Empowering Local Governments Key to Boosting Human Capital in the Philippines

MANILA, December 12, 2024 - Empowering local government units (LGUs) to deliver health, nutrition, and early childhood interventions is essential for boosting human capital and helping the Philippines to achieve its goal of becoming a middle-class society by 2040, according to the latest Philippines Economic Update (PEU) released by the World Bank.

Human capital encompasses the health, knowledge, skills, and experience acquired throughout a person's different life stages. It is one of the main drivers of broad-based economic growth, which translates into improvements in living standards.

"The process of building human capital is sequential and cumulative, underscoring the need to start early," said Zafer Mustafaoğlu, World Bank Country Director for the Philippines, Malaysia and Brunei Darussalam. "Although human capital can be acquired over a lifetime, it is built most effectively when people are young. This is where local governments can play a very critical role."

Local government units or LGUs - provinces, cities, municipalities, and barangays (villages) - are uniquely placed to ensure the convergence of services at the individual, household, and community levels, Mustafaoglu added. These units have mandates, defined under the 1991 Local Governance Code, to deliver health care and nutrition services as well as to manage social welfare. They are also entrusted with delivering early childhood education services for children age between three and four years old.

LGUs are where interventions and programs from various sectors ultimately come together and are rolled out on the ground. Consequently, they are expected to facilitate the implementation of national-level programs and regulations, including early education, health, and nutrition.

"Good nutrition in the early years as well as positive early experiences affect the quality of the brain's architecture, laying the foundation for future learning, health, and development," said Tara Béteille, World Bank's Lead Economist and Human Development Program Leader for the Philippines, Malaysia and Brunei. "Investing in the first six years of a child's life - particularly the first 1,000 days between conception and a child's second birthday - has the highest return on investment for the country."

The Philippines underperforms significantly in early years outcomes. Undernutrition among Filipino children is alarmingly high. In 2021, for instance, about one in four children under the age of five was considered stunted or small for their age.

Enrollment in early childhood education also remains low and stagnant, hindering the accumulation of foundational skills. This is despite most barangays having day care centers. In 2020-21, only 47 percent of three- and four-year olds in the Philippines were enrolled in preschools and 66 percent of five-year olds were in kindergarten.

Despite multiple efforts to strengthen LGUs, many still encounter numerous challenges in fulfilling their mandate to support human capital development in their localities. One notable example is the shortage of "early years workers," which hinders the delivery of those essential services that are crucial for building human capital.

Béteille said the role of early years workers-such as community health workers, preschool teachers, and other local community-based professionals-is intrinsic to driving better outcomes in health, nutrition, and education. Such workers are the face of the government's services. Global experience highlights that the quality and availability of these workers significantly influence human capital development, she added.

The PEU recommends bold reforms to boost human capital, including addressing worker shortages, enhancing the capacity of LGUs, and motivating early years workers through training as well as improved compensation and incentives.

The report also recommends using performance-based grants to encourage LGUs to prioritize early years services and mechanisms like Program Convergence Budgeting (PCB) to pool resources. The advantage of an approach like PCB is that it allows LGUs to align and gather resources from different departments and programs, thereby creating larger funding streams for early childhood initiatives.

Other additional recommendations in the report include harmonizing the roles of national and local governments, enhancing monitoring and evaluation, and fostering community-level coordination. Together, these steps will help enable early years workers to perform more effectively and achieve better early year outcomes for Filipino children.