Capitalize on our workforce; lessons from Ireland

Being a lower middle-income country is not a good place to be. There are never enough resources for our basic needs. But how can we graduate to high-income status where every citizen enjoys $13,000 a year or three times the current level? Becoming a manufacturing hub like China or Vietnam is out of the question, what with our expensive power cost, inefficient logistics and bureaucratic red tape standing in the way. Neither can we do it through agriculture, considering our inefficient cooperative structure, politicized agricultural policies and outdated farming methods.

Our competitive advantage lies in our people. Hence, we must make the necessary investments to sufficiently capacitate the next generation of Filipinos.

The Irish model demonstrates how a country can grow in wealth in as quickly as 20 years on the back of human resources. Ireland’s economic miracle is one the Philippines can (and should) emulate.

Just 40 years ago, Ireland was counted as one of the poorest countries in Europe. It suffered from a thin manufacturing base and an under-performing agricultural sector. Political and economic turmoil following the oil crisis of 1979 caused unemployment to spike to 20 percent while inflation hovered at 18 percent. Conditions were dire for the Irish people. More than 200,000 out of the country’s 3.3 million population had to emigrate overseas to find work. A brain drain ensued. Ireland’s situation draws many parallelisms with the current conditions in the Philippines.

Today, Ireland has emerged to become the 5th wealthiest global economy with per capita income of $102,000. The average Irishman is 25 times richer than the average Filipino. The Irish economy is among the fastest growing in the world, expanding by an eye watering 25.2 percent in 2015 and about 7.36 percent thereafter despite the pandemic. The Erin republic is today’s epicenter for technology.

How did they do it?

In 1980, Irish politicians realized that if its citizens continued to leave the country at the rate they were, the country would lose all its talents and fundamentals for development. So it decided to invest in their most important asset – its human capital. They did so by pouring the lion’s share of its resources on education.

The government was keen to understand which skills would be in high demand in the next 20 years. They identified electrical engineering (EE) and information technology (IT) in anticipation of the computerization boom. Remember, this was the decade when Apple, Microsoft and Oracle were born.

The Irish government invested in forming the best curriculum money can buy, even if financial resources were tight. They built Regional Technical Colleges in far-flung towns to make EE and IT courses available to all. Simultaneously, they re-purposed many of their universities to specialize in EE and IT and attracted thought leaders in the field to form its faculty.

Moreover, the Irish government mandated their youth to be proficient in at least two languages outside English. This was to prepare the workforce to become technology specialists beyond Irish borders.

In less than a decade, the proportion of science and technology graduates in Ireland outnumbered those in Germany, Finland and America. Ireland became the source country for high-level executives in Silicon Valley and its equivalents in Europe.

The Irish economy was doing so well that by 1996, 20 percent of workers between 30 to 35 years old were returning emigrants. This triggered a talent boom, which attracted even more technology companies.

It was in the mid-90s that the Irish government decided that their field of specialty should evolve yet again. Just as they focused on EE and IT to take advantage of the computerization boom, they diversified into program coding in anticipation of the internet wave. And to make Ireland an even more attractive destination for dot.com companies, Finance Secretary Charlie McCreevy announced that corporate income tax would be reduced from 32 percent to 12.5 percent whilst 25 percent of research and development spending could be converted to tax credits.

McCreevy’s move was revolutionary in timing and substance. It was at this period that internet companies were looking for domiciles where talent was aplenty and operating costs were low. Ireland quickly became a technology hub where the top ten internet companies like Facebook, Google and Amazon operated at scale. The digital sector contributed over 44-billion euros to the Irish economy in 2020.

Because of its advance curriculums in technology, Ireland also became a world destination for higher tech education. The education sector generated $11 billion last year, making it a substantial contributor to the economy. Education is not an expense center but a revenue center for the Erin republic.

Irish policy makers have already charted the next step in their economy’s evolution. They now aspire to be the fintech capital of the world. Although much skepticism surrounds cryptocurrency and blockchain, Irish universities and Regional Technical Colleges are already preparing their students for the fintech boom.

So you see, based solely on investment in education, Ireland transformed itself from a backwater country to a technology and education powerhouse with one of the richest societies in the world. It can be done!

Back to the Philippines, past administrations dropped the ball on education and we are paying the price for it today. The days where Filipinos are the world’s source of manual and domestic helpers must end. With the Vice President handling the education portfolio, the time is ripe to embark on our own educational revolution. We face three great disruptions in the future – the fintech revolution, the biotech revolution and the artificial intelligence revolution. The DepEd and CHED will do well to prepare for this. Filipino policy makers should follow Ireland’s lead and leverage on education to catapult us to high-income status.

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Email: [email protected]. Follow him on Twitter @aj_masigan