New system to slash OFW remittance fees, says BSP

Overseas Filipino Workers (OFW) stand to save P100 to P500 when sending money to the Philippines once the new Philippine Payments and Settlements System Remit System starts operating before the fourth quarter of the year.

Also known as the Philpass Remit System, the new settlement system for money transfers would eliminate third party courier services between commercial banks in remittances involving bank credits, the Bangko Sentral ng Pilipinas said Monday.

"This will reduce the cost of remitting money from the OFW remitter to the beneficiary," the BSP said.

"Under the existing system, beneficiaries pay from P150 to P550 as back-end processing fee. With the migration to the new system, the fee will be reduced to P50 for each remittance transaction as the BSP will be charging banks a minimal amount for the settlement of transactions," the BSP explained.

With the Philpass Remit System, families of OFWs would be able to save from P92 million to P922 million a year in remittance fees, the central bank said.

The central bank said the Philpass Remit System is a "safer, faster, and cheaper means of remittance transactions," as it uses the BSP-Philpass clearinghouse in moving remittances from a local bank to another bank where the OFW beneficiary maintains an account.

The system is an initiative of the BSP and the Association of Bank Remittance Officers Inc. (ABROI), under a memorandum of agreement (MOA) signed in December.

The Philpass Remit System was originally scheduled to start in the first quarter, but only one bank was able to migrate to the new system since the MOA was signed. The BSP did not name the bank.

"Only this bank therefore will be able to service the processing of incoming and outgoing remittances at P50 per transaction as back-end processing fee charged to the OFW beneficiary, while the rest of the ABROI member banks might still charge the old rate," the central bank said.

According to the BSP, other member banks would come on stream once the remaining issues on hardware and system connectivity have been resolved.

Other ABROI members expect to migrate to the new system this month at the end of June, while two banks would be able to comply with the new system at the end of September.

Remittances by OFWs grew by 7 percent to $4.339 billion in the first quarter of the year from $4.057 billion a year earlier.

Last year, the money transferred by OFWs to relatives in the Philippines went up by 5.4 percent to a record $17.348 billion from $16.426 billion

The BSP expects OFW remittances to grow by 8 percent this year.

About 81 percent of total remittances reported by local banks in the first quarter came from the US, Canada, Saudi Arabia, UK, Japan, Singapore, Italy, and the United Arab Emirates. —VS, GMANews.TV, Article posted May 24, 2010 - 06:44 PM

OFWs now tax-exempt

Overseas Filipino workers (OFWs) are now exempted from paying documentary stamp tax (DST) on their remittances as well as travel tax and airport fee.

This is contained in the amended Migrant Workers and Overseas Filipinos Act.

The law exempts migrant workers from the payment of travel tax, DST, and airport fee upon showing of proof of entitlement from the Philippine Overseas Employment Administration (POEA).

“The remittances of all OFWs, upon showing the same proof of entitlement by the OFW beneficiary or recipient, shall be exempted from the payment of documentary stamp tax,’’ Section 22 of Republic Act 10022, stated.

Former labor undersecretary and now Nacionalista Party (NP) senatorial bet Susan Ople immediately urged the Department of Labor and Employment (DoLE) and the Department of Finance (DoF) to immediately issue the new law’s implementing guidelines.

“The DoLE and the DoF should promptly issue the new law's implementing rules and regulations so that OFWs would immediately benefit from reduced remittance charges,’’ Ople said in a statement.

She said that the scrapping of the DST is very timely because it could help the OFW beneficiaries here recover some of the buying power they lost due to the peso’s surge against the dollar.

“OFWs can now count on some P1.3 billion in extra savings with the abolition of the DST on all their remittances,’’ Ople said, as she cited DoF’s projection at $19 billion worth of remittances this year.

“The removal of the DST on all funds wired home by OFWs would help drive down money transfer charges, and put more cash in the pockets of those receiving remittance,’’ she added.

Prior to the passage of RA 10022, all money transfers from abroad and payable in the Philippines, including those wired home by OFWs were subject to the DST at a rate of P0.30 for every P200.

Ople said that local banks and non-bank money transfer agents such as The Western Union Co. and Moneygram International, Inc. collect the DST before the funds sent home by OFWs are actually paid out to their beneficiaries here.

This means that OFWs pay a DST of P33.27 for every $500 or P22,180 (at $1:P44.36) they send home. The amount is on top of foreign and local bank fees, plus the P0.50 to a dollar margin domestic banks that are allowed when paying out remittances in pesos.

Various OFWs and labor groups and even an administration senatoriable had called for the scrapping of the tax imposed on remittances, saying it will severely burden the overseas workers and their families.

The Trade Union Congress of the Philippines (TUCP) had said the government has been raking in money from OFW remittances through the DST, reaching to over P1.3 billion.

Migrante International believes the government has had enough from the billions of dollars of OFW remittances it received yearly.

“OFWs have been the country’s economic saviors for over three decades already; it is therefore high time for the government to do the saving,’’ the group said.

Given the contribution of OFWs in helping keep the economy afloat, Lakas-Kampi-CMD senatorial bet Atty. Raul Lambino also said it is not wise fiscal policy to require DST payment for OFW remittances.

An estimated 10 million Filipinos, migrants and contract workers are working abroad. OFWs remit around $17 billion annually, it was learned.

Source URL: http://www.mb.com.ph/articles/253203/ofws-now-taxexempt

OFWs Can Use their Remittances More Profitably

This is a continuation of my previous post on the beasts of burden – the OFWs. We look at the current practices, and how we can improve it to bring about a positive bottom line – not just for OFWs but for the overall economic well being of the Philippines as well. Benigno demystifies the myth of OFW remittances contribution to the economy. In his recent GRP piece on OFW contributions he writes:

Read the rest of the article here.

RP dependence on OFW earnings leads to jobless growth -- recruiter

MANILA, Philippines --Awash with dollars from US$18 billion (more than P821 billion) a year in remittances from overseas Filipino workers a year, the Philippine economy could be now afflicted with the “Dutch disease,” an economic malady that sees the decline of local industries, fuels an overvalued peso, makes exports costly and imports cheap, and results in jobless growth, according to recruiters.

Lito Soriano, executive director of the Federated Association of Manpower Exporters, issued the warning in a recent forum on the strong peso and what must be done on the peso-dollar exchange rate concerns of overseas Filipino workers.

“Ironically for the OFWs who are the ones sending the dollar windfall to their families each month, they and their families are the first victims of the economic malady that was first experienced by the Netherlands,” Soriano said in a statement.

Soriano was referring to the term coined by The Economist in 1977 to describe the decline of the manufacturing sector in the Netherlands following the discovery of a large natural gas field in 1959. This culminated in the world's biggest public-private oil industry partnership in 1963.

The Dutch disease is a concept that purportedly explains the apparent relationship between the increase in exploitation of natural resources and a decline in the manufacturing sector. The theory is that an increase in revenues from natural resources will “de-industrialize” a nation’s economy by raising the exchange rate, which makes the manufacturing sector less competitive and public services entangled with business interests.

The concept has since been applied to other types of economic models. In the case of the Philippines, the increase in revenues comes from the OFWs’ remittances.

Soriano, chair of the LBS Recruitment Solutions, said the bloated dollar supply, not earned with private and government investments, would ten to lure decision makers to squander public funds and go into foreign borrowing sprees, confident the country has enough reserves to pay for the foreign loans.

The recruiter said that one of the “most obvious” symptoms of the Dutch disease has been the continued strengthening of the local peso even when the economy has been “barely” growing.

“When an OFW sends $1, 000 to his family today, it’s equivalent to only P45, 000 at P45 to the dollar exchange rate or P5, 000 less than what they got when the dollar was worth P50 in 1997,” he said.

As a “rule of thumb,” the recruiter added, an OFW would not get a raise while on contract for two to three years

The strong peso fueled by OFW money have further punished both the local industries selling to the domestic market and abroad because their costs were much higher than those from countries not suffering from the Dutch disease, Soriano added.

“The decimation of both the domestic industries and export industries has depleted the manpower pool for highly skilled and professional workers that are in the high-end of the deployment industry,” he explained.

Soriano added that the OFW deployment industry has suffered from a “shallow pool” of highly trained people that resulted in fewer takers and the increasing deployment of factory workers, maids and entertainers.

Citing data from the Philippine Overseas Employment Administration, Soriano said that of the 7.8 million sent to different parts of the world from the year 2001 to 2008, average yearly deployment was 893, 475 people, but close to half of them (47 percent) were rehired land-based workers plus 24 percent returning seafarers.

Newly hired averaged only 29 percent or less than a third, he said.

In 2007, Soriano said POEA figures revealed that among the first-time OFWs, 121, 715 were factory workers, 107,135 were classified as service workers mostly domestics while only 43,225 were professional and technical workers. Another 20, 000 were sent out as sales workers and clerks.

“In 2007, 74 percent of deployed workers were domestics, service and factory workers. Of all the deployed, only 14 percent were new hires,” he pointed out.

Among nurses, Soriano said, only an average of 10, 000 have been getting nursing jobs abroad each year, a “far cry” from the alleged tens of thousands some public officials claim. Most nurses end up without jobs here.

He said the “most alarming trend” has been the increasing rate of female workers getting jobs overseas. In the past seven years, he said, 64 percent were female against 36 male and most of them were sent as domestic helpers, entertainers and factory hands.

Soriano said the cure for the Dutch disease would be multi-faceted.

“Taipans should invest in permanent jobs like manufacturing and light industries. There should be a more competitive exchange rate as the peso is overvalued by 20 percent resulting in a lower exchange rate for OFWs,” he said.

Soriano said that government should also admit the existence of the economic phenomenon, adding, “The Bangko Sentral ng Pilipinas is projecting more remittances from OFWs, but how about earnings from other sectors such as the export industry?” - Jerome Aning, Philippine Daily Inquirer, March 14, 2010

Women ‘enrich’ husbands in RP — reports

And they may also elect the country’s next president

MANILA, Philippines—Thanks to their wives, married Filipino men are more financially secure than most bachelors. Today, International Women's Day, is the best time to thank them for it.

But first, some news from the United States.

A recently released report of the Washington, DC-based Pew Research Center shows a growing number of American men married to women whose education and income exceed their own.

From an economic perspective, the report said this trend is contributing to a “gender role reversal” in the gains from marriage. In the past, when fewer wives worked, marriage was a route to financial security for women. Nowadays, it is men who are getting the biggest economic boost from wedded bliss.

The report studied the numbers between 1970 to 2007, when median household income for married men, married women, and unmarried women increased 60%. Unmarried men, on the other hand, increased their income by only 16%.

This trend is also evident in other parts of the world, especially in the Philippines, where women celebrate their economic, political and social achievements.

Like in the US, there are more women attending college in the Philippines. The proportion is highest in graduate programs, according to the National Statistics Office (NSO).

The result is 20% of working women and only 10% of working men have completed college.

In Bar Exams, women have ended the reign of men as topnotchers. Women have also equaled, if not exceeded, the number of men in traditionally male-filled professions such as accounting, engineering, and medicine.

During elections, voters turnout among women surpasses the men. Since 1998, there are more registered female voters than males. These figures suggest that women will play a key role in electing the next Philippine president on May 10, 2010.

The Philippines is, in fact, among the top 10 countries in the world that have bridged the gender gap in labor force participation and wages.

It is the leader in Asia and ahead of most rich countries like the US, Germany, France, Britain and Australia, according to the 2009 Global Gender Gap Report of the Geneva-based World Economic Forum.

Based on the 2009 International Business Report of the US-based accounting and management consultants firm Grant Thornton, Filipino women held 47% of senior management positions in privately-held businesses, the largest figure worldwide.

MasterCard’s 2010 World Wide Index of Women’s Advancement also reported that the Philippines topped 14 Asia-Pacific countries in narrowing the socio-economic gap between males and females.

The trend is the same among Filipinos abroad. More than 60% of the 11 million overseas Filipino workers (OFW) are women. Many of the women face physical or mental risks abroad just to support husbands and children at home.

The Philippine economy relies heavily on the remittances of these OFWs. On average, their remittances are equivalent to 10% of the country’s gross domestic product. This figure was noted by the conservative US think-tank Heritage Foundation in its recently issued 2010 Index of Economic Freedom.

Thanks to the wives, Filipino married men are better off than their single counterparts. (Newsbreak) - Written by Frankie Llaguno, MONDAY, 08 MARCH 2010

Remittances grew 5.6% to $17.35B in ’09

MANILA, Philippines--REMITTANCES SENT TO THE PHILIPPINES grew faster than expected in 2009 in what monetary officials said was proof that demand for Filipino labor did not shrink despite the worst of the global crisis.

Money sent by Filipinos abroad reached $17.35 billion last year, registering a 5.6-percent growth from the $16.43 billion the previous year, the Bangko Sentral ng Pilipinas reported yesterday.

The growth in remittances outpaced the BSP’s own forecast of only 4 percent. It also proved wrong earlier predictions that money from Filipinos overseas would shrink by as much as 30 percent because of layoffs and company closures in countries that fell into a recession, including the United States.

In December alone, remittances amounted to $1.58 billion, up 11.4 percent from the $1.41 billion recorded in the same month of 2008.

BSP Governor Amando Tetangco Jr. earlier said remittances managed to grow despite the crisis because layoffs in some countries were offset by hirings by companies in alternative labor markets.

Bernardo Villegas, economics professor at the University of Asia & the Pacific, earlier said Filipinos who lost their jobs because of the crisis did not go home but instead sought new jobs offshore.

The behavior of Filipinos was unlike other migrant workers who immediately went back to their home countries after being laid off. Villegas added that some foreign companies prioritized Filipinos in deciding which of their employees to retain.

Remittances are a closely watched economic indicator as these largely fuel household consumption that, in turn, serves as a key driver of the economy.

Economic managers said the sustained rise in remittances was one reason the Philippines avoided a recession last year. The Philippine economy, as measured by the gross domestic product (GDP), grew 0.9 percent in 2009.

For this year, the BSP expects remittances to grow 6 percent from the 2009 level. - By Michelle Remo, Philippine Daily Inquirer, February 15, 2010

Remittances go mostly to food—ADB study

MANILA, Philippines—Even as last year’s remittance rose 5.6 percent to a record $17.3 billion, a study by the Asian Development Bank showed that monies overseas Filipino workers send to their families here are spent more on food than on education, health care, and durable goods.

“The results show that it is only for food share that the coefficient of the remittance is statistically significant,” said the study entitled “Remittances and Household Behavior in the Philippines.”

While 2009 remittances from abroad accounted for 10.8 percent of the country’s gross domestic product, the study which was released last month said they did not contribute to creating domestic demand.

“These flows may also contribute to the creation of new social assets and services and community physical infrastructure such as schools, health centers, roads, and other community projects,” the study said.

With the global financial crisis, these fund transfers were seen as possible sources of increasing domestic demand and rebalancing economic growth.

“Unlike the previous studies however, our estimations show that remittances to the Philippines do not have a significant influence on other items of expenditure, particularly investment spending on education, health care, and durable goods,” the study said.

“In other words, the analysis in this paper does not support evidence of remittances contributing toward rebalancing growth by creating domestic demand,” it added.

This study, which used 2000, 2003, and 2006 data from the Family Income and Expenditures Survey to analyze the role of remittances in household consumption, investment, and poverty reduction, showed that about 20 percent of all Filipino households receive remittances.

“And this fraction has been rising over time,” it said.

The study shows that richer households receive more remittances.

“While less than 10 percent of lower income households receive remittances, the proportion increases with income. These flows from abroad contribute as much as 15 percent to the incomes of the highest income quintile but just over 1 percent for the poorest quintile,” it said.

The study also shows that receiving households tend to be bigger with fewer employed members compared to households that don’t receive remittances.

This reflects “higher dependency ratio as a factor in attracting remittances,” it said. - INQUIRER.net, February 16, 2010

OFWs Deliver Again

MANILA, Philippines — The Philippines is one of the three East Asian countries (excepting China) that avoided a recession in 2009. The other two are Indonesia and Vietnam.

Registering a positive growth in GDP of at least 1.5 percent (it could been higher had it not been for the devastation caused by super typhoons), the Philippine economy has grown mostly due to private consumption expenditures and government pump priming. Exports dropped precipitously and investments were anemic.

The consumption-led growth, in turn, can be attributed to the more than P800 billion received by the relatives of the overseas Filipino workers whose remittances increased by more than 4 percent for the whole year against all odds. The Philippines would have surely gone into a recession if the OFW remittances had dropped by 6 percent or more, as forecasted by the World Bank and IMF at the beginning of this year.

Thanks to the superior quality of OFWs (the first to be hired and the last to be fired), remittances kept on increasing throughout the year. The only fly in the ointment is the strengthening of the peso at the end of the year, due mostly to the depreciation of the dollar. Many OFWs were expecting an exchange rate closer to P50 to $1 at the end of the year. They would be lucky to get P47.

Be that as it may, the purchasing power of the relatives of the OFWs is a formidable P800 billion or more. Since the government is already reaching its limit of deficit spending of 4 percent of GDP, the Philippine economy will have to be propelled by consumption spending for at least the first half of 2010 for the GDP growth target of 3 to 4 percent for the whole of next year to be attained.

That is why I reiterate my suggestion that OFWs and their relatives take an upbeat mood beyond the traditional Christmas period. I got a lot of feedback about my suggestion that at least for this year, Christmas be extended to at least to the middle of January to coincide with the Sto. Nino celebrations in cities like Cebu.

Let me respond to some of the criticisms to my suggestion. I was not in the least suggesting the adoption of a consumerist outlook. Consumerism is evil. It is a lifestyle that equates human happiness with an unlimited accumulation of goods, of making "having" as the end all and be all of human existence.

In fact, what I suggested was for the OFWs to help their relatives who suffered from the ravages of Ondoy and Pepeng to rebuild their houses, replace their damaged clothes, furniture, and appliances, and in general restore their standards of living to where they were before the tragedies struck. These expenditures are the farthest from a consumerist lifestyle. They are for basic necessities and do not imply an insatiable desire for material goods.
It is not true that all OFWs are limited to only two or three weeks of vacation. For one, there are the 380,000 seafarers who normally get anywhere for one month to three months of home leave. I am very familiar with this category of OFWs because I do a lot of research on Filipino seamen who will be our perpetual OFWs.

Even if we are able to eradicate poverty completely in the Philippines, there will always be hundreds of thousands of Filipinos in international shipping lines because they are highly appreciated by their respective employers and many Filipino males have a natural inclination to working in this industry. Even during the current crisis, when numerous ships were mothballed in places like Singapore and Hong Kong, the demand for Filipino seafarers continued unabated. These OFWs can be among those helping to boost consumption spending on basic necessities, including some amount of domestic tourism.

In addition to seafarers, those who can afford to stay more than two weeks for home leave are numerous OFWs who are service-oriented workers, such as caregivers and nurses in developed countries in Europe and North America. From my experiences in Spain, where I spent two years teaching in a business school in Barcelona, Filipino immigrant workers are so especially appreciated that they can normally ask for a month or more of vacation. Their talents, skills, and personal traits stand out in comparison with other foreign workers from Asia, Africa, and Eastern Europe.

It is true, as some of the bloggers commented, that those who are home for the Christmas vacation should spend as much time staying with the family. Bonding with the children is especially necessary. But I would like to remind the married OFWs that one of the important suggestions of marriage counselors is for husband and wife to regularly spend time alone with one another, i.e. taking frequent second honeymoons. I would like to suggest to vacationing OFWs to consider spending time alone with their respective husband or wife to get to know places like Panglao, Dumaguete, Camiguin, Coron, Sorsogon, and numerous places to which they have not yet traveled. There are very cheap fares that the local airlines are offering.

The Philippine Nautical Highway is a much improved infrastructure connecting the major islands. A couple can drive from Manila to Batangas, then to Calapan, then to Panay and finally to Zamboanga using the ROROs and enjoying the good weather of January and February. Again, this has nothing to do with a consumerist lifestyle. I consider it as a basic need of married couples who need to spend time with one another, away from their daily worries and concerns.

Some of the bloggers misunderstood my reference to pasalubongs. I was not suggesting that you bring a lot of goodies from abroad to give to your relatives. In fact, you can buy practically anything you want to give to your relatives in local stores. And I do agree with some of the comments that your love for your family is not measured by the amount of goods you bring back home.

When I was talking about pasalubongs, I was referring to what you would bring back as gifts to your employers and other friends you have in the foreign places in which you work. There are already very well processed and packaged Filipino delicacies (such as those produced in Cebu, Bulacan, Pampanga, Ilocos Norte, Iloilo, the Bicol region) that can compete with Godiva, Nestle, or Cadbury chocolates. They can pass even the most stringent customs regulations of countries like Australia.

I would like our millions of OFWs to be the first promoters of our local food processing industry which is already reaching world-class level, thanks among others to the efforts of the Department of Science and Technology to modernize the processing and packaging of our traditional delicacies like the chicharon, pastillas de leche, pili nuts, dried mangoes, etc. The Philippine food manufacturing industry will go from strength to strength and will not go the way of other manufacturing sectors that have collapsed because of the Chinese competition. An example of a world-class Filipino brand is Oishi that has a very strong presence in China and some Southeast Asian countries.

The first quarter of 2010 will see faster growth in GDP also because of the expected election-related spending. Together with the continuing strong remittances from abroad, these expenditures will boost private consumption spending which will remain to be the main engine of growth for at least the first half of 2010. If we are able to elect a very credible set of leaders in May 2010, the second semester of 2010 can also be boosted by strong inflows of foreign direct investments, especially in such sectors as mining, infrastructure and energy, tourism and business process outsourcing. - Dr. Bernardo Villegas, INQUIRER.net, December 15, 2009

Belt-tightening by Migrant Workers Unfelt at Home

BATANGAS, Philippines, Dec 18 (IPS) - The global financial crisis may have dealt a severe blow to Filipino migrant workers, thousands of whom lost their jobs and fell into debt. But public schoolteacher Melinda Mendoza does not see this impact at all -- at least not within the four walls of her classroom.

On the contrary, Mendoza, 45, is bothered no end by her pupils’ ostentatious display of opulence in a poor rural setting, where luxury is atypical.

"They have huge allowances," says the teacher of 21 years in the government-run Pulong Anahao Elementary School, located in the town of Mabini here in Batangas province, a two-hour drive south of Manila.

On top of that, the students own electronic gadgets like mobile phones that are no match to those of a public school teacher like Mendoza. She earns a measly few thousands of pesos a month, hardly enough to buy a high-end unit that is a status symbol in this South-east Asian country, at least 30 percent of whose 90 million people live in poverty.

Mendoza says about half of her students are children of migrant workers, a great majority of whom work in Italy as domestic helpers, caregivers, nannies or factory workers.

These children’s parents earn what they can never earn in the Philippines, which has become the world’s largest exporter of human labour after its workers began going overseas in droves in the seventies. Today, Filipino domestic workers in Italy earn 60,000 to 80,000 pesos (1,287 to 1,717 U.S. dollars), or a lot more, a month.

"There is dependence on remittances among families," says Ricardo Casco, national officer for labour migration support of the International Organization for Migration (IOM).

Based on 2007 data from the World Bank, the Philippines ranks fourth globally in terms of remittances received, next to India, China and Mexico. In 2007, its remittances reached a whopping 14.45 billion dollars, up from only 103 million U.S. dollars in 1975.

Like many Filipino workers abroad, those in Italy were not spared by the crisis late last year that have since forced many offshore companies either to close shop or cut production, says Estrella Dizon-Añonuevo, executive director of Atikha Overseas Workers and Communities Initiatives.

A migrant worker’s monthly take of 1,500 euros (2,150 dollars) in Italy was reduced by half as a result of the crisis. Remittances to families in the Philippines in some instances dwindled by 15 to 20 percent at the height of the downturn, she says.

Yet, many Filipino workers scrimped and saved to ensure that they maintained the same level of financial support they had been giving to their families, says Añonuevo, whose NGO conducts financial literacy among migrant workers as part of its advocacy.

"There was belt-tightening among migrants," she points out. Some were forced to live with fellow workers to save on rent and keep money that otherwise should have gone to their own basic needs.

But Añonuevo also says the hardships these migrant workers endured hardly ever figured in discussions between migrant parents and their children in the Philippines that are often held through today’s modern technologies, including the Internet.

It was not uncommon to hear of Filipinos holding down several part-time jobs at the same time in order to continue sending remittances home. "What is the purpose of spending the best years of your life anyway?" asks IOM’s Casco.

This is why schoolteacher Mendoza hardly sees signs of migrant parents’ economic problems affecting her students’ lifestyles. Every day, in fact, she sees how the class divide plays out in her classroom.

At lunch breaks, she says, one can see who the children of overseas Filipino workers are – or OFW, as they are commonly called in the Philippines – and who are not. They have packed lunches and snacks – and money to buy more food in the school canteen – while many of the latter subsist on so little or none at all.

"I usually tell my students to share their food with those of their classmates who have no food," she says.

Mendoza worries that her students exemplify a materialistic bent born of a culture that has become dependent on remittances sent by their migrant- worker parents.

The village of Anahao, which has a population of less than a thousand, has benefitted quite a lot from the wave of migration for labour.

This was especially so in the nineties, when a village woman, unable to land a job even if she was a college graduate, packed her bags and left for Italy to work as a domestic helper. It did not take long before others followed in her footsteps, literally, inspired by her example and the fortunes that going overseas seemed to have brought her.

Soon, Anahao itself began to change. European-style mansions replaced wooden structures typical of a rural setting, earning it the moniker ‘Little Italy’. Farming was the main source of villagers’ income until the 90s, when families became entirely dependent on remittances and gave up ploughing.

Today, 15 percent of Mabini town’s residents works overseas. Seventy-two percent of them work in Italy, 10 percent in the Middle East while the rest is in the United States, Asia and elsewhere in the world.

Within and outside the village of Anahao and other parts of Mabini, one can hardly miss the telltale signs of a rural town that has tasted progress. Many more concrete houses are being built, expensive vehicles being driven around – among others to ferry children to school such as Mendoza’s – and private schools whose total enrollment far exceeds those of state-owned schools, because migrant parents equate them with better education.

"They even go to expensive hospitals," says Esperanza Balita, a municipal employee who was once a migrant worker herself.

Realty property taxes, an indicator of land and home ownership, have nearly doubled over the last decade, from 17 million pesos in 1998 to 31 million pesos (365,000 to 665,378 dollars) in the first quarter of this year.

Meantime, the outflow of migrant workers continues from a country that already has some 10 percent of its population working overseas in 190 countries. In 2008, at least 1.3 million Filipinos left for overseas work. Local communities worry about the continued social cost of migration, regardless of how hard times are putting great pressure on migrant parents overseas.

Village chief Raymundo Magsino, in an interview with IPS, says a number of youth in his community have dropped out of school, not for lack of resources as is often the case in many poverty-stricken areas of the country, and certainly not because of the economic crunch, but for sheer lack of interest.

Many young people here know they will be going to Italy anyway to join their parents, who, in less than a year of working there, provided they already have a working visa, are entitled to petition and have their children join them before they turn 18, explains Magsino. There, they can pursue their education or take on jobs common among Filipino migrants.

The attraction of leaving the Philippines is so strong that offers of free livelihood training –- so that they are productive while waiting to join their parents –- hardly had any takers, the former police chief rues. Yet these young people while away their time playing ‘tong-its’ –- a popular numbers game in the Philippines – or chatting on their computers or in some Internet shop.

Mabini mayor Nilo Villanueva has far bigger concerns -- and they are not about the impact of the financial crisis. "The usual close relationship between parents and children" is gone, he says in a report accompanying the results of a study conducted by his office on migration in his town.

This has been manifested in an increasing number of out-of-school youth, reported cases of rape, annulment of marriage, and a host of other social concerns that, directly or directly, may be attributed to labour migration.

Mendoza, the elementary schoolteacher, shares Villanueva’s concern. One of her pupils, whose parents work in Italy, have stopped coming to school, and she knows that this has nothing to do with the financial crisis. - Tess Bacalla*, Inter Press Service News Agency, Saturday, December 19, 2009 12:00 GMT

(*This feature was produced by IPS Asia-Pacific under a series on the impact of the global economic crisis on children and young people, in partnership with UNICEF East Asia and the Pacific.)(END/2009)

Impact of the global recession on international labor migration and remittances

Implications for poverty reduction and development in Nepal, Philippines, Tajikistan, and Uzbekistan

Summary

The German Federal Ministry for Economic Cooperation and Development has commissioned a series of country studies to assess the impact of the global financial and economic crisis on external migration, return migration, remittances, and the consequent effects on poverty and development. Migration is usually seen as a livelihood strategy by migrants and their families; and remittances provide important resources to finance everyday life. The first four country studies represent broad regional variety and were carried out in March 2009 (Mali, Nepal, Philippines, and Uzbekistan); studies on Albania, Armenia, and Tajikistan are currently being drafted. Read more...

Filipinos fuel oil-rich Emirates’ progress, dreams

ABU DHABI—When you arrive at this oil-rich nation’s swanky airports, look up at the massive glass skyscrapers and walk into luxury hotels, you won’t be mistaken if you think Filipino hands helped make all this progress possible.

At Abu Dhabi’s iconic landmark, the majestic $3-billion Emirates Palace Hotel, one is greeted by the friendly smiles and familiar greetings of its Filipino staff.

Even in the royal household of Sheikh Mohammad bin Rashid Al Maktoum, United Arab Emirates Vice President, Prime Minister and Ruler of Dubai, Filipinos were visible when the Sheikh hosted a banquet for 91 journalists from all over the world.

The journalists were invited to be part of the UAE’s 38th national day celebration on Dec. 2, a week before the $60-billion Dubai debt crisis erupted.

Top officials of the UAE paid tribute to foreign workers, not least of them Filipinos, as an important pillar of the economic progress that has made it the second biggest Arab economy next to Saudi Arabia.

Minister of State for Foreign Affairs Anwar Gargash told the visiting journalists that talks were ongoing to improve the wages and conditions of workers from the Philippines and other countries.

“The issue of labor will be a continuous issue for us for many years,” Dr. Anwar said at a briefing.

Work in progress

With no more than 20 percent of its five million population being locals (or emiratis), the UAE is highly dependent on foreign labor to build its ever-expanding oil-based economy.

The UAE is the eighth top oil producer in the world, with a daily capacity of nearly three million barrels. It is also ranked as the world’s third biggest oil exporter.

“We have a lot of labor from the Philippines and Indonesia, and we are talking to these countries about conditions of labor, how we can improve them. It is a work in progress,” Dr. Anwar said.

Some 529,000 Filipinos live and work in the UAE, according to 2007 data from the Philippines’ Commission on Overseas Filipinos. Most of them are in Dubai, one of the UAE’s seven emirates.

“We’re doing a lot, and I think in many countries, such as the Philippines and Indonesia, there’s more appreciation of what we are doing ... because [the workers] are basically living the experience with us,” he said.

‘Nothing will change’

The assurance was made a week before the Dubai debt crisis sent markets tumbling worldwide.

Dubai World, the UAE’s investment arm, sought a 6-month delay in the payment of its $60-billion debt, triggering fears of a debt default across the globe.

But in Manila, UAE Ambassador Mohammed Ebrahim Aljowaid downplayed the debt crisis’ implications on the UAE economy and the fate of Filipino and other foreign workers.

He said his government would honor its commitment to provide better employment terms.

“Nothing will change,” Aljowaid said in an interview during the Manila reception for the 38th national day on Dec. 2.

He denied that Filipinos were being retrenched or were losing jobs as a result of the debt crisis.

“Nothing. Up to now I have not seen anything like that. Don’t worry, everything will be OK,” he said.
Aljowaid said there had even been an increase in the deployment of Filipino workers for the UAE—from 150 a day to 250 in the past weeks.

Most preferred workers

Filipinos are outnumbered by other Asian workers here but they are said to be the most preferred.

“Kasi may utak daw tayo at No. 1 sa English (It’s because we are intelligent and are No. 1 in English),” said Raque Mah, a limousine driver at the Hilton Hotel.
According to Mah, Filipinos are also paid higher than their Indonesian or Pakistani counterparts because of their skills. The minimum wage is 1,500 dirhams (P18,840).

The UAE is a good place to work in, said Mah, who has worked in other countries. She said those employed by private companies, like herself, were enjoying free housing, and those employed by the government, free food provisions.

About the only problem they encounter here is homesickness, Mah said.

She said there was talk about moves to grant foreign workers “equal pay” of about 2,500 to 3,000 dirhams (P31,450 to P37,680).

Not a bubble

Will the UAE remain a desert oasis for Filipino workers despite the crisis?

No less than Sheikh Mohammad assured the visiting journalists that his nation’s economy was sufficiently strong to withstand the global economic recession.

He invited the journalists to tour Abu Dhabi and Dubai to see the furious construction of towering office buildings, luxury hotels, transport systems and entire islands for new residential, commercial and tourism hubs.

He dismissed criticism that everything was a bubble.

“With challenges come opportunities, so you’ll have to take those opportunities now,” he said.

The visionary Dubai ruler recalled how his program to position the UAE as a regional hub for finance, investment and tourism had been met with doubt.

“They said, ‘You, Sheikh Mohammad, have big dreams.’ And now we tell them that we managed to turn our dreams into reality,” he told the journalists.

Sultan Nasser Al Suwaidi, UAE Central Bank governor, allayed fears that the massive real estate projects would crash, saying the UAE economy was “dynamic.”

“When they build, they don’t know the future, and when you’re half-way you can’t stop [the projects]. We ended up with excess units but this will be resolved in time,” Nasser told the journalists.

Building boom

Among the developments here is the $40-billion Yas Island built to host the inaugural Formula 1 Abu Dhabi Grand Prix last month. - Juliet Labog-Javellana, Philippine Daily Inquirer, December 13, 2009

BSP projections aiding illegal recruiters — FAME

MANILA, Philippines — Recruitment agencies warned the Bangko Sentral ng Pilipinas (BSP) against making statements about the expected rise in remittances from overseas Filipino workers (OFWs) in countries where the Philippine government has been negotiating for more job opportunities for them.

The Federated Association of Manpower Exporters (Fame) said the repeated statements announcing new markets in New Zealand, Canada, Australia, Japan and Guam as possible sources of dollar remittances was just giving more information to illegal recruitment syndicates that entice jobless Filipinos with the promise of high wages.

“The BSP statements are often misleading and give the impression that there are new markets that are being tapped by the government such as Australia, Japan, South Korea, Canada, Taiwan and Guam,” Fame executive director Lito Soriano said in a statement.

He said that the BSP statements were mostly based on “old and repetitive” issuances by the Philippine Overseas Employment Administration (POEA).

Soriano noted that the POEA had not approved any new job orders up to now for Guam and that actual mobilization for the construction of a US military base on the island might only start in July 2010.

To lighten Okinawa’s load, Tokyo and Washington have agreed to relocate about 8,000 US Marines from Okinawa to Guam by 2014, but the US military says the plan cannot move forward until a new base in northern Okinawa is finished.

Prior to their eventual transfer to Guam, the US Marines are to relocate from the Futenma Air Station in southern Okinawa to Camp Schwab on the northern side. The relocation was agreed to by Japan and the US in 2006 but was later put on hold.

As for Australia, New Zealand and Canada, Soriano said the “real” situation was that the three countries were in recession and job orders had completely stopped.

In East Asia, Soriano said the POEA deployed only 30 caregivers and nurses to Japan on Sept. 27 while the South Korea trainee deployment has not reached even 4,000 in 2009. Taiwan’s special hiring program has only deployed less than a thousand for 2008 compared to the private sector, which deployed more than 40,000 factory worker and caregivers.

“Those markets have dried up and only the Middle East countries of Saudi Arabia, UAE, Qatar and Libya where over two million Filipinos are concentrated are steadily increasing remittances flows,” Soriano said.

The recruitment executive, however, warned that the over 200,000 OFWs in Dubai, the second biggest source of remittances this year, were likely to send less next year because of the emirate’s debt crisis.

The BSP earlier said that in the first three quarters of the year, OFWs sent home through banks a total of $12.789 billion, up $516.62 million or 4.21 percent from the $12.273 billion in the same period in 2008.

The decline in remittances from the US was offset by the $1.38 billion sent by OFWs in Canada and the $588 million from Japan, which, respectively, were 56- and 57-percent higher compared to last year. - By Jerome Aning, Philippine Daily Inquirer, December 13, 2009

Kidnap-prone Filipino seafarers keep remittances afloat at $2.5 billion

Amid the threat of kidnappings in the high seas, Filipino seafarers remitted a record $2.502 billion from January to September this year, the Trade Union of the Philippines (TUCP) said.

The increase in remittances is attributed to the rising enlistment of Filipinos in the world’s ships, TUCP secretary-general Ernesto Herrera said Tuesday.

“Foreign employers find Filipino sailors quick learners, and easier to train compared to other nationals," Herrera added.

According to him, several European and Asian shipping firms have disbanded their multinational crews to replace them with all-Filipino personnel.

Filipino seafarers from all major destination ports in the world have increased their remittances this year.

Remittances from Filipino seafarers in Norway soared by 110 percent to $229.551 from $109.079 million from the same period last year.

Filipinos from Japan also boosted their remittances 57 percent to $222.505 million from $141.886 million last year.

Double to triple-digit increases in remittances from Filipino seafarers were also recorded in the United Kingdom, Germany, Singapore, Greece, Cyprus, Netherlands, Denmark, Oman, Hong Kong and Sweden.

These developments offset the 24 percent drop in remittances from Filipino seafarers in the US, which experienced a slump in the economy since last year.

But even the TUCP admitted that the continued kidnapping of Filipino seafarers in the Horn of Africa is a great concern to them.

About 67 Filipino seafarers remain locked up by pirates on five vessels in Somalia, while one is in Nigeria.

The TUCP renewed its appeal to the International Maritime Organization and the shipowners to repel pirates and protect seafarers.

Filipinos make up a third of the world’s seafarers, making them the most visible nationality in the world’s ships as well as the most vulnerable to pirate abductions. Some 229,000 Filipino seafarers are on board the merchant shipping vessels around the world at any given time.

Filipino seafarers’ remittances accounted for 20 percent of the aggregate remittances from all overseas Filipino workers in the nine-month period. - JOSEPH HOLANDES UBALDE, GMANews.TV, December 08, 2009

Harnessing OFW remittances

A NEWS report quoting a study conducted by a civic group, Atikha Overseas Workers and Communities, as saying that about 70 percent of overseas Filipino workers (OFWs) are unable to save or invest for themselves due to financial-management illiteracy reflects lost opportunity.

With 10 percent of the 92 million Filipinos, or 9 million, working abroad and sending money back home, there is so much money that could have been invested in productive enterprises.

Last year OFWs sent home $16.4 million. If the projection of the Bangko Sentral ng Pilipinas (BSP) proves right that the OFW remittances will grow 4 percent this year, these remittances will top $17 billion this year. Remittances have been valued at 10 percent of the gross domestic product (GDP) and have been credited with fueling household consumption, which accounts for 70 percent of the country’s economy.

For next year, the BSP predicts that remittances will grow by another 6 percent because of the global economic recovery.

Think how much impact it would have if the country can harness the potentials of this big money coming in from other countries every year, beyond fueling household consumption like the purchase of appliances and home improvements. To think that the exports of Filipino labor have been going on since the Marcos years in the 1970s, which at the time served as a safety valve for disgruntled Filipinos who couldn’t find jobs in the country.

The Filipino diaspora has continued since then. And, yes, OFWs were able to provide for the expenses of their families back home, for the purchase of household appliances and for the education of their children. But not much beyond that. We’re thinking in terms of savings and investments, not expenses for fiestas or other profligate ways that dry up savings. We’re thinking of making OFWs entrepreneurs.

Atikha executive director Mai Añonuevo says the OFWs’ failure to save and invest negates the opportunity to harness their remittances for developing communities, especially the rural areas, through the establishment of social enterprises funded by OFW money. This means creating businesses, owned by the OFWs and which will create jobs.

The biggest hurdle seems to be the lack of financial literacy of the OFWs themselves. We have to realize that most of these OFWs did not have training in business and finance before they left the country to work abroad. Neither did they have the opportunity to get training abroad because they have been busy working and earning.

The European Commission (EC) and the United Nations (UN) have taken the initiative to help by collaborating with local nongovernment organizations. They provided P52.3 million for various projects, including one that seeks to maximize the gains and minimize the social cost of overseas migration through the development of initiatives that will enhance the OFWs’ financial literacy and their families.

Mayan Villaba, who handles the “Enhancing the Capacity of Migrants as Partners of Economic Development” program, also funded by the EC and the UN, explains that remittances have the potential to develop rural communities and provide jobs to townsfolk, if OFW savings are invested in social enterprise.

This is really a matter of proper budgeting and goal-setting, says Añonuevo, and the OFWs will be able to save and invest for their future. We agree and we should work for that, because OFWs, after years of working abroad, will have to think about the time when they come back home for good. They would need something to do with their time and savings. Wouldn’t it be nice if they can contribute something to their communities with their enterprises that create jobs? - Editorial, Business Mirror, Wednesday, 18 November 2009 20:55

Local gov’ts advised to tap OFW remittances for programs

Written by Jesus F. Llanto
SATURDAY, 19 SEPTEMBER 2009

Expert says families tend to invest 10% of the dollars sent by relatives abroad

Local government units (LGUs) should consider tapping the remittances of overseas Filipino workers (OFWs) in funding projects in their communities, an expert on migration said.

During the Joint Cities Conference on Transparency, Accountability and Competitiveness in Makati City held this week, University of the Philippines political science professor Jorge Tigno said that LGUs can pool portion of the remittances of the migrant workers to help fund projects in their localities.

“We need to think that development can come not only from official development assistance (ODA) and foreign direct investments (FDIs) but also from remittances,” Tigno said.

Around 10% of the 80 million Filipinos are working in other countries and the multi-billion remittances they send annually have boosted consumption and kept the economy afloat.

OFW remittances reached US$16 billion in 2008, according to data from the Bangko Sentral ng Pilipinas. For 2009, preliminary data show that total remittances have reached almost $10 billion in the first 7 months.

$1-B POTENTIAL

Tigno said that studies have shown that about 10% of OFW remittances are saved or are invested by their families.

“That’s more than a billion dollar that we can tap to fund projects in the community,” Tigno said.

“Income remittances have a direct impact,” he added. “Migrants have a tendency to identify with their hometowns.”

LGUs, Tigno said, overlooked the potential of remittances as fund sources for their community projects because local officials think they are not the ones who will benefit from them. He added that most LGUs do not even monitor the migrants in their jurisdictions.

He added that most local development plans of the LGUs do not tackle the role of the migrants and effect of migration in the community.

JOB-CREATING PROGRAMS

“They tap the migrant workers to donate money for the fiesta celebration, construction of waiting sheds or medical missions, which may not be what the LGUs really need,” he added.

Most LGU programs, he added, that are funded with the help of the migrant workers’ remittances are those that have high impact for short term only.

LGUs should implement programs that can generate income and create employment, he said. “LGUs should have a program otherwise the money will go to waiting sheds again.”

Tigno, however, said that even the national government should start drafting a policy to tap the development potential of migration. He added that the current Medium Term Development Plan does not mention the potential of migration and that the National Economic and Development Authority (NEDA) should include the issue in crafting the next MTDP.

“A pronouncement on the part of national government to say that migration has a positive role to play in development is needed,” he said. “Once that’s made then the cue can be taken by the local government and it can encourage them to craft their local development plans that will include the role of migrants.”

BROADER PERSPECTIVE

He said that the national government is having a dilemma with this issue since it could be accused of promoting migration, which is a violation of Republic Act 8042 or the Migrant Workers Act of 1995.

Section 2-C of RA 8042 reads: “While recognizing the significant contribution of Filipino migrant workers to the national economy through their foreign exchange remittances, the State does not promote overseas employment as a means to sustain economic growth and achieve national development.”

Tigno said, however, that the government should broaden its perspective and should realize that acknowledging the contribution of migrants is not necessary promoting migration.

“We are just tapping and managing the phenomenon so it can contribute to local development,” Tigno said. (Newsbreak)

Remittances from UAE Filipino Workers to Fall by 6pc in 2009

Khaleej Times
20 July 2009

ABU DHABI - Remittances sent by Overseas Filipinos Workers (OFWs) in the UAE will dip by 6.67 percent this year, according to a Philippine bank official.
"There will be a slight decrease in the remittances sent by OFWs because of the global crisis," said Manny I. Inserto, assistant vice-president and regional head of remittances for Middle East and Africa, Global Banking Department of LandBank. LandBank is wholly-owned by the Philippine government.

He forecast that this year, UAE's remittances to the Philippines will drop moderately to $1.4 billion from an estimated $1.5 billion in 2008.

"This is a conservative estimate and is based on the number of banks (operating) in the UAE, OFW population and the volume of remittances," Inserto said. "On average, each Filipino sends between $400-$500 per month," he added. There are around 400,000 Filipinos residing and working in the UAE. The UAE ranks as the second largest remitter from the Middle East, after Saudi Arabia which has a Filipino population of 1.5 million. According to the Department of Labour and Employment (DOLE) there are around 1,357 OFWs in the UAE who lost their jobs and have returned to the Philippines in March. There are 6,406 displaced OFWs from around the world. Meanwhile, Bangko Sentral ng Pilipinas (BSP), the Philippine central bank said on Wednesday 150709 that remittances from overseas Filipinos coursed through banks grew year-on-year by 3.7 percent in May 2009 to reach a record high of $1.48 billion.

Cumulative remittances for the first five months of the year totalled $6.98 billion, representing a 2.8 percent increment compared to the same period last year.

"The stream of remittances from overseas Filipinos continued to show signs of strength despite lingering global economic fragilities, providing some basis for cautious optimism regarding steady remittance levels for 2009," BSP Governor Amando M. Tetangco, Jr. said. He added that remittance flows continued to be underpinned by the steady demand for Filipino workers abroad, specifically professional and skilled workers. ----Last year, remittance flows to the Philippines reached $16.4 billion, roughly equivalent to a tenth of gross domestic product. In 2007, total remittances were $14.5 billion.

This year, BSP expects the remittances to stay flat. "Remittances for the full year 2009 are expected to exhibit a flat growth even with the mounting concerns about the effects of the recessionary conditions in the global economy," the central bank said in a press statement early this month. For the period January-May 2009, the major sources of remittances were the US, Canada, Saudi Arabia, UK, Japan, Singapore, UAE, Italy and Germany. According to World Bank statistics, Philippines is the fourth largest remittance recipient in the world, next to India, China and Mexico.

Less immigration but no big exodus

http://www.7days.ae
Tuesday 8 Sep, 2009

Emigration to Gulf states from South Asia is down, but there is no large-scale return of migrants, a study pub-lished yesterday showed.

The Migration Policy Inst-itute (MPI) study for the BBC World Service, found that “migrants have been laid off at high rates throughout the world, including construction workers from India in Dubai and other Gulf states”.

The study added that statistics on Indian migrant return were difficult to get, however, anecdotally, “experts say that there is no large-scale return migration... due to the crisis”.

“Counter to the widely held public perception, immigrants overwhelmingly are choosing to stay put in their adopted countries rather than return home despite very high unemployment and lack of jobs,” the research said.

MPI found that three Asian countries had seen their remittances grow in 2008 to 2009 - Pakistan, Bangladesh and the Philippines.

However, around ten per cent of Bangladeshi migrants had been sent home from contracts in the Gulf, while many Filipino men on Middle Eastern construction projects had also returned home before the end of their contracts.

“South and East Asia have been spared the worst of the crisis and - although remittances are expected to slow somewhat in 2009 - they continue growing,” MPI said.
“Compared to the same period last year, remittances are growing at a rate of 23 per cent to Pakistan (faster than during the past three years), 16 per cent to Bangladesh (still down substantially from 2008), and three per cent to the Philippines (also down substantially from last year),” the institute added.

Giving remitters their voice

Rodel Rodis
INQUIRER.net
September 10, 2009

CALIFORNIA, United States—Considering that the globe is mired in a major economic crisis which continues to roil its most advanced countries, the Philippines’ economic picture is impressive.

Its unemployment rate is hovering around 7 percent (while the latest US figure is at 9.7 percent), and its gross national product (GNP) of about $186 billion recorded a phenomenal 4.5 percent growth in 2008. Moreover, while the US economy contracted as of the second quarter of 2009, the Philippine economy managed to grow by 4.4 percent.

What accounts for this performance? Simple: higher remittances. Which just goes to show that when the going gets tough, the tough overseas Filipino workers (OFWs)—laboring in all the continents except Antarctica—somehow manage to send more money home.

According to the BSP (the Philippines’ central bank), remittances from January to June 2009 totaled $8.5 billion, of which $4.5 billion came from the Americas. When annualized for 2009, this translates to at least $17 billion. Though the pace has slowed this year from the almost 10 percent annual growth recorded for most of this decade, the final year-end tally will likely be higher because remittances usually rise during the Christmas holidays.

It should be noted that the BSP figures only take into account those money flows which go through the formal channels—i.e., money which flow through banks and non-bank financial institutions engaged in money transfer services.

What would the total figures be if they included the value of goods and services which flow to the Philippines using the informal channels and methods—e.g., the “colorum” remitters; the padala system or the cash hand-carried by balikbayans; and the pasalubongs stuffed in balikbayan boxes? What value can be placed on the medical missions conducted by Fil-Am doctors; on those donations to charitable organizations like Books for the Barrios which advance Filipino causes; and on those tourists who visit because of the encouragement, active or otherwise, from their Filipino co-workers and friends?

In her report, “Poverty in the Philippines: Income, Assets, and Access,” Karin Schelzig, a Social Development Specialist for the Asian Development Bank, cited a World Bank study which estimated actual remittances to be as high as $21 billion in 2002. That year, however, the official BSP figures only showed total remittances to be around $7.6 billion.

A rudimentary extrapolation from this data means that the 2009 figure may be as high as twice the $17 billion estimated for 2009—$34 billion—or more.

Given that the Philippine government’s budget for 2010 is about P1.541 trillion (roughly $32 billion), this means that after financing the operation of the entire Philippine government for the entire year—e.g., after paying for the President, every government worker, every teacher, every soldier, and every congressman/senator and all his/her pork barrel projects—the OFW remitters still have a couple of billion dollars of change left.

A 2008 study by two University of British Columbia professors, Dr. Michael Goldberg and Dr. Maurice Levi, reveals that as a percentage of GDP, remittances account for 13.5 percent of the Philippine economy and that they have become more substantial than the combined impact of foreign direct investments (FDI) and official development assistance (ODA) funds.

The study also found that in large recipient countries like India, China, Mexico, and the Philippines which are characterized by income inequality, volatility, and an absence of developed credit and insurance markets, “remittances can serve as a substitute for financial markets, for example, allowing households to finance investments, including investments in human capital, and in this way spur economic development.”

Further, the study disclosed that “remittances might help investors circumvent the constraints of the financial system to take advantage of high economic returns that are inaccessible to them because of the lack of credit and savings vehicles.”

But economics is not called “the dismal science” for nothing. For every economist saying “good,” there’s another saying “bad.”

A 2009 IMF Working Paper entitled “Do Workers’ Remittances Promote Economic Growth?” postulates that “[t]o the extent that remittance inflows are simple income transfers, recipient households may rationally substitute unearned remittance income for labor income” and that remittances “may be plagued by severe moral hazard problems.”

The paper concludes that “[p]art of the reason why remittances have not spurred economic growth is that they are generally not intended to serve as investments but rather as social insurance to help family members finance the purchase of life’s necessities.”

The IMF study seems to suggest that by helping the poor financially, you are making them worse off and dependent on you. I suspect that hundreds of thousands of OFWs who have seen their remittances send their kids through college, finance the purchase of jeepneys and tricycles, and fund the start of sari-sari stores and other small businesses, will disagree with the IMF study.

The main flaw of the IMF study is the starting premise that the role of remittances is to promote economic growth. It is undisputed that remittances contribute to the economy. But they are not intended to promote economic growth—only sound government policies can do that.

Thus, it is high time that the Philippine government be held accountable to the millions of OFWs remitting nonstop year in and year out, crisis or no crisis, and always reliably bailing out the government despite the endemic and systemic corruption at its core.

That is the goal of the 6th Global Filipino Networking Convention set to take place on January 21-23, 2010, in Cebu, Philippines (www.6thGlobalCebu.com). It will be a forum for the 11 million Pinoys in the global diaspora to voice their opinions on what the Philippine government should be doing with their money which continues to be the singular, most reliable source of support for the Philippine economy. Since their funds virtually finance annual government operations, their voices should be heard loud and clear.

Send comments to Rodel50@aol.com or mail them to the Law Offices of Rodel Rodis at 2429 Ocean Avenue, San Francisco, CA 94127 or call (415) 334-7800.

Low-skilled workers are the top remitters

manilatimes.net
Sunday, August 16, 2009

Low-skilled overseas workers are the country’s top senders of money from abroad.

Women domestic workers, by the number, are also the topmost deployed overseas workers even if they may have earned smaller salaries and send home lesser amounts of remittances compared to other overseas workers.

According to the Institute for Migration and Development Issues (IMDI), male plant and machine operators and assemblers, male trades and related workers, and female laborers and unskilled workers are the country’s top remitters.

The non-profit organization cites the annual Survey on Overseas Filipinos (SOF) of the National Statistics Office, which shows that male plant and machine operators and assemblers remitted P14.543 billion in 2007, up from P7.927 billion in 2001.

These workers were the top remitters from 2001 to 2004 and in 2007.

Female workers

While female laborers and unskilled workers were the second-highest group of remitters by volume in the annual survey, this category of female migrant workers is the leader among female overseas workers. Female laborers and unskilled workers sent home P13.082 billion in 2007, up from P6.452 in 2001.

Yet, female service workers doing domestic work are the leading overseas workers by total number, according to the institute, citing 15-year data from the Philippine Overseas Employment Administration (POEA) on deployed new-hire overseas workers by gender, skill and country of destination.

The data on new-hire overseas workers by the agency show that domestic helpers and related household workers, choreographers and dancers and composers, musicians and singers—all females—are also the leading Filipino workers deployed abroad.

The topmost groups of skilled workers are female nurses, followed by male engineers (electrical and electronics) and technicians.

Low-skilled or semi-skilled overseas workers’ regular remittance transfers that benefit their immediate families make them the “major driver of the country’s remittance economy,” according to the Institute for Migration and Development Issues.

Global trend

This trend reflects the fact that job opportunities in developed countries call for semi-skilled or low-skilled workers so that host country nationals can actively participate in their country’s labor force.

The institute recommended that measures to support and protect the rights and welfare of these low-skilled workers should be put in place. They should have access to various forms of legal redress when they are abused.

“They [low-skilled workers] remit frequently [though in lesser amounts], they also try out micro-to-small enterprises, and had to repay debts incurred prior to their migration overseas,” according to the institute.

Remittances hit record high in May, BSP says

RUBY ANNE M. RUBIO, GMANews.TV
Article posted July 15, 2009 - 06:11 PM

MANILA, Philippines - Money sent home by Filipinos working abroad reached a monthly record high in May this year, as demand for skilled labor continued to be steady, the Bangko Sentral ng Pilipinas (BSP) said.

Remittances for May this year reached $1.48 billion, 3.66 percent from $1.43 billion in 2008, breaching the previous monthly record set in March worth $1.47 billion.

The latest figure brought the total five-month cumulative remittance at $6.98 billion, 2.8 per cent higher than the $6.79 billion reported during the same year.

Besides citing steady demand for Filipino labor, the BSP said that the hike in remittances was also the result of “expanded access of overseas Filipinos and their beneficiaries to a wide range of financial products and services offered by banks and other financial institutions."

United States, Canada, Saudi Arabia, United Kingdom, Japan, Singapore, United Arab Emirates, Italy, and Germany were major sources of remittances during the January-May period with remittances from sea-based and land-based workers growing by 4.6 percent and 2.4 percent, respectively.

Remittances “continued to show signs of strength despite lingering global economic fragilities, providing some basis for cautious optimism regarding steady remittance levels for 2009," BSP Governor Amando M. Tetangco, Jr. said in a statement.

Demand for Filipino workers is expected to hold up as a result of hiring agreements forged between the Philippines and some host countries such as Qatar, Saudi Arabia, Canada, Australia and Japan, the BSP said.

Manila also entered into a bilateral agreement with Seoul with labor departments of both countries approving a hiring agreement.

Meanwhile, the Philippine Overseas Labor Office in Tripoli has started talks with the Libyan Health Ministry for the recruitment of about 4,000 Filipino medical workers in the North African country.

"Despite the relatively weak global economic environment, the Philippine government’s intensified efforts [such as employment facilitation programs] to assist retrenched overseas workers have contributed to the deceleration in the rise in the number of displaced OFWs," the BSP said.

For its part, New York-based GlobalSource said that remittances may slow further and possibly decline by three percent, citing its latest estimates as indicated in its July 10 report.

In April, the think tank said that remittances may be unaffected by the crisis since Filipinos abroad are employed in relatively recession-proof sectors such as healthcare, education, and government service, especially in the US.

It also said that Middle Eastern economies – particularly Saudi Arabia – continue to be resilient, helping sustain demand for Filipino labor.

Pump-priming efforts around the world have also been identified as among the reasons why Filipino workers will continue to the deployed abroad.

"…a drop in remittances, if it happens, will not be immediate and may be masked by a repatriation of savings and lump-sum benefits or, as we are learning, by a twist on the 'flight-to-safety' theme where a chunk of the inflows comprises accounts seeking safer shores [i.e. not current income]," GlobalSource authors Romeo Bernardo and Margarita Gonzales said.

GlobalSource is also looking at a stronger peso by yearend at P47.90 per dollar from an earlier projection of P49.

In its Market Call report in June, First Metro Investment Corp. and University of Asia & the Pacific said sustained demand for our migrant workers in different countries continues to help keep up these inflows of OFW remittances.

"Moreover, with the government’s employment deals with several countries in need of our workers – the risks from the continuing global economic recession affecting the remittances are being tempered," the report said.

Under the Japan-Philippines Economic Partnership (JPEPA), an additional 273 health workers have already been deployed in May, the June Market Call report said.

“Even the rise in retrenchments of OFWs has abated. And with the OFWs and the recipients of remittances having easier access to expanded and enhanced remittance-linked services, the inflows of OFW remittances can be sustained," it added. - GMANews.TV