OFWs did it again

Once again, the unsung OFWs contributed some $23 billion in foreign exchange remittances to the Philippine economy in 2011, boosting our international reserves, filling our banks with savings, stimulating  the housing market, investing in human capital through the education of their children and contributing significantly to a consumption-led growth as investments grew very slowly in the public sector. We cannot thank them enough for the sacrifices they are making for their respective families and for the entire nation.

Throughout the whole of 2011, workshops on the costs and benefits, threats and opportunities pertinent to OFWs were held at the Center for Research and Communication. Those who participated were OFWs themselves, academics, labor officials, entrepreneurs, and NGO and labor union leaders. Some of the conclusions reached were as follows:

Despite continuing financial and political turmoil and high rates of unemployment in the host countries of OFWs, remittances will continue to rise because Filipino workers are usually a cut above the majority of overseas workers coming from other countries. OFWs are generally better educated, English-speaking, capable of giving tender and loving care in personal services, multi-talented, and with better personal hygiene. The acid test was in 2009, the worst period of the Great Recession. OFW remittances still grew at 6 percent. I forecast that the same thing will happen in 2012, a very difficult year for the global economy. OFW remittances will continue to grow by at least 5 percent.

Those who are able to get jobs abroad do not come from the poorest of the poor, who are unable to come out with the steep financing costs required by recruiters. Most of the OFWs come from the middle-income households that earn an equivalent of $2 to $10 per capita per day, using the ADB classification of middle-income families. The great majority of them seek employment abroad not because they are suffering from dehumanizing poverty in the Philippines but because they perceive significant wage and income differentials between what they can earn here and what they will receive if they work abroad. Since these wage differentials will continue to be wide for the indefinite future, even if the Philippines is able to significantly reduce poverty incidence over the next decade or so, there will always be millions of Filipinos seeking employment abroad, thanks to our growing population and the demographic winter that is being experienced by most of the host countries. For example, there will always be hundreds of thousands of Filipino seafarers working for international shipping lines. Even if household service workers dwindle, they will be replaced by more knowledge-intensive professionals.  What would decline, however, will be the percentage to GDP of OFW remittances. As our economy grows at 7 to 10 percent in the coming years, OFW remittances will drop from the high of 10 to 12 percent of GDP to 5 percent or less.

Every effort must be exerted by the government, the business sector and NGOs to help OFWs and their families make better use of their savings, which are the sources of the high liquidity being enjoyed by our banks. In the last 10 years, savings of OFWs have accounted for the rise of our savings rate from the low of 19 to 20 percent of GDP in the last century to over 30 percent today.  Contrary to a widespread opinion that the families of OFWs fritter away what they receive in frivolous consumption, a great portion of remittances are spent on human capital (education) and housing (which is a form of investment). But much more can be done to help the OFWs and their families to invest in small and medium-scale businesses so they can join the entrepreneurial class that is the foundation of every progressive economy. This should be a primary concern of the Department of Trade and Industry, the Development Bank of the Philippines and private development banks.

Not everything is a bed of roses for the OFWs. They face obvious risks to life and limb in the troubled countries of the Middle East and Africa where they work.  Efforts of the government, especially through the office of Vice President Jejomar Binay and Foreign Affairs Secretary Alberto del Rosario, to give them hands on assistance in these tight situations must be lauded. A recent case that is especially commendable is the way Secretary Del Rosario traveled personally to Syria to make sure the OFWs there were safe. Besides these political risks, there are the social and economic costs that have to be considered. One of the most eloquent in identifying the challenges faced by the OFWs and the country because of its overreliance on them is Loreto B. Soriano, who presented a paper in the CRC workshops entitled “Overseas Migration, Remittances—A Reality Check.” Mr. Soriano worked as an OFW himself in the Middle East in the last century and is now managing a manpower recruitment company for OFWs. He has mastered the tools of economic analysis by self-study and has profound insights on this very important economic sector. Let me quote some passages from his paper: “Remittances have saved the Philippines from economic and social disasters but not from bad development outcomes. Remittance flows have allowed doubtful policy decisions to prevail and culminate in a neo-liberal economic order that has led to jobless growth, the decimation of domestic agriculture and manufacturing and an import-centric, consumer-driven economy…It has been argued that overseas migration has little economic cost to the Philippines for it has expanded in periods of high unemployment. Poverty alleviation has been one of the main reasons advanced by successive administrations in justifying the export of its citizens. And yet, poverty reduction via migration promotion has had indiscernible gains in most provinces…Socially, there is a detrimental effect on the family, especially for young children and teenagers, when one or both parents are working overseas. The emotional and behavioral downsides cannot be underestimated, [as] they affect both parties so distant from one another. Social costs eventually develop into economic costs.”

The very valid points of Mr. Soriano should motivate our policy makers to avoid any complacency that may result from the bonanza of OFW remittances. They should address the root causes of poverty, which start with the utter neglect in the past of countryside and agricultural development. There should be many initiatives from all sectors concerned to minimize the social costs of families being separated, especially of male teenagers growing up without their fathers, and of marriage breakups. In this regard I would encourage more Catholic dioceses to emulate what the Imus diocese did under the leadership of now Archbishop of Manila Luis Antonio Tagle of sending Filipino priests to take care of OFWs in different cities abroad. Doctrinal and spiritual guidance of these OFWs by Filipino priests can go a long way in helping them avoid being swallowed up by the materialistic culture that prevails in many of their host cities. I have seen with my own eyes how OFWs in the City of Barcelona appreciated the pastoral care given to them by priests from the diocese of Cavite.

For comments, my e-mail address is [email protected].