WB tells govt to invest more in human capital

By Rose de la Cruz

The World Bank urged the government to invest in its youth now in terms of health, education, reskilling and upskilling before the Philippines gets old.

At the launch of the Philippine Human Capital Review report, World Bank country director Ndianme Diop for Brunei, Malaysia, the Philippines and Thailand said “investing in human capital within a generation starting today will make the Philippines a rich country before it gets old.”

He said investing in human capital are immense for the country, especially since the Philippines has a unique advantage over its neighbors who are expected to age before they become rich countries.”

Investing in human capital now will enable the country to improve its Human Capital Index score where it is currently lagging behind its neighbors at 0.52.

“ So if investment in human capital happens now, the people that will be coming out of the education system and joining economic activities will be equipped to really propel the Philippines to even higher growth, which means that the Philippines will be able to grow at a high rate,” Diop said Monday during a press briefing.

“If you don’t invest in human capital now, those kids that are getting out of school and entering the labor market will not be able to drive innovation, to drive economic growth, and then you’ll see a hump. You’ll see the growth in the longer term, not in the medium term,” he added.               

A presentation done by WB economist Toni Joe Lebbos showed that human capital “encompases the health, knowledge, skills, and experience that people accumulate throughout their lives.”

For the Philippines, human capital accounts for 70 percent of the country’s total economic wealth.

Diop said the Philippine economy has been growing at an average of 6 percent since 2010, except during the pandemic. Reaching this growth in the next 25 years will transform the Philippines into a high-income country before it starts to age, Business Mirror reported.

Lebbos said the demographic window for the Philippines closes in 25 years, citing social and economic challenges and reducing disparities to allow the country to maximize the productivity of its working population which would peak soon.

Thailand, he added, has started to age but has not reached high-income status. This is why it is crucial for the Philippines to move fast and to make the right investments in health, education, reskilling, and upskilling.

“While many analysts have pegged the country’s potential gross domestic product [GDP] growth at about 5 to 6 percent, this demographic transition can be a boon to the Philippine economy,” said NEDA Secretary Arsenio M. Balisacan in a speech in the same forum..

Over the next two to three decades, Balisacan said, we may look at boosting as much as one percentage point to GDP growth per year. The Philippines has the opportunity to grow rapidly and replicate the economic success stories of its East Asian neighbors during their rapid industrialization and development periods.

WB said that 27 percent of children aged zero to five years old are stunted and 90 percent of primary school age children are not learning. Also, 18 percent of young Filipinos aged 15 to 24 years old are not in employment, education, or training (NEET) stages.

It noted that mortality from non-communicable diseases (NCDs) in the Philippines is rising compared to other countries, while gender disparities among adults aged 26 to 64 years old were noted in the labor force.

Aging or senior Filipinos face difficulties accessing healthcare and social protection services nationwide, the bank added..

Given these, WB recommended that the Philippines invest early by strengthening governance, monitoring, awareness and scaling up interventions to reduce stunting and ensure optimal child development.

It also cited the need to develop enabling platforms for Early Childhood Care and Development and focus on foundational skills; prioritize social protection for vulnerable groups; and ensure adequate and efficient financing and incentives.

Lebbos’ presentation also urged strengthening the LGU’s capacity  to invest in human capital by channeling resources and support towards lagging areas that need them most. “While investing in the Early Years will yield the maximum benefit, do not lose focus on the young populations soon to enter the labor market,” he added.

The report highlighted the importance of health, nutrition, education, and social protection during the first decade of life; the accumulation of knowledge, skills, health, and experience that allows citizens to realize their potential as productive members of society.