RP productivity crippled by remittances

BANGKOK—The Philippines’ “heavy reliance” on remittances of migrant workers—reaching $19 billion last year—has been crippling its domestic productivity for many years, said a regional official of the International Labor Organization (ILO).

Gyorgy Sziraczki, senior economist of the Regional Economic and Social Analysis Unit of the ILO office here, said the increasing remittances “reduces pressure on the government to come up with reforms on the [labor] market structures.”

“Sending Filipinos overseas has resulted in a brain drain and a loss of some educated and trained people from the Philippines,” he said. “This has resulted in major social and economic cost to the Philippines, including a weakening of the country’s competitiveness, although the extent of this has not yet really been qualified.”

Sziraczki was speaking at an ILO media course on International Labor Standards at the UN regional office here for journalists in Asia and the Pacific.

The Philippines has the most number of ILO Conventions
ratified, which should have made it attain International Labor Standards. However,  ILO officials believe these ratifications “remain on paper” lacking legislative interpretation and implementation.

“When dollars come in through remittances sent by overseas workers, the question is to what extent they contribute to higher living standards and stronger economic development,” he said.

He said the remittances uplift the lives of Filipinos in terms of sending children to school, as well as health care. “[But] what is less clear is to what extent they contribute toward economic progress, for example, in investments to start new businesses.”

The Philippines “scores well” in terms of labor force, educated labor, as well as labor-market efficiency and innovation, but the economic and social performance of the Philippines is one of the lowest in Southeast Asia. “In terms of productivity growth, it is at the bottom compared with many other countries [in Southeast Asia],” he said. –Estrella Torres / Reporter, Businessmirror