Cost-Benefit Study on Dual Training System in the Philippines

Why engage in a Cost-Benefit Study?

The result of this study provides the empirical evidence in identifying the critical constraints in the Dual Training System (DTS) in the Philippines, as well as to provide appropriate policy recommendations for TESDA on how to expand and improve the DTS program.

What did the study find - Is dual training profitable for companies?

• Combined short-term and long-term benefits to firms engaged in dual education clearly outweigh the overall costs, ranging from 20 to 75% higher than average costs
• Firms in the Manufacturing and Hospitality sector benefit the most from dual training, outweighing costs by at least 30%
• Large and medium sized firms benefit the most from dual training

Methodology - How to Conduct a Cost-Benefit Study?

STEP 1 - Define Data Sources

This particular costs and benefits study collected information from the firms and Training Vocational Institutes (TVI) that are practicing DTS in the country. As of December 2015, data from TESDA showed 706 firm-partners and 106 TVIs practicing DTS in the Philippines. The data collection for the study covered four regions, with a total of 451 firm-partners and 82 TVIs. Notwithstanding that the firms and TVIs covered are not nationally representative sample, the information collected and the results from the analysis of the empirical data can provide the necessary policy recommendations for the enhancement and improvement of the DTS program in the country.

STEP 2 - Develop Questionnaire

A structured questionnaire to capture the firms’ costs and benefits in participating in the DTS program was developed based on the BIBB’s framework. The firm questionnaire was modified according to the Philippines firms’ peculiar characteristics. The preliminary draft of the firm’s questionnaire was developed at the BIBB Office in Bonn, Germany in June 2015, under the guidance of the technical experts from the BIBB. A team composed of representatives from TESDA, Academe (UP School of Statistics), Technical Vocational Institute (Don Bosco), and from the hospitality and construction sectors, as well as from PCCI-HRDF worked on the development of the questionnaire.

The firm’s questionnaire is divided into six major parts and collects the following information:

Part 1: Gathers information related to the profile of the companies (e,g. type of industry, size of the company, number of employees, location of the company, among others).

Part 2: Seeks information related to the training activities of the company (e.g. number of trainees in 2012, 2013, 2014 and the reckoning period for the costs and benefits of the DTS: 01 July 2014 to 30 June 2015). This part also asks for the Personal Cost of Trainees by Occupation, as well as the costs associated with the trainers.

Part 3: Collects information related to the physical costs of the training by occupation.

Part 4: Asks information associated with the short-term benefits, benefits associated with seasonal demand and long-term benefits.

Part 5: Asks the expenses occurred in giving orientation per training per skilled worker who are not under DTS.

Part 6: Asks more detailed question on the long-term benefits, accidents and wastage in the company.

In addition to the firm’s questionnaire, two other questionnaires were developed for the TVIs and Trainees. While the main focus of the study was the costs and benefits of the DTS for the firm, information associated with the TVIs and the trainees in the practice of the DTS are also important in providing additional information in identifying the key constraints in the expansion of the DTS program in the country.

The firm questionnaire was pilot tested to check that questions are properly phrased and clear to the respondents. Three firms were identified to participate in the pre-testing: DMCI Technical Training Center (Construction Industry), Marco Polo Ortigas, Manila (Hospitality Industry) and Palm Beach Resort (Hospitality Industry). Appropriate revisions were then incorporated into the final version of the questionnaire.

STEP 3 - Collect and Analyze:

The preliminary version of the questionnaire was then turned over to the research team from the University of the Philippines School of Statistics tasked to collect the information from the firms and analyze the results.

A training manual to guide the researchers in the data collection process was developed and several trainings of researchers assigned to cover respondents were conducted.

Letters from TESDA and PCCI were sent to the companies informing them of the research project.

Interviews were done face-to-face, with the President or the General Manager of the firm as the respondent and the Owner or the Head of the Institution for the TVI. Considering, however, the technical nature of the questionnaire, it is a common practice that a Human Resource Manager or the Training Officer or the Operations Supervisor/Manager will provide information to the researcher. As part of the protocol of the research team, the General Manager or President of the firm is the one who will clear the questionnaire and verify its content/responses, before the questionnaire is accepted.

Considering that the trainee’s questionnaire is a rider to the firm’s questionnaire, interviews were conducted only for trainees who were at the premises of the firms during the visit of the researchers. Trainees who were not in the company premises during the time of the visit of the researcher were excluded in the study.

Quality control in the survey operations is a crucial part of the data collection. In particular, two strategies were developed for the study:

Spot checks were made by a field supervisor through random and unannounced visits to the enumerators to check if the work is being done according to the timeline and the agreed standard. Spot checks were carried out in at least 100 different firms.

The project team made random callbacks to firms to validate the information the respondents provided in the questionnaires. This is to make sure that proper responses are recorded in the encoding stage. Moreover, the research team also checked, edited and verified the entries in the questionnaires before the encoding process. The editors were the ones making the necessary callbacks to the firms. The research team also put in place the necessary procedures to guarantee a timely double entry of data. Randomly selected 20% of the data were double entered. The preference is for a direct electronic entry of data. This process started as soon as the interviews were being fielded and completed within a period of 2 weeks after the field work ended.

Key Findings - What are the Cost-Benefits of the Dual Training System in the Philippines?

• The study showed that the combined short-term and long-term benefits derived by the firms from the DTS program clearly outweigh the overall costs.

• The simulations made for firms in the Manufacturing and Hospitality sectors on the combined short and long-term benefits of the DTS program showed such could be higher than overall costs by at least 30 percent.

• For large and medium size firms combined benefits can be 20 to 75 percent higher than average costs

• The DTS program produces substantial positive spillover effects on DTS trained workers – they become more productive, as shown by the substantial long-run productivity difference between a DTS-trained and Non DTS-trained workers.

• One-in-three DTS trainee is employed by the firm that trained them. Higher probability of being employed is the trademark of the enterprise-based program such as the DTS, over other modes of training.

• While there is a clear advantage for firms to participate in the DTS program, the success of the program will depend on the individual actions and cooperation among the three key players in running the DTS: TESDA, TVIs, and the Firms. The TVIs have important roles to play to make sure the practice of DTS is successful. One common problem experienced by firms is that TVIs have difficulty in catching up with the latest technology and new skill sets expected by the firms from the DTS trainees. There seems to be a gap between the skills learned by the trainees in school (TVIs) and the practice at the workplace. A recommendation for the TVIs is to be flexible enough to catch up with the changes in technology through capacity building of the TVI trainers. Partnering with the firms, with the firms’ training personnel to train the instructors of the TVIs on the use of the latest technology, may be an area that TVIs should look into.

Who made the cost-benefit study possible?

The Cost-Benefit Study on Dual Training System in the Philippines was jointly implemented by the K to 12 Plus Project and the Philippine Chamber of Commerce and Industry Human Resources Development Foundation (PCCI HRDF) with the support of the Technical Education and Skills Development Authority (TESDA) and the Federal Institute for Vocational Education and Training (BIBB).

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