# **I. Introduction**<sup>**1**</sup>

Rising youth unemployment rates have been increasingly recognized as a serious challenge in both developing and advanced economies, as the trend indicates a potential skills gap between workforce demands and recent graduates. Youth idleness, a term referring to young people who are neither employed, nor enrolled in education, nor in a training program, describes one in every four persons ages 15–24 in the Philippines.<sup>2</sup> Meanwhile, the number of employers reporting difficulties hiring workers with relevant workforce skills has increased by 30 percent in the past six years, particularly among growing, innovative, and large-scale firms in the country.<sup>3</sup> While education contributes to the accumulation of general human capital, training in the workplace is designed to equip workers with specific job competencies.<sup>4</sup> Transitioning from school and vocational training to the work force often requires developing appropriate hard and soft skills, which can take place through on-the-job training (OJT), apprenticeships, and other vocational programs. These transitional programs are typically implemented in companies where new employees can acquire critical skills, knowledge, and behaviors by working alongside experienced workers or trainees. When particularly skilled workers are not readily available from the labor market, companies must train current employees and source trainable new hires to develop their own human capital specific to their needs.

In Germany and other European countries, governments and firms have been jointly delivering a highly effective vocational training system, known as the dual training system (DTS) or dual education, as a way to develop employment skills. In the DTS, trainees build practical skills through OJT at companies while acquiring relevant theoretical knowledge at vocational training institutions. Many developing countries, including the Philippines, have shown an increasing interest in these types of systems. As dual training programs are relatively new in developing countries, their outcomes and challenges are still being defined.

The DTS was institutionalized in the Philippines in 1994 through the enactment of Republic Act No. 7686 (also known as the Dual Training System Act of 1994). Originally adopted from the German model, the Philippine DTS was introduced in the 1980s through a joint project of the Southeast Asian Science Foundation and the Hans Seidel Foundation. After its debut in the Dualteach Training Center, the program’s success led to a nationwide expansion in 1991. The

> 1  We would like to thank Irene Isaac, Marissa Legaspi, Ursula Mendoza, and their colleagues at the Planning Office of Technical Education and Skills Development Authority (TESDA) for their wholehearted support and guidance throughout the project. The team benefitted greatly from the insight and leadership provided by Imelda Pagtolunan (Research Institute for Mindanao Culture at Xavier University), whose support guided data collection in the field. Special thanks are due to the survey team, especially Ninosa Nuque, Jhat Palma, Rowena Maximo, Lita Sealza, and the Sustainable Development Solutions for their efforts tracking former trainees. Finally, the team also thanks KDI School of Public Policy and Management for their financial support. The original study and survey were led by Futoshi Yamauchi and a team consisting of Taejong Kim, Kye Woo Lee, and Marites Tiongco. Any remaining errors are ours.

> 2 <mark>Rutkowski</mark> et al., 2016.

> 3 Acosta et al., 2017.

> 4 Becker 1962; Mincer 1962.

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