Philippines loses at least P22B in GDP due to school dropouts — UNESCO


THE Philippines loses billions of pesos every year in foregone earnings due to out-of-school-children, a study made by the United Nations Educational, Scientific and Cultural Organization (UNESCO) revealed, with the amount equating to nearly one percent of the country’s gross domestic product (GDP).

A study published by UNESCO Bangkok and the Results for Development Institute (R4D) looked at the economic cost of out-of-school children among seven countries in Southeast Asia — including Cambodia, Indonesia, Lao-PDR, Philippines, Thailand, Timor-Leste and Vietnam — using two methods of measurement.

In the first method, which reckons GDP losses via a set wage premium vis-a-vis the number of out-of-school-children, the study found that the Philippines loses 0.18% of GDP every year due to foregone primary and secondary education.

With the country’s GDP reaching P12.63 trillion in 2014, the losses would translate to about P22.73 billion.

The wage premium in the Philippines, defined as ‘the expected percentage difference in earnings between people who complete a given level of education compared to those who do not,’ is set at 8.7% in primary education and 6.0% in secondary education.

Among the seven countries, the Philippines’ losses was found to be the second lowest, higher only than Vietnam whose losses were pegged at 0.11% using the same model.

In the second method, which derived the losses using a labor economics model that plots wages against a population’s years in school, found even bigger losses amounting to 0.7% of the GDP.

The figure would translate to almost four times the amount in the first approach, amounting to about P88.40 billion. In this approach, the Philippines was found to also have the second lowest losses, against Vietnam’s 0.3%.

Citing 2009 data for the Philippines, the study said that there are more than 1,400,000 out-of-school children in the Philippines, the highest among the seven surveyed nations in the study.

“[T]he two approaches show that there are significant economic incentives to educate [out-of-school-children] in Southeast Asia,” the study concluded.

“Given the large and numerous benefits associated with primary education, programs that increase access to education for [out-of-school-children] are critical interventions to promote economic and social development,” it added. — Alden M. Monzon