Incentives, reforms vital to spur enterprise based training

The government should consider funding or incentives to encourage adoption of enterprise-based training and address the growing need for constant learning of workers in the Fourth Industrial Revolution, according to an analyst.

Aniceto Orbeta, Jr., a senior research fellow at the Philippine Institute for Development Studies, said enterprise-based training is “acknowledged as the best form of training” but has an extremely low output in the country.

He pointed to the latest data from the Technical Education and Skills Development Authority showing that in-firm training accounts for less than 4% of the Philippines’ total training output.

The digital age will usher in faster job destruction and job creation, which will require continuous training as workers move from one job to the next, said Orbeta, speaking at a recent webinar on work policy reforms in the post-pandemic period that was organized by the Foundation for Economic Freedom.

Enterprise-based training can answer the need for workforce upskilling and reskilling, but obstacles need to be addressed first, he said.

This form of training has several benefits. For the apprentice or intern, it can facilitate employment, particularly for workers with weak or uncertain paper qualifications.

For the company, it can usher a steady stream of productive workers, and provide an effective screening mechanism through firsthand information on the work attitude of the trainee.

And society can also benefit since enterprise training serves a public good component by facilitating employment and increasing industry and labor productivity.

But Orbeta also stressed the urgent need to reform apprenticeship laws to resolve issues that discourage the uptake of enterprise-based training.

For one, he recommends that apprenticeship should be treated as training, not work, as doing so will “resolve many of these issues.” When considered as training, the apprenticeship will have a pre-specified curriculum, time period, competency assessment and certification, and will be subject to existing relevant regulatory laws.

On the issue of paying the training fee or allowance, Orbeta proposes a sharing scheme between employers and apprentices. The current practice is for the firm to pay 75% of the minimum wage as allowance, with the 25% considered the contribution of the trainee to his own training.

“Explicitly recognizing the contribution of the trainee also recognizes his stake in his own training,” he said.

And since in-firm training has a public good aspect, Orbeta said direct training costs should be partly reimbursable in the form of public subsidy. Firms have been heard saying that “getting this reimbursement is very costly, discouraging them from participating in in-firm training,” he added.

Another issue to be tackled is hiring after training. This should not be a requirement but should depend on the assessment of employers and the concurrence of the apprentice, he said.

“Our recommendation is not to make this mandatory and to give the option to firms and to the apprentice as well the choice to enter into an employment agreement after a training or not.”

Orbeta urged government to invest in enterprise-based training as this “constitutes one of the more effective uses of government money.”

Funding can be in the form of financing onsite or off-the-job portions of the apprenticeship. It can also be as payment of the contributions to social protection systems so the apprentice can be provided social protection.

There should also be incentives for the apprentice who finishes training and for the employer who hires the apprentice. The government should also provide employment facilitation support for trainees who may not be hired by the employers.

At the same time, Orbeta called for the implementation of a program incentivizing the continuing life-long learning and training of workers who want to upskill or shift jobs amid rapid changes in the labor market.

“Firms will be the best venue for this type of training as well, particularly on cutting-edge technologies that form part of the competitive advantage of firms. There’s a need to provide incentives for this kind of training, not just for new workers.”

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