Enhancing manufacturing with skilled workers

The Enterprise-Based Education and Training (EBET) Framework Act addresses the gap between workforce skills and industry demands in the Philippines. It grants tax incentives and subsidies to enterprises investing in skills development, easing employer costs while equipping workers with industry-relevant competencies.

With its implementing rules and regulations finally in place, the law strengthens apprenticeships and dual training, ensuring practical, workplace-ready education.

The manufacturing sector’s skills dilemma. The Philippine Statistics Authority reported that the manufacturing sector employed 1.2 million workers in 2022, a 2-percent increase from the previous year. However, many firms struggle to find workers with the right skills. Based on the Future of Jobs Report 2025 of the World Economic Forum, 67 percent of companies in the Philippines identified skill gaps in the labor market as a top barrier hindering the transformation of their business.

The underemployed stood at 6.5 million in January 2025, highlighting the need for better-quality jobs.

Traditional education emphasizes theory over practical skills, leaving graduates unprepared. Enterprise-based training, which integrates on-the-job experience with classroom learning can help. But only 9 percent of technical-vocational education and training enrollees participate in such programs, emphasizing the need for stronger industry involvement and policy support.

EdCom II and the push for workforce reform. The Second Congressional Commission on Education (EdCom II) advocates for closing the workforce skills gap, identifying three key issues: foundational learning deficits, misalignment between technical education and industry needs, and minimal industry involvement in training. This led to the passage of the EBET Framework Act.

With automation, artificial intelligence, and digital manufacturing rapidly reshaping industries, the Philippine workforce must develop advanced technical skills to stay competitive.

Revitalizing local manufacturing through EBET. A well-trained workforce is key to strengthening local manufacturing by improving productivity, quality, and efficiency while reducing costs from errors and retraining. EBET encourages businesses to invest in workforce development, offering an opportunity to build a skilled local labor force and lessen reliance on foreign workers. As immigration policies tighten, high-quality training becomes even more crucial for job creation and economic stability.

We can also explore initiatives similar to the Balik Scientist Program, which encourages skilled Filipino workers abroad to return home and share their expertise. Offering competitive incentives such as tax benefits and career opportunities can attract top talent. The presence of a highly skilled labor force will also make the Philippines a more attractive destination for foreign investments, further driving economic growth and industrial development.

Recommendations for effective implementation. Strong collaboration between the government and private sector is essential, requiring targeted incentives—such as government-subsidized apprenticeship programs and direct grants for industry-led skills development—to encourage business participation in training programs. Policymakers must also streamline regulations, enhance coordination, and invest in training centers and vocational schools, digital infrastructure, and better transportation systems to foster an environment conducive to industry-led education.

Benchmarking against Asean counterparts. Indonesia and Vietnam have successfully implemented workforce upskilling programs. Indonesia’s pre-employment card (Kartu Prakerja) provides financial aid and online training through private sector partnerships, while Vietnamese government-led initiatives, like the national program on vocational training, aim to strengthen vocational education and align training with industry demands.

While the Corporate Recovery and Tax Incentives for Enterprises and Maximizing Opportunities for Reinvigorating the Economy law includes fiscal incentives for training, refining its approach can maximize effectiveness. The government can also explore additional incentives based on the number of employees or trainees a company accepts or by offering targeted benefits to key sectors like technology, manufacturing, and agriculture.

Updating training curricula of Tesda. To keep pace with technological advancements, training curricula must be regularly updated every two to three years, as recommended by industry standards and workforce needs.

A skilled workforce is the backbone of a thriving manufacturing sector and a resilient economy. The EBET Framework Act paves the way for a future where Filipino workers are equipped with relevant expertise, businesses have access to a competent labor pool, and the country strengthens its foothold in the global market. Now is the time to ensure that workforce development moves beyond policy into tangible results that benefit workers, businesses, and the nation as a whole.

—————-

Gary B. Teves had served as finance secretary under the Arroyo administration.