The low literacy rates of students seem to weigh on PHL’s economic growth

By Almira Louise S. Martinez, A reporter

The Philippines may be experiencing an economic downturn fueled by low student proficiency levels, as literacy rates in both local and international tests decline.

“Decreasing literacy weakens the capacity of the population, reduces the ability of workers to adapt to technology, and limits the mobility of high-value jobs,” John Paolo R. Rivera, senior researcher at the Philippine Institute for Development Studies (PIDS), told BusinessWorld in a Viber message.

“If this trend is not reversed, the Philippines risks long-term slow growth, weak competitiveness, and deep inequality, as many Filipinos remain trapped in low-skilled, low-paid work while other countries move up the value chain,” he added.

The problem of basic learning has been a long-term problem in the country for at least 30 years, according to the Second Commission of Congress on Education (EDCOM 2).

“If you see our curriculum over the last thirty years, it’s very ambitious, very ambitious. You go from many types of literary texts, you read poetry, short stories, extended essays,” EDCOM 2 Executive Director Karol Mark R. Yee told BusinessWorld in an interview.

“But (it turned out) that our challenge was not being able to read and write and not being able to understand complex texts,” he added. “We need a learning program that is compatible with the student, we need to plan strategies and prioritize because we cannot expect them to learn everything.”

More and more Filipinos are illiterate

Data from the agency showed that 24.8 million Filipinos could not read and write by 2025, almost doubling from 14.5 million in 1993.

A similar concern was seen in the 2024 Functional Literacy, Education, and Mass Media Survey (FLEMMS) report of the Philippine Statistics Authority (PSA), which showed that 18.9 million Filipinos aged 10 to 64 are considered illiterate.

Functional literacy, as defined by the local math center, is the ability to read, write, and count, but not cognitive skills.

One of the alarming signs flagged by Mr. Yes, the poor performance of primary school students, especially grades 1 to 3, where 85% struggle to learn, and only 15% can read according to their level.

“We have to focus on the foundation,” he said. “We really need literacy up to grade 3 because without that, you can’t keep pushing them to more levels to learn more difficult tasks.”

SEA-PLM Report 2024

In the 2024 Southeast Asia Primary Learning Metrics (SEA-PLM), Filipino 5th graders were lagging behind in reading and math within the region.

This study revealed that only 13% of students are considered to have reached the lowest levels of reading, while 14% have reached the lowest levels in mathematics.

“If you look at the global data, it’s really going down, that’s why we’re not the only ones who say there’s a problem – almost everyone is facing their own problem,” said Mr. Yeah.

“Besides that for us, because it’s probably the first time we’ve faced this… It’s clear to us that we’re not alone. There are many of us, and many have succeeded,” he added.

The economic consequences of the learning crisis

The decades-long education crisis will have a lasting impact on the nation’s future workers, said Federation of Free Workers President Jose Sonny G. Matula. “If literacy rates continue to decline, the long-term risk is that the economy is locked in low value-added jobs.”

“That means slow productivity growth, a weak ability to absorb technology, reduced competition in the production of high skills and services, and greater inequality because fewer workers can increase the level of skills,” he added in a Viber message.

Mr. Matula noted that industries that may be affected by workers who lack basic literacy skills include manufacturing and production lines, construction work, and OSH-sensitive work, transportation and logistics systems, customer management and document writing services, and gig work where workers must navigate applications, goals, estimates, and digital payment systems.

“To a large extent, the decline in literacy undermines human potential – so GDP growth becomes harder to sustain, more fragile, and less inclusive because productivity growth has stagnated,” he said.

“The biggest gap is the tendency to treat literacy as a ‘school only issue’ when it is a labor, economic, and social protection issue,” he added.

Leonardo A. Lanzona, an economics professor at Ateneo De Manila University, said that about one year of schooling can lead to a 7% increase in wages. “Perhaps we can conclude that illiteracy is close to a 7% annual wage loss.”

Analysts have emphasized that persistently low learning outcomes can lead to significant economic losses.

“International research suggests that learning loss can cost countries several percent of their GDP (Gross Domestic Product) over time through lower lifetime wages, weaker productivity, and reduced tax revenue,” said Mr. Rivera.

“In the Philippines, persistent illiteracy can mean billions of pesos in lost income every year, especially as the economy becomes more digital and skilled.”

Citing data from the World Literacy Foundation in 2023, Ateneo Center for Economic Research and Development Director Ser Percival K. Peña-Reyes echoed the same concern, saying that lost wages, reduced productivity, and limited employment caused by illiteracy could cost $4.72 billion or P277 billion every year.

He also added that the United Nations Children’s Fund (UNICEF) also warned about 17 billion dollars in the lifetime income of the current generation around the world without intervention.

“These numbers highlight the serious problem of education in the Philippines, especially after the pandemic,” he told BusinessWorld in a Viber message.

In 2028, Mr. Yee said EDCOM 2 seeks a 30% improvement in the reading ability of 3rd graders, increasing 3rd graders from 43% to 75% within three years.

The changes are ongoing

“Our proposal is that by 2028, we hope that 75% of all grade 3 students are studying at their level,” he said. “That will be a very good start because it means we have made the necessary changes.”

The Department of Education (DepEd) aims to address learning gaps through various educational reforms and programs, such as the ARAL (Academic Recovery and Accessible Learning) program.

The ARAL program, launched on September 13, was authorized under Republic Act No. 12028 and aims to provide preschool learning support for 10th grade students in reading, math, and science.

In the 2026 education budget, P8.93 billion will be allocated to the ARAL program to ensure that learning gaps are addressed by “adequately trained and adequately compensated” teachers.