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It is estimated that there were over 10 million overseas Filipino workers (OFWs) in 2016. The top three countries to which Filipinos migrate to for work are the United States of America, Saudi Arabia and United Arab Emirates. Remittances, defined as the money sent home by OFWs, have become the driving force of the growing Philippine economy. In fact, this 2017, remittances have surpassed that of the last year’s, totaling around $2.5 million in amount.
“In my interviews over the years with leaders from Fidel Ramos (1992 to 1998) up until Benigno Aquino (2010- to 2016), the more than 10 million Filipinos working abroad and sending cash home were framed as vital economic stabilizers.”
The 14th president of the Philippines, Gloria Macapagal Arroyo, once said that OFWs are “the backbone of the new global workforce.” Additionally, she had also said that OFWs are “our greatest export.” Succeeding president, Benigno Aquino III, approved for laws giving special privileges to returning OFWs. These privileges include an allowance in the personal allowance they can bring home and tax-free care (balikbayan) packages. The current president, Rodrigo Duterte, has also implemented a lot of OFW-related changes in the government, including a proposal for the country’s very first OFW department. Evidently, even the highest leaders of the country know the importance of migrant Filipino workers for the economy.
“Far from being a secret weapon, Manila’s addiction to remittances is a growing vulnerability.”
This is my favorite excerpt from this piece written by William Pesek. No doubt that remittances are an important part of the Philippine economy. These remittances help in balancing and stabilizing the economy. The money sent back home helps in providing for the basic needs of the OFW’s family such as shelter, clothing and food. Further, remittances aid in the further education of the young in the family, which in the future, can help in the growth of the Philippine economy. But as the author of the article had pointed out, our addiction to exporting our people might not be beneficial in the long run. It just makes our economy more vulnerable and weak.
“While useful in the short run, these hard-money inflows reduce pressure to create jobs at home. The windfall deadens the urgency to deregulate labor markets, tweak tax policies and improve education and training.”
Let’s look at the immediate and more personal effect of remittances first, which is in the family. I’ve seen it before and I continually see it in succeeding generations. Consider my husband’s mother, who has seven more siblings, all beyond the age of 30 years. Of these siblings, only two have regular occupations which entail them to work abroad. Now these two siblings, along with my husband’s mother, finance all the remaining sibling’s needs, even though they are old enough to work for themselves, not to mention their families. Yes, remittances have this immediate effect of less productivity for the relatives back home.
Another consistent observation I have noticed is that remittances are rarely spent for investments, especially stocks or business ones. As mentioned above, OFWs go abroad to provide mainly for the basic needs of the family. Again, in my husband’s case, those three OFWs, including his mother, has failed to invest in business opportunities. Instead, they have invested on real estate or cars, which are all depreciating investments. Some OFWs invest on small stores selling food, water and other basic goods.
Looking at the more national level of sending our work force abroad, the obvious phenomenon is brain drain. While we can’t blame our workers from going abroad, it’s sad that their talents and skills are being utilized by foreign nations. For instance, in the US, Filipino-American nurses are not uncommon. Filipino architects and engineers are very common in Saudi Arabia. The most common reason for seeking employment abroad, especially for these professionals, is the unmatched salary and compensation that they are offered.
In the same way, remittances can lead to lesser reformations when it comes to career advancements or developments in the Philippines. This is because the economy, and the government, relies on the money sent by OFWs abroad back to the Philippines. Policies would instead remain focused on easier ways of sending workers to foreign lands. Reformations on salary increases domestically or even better job opportunities would remain stagnant because they aren’t the main priority by the government.
The Philippines claims the 36th spot globally when it comes to nominal gross domestic product. But it’s important to understand the nominal gross domestic product doesn’t take into account the relative size or population of the country. Thus, the gross domestic product per capita is a more accurate measurement of a country’s economic growth. This is because it divides the total GDP per capita or per person. And in that case, the Philippines takes the 125th spot globally. So that means that our GDP isn’t enough for our total population, if we divide it equally.
If a recession occurs, in a situation wherein OFWs are repatriated back home, what then happens to the Philippine economy? Since it relies mainly on these remittances, there would be a sudden drop in GDP. More discrepancies when it comes to the quality of living would occur. Without any opportunities back home, these workers are left without jobs. Unemployment rates increase, poverty rates increase and again, we’re back to square one.
The problem with sending our workers abroad is the same as the solutions our government provide locally. It’s only for the short term, it can help feed their families or provide for other basic needs. But in the long run, we lose our own important resources, our people. We become too dependent on remittances to aid the growth of our economy. If flooding occurs in your area, which solution would you choose? Elevating the roads or cleaning up the drainage canals to remove garbage? Which do you think would provide for a more long-term solution? Unfortunately, most politicians would choose the former and look where that brought us.
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