Lose-Lose for the OFW? Various looks at his plight


I read today from http://business.inquirer.net the following post (as excerpted).


OFW remittances up 9.4% at $1.4B in March


Money sent home by overseas Filipino workers (OFWs) through banks surged 9.4 percent to a new monthly record-high of $1.4 billion in March from a year earlier, as the Philippines deployed more workers and banks ramped up their remittance operations, the central bank reported Thursday.


In a statement, …Bangko Sentral ng Pilipinas, said the March inflows brought the total first-quarter remittances to $4 billion, up 13.2 percent from the same period last year.  In the first quarter, the Philippines deployed 263,129 workers abroad, up 13.6 percent from a the same period last year. Land-based workers increased 11.7 percent to 200,398 and sea-based workers rose 20.1 percent to 62,731.


In a separate report, global credit watchdog Moody’s estimated that the major Philippine banks offering remittance services—Allied Banking Corp., Banco de Oro Unibank, Bank of the Philippine Islands, Land Bank of the Philippines, Metropolitan Bank and Trust Co., Philippine National Bank, and Rizal Commercial Banking Corp.—generate 8-17 percent of their operating income from this business. ..


Most of the remittances came from the US, Saudi Arabia, United Kingdom, Italy, United Arab Emirates, Canada, Japan, Singapore and Hong Kong.


In Moody’s estimate, the direct amount of gross revenue generated by banks from remittances—mainly in delivery charges and the spread charged on foreign exchange rates—may have been between $185 million and $380 million in 2007.


1.  ’as the Philippines deployed more workers’


The government allows its working population to work abroad, but for it to be said that it deploys workers would be to grab undue credit.  Some,yes; but not enough, for it to get credit.   One, is this an explicit strategy in the Medium-Term Philippine Development Plan?  Two, the decision to work abroad is that of the worker’s; most of the job searches are their own too.


2.  ‘the major Philippine banks offering remittance services … generate 8-17 percent of their operating income from this business’…and…‘ the direct amount of gross revenues generated by banks from remittances…may have been $185 million and $380 million.’


Perhaps in return these banks can offer affordable loan packages (lower than market interest rates and supporting technical and financial advice) to OFWs to enable them to make good and solid investments for them post-OFW jobs.  Has the government moved in this strategic direction to uplift the plight of the OFWs whom it calls as heroes?  Or is this another sound bite from the buck-toothed?


 And relatedly, I read yesterday from the same site:


Peso at weakest level so far this year


The peso tumbled Wednesday to 42.855 to the dollar, its weakest level so far this year, as offshore investors dumped Asian currencies because of escalating jitters over surging global oil prices.


“Pressure from the record-high $127-a-barrel oil price is the culprit,” said stocks analyst …, managing director at ….


“Worrisome as well would be the effect of oil on other economies, which will affect overseas Filipino workers’ (OFW) earnings and consequentially, remittances,” he added.


Foreign investments in Philippine stocks and bonds have thinned over the past few months, but the at least $1 billion come from OFWs via the banking system, apart from foreign exchange they send through non-bank channels.


3.  The OFW and his family should be happy with this news.  Now he can get more pesos for the currency, particularly the US dollar, he earns abroad.  But unfortunately inflation is up, as oil and rice prices have soared.  So the additional pesos he gets from the currency exchange is eaten up by inflation.   See following Table





Peso-$1 rate


in %















































Peso-dollar exchange rate – at end of month

Inflation – month on month change CPI all items Philippines


This behavior has been explained by a Bangko Sentral official.  Peso appreciation (less pesos per US$) tend to lower inflation.  Imported goods which are substantial and made even cheaper contribute to a lower inflation rate.


Moreover, from the news,


Central bank Deputy Gov. …, in a hearing at the House Committee on Economic Affairs, yesterday said inflation falls by 0.1 percentage point for every 5 percent appreciation of the peso against the US dollar.  The gross domestic product, meanwhile, grows 0.2 percentage point for the same rate of peso appreciation.  Citing data from the finance department, … said the fiscal performance improved by P1.4 billion for every peso appreciation against the dollar. A one-peso gain reduces government revenues by P2.7 billion and spending by P4.1 billion for a net of P1.4 billion.


4.  My take on this,…


And with every 5 percent appreciation of the peso, overseas Filipino worker (OFW) remittances get eroded by the same percent.  And if government estimates are correct, there are about 8 million overseas Filipinos (OFs) sending remittances.  With some 16 million households now, a high estimate of about half of these (8 million OFs over 16 million households) would be feeling the negative effects of this ‘appreciation’.


It might be true then that the OFWis a true hero, working for his family and country and yet at ‘sacrificial’ conditions far from satisfactory to him.  You have a parasitic triangle here: the OFW, his family, and his government.  The true connection is with his family; but a third party, the government, feeds off his remittances to among others, bring the peso up, hold inflation down, raise foreign exchange reserves, retire government debt, improve fiscal performance…  The government says that it needs the revenues for its spending on social services as well as on infrastructure.  So is it better that it is the government that decides on where to spend, rather than  the worker himself whose purchasing power has been diminished by an exchange rate policy that is inimical to his welfare?      In the end it is he and his family at the losing end, with the real value of his remittances eroded.


5.  But we should not get misled that the OFW phenomenon is purely an economic issue.  I would like to show you a framework drawn up by UP and Ateneo professors and scholars.who got together to propose a study for funding.  [To-date, no funds have been solicited to push on with the study.]






Social Consequences Range of Consequences
Positive Negative
Migrant-level Consequences Employment/Income                  Abuse/ Violence
·Higher Status ( Family/ Community)        Dislocation/Disorientation 
Empowerment/Added Skills/Changed Values                 Disease/Dementia/Detention/Death
Social Networks  
Family/Household Savings/Education/Housing Disorganization
Chain Migration  Dependency
Closer Ties/ Interdependence            Conspicuous Consumption
Changed Roles/Values      ( Leisure)  
·Social Mobility  
Local Community Redefinition of Power and Status Brain Drain
Migrant Remittances/Aid Changed Sex Ratio
“overseas migration villages”      emergence of migrant-related social classes 
Sending  Country  Remittances/Employment Brain Drain
Transfer of Skills  Social/Welfare Costs
Emergence of Overseas migration Industry Enhanced Social Class System
Policy Changes                             Multilayered System of Migrant Abuse
Administrative changes  
Changed Social Values  
Host County Labor Supply/Competitive Wages Welfare/social costs (crime/insurance/education/health) 
Migrant Taxes/ Consumption revenue       Family Disorganization
Demographic Changes     ( replacement migration) ·Multicultural children
Political Changes (Government, Courts, Civil Society)  
· Education  
Value Transformation (cracks within homogenous society)  
Social Change/ Multiculturalism   
Global System Multilateral Agreements/Policy Continuation of Unequal Levels of Development
Global Interdependence   Migrant Frictions                           
Emergence of Migrant-related Transnational Industries and Groups    
Transnational Families  




So when does the OFWs find a true champion in government, if the whole government or administration cannot act as this role?  I have no answer; I am just convinced that the relationship between the OFW and the government is onerous in favor of the latter.  But poor OFW, is the option to stay here safer and more secure for him and his family?


Rather than call the OFWs as heroes, why does the government not come out forthright that it treats them more as martyrs?  Anyway, every now and then, the whole government apparatus moves to save an OFW from the gallows in these foreign lands…




6.  Additional Note:


Remittances do not only come from the OFWs.  From Joe Molano, former Executive Director of the Commission on Filipinos Overseas, comes this information


Overseas remittances come from all categories of overseas Filipinos (OFs) (emigrants/legal permanent residents, overseas Filipino workers (OFWs) /other migrant workers and irregulars). Based on latest available figures (Dec. 2006), more than one third (or 3.55M) of the overseas Filipino population of 8.23M are immigrants or permanent legal residents abroad. Temporary migrants or OFWs who come and go number about 3.80M, while irregulars, about 0.87M. There is a clear distinction between the three categories: legal permanent residents abroad do not depend on work contracts for their stay overseas; temporary migrants or OFWs are those whose stay abroad is employment related and who are expected to return to the country at the end of their work contracts; and irregulars (TNTs) are those not properly documented, or without valid residence or work permit or who are overstaying in a foreign country.   


The evidence shows that remittances come from all categories of overseas Filipinos, with very significant amounts coming from traditional immigrant destination countries such as the US, Canada, Australia, New Zealand and a few others. We should therefore make it a point to also recognize the equally significant contribution of non-OFWs by correctly referring to remittances as “overseas Filipino (OF) remittances”. The sources of the data used in the stock estimates of OFs have been the Philippine Overseas Employment Administration (POEA), Commission on Filipinos Overseas (CFO) and the 87 Philippine Embassies and Consulates and Honorary Consulates abroad of the DFA (the main source of data on irregulars). There was also some cross-checking against other available national census data. The estimates only include Philippine born individuals regardless of subsequent acquisition of other citizenship. Yearly estimates of the stock of overseas Filipinos were made during the 13 year period from 1994 to 2006.


So, about 4.7 million workers (OFWs plus TNTs) are most affected by this ‘evil’ economic link between remittances and many economic variables.  The permanent migrants could be pinpointed as the OFs who invest heavily in the country.  Note that those who left the country during martial law and are permanent migrants elsewhere are nearing, at, or just past retirement age and would be looking at investment opportunities here with their pensions.





Filed under overseas workers, Philippine development, Philippines, statistics

2 responses to “Lose-Lose for the OFW? Various looks at his plight

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