8TH National TVET Forum December 11-12, 2008 SEED PAPER ENTERPRISE-BASED TRAINING: ENHANCING THE ROLE OF BUSINESS

AND INDUSTRY IN TRAINING DELIVERY EXECUTIVE SUMMARY

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The enactment of Republic Act 7796 or the TESDA Act on August 25, 1994 led to the creation of the Technical Education and Skills Development Authority (TESDA). Foremost among the TESDAs objectives is the promotion and strengthening of the quality of technical education and skills development for the attainment of international competitiveness. Heeding to such mandate, TESDA introduced various reforms and strategies in the area of training delivery. Hence, the implementation of the Enterprise-Based Training Programs through the apprenticeship and learnership programs (AP/LP), dual training system/dualized training program (DTS/DTP) and on-the-job training (OJT) program. The transfer of the apprenticeship and learnership programs from the Bureau of Labor and Employment (BLE) to TESDA is provided for in Section 18, while the lending of support for the DTS is provided for in Section 8 of the TESDA Act. Apart from the apprenticeship and learnership programs and the DTS, the Authority is given the task to design and administer training programs and schemes that will develop the capabilities of public and private institutions. By virtue of Republic Act No. 7796, all applicable systems and procedures in TVET are applied to the apprenticeship and learnership programs. The programs, however, remain to be implemented in accordance with the Labor Code of the Philippines (Articles 57and 58) and its Implementing Rules and Regulations and Executive Order No. 111 issued in 1986. The current apprenticeship and learnership programs are faced with conflicting provisions in the Labor Code. While the programs stated objectives are directed toward the production of a skilled workforce enough to satisfy the demand of the economy challenged by global competitiveness, the definitions shape the programs as an employment undertaking rather than a training scheme. As the manager in the administration and implementation of the program, TESDA puts emphasis on the acquisition of competencies by the apprentices and learners. The passage of TESDA Board Resolution No. 2006-08 Approving Occupations/Qualifications with Promulgated Training Regulations as Apprenticeable or Learnable sets the policy that no occupation will be declared apprenticeable or learnable if there are no training regulations. For the period 2005-2008, the number of persons trained under the apprenticeship and learnership programs give substantially higher figure in 2005 with an overshoot performance of 101,650 persons trained as against the target of 100,500. The figure in 2006 with the same number of target gives substantially lower figure of 72,592 number of persons trained. With lower target of 70,000 in 2007, it gives an offshoot performance of 71,424 and for the period Jan.-Sept. 2008, gives a figure of 38,781
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performance. A total of 2,975 companies have been participating in the apprenticeship and learnership programs from 2005-2008. Institutionalized through the enactment of RA 7686 in 1994, the Dual Training System or DTS is an instructional delivery system of technical and vocational education and training that combines in-plant and in-school training, based on a training plan designed and implemented by an accredited dual system agricultural, industrial and business establishments. On the other hand, the Dualized Training Program (DTP) is a transitory phased implementation strategy of the Dual Training System by introducing at a given time one or two of the five elements of the DTS as defined in RA 7686. From 2005-2008, only 166 schools and 1,580 companies have been implementing the dual training program. Within the same period, out of the 12, 935 DTS graduates, 2,017 had been employed. The On-the-Job Training (OJT) Program/Practicum has become part of the curriculum of the technical vocational institutions where students in a given semester are exposed to actual operations in selected companies. Through hands-on training, the students are introduced to the values of discipline, hard work and labor. The students may or may not be given allowance by participating companies. INTRODUCTION The new millennium brings progress by effectiveness, efficiency, innovation and competitiveness. The need to achieve these factors necessitates a move that can accelerate the development of a training scheme that will propel the Filipino workforce towards meeting global standards. To respond to this growing concern, TESDA pursued the implementation of Enterprise-based Training (EBT) Schemes which include the Apprenticeship and Learnership Porgrams, Dual Training System/Dualized Training Programs and Onthe-Job Training Programs. This is with the end view that the best place of training is in the place of work or in enterprise because it provides the best tools, equipment and environment to do the job/work. The Enterprise-based Training (EBT) Scheme endeavors to reinforce the adoption of an industry-led manpower development strategy. This covers on-the-job in enterprises or places of work. It is comprehensive, systematic and enterprise-led which aims to improve productivity and product quality, and enhance trainees employability with emphasis on work ethics development. The EBT Scheme encourages the adoption of the dual approach wherein the theoretical part of the training shall be conducted in school and the practical portion shall be in enterprises. The pursuit of EBT arrangement enables the local industries, middle-level manpower, products and services attain greater competitiveness in the global market which in the long run bring about better demand supply matching and will ease burden cost on the part of the government.

Although the aforementioned EBT modalities (apprenticeship/learnership, dual training system/dualized training program, OJT) have already been introduced/reintroduced to the industry, these programs have not achieved their original objectives. Undoubtedly, these programs were given lukewarm acceptance by the companies as indicated by the decreasing number of companies implementing these programs. The rigid provisions of the laws (Apprenticeship/Learnership, DTS) governing the implementation of these programs, among others, led to limited company participation. SITUATIONER/CURRENT DEVELOPMENTS A. Apprenticeship and Learnership Programs Pursuant to the TVET reforms currently being pursued by TESDA and as part of the agencys effort of enhancing the implementation of enterprise-based training, the apprenticeship and learnership programs are implemented pursuant to the following laws: Republic Act No. 7796 (TESDA Act of 1994) and Its Implementing Rules and Regulations P.D. No. 442 (Labor Code of the Philippines) and Its Implementing Rules and Regulations Executive No. 111 issued on December 24, 1986 The Apprenticeship and Learnership Programs continued to be viewed as training and employment programs but greater attention is given to the skills acquisition of the apprentices and learners As defined in the Labor Code of the Philippines, apprenticeship is a training within employment involving a contract between an apprentice and an enterprise on an approved apprenticeable occupation. On the other hand, learnership refers to any practical training on learnable occupation which may or may not be supplemented by related theoretical instruction. The Apprenticeship Period shall not be less than three (3) months but not more than six (6) months. However, the participating employer has the option to hire the apprentices even prior to the completion of the apprenticeship period. On the other hand, the Learnership Period shall not be more than three (3) months. The employer may hire the learner, if the learner so desires upon completion of the training. A learner who has worked during the first two months shall be deemed a regular employee if training is terminated by the employer before the end of the stipulated period through no fault of the learner (Pls. see Rule VII, Section 4,Book II, Labor Code). The competency-based system is being adopted in the implementation of the programs. All training packages to be developed for these programs shall be in accordance with the TESDA approved competency-based format. Identification and approval of new occupations for apprenticeship and learnership programs have been in accordance with TESDA Board Resolution No. 2006-08
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approved on January 31, 2006 which states Approving Occupations/Qualifications with Promulgated Training Regulations Endorsed by Industry Working Bodies and Other Recognized Industry Bodies as Apprenticeable and Learnable Occupations. To date there are 200 approved apprenticeable occupations and 165 learnable occupations. Any enterprise registered with the appropriate government authorities with ten (10) or more regular workers is qualified to implement the programs. The number of apprentices/learners for each participating enterprise shall not be more than twenty percent (20%) of its total regular workforce. Apprentices/learners are considered special workers. Apprentices/Learners shall be entitled to receive a wage not less than seventy five percent (75%) of the prevailing minimum wage and benefits such as social security and health benefits, and overtime pay. An apprentice/learner can work overtime provided there are no regular workers to do the job and the time spent on overtime work is duly credited to his training hours. Participating enterprises shall be entitled to any of the following: 1. An additional deduction from taxable income of one half (1/2) of the value of labor training expenses incurred for developing the productivity and efficiency of apprentices/learners. Provided, that such deduction shall not exceed ten percent (10%) of the direct labor wage, and that the enterprise who wishes to avail of this incentive should pay his apprentices the minimum wage. (Pls. refer to Book II, Title II, Chapter I, Article 71 of the Labor Code). Whenever applicable, graduates of the Apprenticeship/Learnership programs shall be subjected to competency assessment. Competency Certificate shall be issued on the basis of demonstrated competencies of the apprentice/learner for each occupation/qualification. No Apprenticeship/Learnership training will commence until an Apprenticeship/Learnership Agreement has been forged between the enterprise and an apprentice/learner. Registration Certificates of companies that are not taking in apprentices/learners for two (2) consecutive years shall be revoked. From 2005-2008, TABLE I indicates the targets and number of persons trained by region and TABLE II indicates the number of participating companies by sector. For the period 2005-2008, the number of persons trained under the apprenticeship and learnership programs give substantially higher figure in 2005 with an overshoot performance of 101,650 persons trained as against the target of 100,500. The figure in 2006 with the same number of target gives substantially
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lower figure of 72,592 number of persons trained. With lower target of 70,000 in 2007, it gives an offshoot performance of 71,424 and for the period Jan.-Sept. 2008, gives a figure of 38,781 performance. A total of 2,975 companies have been participating in the apprenticeship and learnership programs from 20052008.
TABLE I. No. of Persons Trained by Region For the period 2005-2008
REGIONS 2005 Target NCR I II III IV-A IV-B V VI VII VIII IX X XI XII CAR CARAGA ARMM TOTAL 2278 804 804 13400 30150 670 804 1005 10050 1675 3819 2680 8208 2345 1005 804 100500 Output 28898 853 787 9719 32165 829 467 467 5919 2398 7831 2589 4143 2149 1494 942 101650 2006 Target 22278 804 804 13400 30150 670 804 1005 10050 1675 3819 2680 8208 2345 1005 804 100500 Output 14012 257 886 4016 27798 103 267 1113 5180 1420 7388 5461 1323 462 1670 1236 72592 2007 Target 14000 1300 850 6000 27000 100 300 1000 5300 1600 4000 4500 1000 1000 1200 850 70000 Output 15233 2288 992 5767 21898 357 233 1384 3806 1711 6799 4350 1806 1644 1792 1364 71424 62722 38781 Target 15400 2250 970 10000 19908 133 330 1235 1250 1387 5484 250 1000 825 1175 1125 2008 Output Jan.-Sept. 6922 1131 537 3174 13474 50 73 836 2965 611 3629 2005 895 92 1353 1044

TABLE II. Number of Participating Companies by Sector For the period 2005-2008 Sector 2005 2006 2007 Agriculture & Fishery Automotive Aviation Construction Decorative Craft-Ceramics Decorative Crafts- Gifts, Toys & Hardwares Decorative Crafts-Jewelry Electrical Electronics Footwear & Leathergoods Furniture & Furnishings 11 75 3 106 1 4 1 0 123 29 46 3 54 1 28 3 3 1 12 33 8 10 10 77 2 82 3 0 5 30 66 9 16

2008 Jan.-Sept. 2 35 40 3 35 9 5

Sector Garments Heating, Ventilation & Airconditioning/Refrigeration Health, Social & Other Community Services Information and Communication Technology Land Transport Logistics Maritime Metals & Engineering Personal Services Printing Processed Foods and Beverages Shipbuilding Tourism Utilities Wholesale & Retail Trading TOTAL

2005 251 8 6 1 3 107 13 15 2 62 16 39 922

2006 67 6 5 1 2 39 9 11 1 90 9 127 523

2007 99 17 14 80 17 23 1 68 3 14 31 1 137 7 210 1,022

2008 Jan.-Sept. 59 7 127 10 47 7 20 1 92 5 508

B. Dual Training System (DTS)/Dualized Training Program Pursuant to the TVET reforms currently being pursued by TESDA and as part of the agencys effort of enhancing the implementation of enterprise-based training, the dual training system/dualized training programs are implemented pursuant to the following laws: Republic Act No. 7796 (TESDA Act of 1994) and Its Implementing Rules and Regulations Republic Act No. 7686 (DTS Act of 1994) and Its Implementing Rules and Regulations The Dual Training System (DTS) is an instructional delivery system in technical and vocational education and training that combines in-plant training and inschool training based on a training plan collaboratively designed and implemented by an accredited dual system educational/training center and accredited dual system establishment. On the other hand, the Dualized Training Program (DTP) is a transitory phased implementation strategy of the Dual Training System by introducing at a given time one or two of the five elements of the DTS as defined in RA 7686. Under the DTS, the establishments and educational institutions share the responsibility of developing in the trainee the best possible qualifications, the former essentially through practical training and the latter by securing an adequate level of specific, general and occupation-related theoretical instruction.

The DTS Law stipulates that the training establishment should pay the trainees, through the training institutions, an amount no less than 75% of the prevailing minimum wage during the period of training. The students are considered as trainees. Training institutions should comply with the Unified TVET Program Registration and Accreditation System (UTPRAS) requirements prior to seeking its accreditation to implement the dual training system or the dualized training program. A Memorandum of Agreement or Memorandum of Understanding shall be forged between the school and company prior to the implementation of the dual training program. Participating establishments shall be allowed to deduct from their taxable income the amount equivalent to fifty percent (50%) of the actual expenses paid to the accredited institutions for the establishments trainees; provided, such expenses shall not exceed five percent (5%) of their total direct labor expenses. The following tables reflect data on the number of participating schools, companies and programs implemented under the DTS and DTP from 2004-2008. Likewise, the number of enrollees, graduates and employed. From 2005-2008, only 166 schools and 1,580 companies have been implementing the dual training program (DTS and DTP). Within the same period, out of the 12, 935 DTS and DTP graduates, 2,017 had been employed.
DTS/DTP PARTICIPATING SCHOOLS AND COMPANIES AND THE PROGRAMS OFFERED 2004-2008 (September) Participating Schools Number DTS 57 DTP 109 Total 166 Participating Companies DTS DTP Total Programs DTS DTP Total Number 347 1,233 1,580 Number 75 370 445

C. On-the-Job Training (OJT) Program

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The On-the-Job Training (OJT) Program/Practicum has become part of the curriculum of the technical vocational institutions where students in a given semester are exposed to actual operations in selected companies. Through hands-on training, the students are introduced to the values of discipline, hard work and labor. The students may or may not be given allowance by participating companies. A total of 320 training hours should be allotted for the OJT of the student.

ISSUES AND CONCERNS A. Apprenticeship and Learnership Programs 1. Limited number of participating schools and companies in implementing the Apprenticeship and Learnership programs. The requirement for registration of apprenticeship and learnership programs is ten or more regular workers and most of the companies in the regions are micro or small enterprises with less than ten regular workers.

2. Limited advocacy/promotion of the programs. 3. No clear procedural guidelines on tax availment as incentive package for participating companies. B. Dual Training System 1. Payment of Training Allowance While many large-scale enterprises in the high-technology sectors can afford to pay the allowance, many small and medium enterprises find it difficult to comply with the payment of the training allowance. 2. Accreditation of partner establishments Most enterprises do not want to sign Memorandum of Agreement with the schools. They want to take in trainees but without commitment neither to the schools nor to the trainees. Therefore, they cannot be accredited under the DTS. Availment of Tax Incentives The voluminous documentary requirements in the availment of tax incentives pose a disincentive to the participating enterprises.

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4. Limited Manpower in the schools This prevents the schools from assigning an Industrial Coordinator. The IC is school personnel who are in charge of marketing the DTS to prospective establishments/partners and in the monitoring of the trainees in the school and in the company.
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5. Limited number of participating schools and companies implementing the DTS. CONCLUSIONS AND RECOMMENDATIONS From the issues and concerns identified, perceived solutions to strengthen and encourage greater participation of the industry in the implementation of the Enterprise-based Training Programs are on two areas: policy/technical matters and advocacy/promotional concerns: 1. Policy Area 1.1. 1.2. Develop/introduce additional incentive packages to attract more companies to implement the programs. A need to review the rigid existing implementing guidelines of the DTS/DTP and the Apprenticeship and Learnership training modalities with the objective of introducing flexibilities in the implementation of the said programs.

2. Advocacy and Promotion A continuous massive promotion and advocacy of the EBT programs/arrangements should likewise be done.