Looking at the skills gap

Each of the 10 ASEAN members has challenges to overcome to bolster and sustain economic growth at a time when the global economy is weak and competition is intensifying.

But one challenge they all have in common is the skills gap in the workforce, which takes different forms in each economy. Rigid policies and incentives are required to help close the skills gap, otherwise it will be difficult for ASEAN members to successfully move to the next stage of development. While each of the ASEAN-5 (that includes the Philippines) is focusing on developing different industries, they all face the same need in providing a wide array of skills to support their economic transformation.

These include a broader set of soft skills such as English language command, IT and management skills, as well as general and job-specific professional skills. Some of those skills are especially relevant for countries that intend to develop high value-added manufacturing industries.

Despite the proliferation of training institutions, many companies still find it difficult to recruit trained workers with the relevant skills. In the Philippines, we at ECCP have supported the apprenticeship bills in both Houses of Congress and provided solutions at every step of the evolution of the legislation. It is sad to note that it is unlikely that the Apprenticeship Bill, that has passed the House, will make it through the Senate in the 16th Congress. Senators should see the value the combination of K to 12 and apprenticeship in guiding the youth exactly down the skills avenue that will provide the relevant skills for manufacturing and other industries in this country. We have addressed all the questions regarding potential abuse of the Apprenticeship Law; and still the bill is not moving in the Senate.

Whether ASEAN countries realize their growth potential to become a significant player in the global economy depends crucially on their ability to provide a sufficiently large number of workers with the relevant skills to meet the challenging needs of the growth industries.

ASEAN needs to adequately supply trained workers to meet the demand of industries that are deemed to be economic growth driven. Without the right skills set, it would be difficult for the workers in ASEAN countries, especially the younger ones, to play a meaningful role in the restructuring and upgrading of these economies.

Let’s take a brief look at some ASEAN countries:

In Indonesia, skills gaps pose a serious challenge to growth and development across the industries because of constraints on the supply side. Both the quantity and quality of trained workers is inadequate at all levels including the tertiary level.

Thailand faces two skills gaps challenges. There is an uneven quality and a shortage of skilled workers, and also uneven quantity which is especially severe in science, technology and related fields. Thai workers lack English language proficiency, IT and other soft skills.

For Malaysia, which is moving from labor-intensive to technology-oriented manufacturing, substantial skill gaps exist in a number of key industries including IT and business process outsourcing, tourism, healthcare, aviation maintenance, repair and overhaul industries.

Labor market inefficiency in the Philippines causes an oversupply of certain professionals such as nurses, school teachers and seafarers. Exacerbating the problem is the large outflow of skilled workers.

In Singapore, efforts are being made to reduce the reliance on foreign workers and to retain local workers to meet the demand of five sectors that the government has identified as future growth clusters: advanced manufacturing, health sciences, urban solutions, logistics and aerospace, and global financial services.

Cooperation and coordination among ASEAN countries on intra-regional labor flows could prove to be essential in helping to provide a more effective mechanism to address skills gaps that each ASEAN member faces.