THE Philippines could be losing as much as 10 percent of its gross domestic product (GDP) because workers are not always able to use their skills where they can be most productive, according to Philippine Institute for Development Studies (PIDS) Senior Research Fellow Michael Ralph Abrigo.
Speaking at the 2026 Development Policy Research Month (DPRM) kick-off press conference and Media Awards on Sept. 1, Abrigo said the challenge goes beyond producing skilled workers. The country must also ensure that workers are deployed in jobs and environments that allow them to fully use their capabilities.
“What we estimate is as much as 10 percent of our GDP is actually lost because of this misallocation of talent,” Abrigo said during the open forum.
He said talent misallocation occurs when workers cannot apply their skills at their highest productive level.
The problem is different from unemployment or a lack of skills. A worker may be employed, educated, and skilled but still experience talent misallocation if the job does not match their capabilities or if they spend too much time on tasks outside their core expertise.
The problem can affect even those already employed.
Abrigo cited teachers as an example, saying administrative reports and committee requirements can take time away from their primary responsibility of teaching.
“Imagine you have to do all these reports kasi part ka ng mga committees. So, bago ka pa makapagturo kailangan mo munang gawin ‘yun (Imagine having to prepare all these reports because you are part of various committees. So, before you can even teach, you have to take care of all those reports first),” he said.
By comparison, Abrigo said teachers in other countries can arrive in the classroom and focus on teaching, allowing them to use their skills without some of the additional administrative requirements.
For Abrigo, the question is not simply how the country can produce skilled workers but how it can turn human capital investments into higher productivity.
“We actually have estimates—recent estimates. Gaano kalaki ang nawawala sa productivity ng buong bansa because of this misallocation of talent? (How much productivity does the country lose because people’s skills and talents are not being used in the jobs or activities where they are most productive?),” he said.
Talent misallocation can also stem from informal rules and practices that influence how Filipino workers are valued and deployed.
Abrigo cited cases in which qualified Filipino professionals face additional scrutiny because of characteristics unrelated to their competence.
“These are informal rules that somehow limit our capacity to use our workforce,” he said.
He also cited the experience of senior high school graduates as an example of how perceptions can influence the use of human capital.
When senior high school was first introduced, Abrigo said employers were initially skeptical about the capabilities of its graduates. Although the government and Department of Education had said students were trained to perform specific tasks, the private sector was not immediately convinced.
That changed as employers gained more experience with the graduates.
“I think that openness comes with time, with experience,” Abrigo said, noting that employers who had hired senior high school graduates found them to be “very efficient” and “very productive.”
He said a study found that senior high school graduates earned about 15% more than workers who had completed only junior high school.
The experience shows that the economic return on education depends not only on whether people acquire skills but also on whether employers recognize and effectively use those skills.
PIDS Senior Research Fellow Valerie Gilbert Ulep similarly linked investments in human capital to productivity, saying health and education should be treated as productive assets rather than separate social-sector concerns.
Ulep said poor health can reduce attendance and productivity, with the effects accumulating across the economy. He also stressed the need for preventive health care so people can remain healthy and productive rather than seek treatment only after illnesses become advanced.
Education presents a similar challenge.
While access to education has expanded, Ulep said policymakers must increasingly focus on the quality and relevance of learning because the economic return from schooling depends on what people actually know and can do.
“Education is productivity infrastructure, like health,” Ulep said in his presentation.
The relationship works both ways. Healthier and better-skilled workers can raise productivity, while a stronger economy can create better jobs and provide more resources for continued investment in human capital.
The private sector also needs an environment that encourages investment and productive job creation.
Abrigo identified regulatory predictability as a key requirement for businesses, along with clear roles for the private and public sectors.
“The two things that are actually needed by the private sector are, firstly, regulatory predictability,” Abrigo said, adding that businesses also need “market capture or market assurance.”
For PIDS Senior Research Fellow John Paolo Rivera, these issues underscore the need to view the economy, education and health as interconnected parts of one system rather than separate policy areas.
The Philippines has reached upper-middle-income status, Rivera noted, but economic growth should ultimately be measured by whether it builds capabilities that support higher productivity and sustained economic transformation.
The challenge, therefore, is not simply to create more programs or produce more graduates. It is to ensure that investments in people translate into capabilities that are recognized, developed, and put to productive use.
Abrigo said this requires moving beyond counting programs, projects, and compliance and instead asking whether incentives are aligned, capabilities are lasting, accountability is shared, and interventions produce system-level outcomes.
“The goal is not simply to do more things. It is to make the system work better together,” he said. PR
