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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
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Contents Overview of Filipino Youth School-to
Work-Transition (STW)
Role of Labor Regulations and Policies
affecting STW Transitions
Going Forward
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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Labor Policies and Regulations that
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)
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Labor Policies and Regulations that
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
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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
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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
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Thank You
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