OFW earnings – an economic booster
Next to the exports of goods and services, overseas remittances are the largest foreign exchange sources for the Philippine economy. And empirical results as that undertaken by the Bangko Sentral ng Pilipinas indicate that the beneficiaries are first, the middle-income classes from across all regions and second, the low-income classes, also from all regions, except that of the NCR where the high-income classes come only second.
Further studies as that of the Asian Development Bank indicate that this has become a strategy in most developing countries – exporting human capital in favor of migrant remittances – to address poverty reduction. Truth is, practically, 10% of Filipinos today of the 90 million population work overseas making RP the third largest migrant-sending country next to Mexico and India. Thus, such remittances clearly become source of capital and resources as it impacts on the development of millions of households in the country.
In 2003 alone, almost 8 million reside or work overseas. Again, some $7.6 billion are recorded to have flowed in through various formal channels in the Philippines but such amount is even believed to reflect only half of the money sent to the Philippines through various other unregulated channels.
Currently, the Central Bank forecasts that overseas worker remittances will hit record of $15.9 billion this year or up by 10% from 2007. It ought to be higher than these recorded figures on account of other channels or modes by which foreign earnings come into the country other those through commercial banks. Fact is, for July 2008 alone, it is said that migrant remittances rose double-digit to hit 24.6 percent. Thus, it cannot be gainsaid that, as a major source of foreign exchange, migrant remittances pay a significant contribution to the country’s gross national product.
RP has, matter-of-factly, filled the void for that great demand for sea-based workers accounting for almost 30$ of the world’s supply of seafarers. And of the total amount of annual migrant remittances, some 14% of which were from Filipino seafarers. And not too surprisingly, albeit sadly enough, these remittances have been mostly used for excessive consumption, both from the OFWs and from their household beneficiaries.
On the other hand, the soothing effect of migrant remittances, is said to have perpetuated a culture of dependence on remittances and this perceived moral hazard or dependency syndrome is seen to impede economic growth unless such amounts of money are better geared toward more productive economic endeavors. In other words, if otherwise not invested productively away from mere excessive consumption of the new-moneyed class, it cannot be transformed as a source of capital for development.
In the evolving configuration, it becomes clear that people from the provinces are fast emerging as the New Middle Class Society (“NMCS”, 2008) in the best Skinnerian tradition as 2/3 of OFWs hail from provinces outside of Metro Manila. Even the government is now being encouraged to open remittance windows for Philippine banks or remittance entities in host countries if only to generate more remittances through the formal sector. Beyond these concerns which are but self-serving on the part of government, it remains the case that Filipino workers are the demand in overseas markets. True enough, these remittances can be driver for economic development for the Philippines but then again, isn’t it uncharacteristic that the government itself suffers from this culture of dependency?
Viewed another way, I do believe that our overseas workers – as the main labor force of most developed countries in the world – only know too well on how to remit their hard-earned earnings to their families and households in the Philippines. Perhaps, it will be a better scheme for them to send their earnings through some backdoor approach other than formal channels since banks stand more to benefit in the process if it were through the formal sector.
Lastly, the government does not have to design a sort of a ‘strategic fiscal template’ in order to harness remittances for other purposes than that designed by the OFWs and their beneficiaries – excessive spending in consumer goods. That will be alright in any case since a lot of money circulate in our domestic markets. Still, ours is a free market economy and any form of imposed economic order is but taboo, call it that. Let not the hand of the State be seen getting cookies from the cookie jar. Leave the OFWs alone.
OFW remittances – an economic booster
OFW earnings – an economic booster