AM+DG
A Potential Problem for K-12 in the Philippines:
Differences in the Employability of Senior High School
and College Graduates
An Undergraduate Thesis
by
Sanchez, Manuel Luis T. II
and
Torres, Yzabel Bernice L.
Honor Statement
“I attest that this thesis I have submitted is my won. I have not cheated, plagiarized, nor received
unauthorized assistance in the completion of this paper.
I have obtained the required prior consent for the use of the data for this research.
I understand that the University of the Philippines may impose the commensurate sanctions and
penalties for instances of academic dishonesty committed in the completion of this paper.”
Manuel Luis T. Sanchez II
Yzabel Bernice L. Torres
ABSTRACT
The K-12 program’s original goals were to have work-ready graduates able to find
jobs without needing a college diploma/degree. The program supposedly would increase the
work qualifications of senior high school (SHS) graduates. In this study, we analyzed the
effect of the new program on the employability of such individuals. A survey was conducted
for Manufacturing and Retail/Wholesale/Shopping firms in order to assess the firms’ demand
for and opinions on SHS graduates. Results show that firms do indeed have demand for these
graduates, but this is no different from the demand for the previous batch of high school
graduates. Only low-level jobs were available to the SHS graduates, mainly due to the lack of
information about the graduates’ abilities. This study also applies a Logit Regression Model
using the Labor Force Surveys for 2017 and 2018, which include the first two batches of SHS
graduates. This empirical analysis mainly shows that college graduates generally have a
higher probability of being employed than SHS graduates, except when we factor in age.
Firms are willing to hire more SHS graduates; however, they may be considered too young
for the jobs they offer. Overall, the results indicate that SHS graduates need to be marketed
more for the skills and capabilities they have to be employed more readily by firms.
Keywords: Senior high school, K to 12, Basic Education, Labor Market, College,
Employment, Employment Rates, Employability, Skills
i
ACKNOWLEDGEMENTS
We would like to express our gratitude to the following people for their continuous support
and encouragement every step throughout the process.
First and foremost, to our thesis adviser, Margarita Debuque-Gonzales, Ph.D., for her
generous support and dedicated involvement throughout our study. Without her guidance and
motivation, this paper would not be possible.
To Orbeta, A. C., Lagarto, M. B., Ortiz, M. K. P., Ortiz, D. A. P., and Potestad, M. V. (2018)
for their paper that served as both inspiration and backbone for this study and to Aurangzeb,
D., and Asif, K. (2013) for their model which we used in this paper.
To all of our previous teachers, in Economics or not, for providing us with the foundation of
knowledge which led to the development of this thesis.
To our friends, Cariza, Agatha, Patrick, Cyril, Sam N., Zarah, Sam B., and more, for sparing
their time, knowledge, and support in order for us to accomplish this paper and for being our
source of strength throughout the semester.
To our respective families for their overflowing love and endless support for us which helped
us overcome the hurdles we may have faced. None of this would be possible without them.
Lastly, to our Almighty God who never gave up on us when we were down and provided us
the wisdom and strength to do whatever it took to finish this paper.
ii
TABLE OF CONTENTS
ABSTRACT
i
ACKNOWLEDGEMENTS
ii
CONTENTS
iii
I.
II.
Introduction
1
Literature Review
A. Returns to Education
2
B. Human Capital Theory and Screening Hypothesis
3
C. Prospects of SHS Graduates
3
D. Demand for Unskilled Labor
4
E.
4
Summary
III.
Data
5
IV.
Model
9
V.
VI.
Results and Discussion
10
Conclusion
20
REFERENCES
​22
APPENDICES
25
iii
I.
Introduction
When K-12 was finally implemented in the Philippines, it raised quite the
controversy. The goal of this program was to give more opportunities for students to master
concepts and skills that could be used to prepare them for the different tracks they will take,
may it be for their tertiary education or for employment. Moreover, the idea was to better
equip students with information, media and technology skills, learning and innovation skills,
effective communication skills, and life and career skills when they graduate in order for
them to be more employable. Students were now given the option to look for work even
before finishing a college degree. Theoretically, this would not only save families money
(paying for 2 more years, instead of 4), but this would also result in immediate and higher
wages (as compared to previous high school graduates). This should have been an easy win
situation—less cost, but similar gains, than college. However, this may not be the case.
Due to the recent introduction of the K-12 program in the Philippines, a new source
for labor has emerged. Senior high school (SHS) graduates were supposedly capable of
attaining careers without the need for college diplomas. This would theoretically increase the
workforce by a substantial amount. However, few studies exist on the topic in general and
even less on the effectivity of the program in the Philippines.
This study aims to highlight the effectivity of the K-12 program by determining
whether the new program was successful in producing graduates that would be readily
employed by companies. Hence, this thesis will look into the different perspectives of the
labor market on the overall employability of senior high school graduates when compared to
college graduates. Not only will we study the available data on the past few years of the
program, but we will also be looking into the firms’ side of the situation.
We attempt to address this research question by first surveying private firms to assess
their willingness to hire SHS graduates. We then run a logit regression to compare the
probability of SHS graduates being employed as opposed to college graduates, and also
calculate the employment rates of these graduates during the available periods. Combining
the insights of the firms from the survey with the available data on the program, we arrive at
conclusions that can help determine whether the K-12 program is in any way successful.
1
The results of our study seem to imply a drastic lack of marketing for the SHS
graduates, which negatively affects the chances of their being employed. Overall, firms still
have somewhat incomplete and skewed outlooks on these graduates; thus, they are less likely
to be employed as compared to their college counterparts in most cases. However, the results
also seem to imply a possible solution to the K-12’s shortcomings.
II.
Literature Review
A. Returns to Education
Kane and Rouse (1995) mainly focus on the returns of two-year and four-year college
stints. Their findings support the concept of positive returns to education, with returns on
four-year college courses being higher than those for two-year college courses and returns on
two-year college courses being higher than having no college education.
Hung, Chung, and Ho (2000) claim that the expected rates of return of senior
secondary students on higher education have a massive impact on their decisions on whether
to pursue tertiary education or to work right after secondary school. They conclude that
secondary students who pursue college expect to have a much higher rate of return on higher
education than those students who enter the labor market immediately after secondary school.
Research by Carneiro, Heckman, and Vytlacil (2011), which presents an empirical analysis of
marginal returns to college, supports this finding. The authors state that most students will
indeed “sort into schooling” depending on the returns or gains to education.
Martins and Jin (2010) discuss whether benefits from an increase in education may
spill over to employees with less education. Based on their results, it does seem to be the case
that the spillovers indeed occur and produce higher returns to individuals with lower levels of
education. The study concludes that there is a stronger relationship between the average level
of education in the firm and wages rather than from the individual’s own level of education to
their wage. The study does mention, however, that the gap between the firm-level and
individual level results depends mostly on how much spillover occurs. Moreover, it seems as
2
if this extra benefit is much more significant if there is a wider range of educational levels,
and if there is an interaction between both groups.
Bhandari and Bordoloi (2006) suggest that social benefits received from a higher level
of education would affect the individual’s demand for education, and in turn, the private
benefit to education. The study concludes that there is a significant increase in benefit from
an increase in education. This comes in the form of not only higher wages, but also a
possibility for the level of education to counter the effects of other factors that may actually
decrease an individual’s wage rate.
B. Human Capital Theory and Screening Hypothesis
One important theory that may aid in this study would be Human Capital Theory,
attributed to economists Gary Becker and Theodore Schultz (Walters, 2004). This framework
states that education produces more productive and efficient workers—and thus higher
returns—partly due to the higher attractiveness of such workers to firms seeking labor.
Groot and Oosterbeek (1994) discuss the effect of different factors on future earnings:
namely, a negative relationship of earnings with skipping classes and a neutral relationship
with failing classes or repeated years, both support Human Capital Theory. In a study done
by Olaniyan and Okemakinde (2008), this theory also explains the positive correlation
between education and economic growth and development, which are mainly due to higher
productivity of the population owing to high-quality education. Education can therefore be
seen as a societal investment that prepares the labor force for better individual performance,
resulting in higher productivity of firms and overall gains in terms of stronger economic
growth and development (Nafukho et al., 2004; Walters, 2004).
In contrast, the Screening Hypothesis contradicts the belief that education increases an
individual’s productivity. It instead hypothesizes that education is more of a “device for
signaling preexisting ability differences” which means that for employers, having a college
degree means a greater amount of skill (Layard and Psacharopoulos, 1974). In this study,
however, these two theories need not contradict each other, but may each provide insight into
the employability of the SHS graduates as compared to college graduates.
C. Prospects of SHS Graduates
3
In one of the few studies done on the K-12 program in the Philippines, Orbeta et al.
(2018) deal mainly with studying the prospects of SHS graduates. They look into the SHS
graduates’ qualifications, the graduates’ demand for employment, and also the firms’
knowledge on and willingness to hire the SHS graduates (Orbeta, Lagarto, Ortiz M.K., Ortiz
D.A., and Potestad, 2018). The paper mentions that, more often than not, the firms are still
unaware of the program; to them, SHS graduates seem no more qualified than previous
batches of students who graduated from fourth year high school.
One issue brought up by the study is how many firms have difficulty differentiating
SHS graduates from the previous, supposedly less qualified, batches (Orbeta et al., 2018).
This leads to the question of whether the program really does increase the demand for the
new brand of unskilled labor. Moreover, there are findings that most jobs granted to the SHS
graduates are entry-level jobs, which are not necessarily different from those offered to
previous high school graduates. While such observations do raise the question of whether
SHS students are deemed better than the previous high school graduates, this paper is more
focused on the comparison of SHS graduates to college graduates since the K-12 program
was supposedly designed as a pseudo-alternative to college—that is, graduates of the
program have supposedly learned enough to work straight after graduation instead of
pursuing a college degree. Doing this will highlight the direct effects of the program
considering that the outcome of said program is to produce work-ready students.
This frame of thinking not only seems to take Human Capital Theory’s idea of more
years of education leading to more productive workers as a given, but also uses the Screening
Hypothesis as a way to explain firms’ demand for these graduates. It may be the case that
while SHS graduates are already more skilled than previous high school graduates and
current JHS completers, but because of firms’ inability to differentiate the two groups, the
supposed benefit derived from Human Capital Theory may not be observed.
D. Demand for Unskilled Labor
Unfortunately, due to the recency of the K-12 program’s implementation in the
country, few studies have been done to determine the demand for SHS graduates in general.
However, studies done abroad relating to the demand for unskilled labor can be used to
4
provide some insight e.g., Goux and Maurin, 2000; Roberts and Skoufias, 1997). These focus
mainly on the demand for unskilled labor in response to other factors such as changes in
wage and advancements in technology, and conclude that unskilled labor is generally much
more sensitive to changes in these factors.
E. Summary
This thesis seeks to consider comparing employment rates and firms’ demand for SHS
graduates compare to college graduates. This is done to assess the demand for SHS graduates
in the labor market as well as show a decent estimation of the returns to education. In line
with this, we consider SHS graduates under the umbrella term “unskilled labor” despite the
supposed added benefit of the extra years in their respective strands.
In addition, this study mainly focuses on the perspective of manufacturing and
retail/wholesale/shopping firms on the differences in the employability skills and demand for
SHS graduates versus college graduates. Considering college graduates as the standard will
allow people to draw conclusions regarding the K-12 project’s effectivity at producing
work-ready graduates. The gap between the employment rates may very well be an indication
on the work-readiness of these graduates.
III.
Data
A. Survey of Firms
We initially generate our own data by conducting a survey to gather firms’
perspective on SHS hiring. This survey was sent to firms via an email containing a link to the
survey. The survey itself was roughly based on a survey done by PIDS in the study “Senior
High School and the Labor Market: Perspectives of Grade 12 Students and Human Resource
Officers” (Orbeta, et al., 2018). The questions were condensed and given discrete options in
contrast to the open-ended format of the original version.
We chose specific traits that we considered to be the most valuable when it comes to
hiring potential workers. These mostly came from the website Benefit Bridge, which
provided a clear and comprehensive list of traits that in turn represent a wider range of traits,
5
such as determination, loyalty, and competency. To ensure that we were able to get a decent
list of possible traits, we also looked at sites such as Forbes, Entrepreneur, Atman Co., and
Employment North. These sites seemed to have similar lists, with many of the listed traits
being similar or close to the options given by Benefit Bridge; thus, we were able to consider
the said list to be a condensed form of the general list of traits. This allowed us to require
each respondent to rank each trait by what they deemed as most to least important.
Figure 1.1 - Type of Firms
The survey was sent to firms who were either in the manufacturing or
retail/wholesale/shopping industry. While these two types are only a few of the many
different types of firms, studying these industries alone should allow us to get a decent
estimate of the employability of SHS graduates as compared to that of college graduates.
These two industries are the main industries in which SHS graduates stand a higher chance of
being employed since these types of firms are the ones that employ a decent amount of
unskilled labor.
The firms range from small to large firms with anywhere from less than 100 to over
1,000 employees. Majority of the responses were from smaller firms (less than 100
employees), followed closely by larger firms (more than 1,000 employees), then by firms
with between 100 and 500 employees (see Figure 1.2).
6
Figure 1.2 - Size of Firms
B. Regression Analysis
Household-level data were obtained from the Labor Force Survey (LFS) of the
Philippine Statistics Authority (PSA) for the years 2017 and 2018. The LFS is conducted
quarterly for 51,000 households or approximately 179,000–180,000 individuals. PSA
provided complete data for the 1st, 2nd and 4th quarters (January, April and October) of 2018
and so the researchers included only these specific quarters for the year 2017 to be consistent.
The LFS considered individuals who are 15 years old and above. For this study, we
considered the following variables: sex, age, highest completed grade, household size, and
employment status of the individuals. The population can be classified as either employed,
unemployed, or not in the labor force.
However, in this study, only those who are either employed or unemployed were
considered. Data for those who are not in the labor force were dropped. Furthermore, only
those observations containing individuals who, at the very least, have graduated from SHS or
from college were retained in this study. The quarterly statistics this survey provides includes
the living situation and educational attainment of the individuals which may account for the
changes in their employment status.
7
Table 1.1 - All variables used for the Logit or Logistic Regression Model
Variable
Variable Name
Definition
Source/s
Household Size
SIZE
Size of household
Philippine Statistics
Authority (PSA)
Sex
SEX
Male or Female
(Dummy Variable)
Philippine Statistics
Authority (PSA)
Age
AGE
Age of the
participants of the
Labor Force Survey
Philippine Statistics
Authority (PSA)
Highest Grade
Completed
GRADE
The highest
educational
attainment
Philippine Statistics
Authority (PSA)
Employment Status
EMP
Employed,
unemployed, or not
in the labor force
Philippine Statistics
Authority (PSA)
Highest Grade
Completed
LEVEL
SHS graduate or
College graduate
(Dummy Variable)
Philippine Statistics
Authority (PSA)
Employment Status
new_EMP
Employed or
Unemployed
(Dummy Variable)
Philippine Statistics
Authority (PSA)
8
Table 1.2 – Mean and Standard Deviation for all variables used for the Logit or Logistic
Regression Model
new_EMP
Level
Sex
Size
Age
Mean ± SD
Mean ± SD
Mean ± SD
Mean ± SD
Mean ± SD
2017
0.930±0.255
0.999±0.030
0.447±0.497
5.024±2.259
36.957±12.331
2018
0.926±0.262
0.975±0.157
0.448±0.497
5.073±2.282
36.537±12.540
IV.
Model
Employment rates used in this study were calculated using the basic employment rate
formula (number of employed individuals divided by the total population). Graduates
choosing to take further education are subtracted from the denominator in order to compute a
more accurate employment rate. As such, we calculated the employment rates for the SHS
graduates and the college graduates, giving us two employment rates per quarter. The
numbers used to get the employment rates were taken from the LFS. For the SHS
employment rate, we only considered those who completed grade 12 and have not taken any
further studies. For the college employment rate, we considered college graduates from all
the available courses. We take the sum of all the graduates of each course as the total college
population.
We use a similar model to that of Aurangzeb (2013), who looked into the effects of a
country’s gross domestic product (GDP), exchange rate, inflation rate, and population on the
unemployment rates over time. Due to lack of available data, we were unable to make a
similar time series study. Instead, our main specification takes the following (cross-sectional)
form:
9
where ​new_EMP represents the outcome variable employment status as a dummy variable
wherein 1 denotes employed individuals and 0 denotes individuals who are not employed
(comprises those who are unemployed and not in the labor force). Other dummy variables
were considered such as the highest grade completed by an individual (LEVEL), taking the
value of 1 for college graduates and 0 for SHS graduates; and the variable SEX (value of 1
means for males and 0 for females). Meanwhile, the variables AGE and SIZE represent age
and the household size, respectively, of an individual.
The new set of equations namely focus on taking the effects of the highest
accomplished grade (that being either SHS graduates or college graduates), sex, age, and
household size on whether or not the person is employed. Therefore, we used the Logit
Regression Model for a more accurate measurement of the effects of explanatory variables on
a dichotomous outcome variable. This regression model determines parameters that
maximizes the likelihood of observing the character of interest of the study in order to
determine the overall fit of the model.
V.
Results and Discussion
A. Survey of Firms
The survey conducted sought to find the differences between the employability of
both senior high school (SHS) graduates and college graduates. Firms were asked whether
they would hire SHS and/or college graduates, what attributes they found most important for
graduates to be hired, how many graduates have applied to their firm, and how many have
been hired. For this survey, we focused on manufacturing and retail/wholesale/shopping
firms and were able to get 27 respondents. More than half those surveyed were
manufacturing firms, with 61.5% of respondents, while the remaining 38.5% were from
retail/wholesale/shopping firms. As shown earlier (Figure 1.2), a significant number of
respondents were firms smaller than 100 employees, followed by firms with over 1,000
employees.
10
In terms of which group of graduates the firms prefer, there seems to be no bias
against one or the other. Of the surveyed firms, only around 7.4% have said that they are not
willing to hire SHS graduates (Figure 2.1). This is in stark comparison to a whopping 100%
of surveyed firms saying that they were willing to hire college graduates (Figure 2.2). This
can perhaps be attributed to firms’ views on SHS graduates being somewhat skewed. As
noted in an earlier study (Orbeta et al. 2018), many firms are unable to tell the difference
between the SHS graduates from junior high school (JHS) completers as well as the previous
batch of high school graduates. This implies a failure in preparing SHS graduates for entry
into the labor force, in communicating the preparedness of new graduates to firms, or both.
Either way, this seems to be enough to explain why a few firms are unwilling to hire SHS
graduates. This is further supported by the firms’ answers when asked to explain why they
are unwilling to hire SHS graduates.
Figure 2.1 - Firms’ Willingness to Hire SHS Graduates
11
Figure 2.2 - Firms’ Willingness to Hire College Graduates
The firms surveyed believe that SHS graduates lacked experience or training for the
available jobs. This is especially true for some bigger firms which claimed they needed
“experienced professionals” given the the nature and size of their business. However, a few
respondents also said that they may be willing to accommodate SHS graduates for operator
positions, namely positions that needed little to no training and are typically entry-level jobs.
This once more coincides with the study by Orbeta et al. (2018), which stated that SHS
graduates were normally offered entry-level jobs despite their supposed increased training.
Human Capital Theory suggests that the increased two years in education should still increase
the overall wages earned by the SHS graduates as compared to that of the previous high
school graduates and to that of JHS completers. However, if the results from Orbeta et al.
(2018) and the responses to our survey are to be considered, it may be the case that the SHS
graduates are unable to benefit from that increase in years of education, and may only benefit
from the supposed increase after their completion of college.
This conclusion seems to be once more supported by the outcome of the survey with
regards to the number of SHS graduates applying for jobs at these firms as well as the
number of SHS graduates that were hired in these firms. For both questions, around half of
the respondents said that less than 10 SHS graduates have applied and have been hired to
their firm (Figures 3.1 to 3.2). Only around a third of the respondents have gotten more than
50 SHS graduate applicants, and only around a quarter of respondents said that they have
12
hired more than 50 applicants. This is a stark difference to the responses for college graduates
in which around half of the respondents said that they have received over 50 college
applicants and over 50 applicants have also been hired (Figures 3.3 to 3.4). Less than a
quarter of respondents have said that they have received less than 10 college applicants and
have hired less than 10 applicants.
This seems to show that not only are firms less willing to hire SHS graduates, but
even if they are, not too many SHS graduates are applying for jobs either. This drastic
difference in results leads us to believe that a significant amount of SHS graduates still enter
college instead of immediately searching for a job. This is once more supported by the
Orbeta et al. (2018) study where firms they studied claimed that “SHS graduates were not
applying for jobs because of the following reasons: firms have no vacant positions in the first
place, SHS graduates (regardless of tracks) wanted to go to college first, SHS graduates were
hesitant to apply because they felt they are not yet prepared to work, and graduates have no
confidence to compete with college graduate applicants” (Orbeta et al., 2018).
These three reasons seem to adequately explain why the college graduates’
employment rates are so much higher than that of SHS graduates. It may be the case that
heading into college is seen as more profitable for the SHS graduates, as more years of study
would likely raise returns. In addition, firms may not see SHS graduates as being work-ready
in comparison to college graduates. This conclusion is consistent with both human capital
theory, which claims more years in education lead to higher future wages, and screening
theory, which claims that the increase in education can be seen as a way for firms to select
more capable workers. This can be the reason why the firms are still unable to differentiate
SHS graduates from the previous batches, and thus, why the SHS graduates are unable to
immediately benefit from the additional two years of education.
13
Figure 3.1 - SHS Applicants
Figure 3.2 - Employed SHS Graduates
14
Figure 3.3 - College Applicants
Figure 3.4 - Employed College Graduates
The results seem to align with the answers regarding traits a worker should have in
order for a firm to consider hiring an applicant. When asked to rank the following traits—
leadership skills, organizational skills, excellent written/verbal communication, intelligence,
active listening skills, and honesty, ambition, and a strong work ethic—the results seemed to
match the general stance on the SHS and college graduates. For both sets, honesty, ambition,
and a strong work ethic were ranked as the most important. This is not very surprising
15
considering how these are traits that employers generally look for in their workers, whether
they be high executives or simple maintenance staff.
What appears most striking are the results for the “least important” and other lower
ranked traits. For SHS graduates, firms ranked both excellent written/verbal communication
and leadership skills as least important, followed closely by intelligence (Figure 4.1). This
seems to imply that the jobs offered to SHS graduates do not necessarily require these traits.
These kinds of jobs would mostly be entry-level jobs or jobs that do not require much
technical/specialized skills. These would tend to be line workers, waiters, janitors, etc. This
implication is further strengthened when one considers the other less important traits such as
active listening skills, organizational skills, and leadership skills. This once more supports the
idea that firms do not necessarily need these traits in applicants without a college degree. If
we take the sum of the results for the lowest two positions, we see that a significant number
of the responses ranked leadership skills in the last two slots. This is followed by excellent
written/verbal communication, and then active listening skills. This pattern strengthens the
conclusion that these firms would tend to assign lower-level jobs, which do not necessarily
need the initiative of the workers, to SHS graduates.
Figure 4.1 - Qualifications for SHS Employment
When looking at these same traits when ranked for college graduates, these traits
associated with taking initiative, leadership, and the like, seemed to rank much higher on
average when compared to that of the SHS group (Figure 4.2). This once more matches the
assumption that college graduates are more trained and thus can be given higher positions or
positions of power. These jobs can be that of management or such. The trait ranked the least
important for college graduates were active listening skills. This is even more surprising since
16
it was the majority vote for both the 5th and 6th slots, the last two slots in the rankings. It
should be noted that traits such as leadership, intelligence, and excellent written/verbal
communication ranked higher, with majority ranking them in either the 2nd, 3rd, and 4th
spots. This clearly shows a stark difference to that of the rankings for SHS graduates.
The rankings this time seem to imply a system that offers them jobs that allow for
more initiative compared to those offered to SHS graduates. It is in this regard that the
college graduates get access to higher jobs that may be more skill-based but also jobs that
provide higher incomes. It may be in that sense that the higher education that comes with a
college degree not only provides a way for firms to segregate between higher-cost but higher
productivity workers from lower-cost but lower-productivity workers, but also provide a
possible explanation for the wage differential, supposedly brought out by an increase in
education, between a SHS graduate and a college graduate.
Figure 4.2 - Qualifications for College Employment
B. Regression Analysis
To provide an easier and more comprehensive interpretation of the logit regression
model, we use average marginal effects. The pooled regression results in Table 2 indicates an
increase in the predicted probability of being employed for college graduates compared to
SHS graduates (Columns 1 – 3) which is statistically significant at the 1% level. However, in
Column 4, including age as an independent variable results in a negative effect on the
17
probability of being hired in the case of college graduates as compared to SHS graduates
(statistically significant at the 1% level).
This can be explained in separate regression results for 2017 and 2018 as presented
respectively in Table A.1 and Table A.2 in the Appendices. Adding age as a variable for the
year 2017 alone would decrease the probability of college graduates being hired but this
effect is not significant. This implies that college graduates are more likely to be employed
than SHS graduates mainly because of the SHS students’ age or maturity. However, in 2018,
one sees the same negative effect on the employment of college graduates, but this time the
relationship is statistically significant at the 1% level.
Table 2. Average Marginal Effects of the Pooled Data (2017 and 2018).
new_EMP
LEVEL
(1)
(2)
(3)
(4)
0.0662***
0.0639***
0.0591***
-0.0239***
(0.00607)
(0.00607)
(0.00608)
(0.00589)
-0.0228***
-0.0229***
-0.0279***
(0.00201)
(0.00201)
(0.00196)
-0.00570***
-0.00249***
(0.000404)
(0.000407)
SEX
SIZE
AGE
0.00663***
(0.000149)
Observations
66,873
66,873
66,873
66,873
18
Note: Standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1
Considering other variables, sex may also affect the employment status of an
individual, as females have more chances of being employed than males at a 1% level of
significance (Columns 2 – 4). Results also show that a unit increase in household size would
decrease the probability of being employed (Columns 3 and 4) and that a unit increase in age
1
would have a positive impact on the probability of being hired by firms (Column 4).
These results give support to Human Capital Theory where more years of education
can be expected to lead to higher returns and higher employment attractiveness of college
graduates for firms. Hence, in accordance with the regression results on the employment level
of individuals, firms prefer to hire college graduates since they already have the academic
degree and skills employers need. However, factoring in age, the results seem to imply that
college graduates are not actually more likely to be hired and that the bias observed may be
simply due to perceptions relating to lack of experience and maturity of SHS graduates. The
latter may be more likely to be hired with proper marketing. If there can be an effective
strategy to inform firms about the capabilities and skills of SHS graduates, then firms may be
much more willing to hire them.
C. Employment Rates
While it is indeed true that most firms are willing to hire SHS graduates, this does not
necessarily mean that the graduates are indeed getting employed. Firms are still unable to
differentiate SHS graduates from JHS completers and the previous high school graduates, and
this association itself proves to be a barrier to SHS graduates’ employment chances. This
association may tend to result in such graduates being viewed as “less qualified” or “less
productive,” making it significantly more difficult for SHS graduates to land a job if they
were in competition with college graduates. This would result in SHS graduates applying to
firms yet not getting employed, thus lowering their employment rates.
1
It should be noted, however, that despite the effects of age on the probabilities of SHS graduates being more
likely to be employed compared to college graduates, these regression results do not control for different types
of jobs, positions, and level of income due to the lack of available data provided in the LFS.
19
Table 3.1. 1st, 2nd and 4th Quarter Employment Rates for SHS Graduates and College
Graduates
Adjusted SHS Employment Rates
Adjusted College Employment Rates
1st Quarter 2017
66.67%
92.80%
2nd Quarter 2017
83.33%
92.15%
4th Quarter 2017
90.91%
93.96%
1st Quarter 2018
88.24%
92.72%
2nd Quarter 2018
84.16%
92.88%
4th Quarter 2018
81.69%
92.99%
Table 3.2. Overall Employment Rates for SHS Graduates and College Graduates
Adjusted SHS Employment Rates
Adjusted College Employment Rates
2017
82.76%
92.99%
2018
82.98%
92.86%
Adjusting the measure to only include the SHS and college graduates that are part of
the labor force (excluding the SHS graduates entering college and the college graduates who
pursue further studies), the employment rates computed for SHS graduates range from 66%
to 91% while those for college graduates range from 92% to 94% (Table 3.1). This supports
the idea that majority of SHS graduates choose to stay out of the labor force after graduation
and opt to pursue further study. Similarly, we can see that if we pool the data for each year,
the employment rates for college and SHS graduates would still have about a 10% difference
in favor of college graduates (Table 3.2).
Given the better employment rates, it can be safely argued that entering college may
still be the much better option. Since both the Screening Hypothesis and Human Capital
Theory imply that college graduates will get higher wages anyway, it is no surprise that the
employment rates are so low and that SHS graduates see college as the more profitable
20
option. If the employment rates of SHS and college graduates did not have such a drastic gap,
it may be argued that SHS graduates are better off finding a job than entering college.
However, this is not the case. This is worsened by the fact that the available jobs and wages
for the SHS graduates, if employed, are not so good either.
VI.
Conclusion
With the implementation of the K-12 program in the Philippines, SHS graduates are
now a new source of participants in the labor force. This study aimed to assess the effectivity
of the new program—i.e., whether SHS graduates are deemed employable or not—and the
incentives for such graduates to enter the workforce. It is because of this that we mainly
looked into returns to education, the demand for skilled and unskilled labor, and the
perspective of firms on SHS graduates.
The survey conducted allowed us to draw out the firms’ general stance on SHS
graduates and whether they were welcome in the labor force. With the results of the survey,
we were able to conclude that even if firms are unable to distinguish SHS graduates from JHS
completers and previous high school graduates, firms are still open to the idea of accepting
SHS graduates. Combining this with the regression results and the calculated employment
rates, college graduates generally have greater probability of being employed. However, SHS
graduates also have a chance of being employed if firms would consider their capabilities.
The data suggests that paying for two extra years of education of an individual would not
directly be beneficial if employers would not be open to this new source of labor force.
Consequently, the K-12 program did not fail but rather needs to be improved at developing
work-ready students, specifically, in disclosing more information regarding SHS graduates to
firms.
Based on the current data, if no further adjustments or improvements are made, it may
seem to be the case that the K-12 program is quite a high-risk, low-return choice for students,
thus, making college a more attractive option. However, due to the recency of the K-12
program, the total scrapping of the program may lead to significant issues. Not only would
public backlash be a possible outcome, considering that it would, in effect, void the efforts of
21
the current and previous batches of K-12, but it may also result in even more confusion in the
labor market than there is currently.
One of the main issues brought to light by our study was the lack of information and
“marketing” about and for the SHS graduates. This could be remedied by simply providing
more knowledge and information to the labor market about the program, the capabilities of
the graduates produced by the program, as well as any other policies related to the program.
While the program may allow for an increase in the overall labor participation rate,
and provide employment to more people without need for a college degree, it does not ensure
that the jobs offered are of a higher quality or standard. With many SHS graduates choosing
to enter college, it would seem that the program has been ineffective at worst or lacking at
best. However, these perceived weaknesses may simply be due to a lack of information
regarding the program and SHS graduates. If the program were to succeed, policies to correct
this lack of information would have to be put in place.
22
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25
APPENDICES
Table A.1. Average Marginal Effects per variable for 2017.
​new_EMP
LEVEL
(1)
(2)
(3)
(4)
0.0663**
0.0648**
0.0609*
-0.0263
(0.0321)
(0.0321)
(0.0322)
(0.0305)
-0.0229***
-0.0229***
-0.0277***
(0.00283)
(0.00283)
(0.00275)
-0.00508***
-0.00185***
(0.000575)
(0.000580)
SEX
SIZE
AGE
0.00651***
(0.000208)
Observations
32,942
32,942
32,942
32,942
Note: Standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1
26
Table A.2. Average Marginal Effects per variable for 2018.
​new_EMP
LEVEL
(1)
(2)
(3)
(4)
0.0669***
0.0646***
0.0594***
-0.0248***
(0.00641)
(0.00641)
(0.00641)
(0.00633)
-0.0228***
-0.0228***
-0.0282***
(0.00285)
(0.00285)
(0.00277)
-0.00630***
-0.00308***
(0.000568)
(0.000571)
SEX
SIZE
AGE
0.00675***
(0.000212)
Observations
33,931
33,931
33,931
33,931
Note: Standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1
Table A.3. 1​st​, 2​nd​ and 4​th​ Quarter Employment Rates for SHS Graduates and College
Graduates (including those who will pursue further studies).
27
SHS Employment Rates
College Employment Rates
1st Quarter 2017
15.38%
70.64%
2nd Quarter 2017
14.08%
68.79%
4th Quarter 2017
6.67%
72.35%
1st Quarter 2018
9.68%
72.57%
2nd Quarter 2018
15.54%
69.37%
4th Quarter 2018
17.25%
71.62%
Table A.4. Overall Employment Rates for SHS Graduates and College Graduates
(including those who will pursue further studies).
SHS Employment Rates
College Employment Rates
2017
9.72%
70.62%
2018
16.13%
71.21%
28