The country’s chronic reliance on remittances from Filipinos working overseas or the so-called overseas Filipino workers (OFW) resulted in the Philippines slipping eight notches in the ranking of countries based on growth opportunities.
According to the International Business Report (IBR) 2010 of US-based accounting firm Grant Thornton, the country skidded down to 25th place this year from 17th place two years ago in the ranking of 27 countries based on the “opportunity index.”
The Arroyo administration has been promoting the export of labor as a policy in an effort to reduce unemployment and at the same time boost foreign exchange earnings but the payback has been on the local economy’s reduced pool of skilled manpower usually referred to as brain drain and the huge social costs on families of expatriate workers.
Calculated based on key indicators such as gross domestic product (GDP), GDP per capita, population size, foreign trade projections and the human development index (HDI), the country’s total score in the opportunity index dove to 56 points from 69 points in 2008.
As cited in the report, although the economy weathered the storm better than most of its neighbors over the course of 2008 to 2009 due to lower dependence on exports, its continued reliance on remittances from an estimated five million Filipino workers abroad to stimulate consumer demand poses a significant risk to long-term economic growth.
That the report perceived the country’s strong reliance on workers remittances as a substantial risk to the country’s long-term growth prospects is without doubt well-founded.
Overseas employment is meant to serve as a temporary palliative to the country’s inability to create enough jobs to its fast-growing population, now 98 million, making the Philippines the 12th most populous country in the world.
After decades of having to look for jobs abroad, Filipinos continue to slave in foreign lands to feed their families back home while an increasing number of local companies found themselves in the red on the back of heightened global competition and dwindling supply of highly skilled workers.
The lack of skilled professionals has been noted in various fora to pose a significant risk to the expansion of the vibrant business process outsourcing, one major bright spot of the Philippine economy.
Meanwhile, the export sector and other industries competing against cheap imports have been adversely hurt by the continued appreciation of the peso against the dollar as a result of the resilience of workers’ remittances.
Even the OFWs have not been impervious to the undesirable consequences of their remittances which left them with fewer goods and services to afford as the purchasing power of their foreign earnings are diminished by the strengthening of the peso.
Experts have stressed that relying on these remittances without being mindful of the hard facts that it is symptomatic of serious economic policy glitches and that it incurs substantial economic and social costs augurs ill to the country’s long-term economic growth. -Philexport News and Features
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