The future of OFW remittances
The Philippines is one of the biggest exporters of manpower in the world, with about eight million overseas Filipino workers (OFW) deployed in various countries working as blue collar and white collar workers. There are several factors that drive Filipinos to seek employment abroad such as poverty, unemployment and the ongoing political crisis that affects the economic performance of the country.
According to National Statistics Office (2007), there’s a slight improvement in the employment rate in the country as of October last year— and this resulted in 6.3 unemployment rate, which is lower than last year’s 7.3 percent. This is why the government’s answer to labor concerns, which includes unemployment, has something to do with overseas jobs such as the mandate of Labor and Employment Action Plan under Department of Labor and Employment to upgrade employee-employer relationship and to “improve labor welfare here and abroad, to facilitate citizens’ “access to both the local and overseas labor markets (MTPDP, 2008).
This attention given to migrant workers can be best explained by the dollar remittances they send to the country. High dollar remittances keep the Philippine economy afloat, as the Bangko Sentral ng Pilipinas reported that the rise in the OFW remittances last year with a total of $13.1 billion also confirmed the increase in the number of Filipino migrant workers abroad (Philippine Star, 2008).
First Generation. Over a century ago, emigration in the Philippines had something to do with foreign invasion and/or occupation. During the Spanish rule, the main destination of Filipinos was in Europe, particularly in Spain. When the Americans occupied the country following the Treaty of Paris in 1898, Filipinos were taught English, and the country’s educational, political and economic systems were patterned with those of the Americans. As a result, foreign destinations of Filipinos shifted from Europe to the United States.
The history of Filipino Diaspora began over a century ago when the early Filipinos in the northern region to work in sugar plantations in Hawaii from 1906 to 1929 (Garchitorena 2007). Early Filipino workers had to migrate to California and other U.S. states after they were banned in Hawaii after a union strike in 1924 (Garchitorena 2007). There was no legal impediment that time because Philippines was under American occupation until the passage of the Tydings-Mcduffie Act in 1934 which granted it independence wherein all OFWs in U.S. soil were reclassified as aliens (Robles, n.d.).
In his study titled Diaspora Philanthropy: the Philippine Experience, Garchitorena (2007) classified Filipino migration into three waves. The first wave, which was based on skills, took place in the first and second quarters of the 20th century while the second wave, which saw the inclusion of professionals, began in the 1960s. The second wave, however, had two negative implications: first, it was only “small and short lived” and second, it saw the first phenomena of “brain drain” wherein it sapped the Philippines of its bright and promising graduates.
However, the brain drain fear subsided at once when the Philippine government saw the positive impact of dollar remittances on the country’s economy. The third wave started under the Martial Law regime of former Pres. Ferdinand Marcos who implemented policies concerning migrant workers, one of which is the creation of P.D. 422 of the Labor Code which gave birth to Overseas Employment Development Board and National Seamen Board. Legislations concerning overseas jobs resulted in the sudden increase in the number of migrant workers, which ballooned to 282,506 in 1981 (Garchitorena, 2007 citing Institute of Labor and Manpower Studies, 1984).
A study revealed that about 1,299,086 migrant workers were deployed in all countries from 1980 to 1984 (KAKAMMPI 1998, citing Go, 1997).
Filipino migrant workers were motivated by their desire to help their family. Remittances in the past were physically transmitted to the recipient through what is called door-to-door remittance system. Due to the absence of electronic technology during that time that could facilitate the transfer of money, it would take time before the recipient could receive the remittance sent by a relative abroad. Those sending their remittances had to rely on the integrity, reliability and track record of the remittance companies to ensure that their hard-earned money were in safe hands.
Second generation. The early 1990s saw the advent of more Filipinos willing to work abroad. This was evidenced by the sudden increase of OFWs from 1990 to 1995 to 3,143,914 deployed in several countries in the world (Garchitorena, 2007).
Studies show that most remittances are family-directed intended for the basic needs of the family, education, housing, health and other emergencies, payment of debts, savings for future use (Ateneo 2005).
Aside from giving financial support to their family, some migrant workers who are mostly first generation emigrants based in the United States were also driven by their desire to pay back their country of birth (Garchitorena 2007). With their desire to help the poor, these philanthropist emigrants usually send donations thus boosting dollar remittances in the country.
The year 2000 was known as the electronic boom in the country and world-wide, which saw the advent of IT professionals. IT professionals also became in demand abroad, especially in the Middle East. Workers in the field of health and education also became in demand in most first world countries. Today, hundreds of thousands of nursing and medical-related graduates would like to work abroad for a higher pay.
Also during the same year, records from the Bangko Sentral ng Pilipinas showed that about 65 percent of the remittances come mostly from OFWs based in the United States whose banks have “correspondent relationships with Philippine banks (Garchitorena 2007).
Bank-to-bank remittance system is one of the most widely used methods of transmitting money to the Philippines aside from the usual methods of transmittal.
From the physical mode of money delivery, remittance system developed into over the counter and electronic system. Factors that are considered there days are the reliability, accessibility, promptness, security and the coverage of the remittance service.
One company that is into remittance business boasts about its number of bank connections and its reliable door-to-door delivery service (Philregalo 2008).. Aside from bank deposit service, remittances can also be conveyed through what is called electronic delivery through Cash Card, Smart Padala, Globe G-Cash and express money. More connections with foreign banks are among the must in remittance business in order to attract remitters (Philregalo 2008).
Banks are also attracting foreign remittances like the Bank of the Philippine Islands, which is the country’s leader in terms of OFW remittances (Asian Journal, 2006). A late comer to the remittance business, BPI has this Expat Pinoy Program “which addresses the fundamental needs of Filipinos working abroad” (Asian Journal, 2006).
The future generation. Today hundred of thousands of students are enrolled in nursing and health care programs hoping to land a high-paying nursing job abroad. Among the first world countries, the hottest target is the United States, which employs only 14 percent of Filipino nurses; 57 percent are in Saudi Arabia while only 12 percent are working in United Kingdom (Estella, 2005).
The Philippine Center for Investigative Journalism reported in 2005 (Estella) that the United States would look forward to employing over a million nurses. Canada, on the other hand, would need about 10,000 nurses while the United Kingdom and the Netherlands would employ 27,000 and 7,000, respectively.
In the Medium Term Philippine Development Plan of the Arroyo Administration that ranges from 2004 to 2010, it was stated that the country’s foreign policy is “to protect the interest of the country” by addressing the eight realities in the global setting, one of which is the pronouncement that OFWs “will continue to play a critical role in the country’s economic and social stability” (MTPDP, 2008).
Really, the future looks promising not only for migrant workers but also for remittance businesses. What is certain is that the future will see an OFW boom and more foreign currency remittances.
Internet. (n.d.). Chan Robles Virtual Law Library. Retrieved March 17, 2008, from http://www.chanrobles.com/tydingsmcduffieact.htm.
Advertising Supplement. (2006, August 3). BPI leads OFW remittance banks. Asian Journal. Retrieved March 17, 2008, from http://www.asianjournal.com/data/PDF/2006_OC/07_28/2006_OC_07_28_Sec-2%203.pdf
Research Paper commissioned by Ateneo Center for Social Policy. (2005, October 11). Tapping Filipino migrant remittances for local economy development: Case studies, issues and recommendations for policy consideration. Retrieved March 17, 2008, from http://www.ercof.org/papers/files/Tapping_Filipino_Migrant_Remittances.pdf
KAKAMMPI(Association of Filipino Migrant Families and Returnees). (1998, November 5-6). Philippine Overseas Migration Amidst the Asian Crisis. Retrieved March 17, 2008, from http://www.philsol.nl/A99a/Kakammpi-Nov98.htm
National Statistics Office. (2007, December 18). Lower employment rate in October 2007 compared to last year. Retrieved March 17, 2008, from http://www.census.gov.ph/data/pressrelease/2007/lf0704tx.html
Garchitorena, Victoria. (2007, May). Diaspora Philanthropy: the Philippine experience. Retrieved March 17, 2008, from http://www.tpi.org/downloads/pdfs/Philippines_Diaspora_Philantrhropy_Final.pdf
Medium Term Philippine Development Plan. (2008). Medium Term Philippine Development Plan. Philippine Government Website. Retrieved March 17, 2008, from http://www.gov.ph/listings/mtpdp.asp
Internet. (2008, January 16). OFW inflows hit $1.2B in Nov, bringing 11-mo total to $13B. Philippine Star. Retrieved March 17, 2008, from http://www.gsmcondo.com/pdf/January_16_2008.pdf
Internet. (n.d.). Fast and efficient service. Philregalo.com. Retrieved March 17, 2008, from http://www.philregalo.com/browseproducts/$80-Remittance-Bank-to-Bank.html