by paulynne castillo, mitzie irene conchada, divina ... · paulynne castillo, mitzie irene...

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Paulynne Castillo, Mitzie Irene Conchada, Divina Edralin, and Marites Tiongco

April 2016

Promoting entrepreneurship to address youth employment

By Paulynne Castillo, Mitzie Irene Conchada, Divina Edralin, and Marites Tiongco

Abstract

The Bureau of Labor and Employment Survey data on youth employment reveal that the

Filipino youth are predominant in entrepreneurial activities in the country. The youth is defined

by the Youth in Nation Building Act of 1994 (RA 8044) as individuals between the age of 15

and 30 years old. Unfortunately, the youth also experience the highest level of unemployment,

where 49 percent of the unemployed belong to the age bracket of 15 to 24 years old. To

immediately address this problem of youth unemployment, the government encourages the youth

to go to into business. Two of the programs of the government, specifically Department of Labor

and Employment (DOLE) aimed at reducing the number of unemployed as well as addressing

the education for employment needs of the youth are the Youth Education-Youth Employability

(YE-YE) Project and Youth Entrepreneurship Support (YES) Project. The study focused on

assessing the role of government programs - such as the YE-YE and YES projects in improving

the welfare of the Filipino youth using propensity score matching (PSM) and the Community-

based monitoring system (CBMS) data. Results show that the youth who availed of one or two

of the entrepreneurial programs received higher incomes and wages of around nine thousand

pesos and four thousand pesos per year, respectively. Despite this favorable result, however,

only a small proportion of the youth avail of government-sponsored training and education

programs. Hence, there is a need to promote the entrepreneurial programs among the youth and

to monitor their progress and continually support their efforts in sustaining the business.

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Introduction

For a developing country like the Philippines, entrepreneurial activities play an important

role in providing alternative sources of income. Indeed, as of 2012, the Department of Trade of

Industry (2014) classified 99.6% of the country’s registered enterprises - or 940,886 firms – as

micro, small-, and medium-enterprises (MSMEs). Majority of these establishments were

engaged in the retail and wholesale industry. Similarly, the data indicate that most of the

MSMEs were located in the National Capital Region, CALABARZON (Region 4-A), and

Central Luzon (Region 3).

The 2014 Global Entrepreneurship Monitor (GEM) (GEM, 2014) survey confirmed that a

significant number of Philippine businesses belonged to the retail sector, specifically in the sale

of food and beverage items and other basic essentials. Retail stores, like sari-sari stores and food

stalls, are popular start-up businesses because they require little capital and they could be set-up

at home.

In terms of the involvement of the youth, the Bureau of Labor and Employment Survey

[BLES] (2015) revealed that the Filipino youth – defined as individuals between 18 to 30 years

old - were predominant in entrepreneurial activities in the country. BLES reported that the youth

had the highest levels of unemployment and underemployment and may, thus, be the primary

reason for their increased involvement in start-up businesses since 2006 (Philippine Global

Entrepreneurship Monitor, 2013). The GEM survey further revealed that: 1) majority of the

youth entrepreneurs are engaged in consumer services such as retail trade, eating and dining

places, health and wellness care, repair services, cleaning and laundry services, among others;

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and 2) the youth are more optimistic about entrepreneurial activities compared to the other age

groups.

In the light of the situation, this study focuses on the behavior of youth entrepreneurs,

particularly how unemployment pushes them to explore entrepreneurial opportunities as well as

the role of government programs such as the Youth Education – Youth Employability (YE-YE)

and Youth Employment Support (YES) projects - in improving the youth’s likelihood of

enjoying higher benefits from employment and entrepreneurial activities. Specifically, the study

would like to answer the following research question: 1) What human capital development

strategies do the youth use in positioning themselves in the labor market?; 2) What are the

characteristics of young entrepreneurs and in what types of entrepreneurial activities are they

engaged?; and 3) Do youths who are engaged in entrepreneurial activities have a better quality of

life relative to those who are not?

This study will contribute to the body of knowledge on youth entrepreneurship as a

means to enhance labor market outcomes.

Data and Methodology

The data used for this study are both secondary and primary data. Secondary data are

drawn from GEM 2014 survey data, BLES 2006-2015 statistics, and PSA-NSCB statistics.

Primary data consist of the CBMS 2015 survey data, which include modules on entrepreneurship

activities and employment/self-employment characteristics.

In assessing the effect of entrepreneurial training programs on income and well-being of

on young entrepreneurs, the study uses Propensity Score Matching (PSM) developed by

Rosenbaum and Rubin (1983). In this method, propensity scores are estimated with a probit or

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logit function, that represent the predicted probability that an individual is in a particular group,

either treatment or non-treatment group, given a set of covariates (Nichols 2007). In this study,

the treatment group is composed of the youth who participated in entrepreneurial training

programs such as YE-YE and YES programs. The scores are used to find matched individuals

with similar propensities that did not avail of the training programs. Successful matching

requires variability in the scores within each group and overlap of scores across groups. After the

matched groups are created, a standard statistical analysis is used to test for differences on the

outcome variables, e.g., income.

Review of related literature

Millennium development goals and poverty

Eradicating extreme poverty is of paramount importance among policymakers especially

in developing countries. At the heart of poverty is the vulnerable who are mostly children and

women, ethnic minorities, and persons with disabilities. Social stability and a higher standard of

living for the poor, therefore, are among the key benefits expected from courses of action that

provide greater access to economic opportunities.

There is a global effort to address the United Nations’ millennium development goals

(MDGs) (United Nations, 2015) and this has been evident in the formulation of social welfare

policies in developing countries such as the Philippines. The MDGs serve as a framework for

government programs in addressing various developmental issues. Meeting the United Nations’

identified eight goals by the year 2015 is the main focus of countries around the world. MDGs

include the following specific targets: to eradicate extreme poverty and hunger; to achieve

universal primary education; to promote gender inequality; to reduce child mortality; to improve

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maternal health; to combat HIV/AIDS, malaria and other diseases; to ensure environmental

sustainability; and to develop a global partnership for development (United Nations, 2015).

Based on the regional development report prepared by the United Nations ESCAP, Asian

Development Bank, and the United Nations Development Program (2013), the Asia-Pacific

region as a whole has made notable progress in attaining its MDG commitments. Progress has

been more observable in the area of poverty reduction but not in specific areas such as hunger,

health, and sanitation (ESCAP/ADB/UNDP, 2013). According to the report, however, the

Philippines lags behind the other countries in South-East Asia as evidence by the little or no

progress in its MDG indicators. The report used four categories in measuring the progress in the

various indicators and these include: early achiever – achieved 2015 target; on track – expected

to meet the target by 2015; off-track: slow – expected to meet the target but after 2015; and off-

track: no progress/regressing – stagnating or slipping backwards.

The Philippines performed well in the MDG indicators on promoting gender equality and

women empowerment and in combating AIDS/HIV, malaria and other diseases; but the country

trails in the areas of poverty, education, and health, specifically child mortality and maternal

health.

Though the Philippines has experienced impressive economic growth rates since 2012,

there has been no significant reduction in poverty rates due to the lack of a trickle-down effect to

the poor and the widening gap between the rich and the poor. The effects might be more evident

in the long-run if there will be sustained growth coupled with successful policies.

The National Statistical Coordinating Board (NSCB) (2014) report on the status of the

country based on the MDGs indicators supports the findings of the ESCAP/ADB/UNDP report

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(2013). The target is to bring down the poverty level to half that of the 1991 level, 17.2% by

2015. The latest statistics, however, show that the proportion of the population below the

national poverty threshold in 2012 was still higher at 25.2%.

In the labor market, the share of women in wage employment in the non-agricultural

sector is 41.4%, which is short of the 50% target by 2015. Moreover, in 2013, only 26% of the

proportion of seats in congress was held by women – less than half of the 50% target.

Despite the implementation of various programs on human capital development through

education, health, and women empowerment, no significant progress has been made in reducing

poverty. Table 1 shows that poverty incidence in the Philippines has not improved by much

since the year 1991. Moreover, the magnitude of poor families has increased from 3.8 million

families in 2006 to 4.2 million in 2012 (NSCB, 2012). The poverty incidence among Filipino

families in 2012 was the highest in ARMM, Eastern Visayas (Region 8), and Socsksargen

(Region 12) with 48.7%, 37.4%, and 37.1%, respectively. Lanao del Sur in ARMM had the

most severe incidence of poverty among families at 67.3%. Maguindanao (ARMM) ranked

second with 54.5% families of the total number of families who were considered poor.

Table 1. Poverty incidence among families (in %)

Region/Province

Poverty incidence among families

1991 a/ 2006 2009 2012

Philippines 29.7 21.0 20.5 19.7

Source: National Statistical Coordination Board (2012)

The challenges to poverty reduction in the Philippines, according to Usui (2011), are the

following: limited job opportunities caused by weak growth performance in the industrial sector;

and poorly targeted and fragmented social protection programs resulting in high errors of

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inclusion and exclusion. Part of the solution, therefore, is a strategy for inclusive growth that can

address poverty (Son, 2008). Inclusive growth is anchored on three pillars (Ali, 2007 as

mentioned in Son, 2008). The first pillar is the generation of full and productive employment.

Second is providing mechanisms for capability enhancement such as human capital

development. Third, and last, is providing social protection for the vulnerable. An important

ingredient here is safety nets that can address the welfare of the vulnerable.

Unemployment and the Technical Skills and Development Authority

One of the ways to address poverty and the high rate of unemployment is through the

programs offered by the Technical Skills and Development Authority. The objectives of

Technical Vocation Education (TVE) in the Philippines involve the formation of high quality

middle-level manpower that will meet the goals and objectives of the macro economy. TVE

focuses both on the competencies and work ethic of its students. The focus of student formation

concerns the areas of: agriculture and fisheries; health and medical services; ICT; maritime;

tourism; hotel and restaurant management; criminology; education; and engineering. In addition,

the role of TVE is to increase the global competitiveness of the Filipino workforce in terms of

productivity, quality, and quantity. The Technical Education and Skills Development Authority

(TESDA) is the government agency tasked to implement and monitor the programs for technical

vocation (Tullao, Conchada, & Rivera, 2009).

TESDA also ensures that competency assessment and certification of workers are

continuously done in pursuit of professionalizing skilled workers. It develops competency

standards and qualifications, coupled with training standards and assessment instruments, which

serve as the basis for the registration and delivery of the various programs. In fact, Technical

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Vocation Education and Training (TVET) programs have to be registered under the Unified

TVET Program Registration and Accreditation System. Likewise, TESDA provides equitable

access and provision of programs to the growing number of TVET clients. Training delivery is

conducted under four modes of training, namely: school-based; center-based; enterprise-based;

and community-based. Moreover, TESDA supports TVET institutions through trainer’s

development program, curriculum and materials development, career guidance and placement,

and scholarship programs. Government support to training is justified when there are critical

skills that cannot be provided by the private sector; when the cost of training in private sector is

high; when the capacity in terms of providing training by the private sector is low; and when the

quality of private provision is wanting (Tullao et al., 2009).

Moreover, TESDA has initiated the establishment of Language Skills Institute to develop

workplace language skills and conduct orientations on culture, which is beneficial for OFWs.

The institute offers lessons in English proficiency and language skills training in Spanish,

Korean, Mandarin, Japanese, and Arabic; thus, providing the ability to communicate with

employers, co-workers, and the communities in places of work. Additional TVET investments

are available through the PGMA-Training for Work Scholarship Program. With an annual

funding of Php 1 billion, this program directly addresses structural unemployment. The said

program provides scholarship in priority industries where there are critical skills shortages and

where jobs are immediately available. Since 2006, around 100,000 persons have been trained in

qualifications that will easily transit them into the job market (TESDA, 2009). In addition, as a

scholarship program, it provides immediate interventions to the provision of highly critical skills.

For instance, full or partial assistance in defraying training costs for business process outsourcing

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(BPO) industry, call center, medical and legal transcription, animation, software development

and other industries with critical skills requirements is available to qualified applicants (Tullao et

al., 2009).

The provision of purposive student assistance and scholarship programs in emerging

occupations and professions with critical shortages increases the efficiency of training. For

instance, by focusing on the labor market requirements, the chances of graduates being employed

are enhanced. Moreover, the private sector can be enticed to offer training programs required by

the labor market. Combined with the public sector investment in training and education,

improvements in the general skill-level of workers can result in greater opportunities for trade.

Hence, higher education and technical vocation education are two important pillars in providing

the needed skills and knowledge that facilitate trade and promote inclusive growth in the

country. Investing on human capital development through skills and development and education

will help the youth in positioning themselves for the labor market, either for paid employment

and self-employment.

Policies and programs that promote youth entrepreneurship

One of the important demand-side strategy for expanding opportunities for youth

employment is promoting youth entrepreneurship. For the last five years, there were two

Republic Acts that were passed that provided a framework for policy measures to support youth

entrepreneurship. These are the Youth Entrepreneurship Act of 2014 (Republic Act No. 10679)

and the Go Negosyo Act of 2015 (Republic Act No. 10644). R.A. No. 10679 has a clear focus on

addressing the growing issue of youth unemployment through education and training programs

that will develop the aptitude, financial literacy, and core skills of the youth needed for

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entrepreneurship. This is equally mainstreamed through establishment of micro, small and

medium enterprises (MSMEs) under R.A. No. 10644, which will generate local jobs, and

facilitate production and trade in the country.

Two programs emerged out of these legislative supports. These are the Youth Education-

Youth Employability (YE-YE) Project and the Youth Entrepreneurship Support (YES) Project

(for more details about these progrmas, see http://bwsc.dole.gov.ph/programs-and-projects-

submenu1/pfy/). YE-YE Project aims to address the ―education-to-employment‖ needs of the

youth, particularly the disadvantaged youth (i.e., 15-24 years old, out-of-school or unskilled; or

from the informal sector or low income family; or members of working youth organizations; or

high school graduate or Alternative Learning System (equivalency program) passer who intends

to study in an academic or technical-vocational course). The YES project aims to mobilize the

college and technical-vocational graduates to become young entrepreneurs and unleash their

entrepreneurship potentials in innovative community-based business ventures thereby generating

income and jobs.

The implementation of these entrepreneurial programs would be justified if it increases

the welfare or well-being of individuals resulting from better labor market outcomes (e.g., share

of youth unemployed in the labor force).

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The youth and the Philippine labor market

The Philippine Statistics Authority – National Statistical Coordination Board [PSA-

NSCB] (PSA-NSCB, 1997-2014) estimated the Philippine population at 103 million in 2015 and

reported an average annual Philippine population growth rate of 1.82% from 2010 to 2015. The

relatively high population growth rate of more than 2% per annum until 2005 resulted in a very

young population in 2015; more than 50% of which was accounted for by individuals below 30

years old - 31.7% were between the ages of zero to 14 years and 27.3% were 15 to 29 years old

(refer to Table 2) (PSA-NSCB, 1997-2014).

Table 2. Philippine population by age group, 2015

Age Group Level (in thousands) Share (in %)

Children 32,682 31.7

Under 5 11,387 11.1

5 to 9 10,951 10.6

10 to 14 10,344 10.0

Youth 28,099 27.3

15 to 19 9,758 9.5

20 to 24 9,545 9.3

25 to 29 8,796 8.5

Non-youth (30 and over) 42,187 41.0

Total 102,968 100.0

Source: PSA-NSCB, 1997-2014

Accordingly, more than 15 million of the Philippine labor force, with an average of

54.8% participation rate per year - has been made up of the Filipino youth from 2009 to 2013

(Bureau of Labor and Employment Survey [BLES], 2015) (refer to Table 7). The BLES data

further reveal that the youth, individuals between the ages of 25 to 30 years old were more likely

to: 1) be college graduates with two to three years of work experience; and 2) have the highest

average labor force participation rates (average of 73.5%) for the same five-year period. By

sheer numbers, therefore, the youth have the potential to significantly contribute to the country’s

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goal of sustained economic growth.

The CBMS database (2015), which included 30,807 youth respondents, indicated that

there are slightly more male youths than females, 50.5% as compared to 49.5%. Collected from

Batangas (1.4%), Cavite (2.6%), Manila (3.5%), Marikina (48.4%), Misamis Occidental (3.4%),

and Negros Occidental (40.6%), the survey results revealed that their highest educational

attainment are: 6.3%, ―below grade school‖; 25.5%, ―grade school‖; 51.5%, ―high school‖;

1.5%, ―tech voc‖; 15.1%, ―college‖; and 0.1%, ―post graduate‖. In terms of civil status,

majority of the surveyed 15 to 30 year olds were single, 71%; married and common-law/live-in

youths are 15% and 12.5%, respectively. The database likewise indicated that out of the 11,815

working youth respondents (89.5%): 71.4% were employed in private businesses/establishments;

13.3% in private households; 7.5% in government/government corporations; 5.2% were self-

employed without any paid employees; and 1% were working without pay on family-owned

businesses.

A look at the statistics concerning the employed youth in the Philippines reveals that

majority of the working 15 to 30 year olds in 2009 to 2013 had some secondary level education,

average of 46.4%. In fact, almost a third of them were high school diploma holders, average of

30.2% (refer to Table 3). Tertiary level education, undergraduate and graduate degree holders,

had the second largest share at an average of 29.2% during the same five-year period. The data

also indicate that the least likely among the youth to find jobs in 2009 to 2013 were individuals

who had no education, average of 0.9%, and who did not graduate from elementary school,

average of 11.3% (refer to Table 3).

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Table 3. Highest educational attainment shares among the employed youth (in %), 2009-2013

Educational attainment 2009 2010 2011 2012 2013 Average

No grade completed 1.0 0.9 0.9 1.0 0.8 0.9

Elementary 22.4 21.4 21.1 21.6 20.9 21.5

Undergraduate 11.6 11.2 11.2 11.5 11.1 11.3

Graduate 10.8 10.2 9.9 10.1 9.8 10.2

High school 46.5 46.3 46.7 46.6 46.2 46.4

Undergraduate 17.0 16.2 16.7 16.1 15.4 16.3

Graduate 29.5 30.0 30.0 30.5 30.8 30.2

Post secondary 0.0 0.0 0.0 4.6 5.0 4.8

Undergraduate 0.0 0.0 0.0 1.4 1.2 1.3

Graduate 0.0 0.0 0.0 3.2 3.8 3.5

College 30.1 31.4 31.3 26.2 27.0 29.2

Undergraduate 15.0 15.5 15.4 10.3 10.5 13.3

Graduate and higher 15.1 15.9 15.9 15.9 16.5 15.9

Total 100.0 100.0 100.0 100.0 100.0 100.0

Source: Bureau of Labor and Employment Statistics

The top five occupations for young workers in 2013 were laborers and unskilled workers,

40.7%, services workers and shop market sales workers, 18.4%, clerks, 8.7%, officials of

government and special interest, 7.6%, and professionals, 5.6% (refer to Table 4). The first three

jobs required minimal education and work experience. In fact, although a high school diploma is

an advantage for applicants to laborers and unskilled workers positions, for instance, elementary

schooling is the minimum educational requirement. Work experience, while preferred, is also

not necessary (PBED, n.d.). Similarly, although applicants with undergraduate degrees have an

advantage, vocational diplomas/short courses certificates are sufficient entry-level education

requirements for services workers and shop market sales workers and clerks (PBED, n.d.).

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Table 4. Youth employment by major occupation group in 2013

Occupation Level Share

(in thousands) (in %)

Laborers and unskilled workers 5,450 40.66

Services workers and shop and market sales workers 2,464 18.38

Clerks 1,167 8.71

Officials of government and special interest 1,021 7.62

Professionals 748 5.58

Others 2,557 19.08

Total 13,404 100.0


In 2013, about a third of the Filipino youth – some 8.8 million - in 2013 were employed

in five sectors: agriculture, hunting and forestry, 24.7%, wholesale and retail trade; repair of

vehicles and motorcycles, 19.5%, manufacturing, 9.7%, transportation and storage, 6.1%, and

construction, 6% (refer to Table 5). The agricultural sector accounts for some 25% to 28% of the

Philippine national output. Vulnerable to unpredictable and uncontrollable factors, particularly

natural calamities and weather conditions, it is one of the most volatile sectors of the economy.

The wholesale and retail industry, on the other hand, is classified under the services sector. It

accounts for an estimated 19% to 20% of the country’s total employment. The wholesale and

retail trade industry is also one of the fastest growing sectors in terms of employment. In 2011,

for instance, BLES reported a 5.2% increase in the industry’s employment level – almost double

the national employment level growth of 3.2%. The industry prioritizes applicants with work

and apprenticeship experiences and, while college degree holders are preferred, vocational and

short courses certificates qualify aspirants for most of the occupations (i.e., sales personnel,

telemarketers, clerks, etc.) within the sector (Bureau of Local Employment, 2003). Similarly, the

BLES database confirms that competition for jobs in the wholesale and retail industry is fierce

and that many candidates vie for the copious but still inadequate number of jobs in the sector. In

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2009-2010, most of the positions in the sector had a median filling-up time of between one to

two months (i.e., cashiers, clerks, sales representatives, etc.) and 66 applicants for every 10

vacancies. For telemarketers, the average median filling-up time was six months and there were

as many as 1,060 applicants for every 10 vacancies.

Table 5. Youth employment by major industry group in 2013

Industry group Level Share

(in thousands) (in %)

Agriculture, hunting and forestry 3,304 24.65

Wholesale and Retail Trade, Repair of Motor Vehicles, Motorcycles and Personal and Household Goods 2,607 19.45

Manufacturing 1,304 9.73

Transportation and storage 815 6.08

Construction 797 5.95

Others 4,577 34.14

Total 13,404 100.0


The data also indicate that the youth mostly worked in industries that had the lowest

average daily basic pay and salary. In 2011, for example, the agricultural sector – where more

than 40% of young workers were employed, paid 45% less than the average daily basic pay and

salary in the non-agricultural sector, PhP 158.20 versus PhP 349.01 (refer to Table 6). Among

the fifteen non-agricultural sub-sectors in Table 9, wholesale and retail trade; repair of vehicles

and motorcycles (with 19.5% of young workers employed), manufacturing (with 9.7% of young

workers employed), transportation and storage (with 6.1% of young workers employed), and

construction (with 6% young workers employed) ranked the lowest in terms of pay – 13th

, 10th

,

8th

, and 11th

, respectively. The average growth of compensation in these sub-sectors during the

five-year period were also below the 4.5% average rate of national pay and salary expansion in

2007 to 2011 (refer to Table 6) - implying that there is little chance that compensations in these

sub-sectors would be at par with the rest of the industries in the near future.

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Table 6. Average daily basic pay of wage and salary workers by major occupation group (in PHP), 2007-2011

2007 2008 2009 2010 2011

Ave. Growth

(%)

Agricultural 132.65 138.85 145.14 152.01 158.20 4.5

Agriculture, Hunting and Forestry 130.56 136.73 142.87 150.66 156.81 4.7

Fishing 159.40 166.21 174.62 169.43 178.43 2.9

Non-Agricultural 292.36 305.67 317.84 334.69 349.01 4.5

Mining and Quarrying 205.09 242.29 241.06 252.78 262.36 6.6

Manufacturing 277.19 289.56 299.93 310.57 316.49 3.4

Electricity, Gas and Water Supply 460.73 457.36 465.62 491.50 542.45 4.2

Construction 256.10 267.83 276.64 285.08 296.93 3.8

Wholesale and Retail Trade, Repair of Motor Vehicles, Motorcycles and Personal and Household Goods 242.49 249.92 257.71 274.54 275.81 3.3

Hotels and Restaurants 242.60 251.25 264.50 280.76 280.08 3.7

Transport, Storage and Communications 344.19 357.10 371.29 385.83 396.90 3.6

Financial Intermediation 473.44 495.85 515.55 529.99 528.57 2.8

Real Estate, Renting and Business Activities 378.04 412.27 426.24 456.61 475.41 5.9

Public Administration and Defense, Compulsory Social Security 411.57 415.54 433.40

449.68 498.10 4.9

Education 460.85 487.49 522.52 566.97 618.53 7.6

Health and Social Work 400.23 417.32 434.36 464.53 470.50 4.1

Other Community, Social and Personal Activities 272.65 287.93 307.97 316.89 325.90 4.6

Private Households with Employed Persons 121.06 122.63 125.88 133.20 138.99 3.5

Extra-Territorial Organizations and Bodies 1,089.33 726.11 873.98

1,321.99 926.18 2.1

All industries 266.65 278.93 290.73 306.53 317.44 4.5


Based on the available information, therefore, the employed youth in Philippines during the

period 2009 to 2013 – except for daily wage, which is based on the 2011 BLES database -

possesses the following characteristics: 1) between the ages of 25-30 years old; 2) high school

graduate; 3) employed in the agriculture, hunting, and forestry sector or in the wholesale and

retail, repair of motor vehicles, motorcycles and personal and household goods industry – if in

the non-agricultural sector – as a laborer or unskilled worker; and 4) earned an estimated

PhP158.20 per day in the agricultural sector or PhP275.81 per day in the non-agricultural sector,

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among the lowest pay during five-year period and were, thus, the most likely to be poor (BLES,

n.d.).

According to the International Labour Organization (ILO), the youth suffer the most

during economic recessions and depressions. Indeed, the ILO placed youth unemployment

across the globe at 12.6% - or 73 million young workers - in 2013 (ILO, 2013). Philippine youth

unemployment in 2009 to 2013 was higher than the global rate, an average of 13.7%, and almost

double that of the average national unemployment rate of 7.2% per annum (refer to Table 7).

Hence, in terms of magnitudes, more than two million of the 15 to 30 year-olds who looked for

work every year from 2009 to 2013 were not able to find jobs.

Table 7. Youth labor force participation rate (in %) and unemployment, 2009-2013

Age Group 2009 2010 2011 2012 2013 Average

Labor force 14,432 14,740 15,204 15,257 15,269 15,020

Labor force participation 54.5 54.6 55.5 54.8 54.4 54.8

15-19 years old 32.4 31.3 32.8 31.9 30.3 31.7

20-24 years old 64.2 64.8 64.8 64.5 64.6 64.6

25-30 years old 73.3 73.7 73.9 73.2 73.6 73.5

Unemployment (in thousands) 2,072 2,096 2,045 2,021 2,065 2,060

Unemployment rate (in %) 14.2 14.2 13.5 13.2 13.3 13.7

Philippine unemployment (in %) 7.5 7.4 7.0 7.0 7.1 7.2


Comparing the characteristics of the youth and non-youth workers, O’Higgins (1997 &

2003) asserted that the former have higher probabilities of being unemployed and/or

underemployed because they are generally less skilled and have little or no work experience

and/or have limited social networks. As labor productivity is likely to be determined by these

factors, non-youth workers are preferred in the labor market. Moreover, labor underutilization

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among young workers also tends to rise faster than their older counterparts during economic

slowdowns and recessions because the youth are less costly to fire.

Table 8. Age group shares in the Philippine unemployment rate (in %), 2009-2013

Age Group 2009 2010 2011 2012 2013 Average

Youth 80.3 80.7 80.1 79.0 78.9 79.8

15-19 years old 18.3 17.5 17.0 17.2 16.3 17.3

20-24 years old 32.5 33.5 33.4 32.8 32.2 32.9

25-34 years old 29.5 29.6 29.7 29.0 30.4 29.6

Non-Youth 19.7 19.3 19.9 21.0 21.1 20.2

35-44 years old 9.5 9.3 9.8 10.1 10.6 9.9

45-54 years old 6.3 6.3 6.4 6.7 6.4 6.4

55-64 years old 3.2 3.0 3.1 3.4 3.4 3.2

65 years old and over 0.7 0.7 0.7 0.7 0.7 0.7

Total 100.0 100.0 100.0 100.0 100.0 100.0


Consistent with the findings in the literature, the data provided in Table 8 reveal that

about 80% of the unemployed in the Philippines for 2009 to 2013 were young workers - roughly

a third of which were individuals in their early to mid-20s. Unemployed college graduates, in

particular, have been the focus of many studies. Various experts conclude that one of the

primary reasons for their inability to find gainful work in the Philippines is the so-called

mismatch between the types of graduates educational institutions produce and the kinds of skills

required by local industries. A World Bank study (n.d.) asserted that the mismatch may be

traced to three main reasons: 1) lack of or inadequate information on the demand for specific

skills. Linkages between higher educational institutions and industry, critical to curriculum

design and pedagogy, were found to be wanting in low- and middle-income East Asian

countries; 2) insufficient supply of qualified faculty who can train future educators, leaders of

industries and governments, and, simultaneously, nurture innovative and creative ideas that

would enhance productivity and national competitiveness; and 3) weak incentives for institutions

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to respond to industry’s labor needs owing to the ―lack of clear accountability for results either to

the government or to other stakeholders‖ (World Bank, n.d., p. 76).

Meanwhile, Esguerra (2005) claimed that job mismatches in the Philippines stem from

institutional factors – such as the lack of information on the availability of jobs, skills

requirement, and compensation. These factors lead to the: 1) under subscription of priority

courses; 2) oversupply of graduates in ―popular‖ degree programs; and 3) inadequate training

provided by educational institutions. Consequently, scores of young workers are unable to find

jobs even during periods of economic expansions. Esguerra (2005) also affirmed that - given an

abundant supply of labor – laws pertaining to regularization and the minimum wage penalize

young workers who generally lack the knowledge, training, and skills industries require.

Aldaba and Sescon (2007) added specific demand and supply factors to the list of reasons

for the underutilization of youth labor in the Philippines. Demand-side factors, according to the

authors, pertain to the inability of the domestic economy to create sufficient jobs to absorb the

significant additions to the labor force owing to limited economic growth as well as the higher

skills requirement of the different sectors of the economy. Supply-side factors, on the other

hand, include social- and education-related issues (i.e., deteriorating quality of education, high

drop out rates, preference for college graduates, rapid population growth rates, etc.) that force

individuals to enter the labor market at a very young age.

Education, in particular, is an important criterion for successfully finding a job in the

Philippines. Studies show that the better educated are more likely to be employed. Hence, a

degree, more often than not, is a basic requirement for employment (Todaro, 2011). The

literature, in fact, attributes income differentials – deemed as returns to education – to the

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number of years of schooling. Consistent with these findings is Todaro’s (2011), claim that, in

developing countries, increasing unemployment rates raises the demand for formal education at

all levels. Weak job creation rates owing to slow national income growth, result in what Todaro

(2011) termed as ―educational certification and displacement phenomenon‖ – an increasing

number of the highly educated but unemployed individuals. Similarly, the ILO (2013)

maintained that long-term unemployment results in the over-education, under-education, or skills

obsolescence of young workers. The trend, thus, contributes to the skills mismatch in the labor

market and the ―educational certification and displacement phenomenon‖.

Table 9. Highest educational attainment shares among the unemployed in the Philippines (in %), 2009-2013

Educational attainment 2009 2010 2011 2012 2013 Average

Age not reported 0.5 0.5 0.4 0.5 0.5 0.5

Elementary 13.3 13.1 12.6 13.2 13.0 13.0

Undergraduate 5.9 6.1 5.7 5.8 5.9 5.9

Graduate 7.4 7.0 6.9 7.4 7.1 7.2

High school 45.2 45.2 45.1 45.1 44.4 45.0

Undergraduate 12.2 12.7 11.5 11.8 11.5 11.9

Graduate 33.1 32.5 33.5 33.3 32.8 33.1

Post secondary 0.0 0.0 0.0 8.2 8.0 3.2

Undergraduate - - - 2.3 1.7 2.0

Graduate - - - 5.9 6.2 6.1

College 41.0 41.2 42.0 32.9 34.1 38.3

Undergraduate 21.9 21.7 21.8 13.4 13.8 18.5

Graduate and higher 19.2 19.5 20.2 19.6 20.3 19.8

Total 100.0 100.0 100.0 100.0 100.0 100.0


Table 9, which contains information culled from the Bureau of Labor and Employment

Survey (BLES) database, seems to provide evidence for Todaro’s (2011) ―educational

certification and displacement phenomenon‖ in the country. Note that in it, the largest

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proportion of unemployed workers in 2009 to 2013 had high school and college diplomas,

average of 45% and 38.3%, respectively. An abundance of college graduates competing for the

available jobs in the economy may reduce the likelihood that those with little or no education

would be employed in the formal market.

Education in the Philippines, however, may not be accessible for the children of low-

income households. Castillo’s (2015) review of the Philippine educational system illustrated that

a considerable share of the Philippine youth were unable to complete the primary – much less the

secondary and tertiary – level of education (as evidenced by high enrolment rates, cohort rates,

and drop out rates for both public elementary and high school), particularly during SY2005 to

SY2009 . Direct and indirect costs of education, coupled with the ―lack of interest‖, were

identified as the major obstacles to schooling for the poor.

Table 10. Motives for starting a business

Age Opportunity Necessity Others Total

TEA

18-24 27.9 9.1 0.7 58

25-34 48.7 13.6 0.0 96

EB

18-24 7.4 7.4 3.7 5

25-34 18.5 25.9 37.0 22

Source: 2014 Global Entrepreneurship Monitor

Rendered unemployed, the youth in the Philippines turn to entrepreneurship as a means

of generating and maintaining income to support themselves and their dependents. According to

the results of the 2014 Global Entrepreneurship Monitor (GEM) survey, majority of the new

young entrepreneurs in 2014 – 76%, started new businesses owing to what they believed were

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promising entrepreneurial prospects (refer to Table 10). Established business1 owners of the

same ages, on the other hand, have the combined motivation of exploiting opportunities of

earning higher incomes and securing their independence as well as the need to maintain their

current incomes (i.e., the lack of jobs elsewhere).

Table 11. Profile of Philippine entrepreneurs

Gender Educational attainment

Male Female Some HS HS

Graduate Post HS Graduate

Experience

TEA Share to total (in %) Share to total (in %)

Youth

18-24 6.0 9.2 0.8 6.3 7.9 0.3

25-34 10.5 14.7 1.5 12.8 10.7 0.0

Non-youth

35-44 9.7 15.7 3.1 11.5 10.5 0.3

45-54 8.4 12.6 3.4 10.7 6.5 0.3

55-64 5.0 8.4 3.4 6.3 3.4 0.3

Male Female Some HS HS

Graduate Post HS Graduate

Experience

EB Share to total (in %) Share to total (in %)

Youth

18-24 1.4 2.1 0.7 0.7 2.1 0.0

25-34 6.3 9.1 2.8 3.5 8.4 0.7

Non-youth

35-44 13.3 14.0 4.2 11.2 11.9 0.0

45-54 16.1 21.7 9.1 17.5 11.2 0.0

55-64 8.4 11.0 7.0 4.2 4.9 0.0


Table 11 shows that roughly 40% of new business owners (enterprises that are less 42

months old) were aged 18 to 34 years. Majority of these young entrepreneurs were female and

had, at least, high school diplomas. The largest share of the non-youth business owners was

female, between the ages of 35 to 44, and were high school graduates (refer to Table 11). Table

1 Established businesses are defined by the Global Entrepreneurship Monitor has enterprises that have been

operating for at least 42 months.

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12 indicates that youth entrepreneurs mainly belonged to the lowest 33 percentile income

bracket. Non-youth new business owners in 2014, on the other hand, were: 1) female; 2)

between the ages of 35 to 44; 3) high school graduates; and 4) belonged to the lowest 33

percentile income bracket (Table 11 and Table 12).

Table 12. Philippine entrepreneurs share by income class

Misc. Lowest Middle Upper

TEA Share to total (in %)

Youth

18-24 0.8 5.0 2.4 7.1

25-34 1.0 10.7 7.1 6.3

Non-youth

35-44 0.5 11.5 7.9 5.5

45-54 1.3 8.4 6.5 4.7

55-64 1.0 6.0 3.1 3.1

Misc. Lowest Middle Upper

EB Share to total (in %)

Youth

18-24 1.4 0.7 0.0 1.4

25-34 0.0 5.6 6.3 3.5

Non-youth

35-44 2.1 9.1 7.7 8.4

45-54 1.4 14.7 7.7 14.0

55-64 0.0 7.0 5.6 3.5


Established business (more than 42 months) owners, on the other hand, had the following

characteristics: 1) 25 to 34 years old for the youth and 45 to 54 years old for the non-youth; 2)

female for both age groups; 3) post high school educational attainment for the youth and high

school graduate for the 35 to 64 age range; and 4) belonged to the lowest and middle 33

percentile income brackets for the youth and lowest 33 percentile income bracket for the non-

youth (refer to Table 11 and Table 12).

BLES reported that about 30% of the unemployed in 2009 to 2013 were between the ages

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of 25 to 34 years old; while the 2014 GEM survey revealed that individuals that belonged to this

age range were motivated by both opportunity (48.7%) and necessity (13.6%) in starting a

business (refer to Table 10). Combined, the data imply that these young adults had the greatest

incentive to try their hand at entrepreneurship. Furthermore, the 2014 GEM survey also

confirmed that, among the youth, individuals between the ages of 25 to 34 were also the most

likely to sustain a business enterprise beyond the initial stages – at least more than 42 months

(refer to Table 11).

Notable in the 2014 GEM survey results is that majority of the new and established

business owners – for both the youth and non-youth – belonged to the lowest 33 percentile

income bracket. The data, thus, suggest that the poor are actively involved in entrepreneurship in

the Philippines (refer to Table 12). The 2014 GEM Report (2015) maintained that

entrepreneurial attitudes and perceptions are very high in the Philippines. Across all

demographics – age, gender, educational attainment, income class, etc., Filipinos believed that

opportunities for new businesses exist in the country. Furthermore, a considerable number of the

2014 GEM survey respondents declared that they had the requisite know-how to exploit these

opportunities.

Among the poor, however, respondents were: 1) less confident of their entrepreneurial

abilities; 2) less likely to view entrepreneurship as a career opportunity; and 3) more likely to be

deterred (in starting a business) by risks (GEM, 2015). Yet, the same database verified that

majority of the new entrepreneurs belonged to the lowest 33 percentile income bracket. Hence,

entrepreneurship may not be a choice but a necessity for poor. The lack of jobs or the difficulty

of finding full-time employment may be forcing the poor, young adults to start a business.

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Per the 2014 GEM survey, more than 80% - 312 enterprises out of a total of 382 – of the

new businesses established during the year were engaged in retail trade and hotels and

restaurants activities (refer to Table 13). The far second and third popular destinations of new

enterprises were in the agriculture, forestry, hunting and fishing (4.2%) and manufacturing

(3.7%) sectors (refer to Table 13). Within the retail trade and hotel and restaurant sub-sectors,

entrants chose to operate sari-sari stores and food stalls owing to their relatively small investment

requirements. Moreover, these ventures can be set-up and managed in the owners’ homes (GEM

Report, 2015).

Table 13. Top 3 Industries for new entrepreneurs (no. of establishments)

Retail trade and Hotels &

restaurants

Agriculture, forestry, hunting

and fishing Manufacturing Others Total

Youth No. of establishments

18-24 49 0 1 8 58

25-34 84 3 2 7 96

Non-youth No. of establishments

35-44 80 5 3 9 97

45-54 58 7 6 9 80

55-64 41 1 2 7 51

Total 312 16 14 40 382


Based on the 2014 GEM survey, established businesses (more than 42 months) were

primarily involved retail trade and food and accommodations activities - 96 establishments out of

a total of 143 or 67.1% (refer to Table 14). Other enterprises that successfully develop beyond

the start-up phase belonged mostly to the wholesale trade and manufacturing sub-sectors, 9.8%

and 5.6%, respectively.

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Table 14. Top 3 Industries for established businesses

Retail trade and Hotels &

restaurants Wholesale trade Manufacturing Others Total

Youth No. of establishments

18-24 2 1 0 2 5

25-34 17 2 0 3 22

Non-youth No. of establishments

35-44 28 4 2 5 39

45-54 30 6 6 12 54

55-64 19 1 0 3 23

Total 96 14 8 25 143


The CBMS survey results (2015) confirmed that the Filipino youth entrepreneurs mostly

invested in sari-sari stores (35%); were involved in service-related activities (26%), rental (3%),

and retail sales (6%); and worked as vendors (29%) (refer to Table 15)*.

With the exception of unspecified reasons (―others‖), the 2014 GEM Report (2015) lists

losses (business not profitable), personal reasons, and lack of financing as the top three causes of

business closures in 2014 – 26.8%, 20.8%, and 20.2%, respectively. Certainly, business success

is accounted for by countless factors; but essential to it are the ability to innovate, access

information, and respond to market signals. The 2014 GEM survey, however, revealed that few

Filipino youth entrepreneurs had training on or any experience in starting and operating a

business, which, in turn, may increase the likelihood of business discontinuance. Personal

reasons pertain mostly to family obligations and emergencies (i.e., childrearing) (GEM Report

2015). The results of the GEM survey, thus, point to the importance of family concerns to

Filipino entrepreneurs – between the family and the business; the former comes first. Owing to

their traditional roles, women are more likely to leave their work or forgo business opportunities

* Please note that values are based on observations with complete data on the business characteristics presented

in Table 15, which includes the gender of the business owner and average sales.

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when the family needs attention Finally, access to credit accounted for one out of every five

business closures in 2014. Majority of Filipino entrepreneurs (76%), per the GEM survey,

finance new businesses with their own savings and/or funds sourced from family and friends.

The percentage of youth business owners who shied away from credit markets in sourcing their

initial capital needs is higher at 80% (GEM Report 2015). The CBMS database corroborates

these findings. Less than 3% of the youth survey respondents in 2015 sourced their business

capital from credit (either from customers, middlemen, agents, or suppliers). Hence, both survey

results may point to a preference that cuts across all demographics (i.e., age, income class, choice

of industry, etc.). Or, it may be one of the many signs that access to credit remain to be a

significant barrier to entrepreneurship and business success in the Philippines. Regardless, the

findings provide a starting point for parties (i.e., local and national government units) interested

in promoting entrepreneurship among the youth and non-youth. At the community level,

entrepreneurship training can focus on the importance and sources of credit for new business

owners. Learning sessions can provide information on the documentary requirements when

applying for business loans. They can guide potential entrepreneurs in gathering the documents

together and filling-up loan applications. Given limited resources, the program can initially

target individuals who are likely to start a business, which the profile included in this study can

help identify. On a broader scale, these learning sessions can be included in the K+12 Basic

Education curriculum. If successful, the programs may be able to reduce the proportion of

business closures attributed to problems getting financing.

Youth entrepreneurial activities and quality of life

The Community Based Monitoring System (CBMS) conducted its accelerated poverty

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profiling survey with special questions on youth employment and entrepreneurship in selected

barangays in Marikina and other barangays in the rest of Metro Manila in 2014-2015. The

survey intended to capture the state of youth unemployment and the existing programs aimed at

promoting entrepreneurship among the youth, among others.

Based on the definition of the youth, ages 15 to 30 years old, the CBMS data showed that

10.5% were reported to be unemployed (did not work for at least 1 hour in the past week) and

most of which are in the age 21 to 22 years old (11.2% and 10.3%, respectively) and are males

(59%). Out of the youth unemployed, most have high school as their highest educational

attainment (65%) and are single (82%).

For the youth who are engaged in entrepreneurial activities, most of them are engaged in

farm, small workshop/garage/shop (30%) and other activities that are part of the informal sector

(52%). Table 15 shows the characteristics of the other business types* in which the youth are

engaged. The top three business activities include street peddlers/hawkers (vendors), sari-sari

stores, and service. These types of business requires minimal or almost no capital and could be

operated in their home.

Table 15. Selected business characteristics

Share of male-owned

businesses (in %)

Share of female-owned

businesses (in %)

Share to total entrepreneurial activities (in %)

Average earnings (monthly, in PhP)

Sari-sari 3.23 32.3 35 9,947.0

Vendor 9.7 19.4 29 1,692.6

Service 12.9 12.9 26 6,817.7

Retail sales 3.2 3.2 6 7,250.0

Rental 3.2 0.0 3 22,500.0

Source: Computations of authors based on CBMS 2015 data

* Please note that values are based on observations with complete data on the business characteristics presented

in Table 15, which includes gender of the business owner and average sales.

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Notable in Table 15 is that, among the youth, women are more likely to be engaged in

entrepreneurial activities relative to their male cohorts - 67.7% of businesses are female-owned

versus 32.3%, which are male-owned. The 2014 GEM survey revealed that, relative to men,

women have a more optimistic view of the Philippine business environment and they are more

confident of their ability to start and operate their own firms. Similar to the CBMS survey

results, therefore, GEM also reported more female-owned, relative to male-owned, new

businesses (GEM Report, 2015).

The entrepreneurial training programs availed by the youth were limited to the following

in the CBMS data:

Work Improvement in Small Enterprise

Youth Entrepreneurship Program

Special Program for the Employment of Students

Youth Education- Youth Employability

Sustainable Livelihood Program

Community Based Employment Program

TechVoc Program

Other TESDA Programs

DILEEP-Livelihood or Kabuhayan program

TESDA Technology- based community training

It is assumed that these trainings are relevant for labor market outcomes. As it is, there

was a very low turn-out rate in the number of individuals who availed of the various training

programs. The total number of the youth who availed of all abovementioned programs are 255

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individuals, most of which are males (54%) and are high school graduates (31%). In order to

determine whether those who availed of the entrepreneurship/employment related program were

better off compared to those who did not avail, 802 individuals were randomly selected based on

their characteristics particularly age. The 362 individuals were part of the beneficiary group and

the 440 individuals were the non-beneficiary group. Utilizing the method Propensity Score

Matching (PSM), the study estimated the effect of the program given certain characteristics of

the individual. The model is described as:

(1)

Where:

Sex – whether male or female (with value equal to 1 if male, 0 if female)

Civstat – dummy variables for various civil status (with value equal to 1 if married, 0 if

not married 0; widowed, 1, not widowed, 0; live-in, 1, not live-in, 0; and

separated, 1, not separated 0)

Workcl - dummy variable for whether the individual is self-employed or not (1 if

Self-employed, 0 otherwise)

Unemp – dummy variable for whether the individual is unemployed or not (1 if

unemployed, 0 is employed)

Educal – highest educational attainment as proxy for living standards — the higher the

education the more likely to raise living standards

Phsize – family size

Illness – got sick in the past 3 months; ability to access productive employment and labor

productivity

Wealth index – index durable assets such as land, housing, etc to capture personal

security and privacy

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Internet – internet connection; proxy for social connectedness as dimensions for well-

being/welfare

Busasset – business asset; initial capital of business

Urb – urban; denotes the location (with value equal to 1 if living in urban areas, 0 if not

living in urban areas)

Based on the descriptive statistics in Table 16, the typical youth who availed of

government-sponsored training programs has the following characteristics: 1) male; 2) married;

3) working but not self-employed; 4) belonging to a household that consists of about five

members; 5) resides in an urban area; and 6) with elementary schooling as the highest

educational attainment. Most of those who availed of the training programs are from Marikina

(35%). The data gathered also point to a wide disparity in income levels. Cash income, for

instance, ranges from PhP0 to PhP1.8 million with average of PhP181, 678 for 802

individuals/households; indicating that earnings of the majority of the respondents were closer to

the lower limit. The trend extends to total annual income (cash and non-cash) in which the

minimum income is PhP0, a maximum of PhP1.9 million, and an average total annual income of

PhP254,336 given the same number of individuals/households. Noticeable in the two indicators,

however, is the almost 40% increase in average income given a less than a 7% boost in total

income from the non-cash infusion. The statistics imply that – relative to the rest of the income

brackets - low-income households benefit the most from non-cash income. Moreover, low-

wages are seemingly the norm among the surveyed individuals/households. Given a PhP0 to

PhP1.8 million range, the average annual income among the 802 respondents is no more than

PhP160,518 (refer to Table 16).

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Table 16. Descriptive statistics

Variable Definition Obs Mean Std. dev Min Max

Dependent variable

availprog Availed and did not avail of entrep program 802 0.4513 0.4979 0 1

Independent variables

Sex Male or female 802 0.5311 0.4993 0 1

Civstat1 Widow 802 0.0087 0.0930 0 1

Civstat2 Live-in 802 0.2182 0.4132 0 1

Civstat3 Separated 802 0.0224 0.1482 0 1

Civstat4 Married 802 0.2655 0.4419 0 1

workcl1 Self-employed or not 802 0.0336 0.1804 0 1

educal1 Grade school 802 0.1521 0.3593 0 1

educal2 College 802 0.1284 0.3347 0 1

educal3 Technical vocation 802 0.0361 0.1868 0 1

educal4 Postgraduate 802 0.0049 0.0704 0 1

Phsize Household size 802 5.1533 2.6610 1 16

busasset Business asset (start) 582 1387.45 21342.44 0 500000

Illness1 Got sick for last 3 months 802 0.0224 0.1482 0 1

wi_fa Wealth index – factor analysis 802

-1.15E-07 4.8509

-8.55578 16.1297

unemp Unemployed 447 0.0760 0.2653 0 1

povp Poor or non-poor 802 0.2543 0.4357 0 1

internet Access to internet 802 0.1172 0.4135 0 5

urb Urban location 802 0.7518 0.4321 0 1

Outcomes

totincsh Total income in cash 802 181677.6 186802.8 0 1800000

totin Total income 802 254339 244912.1 0 1920000

wagcsh Wage in cash 802 160518.9 181977.5 0 1800000

etotcsh

Total income from entrepreneurial activities (cash) 802 7099.258 33079.19 0 540000

totexp Total expenditures 582 1744.50 11247.68 0 120000

Totsales Total sales from entrepreneurial activities 582 2830.06 25563.21 0 540000

The difference in living standards extends to business-owner respondents. Business

assets (start-up capital) ranges between PhP0 to PhP500,000 among 582 entrepreneurs. The

average start-up capital, however, is less than 0.3% of the maximum at PhP1,387.45.

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Entrepreneurial sales, income, and expenditures follow the same pattern (refer to Table 16).

Applying the probit model to the data gathered, the results identify four characteristics as

significant to the decision of the surveyed youth to avail of the government-sponsored training

programs: 1) poverty status; 2) household size; 3) civil status, specifically, those who are

widowed; and 4) those who are married (refer to Table 17).

Table 17. Probit regression

availprog Coef. Std. err P>z

unemp 0.0168 0.2297 0.9420

povp 0.2456 0.1117 0.0280 **

wi_simple -0.4138 0.3234 0.2010

phsize 0.0872 0.0187 0.0000 **

educal1 0.0235 0.1297 0.8560

educal2 0.1694 0.1428 0.2360

educal3 0.1338 0.2476 0.5890

sex -0.0073 0.0934 0.9380

civstat1 1.2829 0.6005 0.0330 **

civstat2 0.1355 0.1188 0.2540

civstat3 -0.1117 0.3153 0.7230

civstat4 -0.1935 0.1128 0.0860 **

busasset 0.0000 0.0000 0.3360

illness1 0.4076 0.3086 0.1870

internet 0.0312 0.1140 0.7840

urb 0.0880 0.1153 0.4460

cons -0.6091 0.1775 0.0010 Number of obs = 802 **significant at 90%

The results of the probit model show that those who are poor are more likely to avail of

the training programs since they are the ones who need it the most. Most of the poor are

unemployed or have been laid off from work and getting a new skill through training will help in

providing them an opportunity to be employed or venture into a business. Most of the poor

based on the data are male, between age 25 to 29 years old, and have finished only high school.

Indeed, the 2014 Philippine Global Entrepreneurship Monitor (2015) posited that it is

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possible that the relatively high propensity for the poor and the youth to engage in

entrepreneurship is that starting a business is the only available option to them to earn a living.

With little or no education, the formal sector is less likely to employ the poor and the youth in

any capacity. The BLES data for the 2009-2013 unemployment (refer to Table 8 and Table 9),

for example, revealed that 80% (annual average) of the unemployed were between the ages of 15

and 34 and that more than 58% (annual average) of the jobless for the same time period had little

or only elementary or high education. It could then be that the probability of getting a job or

starting a business is enhanced by the acquisition of new skills or re-tooling through government-

sponsored training programs.

The next significant variable was the household size. The larger the household to which

the youth belongs, the more likely it is for the youth to avail of private and government-

sponsored training programs. The difficulty in sending children to school, especially among

low-income households, is exacerbated by a greater number of offspring. Hence, a significant

proportion of children are unable to complete basic education – even when public schools in the

Philippines are essentially free. In fact, Philippine dropout rates in SY2010-11 were estimated at

4.4% for primary schooling and 8.1% for secondary schooling (PSA-NSCB, 1997-2014).

Castillo (2015) cited the UNICEF-PIDS study of 2010 that claimed that direct and indirect costs

of education and the need to earn an income as the main cause of non-school attendance among

the Filipino youth aged 12 to 15 (61.1%). On the other hand, ―lack of interest‖, which UNICEF-

PIDS (2010) interpreted as possibly due to the inability of schools to produce relevant results,

was the primary reason for the 6% high school dropout rates.

Per the CBMS data, on average, the highest educational attainment of the youth included

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in the survey is grade school. Government-sponsored training programs may, thus, be a means

of acquiring the skills they: 1) need in order to be employable or to start a business; and 2) deem

relevant in securing gainful employment or to start a business.

In addition to household size, the youth who are widowed are more likely to avail of

private and government-sponsored training programs. Just like married couples, they have to

survive and take care of their children, thus they would need to look for sources of income to

earn. Those who reported that they were widowed were all females, 28 years old (48% of

respondents), and finished only grade school (71%).

Those youth who were married were also more likely to avail of the training programs.

The necessity to contribute in the family income to feed an average family size of 4 (33%) is

higher among the youth who are married. Most of those who are married are females (54%),

between the age 25 to 30 years old (80%) and have only finished high school (31%).

After performing balancing tests and robustness tests of the PSM, final results are found

in Table 18.

Table 18. PSM results: for youth who availed of or did not avail of the training programs

Outcomes

Treated Control ATT Std. Err. t-value

Total income per capita, annual

362 173 9968.993 5517.744 1.807

Total income in cash per capita, annual

362 173 3889.792 3791.387 1.026

Wage in cash per capita, annual

362 173 6290.127 3935.054 1.598

Data analysis using the CBMS survey revealed that the respondents who availed of

various government-sponsored youth entrepreneurship programs - such as the Youth

Entrepreneurship Support (YES), the Youth Education-Youth Employability (YE-YE), TESDA,

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and community-based programs – enjoyed higher total income, more than PhP9,900 annually

and higher wage, more than PhP6,000 per year. Moreover, the total income in cash is higher for

program beneficiaries (PhP3,889). Though the results for the three outcomes, income (cash and

in kind), income in cash, and wage, are significant at various levels, it turned out that income

was more significant than wage. Based on the results, the programs are helpful in improving the

quality of life through increased income (both in cash and kind) and wages. This increase in

income (both in cash and kind) and wage allows one to expand his/her consumption basket and

provide access to more goods – aside from food - such as education and health. Given this, there

is more than enough reason to convince the youth who are unemployed to avail of these

programs. There should also be proper targeting on the part of the agency who implements is to

ensure that the real beneficiaries are the youth. One area for future study would be to investigate

on the long term effects of the training programs on outcomes such as education and health.

Numerous studies have confirmed the importance of education and training as an input to

the success of entrepreneurs (i.e., Cooney, 2012; Henry, Hill, & Leitch, 2003). In particular, the

European Commission (2008) asserted that entrepreneurial education and training should focus

on developing creativity and innovativeness. Cooney (2012) categorized these essential

entrepreneurial skills into three: entrepreneurship skills (includes inner discipline, ability to take

risk, innovativeness, change oriented, and persistence); management skills (include planning,

decision-making, motivating, marketing, finance, and selling); and technical skills (operations

specific to industry, communications, design, research and development, and environmental

observation).

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In the Philippines, the Youth Entrepreneurship Program (YEP), enacted in 2005 through

Executive Order 470, is tasked with cultivating specific skills that fosters ―entrepreneurial

capacities and mindsets‖. The YEP has several components that attempt to address the unique

needs of potential entrepreneurs such as (Concepcion, n.d.):

1. entrepreneurship education: provides a wide range of training that spans

psychological, attitudinal, technical, and managerial (i.e., preparation/development of

business plans, management efficiency enhancement, etc.) aspects of starting and

operating businesses;

2. credit assistance and lending: provides information on sources of credit – specifically

from government agencies;

3. role modelling and mentoring: provides opportunities for apprenticeships with local

businessmen through meetings and activities (i.e., dedicated website) with local business

clubs;

4. business plan development and training: provides training on the

preparation/development of business plans and continuing training with the goal of

improving business operations;

5. market syndication and linkaging: offers market expansion opportunities through trade

fairs and business matching activities; and

6. business information network: provides continuing support to young entrepreneurs in

the form of information on market trends and business innovations (i.e., emerging

technologies, practices, products, etc.).

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Policy and Strategy Recommendations for Youth Development and Employment

The following are some policy recommendations to address youth unemployment in the

country. These programs should be made accessible to the youth, especially those who are poor.

It is imperative to aggressively promote these programs to encourage and motivate the

youth to avail of them. The promotional strategy that can be done at the LGU level to advertise

the programs is by using traditional medium like poster, tarpaulin, leaflet, and brochure. The big

poster and tarpaulin can be placed in the bulletin boards of the Municipal building and outside

the Barangay hall where announcements are posted. Leaflet and brochure can be given house-to-

house to target beneficiaries in the community by the Barangay officials. In this age of

technological advancement, another effective means to promote the programs is by utilizing the

social media like the Facebook, Twitter, and Instagram. Each Barangay should be able to create

their account in each of this social media platform to reach as many youth as possible since many

of them will most likely have access to any of this. Lastly, the ever reliable town hall meetings

regularly done by the mayor and the barangay captain should be another means where they can

promote the programs intended for the youth as well as get their feedback. Another strategy of

promoting these programs is to culminate the training programs with a trade fair in coordination

with the DOLE and DTI. The trade fair will be the culminating activity where the youth will

have a chance to showcase their output/product and sell it for a minimal price. This will also

help prepare them on how to market their product/s or service and build their network. In this

way, they could be more motivated to sustain their business. The third strategy to encourage the

youth is for the training unit of the LGU to coordinate with TESDA to have some sort of a

crediting system for National Certification, a certificate which is recognized not only in the

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Philippine labor market but also abroad as an additional incentive if they decide to work abroad.

Lastly, as a strategy to promote the following recommendations, the LGU should work closely

with DEPED given the K to 12 revised educational systems. The senior high school is a good

opportunity where those young people who are studying can be strongly encouraged to choose

the TECHVOC track.

The following discussion focuses on other ways on how youth employment could be

improved on.

A. Youth entrepreneurial development

The government has been encouraging entrepreneurship as a strategy to reduce the

number of unemployed persons in the country, to encourage the youth to be more

entrepreneurial, and to help attain its goal of poverty alleviation. Necessity and opportunity

influence the growth in the number of youth entrepreneurs. Economic necessity pushes majority

of the youth in developing countries to start entrepreneurial activity particularly because they are

asked to help generate income for themselves and their families. Opportunity motivates

individuals who have alternative options for employment, but choose to be self-employed

(Schoof, 2006 as cited in Entwistle, 2008). Because of economic necessity, the youth often do

not attend school and are engaged in small scale trading/vending activities.

The LGUs are highly expected encouraged to provide training and skills basic

development services and to develop local enterprises to improve productivity and income.

Hence, through the LGUs this proposed youth entrepreneurial development program aims to

meet the human development needs of youth in positioning themselves for the labor market and

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to assist them in developing the required skills and competencies needed to become

entrepreneurs. On a long term basis, these can improve the quality of life of the youth.

The succeeding enumerated list of proposed programs were adapted from the programs of

DOLE (2009); ILO (2012); and the Philippine Medium-Term Youth Development Plan for

2005-2010, which when availed of by the youth are deem to develop their people and technical

skills towards entrepreneurship.

1. Training to develop leadership potential and entrepreneurial competencies

1.1 Awakening the entrepreneurial intention and spirit aims to explain the concept of

entrepreneurship; appreciates the important contributions of entrepreneurship to the

economy and society; discusses how entrepreneurs think; and explains the

entrepreneurial decision-making process as a core competency.

1.2 Leadership with self-discovery and self-concept exposes the youth to the concept of

effective leadership and tackles the concept of interpersonal effectiveness, influence,

impact, and inspiration.

2. Training on Business Ethics and Social Responsibility of Entrepreneurs

Business Ethics and Social Responsibility of Entrepreneurs aims to help understand

the meaning of values, ethics, and social responsibility to facilitate positive change in

behavior necessary to promote socially useful products and services which will contribute

to human development. Discusses some of the ethical issues and dilemmas in business

that continue to confront them, especially misuse of company resources, bribery, conflict

of interest, environmental issues, intellectual property theft, financial misconduct, sexual

harassment, and consumer fraud.

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3. Training on Developing Personal Entrepreneurial Competencies

Personal Entrepreneurial Competencies aims to enhance the competencies required to

successfully start, operate, and ensure the survival of a new business in the marketplace.

Topics will include discussion of the following competencies: opportunity seeking,

persistence, commitment to work contract, risk taking, demand for efficiency and quality,

goal setting, information seeking, systematic planning and monitoring, persuasion and

networking, work ethics, critical thinking and problem-solving skills and good

communication skills, and self-confidence.

4. Training on starting own business

4.1 Starting a business venture

4.1.1 Identification and evaluation of opportunities aims to assess the favorable

conditions in the social-cultural, economic, technological, and political

environment that create a need for new products or services.

4.1.1 Knowing available government support and legal requirements needed to

start a business. Discusses the different programs to assist small businesses

such as finance, marketing, training and human resource development, and

product development and technology assistance

4.1.2 Conducting marketing research considering the 7P in marketing

Creating and testing a product prototype based on the 4Ms of operations

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4.2 Developing a business plan

4.2.1 Product/service plan aims to discuss the activities, decisions and

responsibilities of managing the resources which are dedicated to the

production and delivery of products and services.

4.2.2 Market plan aims to discuss the process of planning and executing the

conception, pricing, promotion and distribution of ideas, goods, and services

to create exchanges that satisfy individual and organizational objectives by

estimating potential market demand, analyzing the competitors, setting the

price the product/service reasonably, adopting a good product name for

branding, and promoting the products/services in various ways to increase

sales

4.2.3 Financial plan aims to discuss the business costs, preparing financial

statements, and analyzing financial performance

5. Training on implementing a business plan

5.1 Keeping Business records will highlight importance of recording all business

transactions, interpreting financial statements, and determining profit and losses.

5.2 Training on Cooperative management skills aims to encourage the cooperative

form of enterprise which will provide the youth a means to create their own

employment, and participate as member-owners of a cooperative.

5.3 Youth exchange program from other LGUs aims to provide the young

entrepreneurs exposure to gather and exchange knowledge and business ideas with an

experienced entrepreneur.

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5.4 Establishing LGU-based youth business centers aims to enable the youth to

become entrepreneurs through the provision of continuing business training,

mentoring, and the provision of loan facility or funding to start small enterprise. The

youth center will draw on the LGU’s existing human resources by involving

community business leaders and soliciting their assistance in business training and

mentoring. The youth center is envisioned to provide a resource referral that provides

information and assistance to existing and potential young entrepreneurs and job

seekers.

B. Youth employment

Employment is a major problem in our country. Finding decent work, unemployment

and underemployment are major issues in the country. Moreover, poverty drives most of the

youth to leave school and look for employment to help their families. According to Entwistle

(2008), in the developing world, a constraint faced by the youth is the necessity for them to find

employment and work even before they develop skills valuable to their employers. Such

economic necessity coupled by their lack of access to educational opportunities leads to a cycle

of low-level employment.

Young people throughout the world are two to three times more likely than the older

generations to be out of work. In the Philippines, some 56.7 million people are between 15 and

24 years of age. The youth constitute nearly two thirds of the unemployed, with unemployment

higher in urban than in rural areas, and females facing greater difficulties than males. Youth are

not working in key industries. Youth unemployment can also be attributed to limited access to

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information on job opportunities, and education has proved no guarantee for employment

(http://www.ilo.org/manila/projects/WCMS_124605/lang--en/index.htm).

One of the major challenges facing governments today is the reduction of youth

unemployment (Schoof, 2006 as cited in Entwistle, 2008). In our country, jobs for the youth

exist can be found in micro-enterprises. Unfortunately, the youth may not have access to the

job-relevant education required hence, most of them are only able to obtain jobs that are low-

paid, unstable, and lacking benefits and advancement potential (Global, 2006 as cited in

Entwistle, 2008).

1. Offer summer employment program to provide or augment their income by encouraging

employment during summer and/or Christmas break. The LGU will provide the youth

paid summer employment for up to six weeks. The youth can work in a variety of entry-

level jobs in government agencies, hospitals, partner small businesses, or retail

organizations

2. Provide work appreciation program to develop work values, work appreciation and work

ethic by exposing the youth to actual work situations. This is in support to the Work

Appreciation Program (WAP) or the KABATAAN 2000 program being implemented by

the Department of Labor and Employment (DOLE). This is meant to provide exposure to

meaningful and productive activities for the youth to appreciate work and develop proper

work ethics. In this program, they will be given opportunities to gain experiences in

working environments provided by the sponsoring companies. The youth would be

introduced to work procedures, work standards, machines, tools, and work environment

relevant to the performance of specific work.

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3. Introduce youth apprenticeship and employment program to give professional

qualification to young unemployed people through exposure to actual work and training

periods. This intervention aims to primarily serve the unemployed youth who are unable

to find a source of income. During the whole apprenticeship and employment program,

the youth is given wage. The apprentice can be on the vocation of his/her choice so they

can be given the opportunity to practice applying their skill.

4. Create a Working Youth Center to increase their level of awareness on matters affecting

workers and to develop their skills to equip them for employment. The LGU will be

encouraged to support this program between various government agencies and

departments. The aim of the Working Youth Center program is to strengthen working

youth organizations, to increase their level of awareness on issues and matters affecting

workers and to develop their skills to equip them for employment.

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