12 th National PESO Congress October Baguio Country Club, Baguio City Helping Filipino Youth to a Good Start : Design of a youth employment facilitation program Kelly Bird Principal Economist Asian Development Bank

2  Situation of youth in the Philippine labor market – some stylized facts  Evidence on the youth transition from school-to- work  Lessons learned from international experience with youth employment programs  MyFirstJob Project Design Features Overview of Presentation

Philippine Labor Market – Some Stylized Facts

4 (1) The Philippine labor force is growing at a rapid pace highlighting the importance of job creation  Working age population is expanding by 2.4% per annum  Labor force is expanding at 2.5% per annum  45% of the population under the age of 25 y/o  Of which half are between the ages of 15 and 24 y/o

(2) Labor force is increasingly educated highlighting the need to create skilled jobs 42% of youth in 2008 have at least some college education compared to 33% in % of youth in 2008 have at least some college education compared to 33% in 1991 Philippines has a relatively high rate of educated work force compared to other middle- income countries in the regionPhilippines has a relatively high rate of educated work force compared to other middle- income countries in the region College graduates get more than twice the wage of high school graduates College graduates get more than twice the wage of high school graduates

(3) Unemployment in the Philippines is relatively high

Unemployment is primarily a youth problem - Female unemployment rates higher (unemployment rate by age )

Teenage and youth unemployment rates have increased over time Statistical significant rising trend in teenage (18 and 19 y/o) and youth unemployment Unemployment increasingly long term or structural –Persons are unemployed for an average of 11 months and half of the unemployed have been out of work for 12 months or more

(4) Teenage inactivity rates have increased over time (share of population inactive) Statistical significant rising trend in teenage inactivity rates in recent years Over 10% of teenagers are inactive (out of school, out of work and not looking for work)

(5) Shift in the demand for labor in the Philippines (percentage change in share of total employment, 2001 to 2008)

Youth School to Work Transition The better the links between school and the labor market, the faster the transition from school to work for young people

 500 households and over 1500 individuals (15 to 65 years)  Construct transition indicators of young persons experience from school to work  Median time to find a job  Time path of this transition  How fast is this transition  Factors that influence this transition  Where do young find jobs  Ease of mobility between formal and informal employment ADB household survey in Manila and Cebu

Youth School to Work Transition – 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 And for young females from lower socio-economic groups

Youth School to Work Transition – Median time to find a job  All youth – 2 years to find any job and 3 years to find a wage job  High school or less – 3 years to find any job and 4 years to find a wage job  At least some college education – 1 year to find any job and 2 years to find a wage job  OECD median is 1.1 years to find a wage job, with Australia, US, Finland with less than 1 year and Italy, Greece and Spain recording 2.3 years or more 14

Youth School to Work Transition – Time Path Youth Employment Rates 1, 5 and 8 years since leaving school 15

Factors that influence the school to work transition Education gap – statistical analysis shows that high school graduates and HS undergraduates have a slower transition from school to work compared to college graduates Age gap – teenagers have a more difficult time integrating in the labor market compared to youth Gender gap – females have a moderately more difficult time finding a first job Economic gap - family background also influences the transition with young persons from lower socio-economic groups experiencing longer transition from school to work

Where do young persons find jobs?  Most (70%) college graduates find wage employment  About half of young persons with high school education find wage employment find wage employment  Teenagers (15 to 19 y/o) enter unpaid family work or employment in private households employment in private households  Young women with high school education or less are more likely to enter these precarious forms of more likely to enter these precarious forms of employment employment 17

Youth School to Work Transition – Youth mobility  The young person’s first job matters in influencing future employability  If your first job is in the formal sector, then you have a 50% chance of finding your next job in the formal sector  If you first job is in self employment, then you have a 70% chance of staying in self employment  Temporary wage contracts are a steeping stone in to formal employment for many young persons 18

Helping Young Filipinos Get a Good Start in the Labor Market High school graduates or drop outs Lower socio-economic groups Young females

Examples of Youth Employment Facilitation Programs Job search assistance programs –Public employment offices –Outsourced to private employment offices Training programs for young persons having difficulty integrating into the labor market –Provisioned through training providers Wage subsidies for employing young persons at entry level positions Public job creation schemes

Lessons Learned from International Experience Monitoring and evaluation of programs is necessary to allow for adjustments to program –Programs should be assessed on their net benefits of the program Benefits = higher employment rates and higher incomes of program participants compared non-participants Costs = admin costs of programs and risks of employment displacement

Lessons Learned from International Experience Programs with a mix of strategies tend to perform better than programs with a main strategy –Programs that include job search assistance, counseling, vocational training and wage subsidies tend to perform better in terms of employment rates and higher incomes over the medium term –Example: Joven program in Latin America – JobStart in UK

Lessons Learned from International Experience Programs with well defined target group tend to do better than general targeting –High school graduates or drop outs, socio- economic disadvantaged groups etc

Lessons Learned from International Experience Programs with activation strategies tend to do better –Encourage young persons to job search early in the unemployment spell –Active monitoring of job search activities and linked to benefits

Lessons Learned from International Experience Readiness of public employment offices –Good governance structure –Well trained staff –Well resourced

Proposed MyFirstJob Pilot Project  Background:  Collaboration between ADB and DOLE  MyFirstJob draws on successful youth employment programs in Latin America (i.e., Joven program in Chile), Canada, UK, and several European countries.  MyFirstJob is at the design stage and we aim to pilot in 2013  Executing agency is Department of labor and Employment  Implemented through selected PESOs  Funded through a grant from Canada International Development Agency 26

MyFirstJob Main features Counseling services provided to participants in the programCounseling services provided to participants in the program Grants for vocational education (4 weeks and 6 months)Grants for vocational education (4 weeks and 6 months) Grants/wage subsidies for job internships with public and private sector employers (up to 12 months)Grants/wage subsidies for job internships with public and private sector employers (up to 12 months) M&E framework – LM performance of the 1,500 beneficiaries and a similar sized control group will be evaluatedM&E framework – LM performance of the 1,500 beneficiaries and a similar sized control group will be evaluated –Results will inform GOP on a larger pilot.

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