I picked up the following statistics from The Economist. America had 1.6 million accountants and auditors last year, according to US Bureau of Labor Statistics. That is down from nearly two million in 2019. Many veterans are retiring. Too few youngsters are interested in taking their place. Only 65,000 students completed an accounting degree in 2022, down from around 80,000 a year between 2012 and 2018.
The article discussed efforts particularly by the American Institute of Certified Public Accountants (AICPA) to attract more people to the profession through rebranding (calling accountants as interpreters of data rather than bean counters) and jazzing up the job as strategic contributors. Otherwise, the problem in the industry will persist where the lack of personnel, typically in accounting, have contributed to potential errors in financial statements, a third more in 2023 compared to 2019.
The US problem translates to opportunities from developed countries like the Philippines. It provides another window for talented Filipino accountants looking for greener pastures elsewhere. Filipino accountants bring valuable skills, including strong technical knowledge, proficiency in accounting principles and fluency in English. Their formal certifications as Certified Public Accountants (CPA) or Chartered Accountants enhance the demand whether in public accounting firms, corporate finance, banking, government agencies and nonprofit organizations.
So, is it in fact a boon? A little research, however, provides the dark side to this opportunity. A report by CNN Philippines in March 2023 revealed a shortage of accountants in the country as college enrollment for this field of study dropped while those licensed were attracted to move abroad. The Philippine Institute of Certified Public Accountants (PICPA) reported that the country has produced just around 199,000 CPAs. There is a gap in people who graduate with an accounting degree and people who go sit in for the CPA exam. The passing percentage rate has gone down, below 25 percent since 2019, which pales in comparison with the AICPA examination passing rate averaging from 45 percent to 55 percent. Local accounting firms have begun hiring non-CPAs to fill the widening gap.
The export of Filipino accountants will only exacerbate the existing situation and hinder domestic economic development. This is the brain drain effect with the emigration of skilled professionals leading to a loss of talent and expertise within the country.
Of course, exporting professionals can bring other economic benefits through remittances and skills transfer. Remittances from overseas Filipino workers including professionals contribute significantly to the country’s GDP and help alleviate poverty for many families. In fact, even if they stay home, some workers cannot find jobs that match their skills and qualifications. This can lead to frustration and dissatisfaction among those who are unable to fulfill their potential.
Another related problem is that many accounting graduates and CPAs are lured into working for the business process outsourcing (BPO) industry, in jobs that require their financial acumen, but not necessarily requiring practice of accountancy. Since the BPO industry services clients in the UK, US or Australia, the pay scale even for a bookkeeper is multiple of those who get employed by accounting firms or other local corporations. So even if work is domestic, there is brain drain at play.
The situation in the accountancy field finds replication in the basic sectors like nursing and education. There is increasing demand for Filipino talent elsewhere. The demand is influenced by factors such as economic growth, regulatory changes and industry trends. The opportunity to work abroad provides higher salaries, better working conditions, and greater career advancement opportunities.
The market is enticing even as there are challenges like cultural adjustment, discrimination and even exploitation in some cases. Manpower export can have social costs such as family separation, emotional strain and cultural dislocation for migrant workers and their families. It can also lead to erosion of social fabric and community cohesion in the source areas.
Like it or not, the increasing demand abroad will even make the overseas journey more tempting to the budding professional. It cannot be stopped simply because of the lack of better options domestically. But it needs to be managed for the sake of our young who will exploit the opportunity.
Paving the road for overseas work involves providing our people with necessary skills, knowledge, and support to thrive in foreign environments. Our educational system must equip them with the technical, language and intercultural skills needed for overseas employment. Information sessions, workshops, career counseling and guidance services must be in place. More importantly, our curriculum must teach our youth about financial management, budgeting and saving strategies.
Since it cannot be stopped anyway given the increasing market for Filipino talents elsewhere, we must better prepare the youth for overseas work. We should empower them to succeed in foreign economies and mitigate the risks and challenges associated with migration.
(Benel Dela Paz Lagua was previously EVP and Chief Development Officer at the Development Bank of the Philippines. He is an active FINEX member and an advocate of risk-based lending for SMEs. Today, he is independent director in progressive banks and in some NGOs. The views expressed herein are his own and does not necessarily reflect the opinion of his office as well as FINEX.)