Remittances surging or slowing down?

The remittances of overseas Filipino workers in October rose 6.2 percent to $1.77 billion, the highest attained in any month, according to the most recent figures released by the Banko Sentral ng Pilipinas.

But former Budget Secretary Benjamin Diokno says this is low by historical standards, noting that before the global financial crisis, overseas remittances had risen to as high as 25 percent.

He added that once the strength of the peso is taken into account, the peso value of remittances will actually be less than 6.2 percent.

Still, there’s much to be glad about. The devastating impact of a sudden return migration of our OFWs in the troubled Middle East has not materialized, at least not just yet.

In “Beyond Libya: What if the OFWs come home en masse,” Rene Ofreneo, Joy Hernandez and Isabelo Samonte, wrote about the prospects of a massive return migration as the Middle East labor market is likely to become more and more inhospitable to the Filipino migrant workers because the people uprisings in the region have a common economic demand: jobs and social welfare for the locals.

There were worries as well that the debt problems of most countries in the euro zone, along with the economic problems of the United States would dampen the demand for Filipino workers and cause remittances to dip or even take a plunge. This, too, has not materialized just yet.

Indeed, going by the BSP’s figures, remittances are even surging. From January to October, total remittances have reached $16.5 billion, or a year-on-year growth of 7 percent.

The steady stream of remittance flows from January to October shows there is still a strong demand for our workers and their deployment overseas has hardly been affected by the troubles going on around the world, including those in host countries. Indeed, the Philippine Overseas Employment Administration even reported an 11.6 percent rise in deployment from January to November this year.

However, there is no room to be complacent. While there hasn’t been a massive flood of displaced OFWs coming home, the same unemployment and underemployment situation, which is what drove our workers to seek jobs overseas in the first place, still exists.

The Philippine depends on remittances perhaps more than any country in the world. We are the third highest remittance-recipient country after India and Mexico, and the highest when remittances are measured as ratios to population, GDP and exports, according to Ernesto Pernia of the UP School of Economics.

Money transfers from Filipinos working all over the world account for at least 10-percent of our country’s GDP, the second largest source of foreign capital after value-added exports like electronic components, and a major source of private consumption which in turn accounts for 75-percent of GDP.

Remittances virtually made our economy recession-proof as other countries were caught spinning in the global economic downturn that started a few years ago and continues to this day.
Every day about 3,000 Filipinos leave for jobs abroad even if the government officially does not have a labor migration policy.

The Overseas Filipinos Act of 1995, which was enacted to promote the welfare of OFWs, says “the State does not promote overseas employment as a means to sustain economic growth and achieve national development.” And yet the Philippines sends nearly a quarter of its adult workforce overseas and the economic benefits of workers’ migration are palpable.

The government needs to be ready with a contingency program for return migration.

We have a country full of Filipino workers willing, able and more than qualified for various jobs that require tangible skills. It’s not like we have no buyers and nothing to sell. Indeed, our workers are some of the most marketable workers in the world. If only the government can get its act together and make the country as marketable as well for investments that would make our workers employable here in their own country.

We are already the number one BPO destination in the world. The BPO sector is seen to employ one million people in the next two years.

Trade Secretary Gregory Domingo has pointed to the development of new sunrise industries in the automotive, coconut and tourism sectors that could readily employ at least 500,000 people directly, following the path of the BPO sector.

Also, with manufacturing costs in China becoming costlier, the Department of Trade And Industry said we could lure investments in certain manufacturing activities such as garments assembly, if we could provide a competitive manufacturing capacity. The Philippines can become a production hub of middle and high-end goods for huge neighboring markets such as China, India and Southeast Asia.

Merchandise exports remain strong with the increase in the shipment of electronic products.

Investment in the electronic sector ranks among the highest in the industry’s history. Demand for electronic and electrical engineers as well as other workers in the sector is expected to remain high in upcoming years as the industry continues to grow.

In short, the government has got options to counteract return migration. But it must look at policy reforms that could strengthen the economy and the domestic labor market, and more importantly, rouse itself from its complacency and overreliance on OFW remittances, which has served as its golden parachute, always ensuring it a soft landing during tough times. –Ernesto F. Herrera, Manila Times

ernestboyherrera@yahoo.com