Overhauling incentives package crucial for industry participation in TVET—study

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Incentives to engage in enterprise-based training (EBT) should be made more attractive to increase companies’ participation in EBT, an effective form of technical and vocational education and training (TVET) in future-proofing Filipino workers’ skills, according to a new report.

The report published recently by the Philippine Institute for Development Studies says that by removing the many barriers that industries face in offering upskilling programs, more firms will be encouraged to participate in TVET efforts, as EBT will go a long way to future-proof the skills and increase the competitiveness of Filipino workers and close the gaping labor-job mismatch.
The paper warns that Filipino workers’ skills sets continue to decline as seen in the prevalence of over education, skills gap, and training-job mismatch. Compounding the skills erosion trend are the closures of technical and vocational institutions (TVIs) to stem the transmission of COVID-19.
“These developments underscore the growing critical role of TVET in upskilling and reskilling the workforce to make their skills future- and- pandemic-proof,” said the report entitled “An Assessment of the Enterprise-Based Training Modality in the Philippines: Barriers, Incentives, and Policy Gaps.”

The document said the Technical Education and Skills Development Authority (TESDA), the national skills authority in the country, seeks to address the skills gaps and develop a globally competitive workforce through its strategy of Area-Based and Demand-Driven TVET, which emphasizes the active involvement of industry in crafting policy directions to bridge the skills gaps and create jobs.
Industry-led or demand-driven TVET has been associated with better labor market and skills outcomes of trainees; greater productivity, profitability, and innovation among participating firms and enterprises; and relatively higher levels of overall labor productivity and competitiveness.

“The role of EBT has grown in importance in the context of rapid changes in production technologies (e.g., fourth industrial revolution). Keeping training programs up-to-date and responsive is also essential to facilitate information on emerging industry adjustments and technological adaptations with the rise in regional qualifications frameworks and international accords,” said the report.
Unfortunately, despite several potential benefits, EBT in the country continues to struggle with low levels of industry engagement, it continued.

This is due to the many barriers to the involvement of industry in providing training and developing the curriculum in the Philippines, said the publication. Topping these challenges are the lack of clear scope and measure of EBT and the failure of existing financial and non-financial incentive mechanisms to effectively attract firms and enterprises and private TVIs to participate and promote EBT.

“Despite the abundance of financial and non-financial incentives, incentive mechanisms have been found to be ineffective in attracting firms/enterprises and private TVIs to implement EBT. In fact, there is no record of a firm/enterprise which benefitted from the available tax incentives under DTS [Dual Training System] and Apprenticeship program,” said the report.
“Meanwhile, there are only anecdotal pieces of evidence of private TVIs who were able to avail of the duty-free imported essential equipment and apparatus for training, which have been far and in between over the past three decades of DTS implementation. These have been attributed to the lack of clear policy guidelines and administrative burden associated with program registration and tax availment.”
Aside from these two root causes, other identified deterrents to industry involvement in skills involvement include the limited operational and technical capacity of EBT implementers, flawed design and arduous development of training programs, prevailing issues within and across interagency and intersectoral bodies, and the restrictive policy and legal framework.
The report urged the government to boost efforts to define and market EBT as well as revamp existing financial and non-financial incentive mechanisms and introduce new ones.
“The latter can include the implementation of alternative financing mechanisms, such as sectoral training levy system, targeted public procurement, and payback clauses, among others, to support the implementation and promotion of EBT, subject to extensive consultations among all stakeholders,” it said.
“The availment and allocation processes of these EBT incentives need to be more efficient and transparent. Other barriers and disincentives can be addressed by unlocking the potential of industry experts in training provision, assessment and development, and improving mechanisms to increase industry involvement. Finally, an enabling policy environment with clear policy direction is paramount to the effective implementation and promotion of EBT,” the paper concluded.

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