1: Professional,technical and relatedworkers

Type 2: Managerial,executive andadministrative workers

Type 3: Clerical Workers

Type 4: Sales workers

Type 5: Service Workers

Type 6: Agricultural,animal husbandry, forestryworkers and fishermen

Type 7: Productionprocess workers, transportequipment operations andlaborers

Source: Survey on Overseas Filipinos, 1993-2001 and Philippine Statistical Yearbooks, various years

0

10

20

30

40

50

60

1975 1988 2000

ElementaryHigh SchoolCollegeNot stated

36

Figure 10. Deployed Overseas Filipino Workers by Destination, Annual Average, 2002 to 2006.

37

38

APPENDIX I Detailed Description of Occupation Types Abroad

Type Broad Category Specific Occupations Type 1 Professional, technical and related

workers (includes entertainers) -Medical, dental veterinary and related workers -Aircrafts and Ships’ officers -Architects, Engineers and related technicians -Composers and performing arts -Scupltors, painters, photographers and related creative artists -Teachers (including supervisors and principals) -Mathematicians, statisticians, system analysts and related workers -Other

Type 2 Managerial, executive and administrative workers

-same as broad category

Type 3 Clerical workers -Clerical and related workers NEC -Bookkeepers, cashiers and related workers -Computing machine operators -Telephone and Telegraph operators -Secretaries, stenographers, typist and card/tape-punching machine operators -Other

Type 4 Sales workers -Salesmen, shop assistants and related workers -Sales supervisors and buyers -Others

Type 5 Service workers -Helpers and related housekeeping service workers NECK -Cooks, waiters, bartenders and related workers -Building caretakers, cleaners and related workers -Service workers NEC -Hairdressers, barbers, beauticians and related workers -Protective Service Workers -Others

Type 6 Agricultural, animal husbandry, forestry workers and fisherman

-Agricultural, and animal husbandry workers, fishermen hunters and related workers -Others

Type 7 Production process workers, transport equipment operations and laborers

-Transport equipment -Bricklayers, carpenters and other construction workers -Electrical fitters and related electrical and electronics workers -Plumbers, welders, sheet-metal and structural metal preparers and erectors -Machinery fitters, machine assemblers and precision-instrument makers -Laborers NEC -Tailors, dressmakers, sewers, upholsterers and related workers -Material handling and related equipment operators -Painters -Production and related workers NEC -Production supervisors and general foreman -Blacksmiths, toolmakers and machine-tool operators -Food and beverages processors -Furniture makers and related workers -Stationary Engine and Related Equipment Operators