TESDA: The Most Critical Agency for National Survival and Prosperity in the Age of AI

August 14th, 2025

By Joey Sarte Salceda
Chair, Institute for Risk and Strategic Studies, Inc. (Salceda Research)

1. The Technical Education and Skills Development Authority (TESDA) will be the single most important government agency in managing the Philippines’ transition into the AI economy. Any mediocre college degree, especially those in the knowledge sector, will at some point be rendered nearly obsolete by AI. Most of our colleges are require significant improvements in quality, and that will not change as quickly as the national interest demands. TESDA can change quickly. It has done so before, shifting from light industrial skills to services sector skills as the economy evolved. In the AI era, this agility will be decisive in protecting livelihoods, retooling the workforce, and ensuring that productivity gains are broadly shared.

2. Artificial intelligence stands among the great technological inflections of history akin to steam, electricity, and the internet. Today, in the Philippines, AI is already lowering logistics costs, sharpening manufacturing accuracy, automating routine finance and administrative tasks, enhancing tourism services, and streamlining public administration. By around 2030, widespread adoption of AI-powered solutions could deliver an estimated ₱2.8 trillion (US $50.7 billion) in economic benefits for businesses, while narrowing the digital skill gap could contribute an additional ₱809 billion (US $14.5 billion) to gross domestic product (GDP).

3. History shows that productivity gains do not automatically translate into prosperity for all as they often concentrate in a small segment of society unless shaped by deliberate policy. Fiscal measures such as increased public spending, universal basic income (UBI), or targeted taxation of high-productivity sectors benefiting from AI can help redistribute these gains, but these policies are often slow to design, legislate, and implement. The speed of AI-driven disruption will likely outpace the ability of fiscal policy to respond in real time. This makes it imperative to complement fiscal measures with rapid, skills-based interventions, ensuring that gains from AI are channeled directly to households, communities, and regions through immediate improvements in employability and income generation.

4. The exposure of Philippine jobs to AI is substantial but opportunity outweighs threat. An estimated 36 percent of jobs face high exposure, and 60 percent of these are in roles where AI complements rather than replaces human work. By 2030, 68 percent of Filipino workers will require new training, higher than the global average of 59 percent, yet fewer than half currently have access. The value of the digital economy has already reached ₱2.1 trillion in 2024, up from ₱1.6 trillion in 2018. These figures make clear that the country’s ability to adapt its workforce will determine whether AI becomes a driver of shared prosperity or a source of deeper inequality.
5. The Technical Education and Skills Development Authority must become the country’s primary instrument of skills readiness and career continuity in the AI era. Its task is to ensure that Filipinos can adapt before disruption pushes them out of work, that re-employment is swift and dignified, and that small and medium enterprises (SMEs) have access to AI-literate talent. TESDA must give priority to rural youth, women re-entering the workforce, displaced business process outsourcing (BPO) workers, and other groups most vulnerable to technological change.

6. Much of what one learns in a mediocre college degree will be rendered obsolete by AI as automation absorbs routine knowledge-based tasks. The pressure on higher education will be to deliver higher-order thinking, complex problem-solving, and innovation. Many institutions will struggle to meet this demand. The great strength of TESDA is that it is the country’s single largest institution capable of modular workforce development. It can deliver lifelong and continuing learning without the constraints of a four-year program where a diploma is the only outcome. Its training can be broken into adaptive, stackable modules, allowing workers to upgrade skills continuously as technology evolves. This makes TESDA uniquely positioned to supply skills that remain valuable in an AI economy, particularly in technical, tactile, and AI-complementary fields that preserve human value in production and services.
7. TESDA will increasingly emerge as the more practical and advantageous choice for many Filipinos. As AI accelerates the obsolescence of routine academic knowledge, the premium in the labor market will shift toward mastery of specific, adaptable skills and the capacity for continuous learning. TESDA’s modular, competency-based programs are built for this reality, producing graduates who can meet immediate industry demand and re-skill as technologies evolve. For a growing share of the population, especially those seeking faster and surer entry into stable and well-paying work, the practical returns from TESDA training will surpass those of an undistinguished four-year degree, making it the most reliable pathway to sustained employability in the AI economy.

TESDA’s AI workforce agenda should be pursued through five strategic tracks:

1. Transition Track – Identify high-risk occupations and move workers into training before displacement occurs. For example, clerical staff in government offices could be retrained for AI-assisted customer service or digital records management.
2. Complementarity Track – Focus on sectors where AI augments, rather than replaces, human skill. This includes healthcare support using AI diagnostics, advanced manufacturing with AI quality control, and skilled trades like welding or mechatronics with AI-enabled precision tools.
3. AI Deployment Track – Train workers and small and medium enterprises (SMEs) to integrate AI into their operations, from data preparation and model customization to the upkeep of AI-enabled machinery in agriculture, logistics, and retail.

4. Productivity Track – Align TESDA’s training programs with sectors that can deliver the largest gains in output and competitiveness. This means deep integration with industry clusters: AI-driven crop monitoring in agriculture, smart process control in manufacturing, AI-optimized maintenance in transport, and automated inventory systems in retail supply chains.
5. Equity Track – Ensure that vulnerable and underserved communities have equal access to AI-era training through targeted outreach, mobile training units, and subsidized programs, closing opportunity gaps between urban centers and rural areas.

The Philippine workforce must be positioned across job families aligned with AI-driven growth:

1. AI-Driven Roles – Occupations where AI will significantly increase productivity, precision, and service quality. TESDA can ensure workers are trained to use these tools effectively rather than be displaced by them. Examples include maintenance and repair with AI diagnostics, healthcare support using AI-assisted imaging, tourism services with AI-enabled customer personalization, electrical trades with smart grid integration, logistics with route optimization, welding and mechatronics with precision robotics, construction supervision with AI project tracking, and public service delivery enhanced by AI process automation.
2. High-Risk Roles – Occupations highly vulnerable to automation, where proactive retraining is essential to avoid long-term unemployment. These include routine data entry, transcription, and low-complexity back-office processing, which together account for about 14 percent of the Philippine workforce exposed to AI. TESDA can prioritize these workers for Transition Track programs that channel them into AI-driven or AI-deployment roles.

3. Resilient and Human-Centered Roles – Work that retains value precisely because it relies on human presence, creativity, and cultural authenticity. This includes culinary arts, heritage crafts, barbering, massage therapy, and fine repair. TESDA can strengthen these sectors through business development support, market access initiatives, and authenticity certification, ensuring they thrive in a digital-first economy.

10. Over the next two decades, the Philippines can anchor a People-First AI economy by reducing the average re-employment gap to under 60 days, having over 70 percent of the workforce in AI-complementary roles with upward wage mobility, becoming a net exporter of AI-ready talent while meeting domestic demand, raising median real wages in line with GDP growth, and delivering faster and fairer public services through AI-trained civil servants.
11. As Adam Smith observed, “The division of labour, however, so far as it can be introduced, occasions, in every art, a proportionable increase of the productive powers of labour.” The rapid adoption of AI will entail a recalibration of the traditional division of labor, and in some cases, might make that same division less rigid. In the age of rapidly evolving technology, TESDA is the only Philippine institution capable of ensuring that the talents of labor are efficiently allocated at the pace and scale that the national interest demands.