Exporting people has become a major industry for low- and middle-income countries. According to the World Bank, the amount of money sent home by migrant workers surged to an expected $794 billion in 2022. Remittances are the largest source of external finance in low and middle-income countries, exceeding the value of foreign direct investment and official development aid, the World Bank also says.
According to an IMF economist, Egypt’s remittance receipts are greater than revenue from the Suez Canal; Sri Lanka’s exceed tea exports; Morocco’s are larger than tourism earnings. Remittances flow directly into the hands of the people who need it most and are often spent on household education and health expenses, as well as small businesses. In the Philippines, it powered the tremendous growth of SM.
Because we have miserably failed to develop an export-oriented manufacturing sector, we are exporting our people instead. What was supposed to be a temporary strategy to take advantage of the construction boom in the Middle East during the first Marcos regime, became permanent.
Two weeks ago, Bangko Sentral reported that personal remittances from Overseas Filipinos posted a new record high of $3.6 billion in December 2023, up by 3.9 percent from the $3.5 billion recorded in December 2022. Cumulatively, personal remittances also reached an all-time high of $37.2 billion, a 3.0 percent increase from $36.1 billion in 2022. The robust inward remittances reflected the rise in the deployment of OFWs due to the continuous increase in demand for foreign workers in host countries. The full-year 2023 remittances represented 8.5 percent and 7.7 percent of the country’s Gross Domestic Product (GDP) and Gross National Income (GNI), respectively.
And the way it looks, we will be exporting more and more of our people as living conditions become increasingly challenging and our leaders are unable to scale up our country’s economic prospects. There is still a long line of nurses waiting for jobs in Europe and the United States where demand for their services is high. But our labor exports are mostly from the lower end of available work vacancies, for household helpers and construction workers with the failure of our educational system.
Exporting labor is an industry by itself with the recruitment business being a lucrative one and inspires scams that victimizes our people who are hopeful for foreign employment. From a policy standpoint, exporting labor reduces the pressure on our ability to gainfully employ everyone who is available for employment.
While OFW remittances have now become a vital lifeline for the Philippine economy, a new study by the Philippine Institute for Development Studies (PIDS) showed it is not without its social costs. The study urges policymakers to look beyond remittances and address the complex social and emotional implications of labor migration.
The most obvious impact of our dependence on exporting people is the breakdown of the family which in turn brings about other serious consequences as children grow up without the supervision and loving care of parents. The PIDS study reveals that family fragmentation emerges as a stark consequence. Family relationships have become more complex and emotionally strained.
The study also warns of a wider concern on over reliance on remittances which can create dependency, discourage local labor participation, and even fuel inequality. “This is particularly concerning given the high number of college-educated OFWs across all levels, even in service jobs.”
In other words, Filipinos who invested in a college education are trading down by accepting lower-level jobs just to be able to earn more abroad. Teachers have been known to accept work as household help in Hong Kong because the pay is more than a teacher’s salary at home.
The PIDS study suggests a potential “brain drain” hindering the Philippines’ workforce development. We are losing many skilled workers who have college degrees and leave to work for better paying jobs abroad even if the positions are below their education and training.
“It is crucial to create more job opportunities within the Philippines and foster domestic development, investing in local skills, and strengthening support systems for both OFWs and their families to mitigate the potential negative consequences of overreliance,” urged the authors.
There was a time when suggestions were made to muster the forex earnings of our OFWs to finance development projects. According to the ADB, India has taken remittance flow to the next level and has issued bonds and securitization to leverage the earning power of their overseas citizens into investments at home. India has raised over $11 billion from diaspora bonds.
A similar approach had been suggested for our OFW earnings. But there is a need to teach financial literacy to our OFWs so they will not be victimized by scams or end up spending/investing their earnings with nothing to show in the end. After working abroad for years, OFWs should have enough financial literacy and skills they can use to reestablish their lives here.
And given that we are in the business of exporting our people, the government should do enough to safeguard their rights and well-being. Addressing wage theft, contract breaches and workplace exploitation remains a priority. Additionally, extending access to social protection programs and prioritizing mental health support for both OFWs and their families are essential, the PIDS paper emphasized.
“While OFWs are celebrated as modern heroes for their economic contributions, we need to consider the broader implications of their sacrifices,” PIDS concluded.
