In the recently released World Bank report “East Asia and the Pacific (EAP) Economic Update,” the Washington-based lender said top companies in the region have been “falling behind productivity” against the best firms in richer economies since the 2000s, especially in the digital and electronics sectors.
It urged leading companies in the Philippines to ensure that workers have the necessary digital and managerial skills to arrest slowing productivity that may hurt investments and economic growth.
The WB said productivity of top global firms in the digital manufacturing sector had increased by 76 percent from 2005 to 2015, whereas those in Indonesia, Malaysia, the Philippines, and Vietnam only improved by 31 percent on average.
Since new technologies typically arrive first at companies in developed economies, and then spill over to other firms, the bank said revitalizing the top firms in EAP matters for the future growth of all companies.
The report noted that productivity growth and adoption of sophisticated technologies require advanced skills and high quality digital infrastructure.
However, it said access to skills and modern data infrastructure is “uneven” across EAP. In 14 of the region’s 22 middle-income countries, the bank said more than half of 10-year-olds are unable to read and understand age-appropriate text.
Even basic digital skills are not widely available, the lender said, with less than a quarter of workers in Cambodia, Mongolia, Philippines, Thailand, and Vietnam able to use the ‘copy and paste’ function in a document.
Meanwhile, over 50 percent of innovating firms in Indonesia, Malaysia, Myanmar, the Philippines, Thailand, and Vietnam cite a lack of managerial and leadership skills as a challenge when hiring new workers.
To tackle waning productivity, the WB urged economies in the region to foster greater competition among companies.
In the Philippines, the business sector and government will need to address the issue of the widening productivity gap if we want to stay competitive. While it may provide a bit of comfort that waning productivity is a regional problem, it also provides an opportunity for our economy to catch up or maybe even leapfrog our neighbors.
Focusing on productivity will be more difficult than it sounds, with so many factors that can be tweaked. But the basics are well known: advancing skills and digital infrastructure.
If our business and education sector puts more effort into those, then we might have a chance of taking advantage of this regional gap.*
