Saturday, August 27, 2005

CFW/OFW workers' remittances, not a long-term boon

"The selfish spirit of commerce knows no country, and feels no passion or principle but that of gain" - Thomas Jefferson, 1809

PLEASE DONATE CORE/FUNDAMENTAL SUBJECT BOOKS TO OUR HOMELAND (i.e. your hometown public schools, Alma Mater, etc.). Those books that you and/or your children do not need or want; or buy books from your local library during its cheap Book Sales. Also, cargo/door-to-door shipment is best.  It is a small sacrifice.  [clean up your closets or garage - donate books.THANKS!]

I consider these earleir posts and the RECTO READER as essential in knowing and understanding our homeland and ourselves, native, Malay Filipinos; and are therefore always presented in each new post. Click each to open/read.
  2. WHAT IS NATIONALISM [Filipino Nationalism]?
  3. Our Colonial Mentality and Its Roots 
  4. The Miseducation of the Filipino (Formation of our Americanized Mind)
  5. Jose Rizal - Reformist or Revolutionary?
  6. The Purpose of Our Past, Why Study (Our) History?
  7. Studying and Rethinking Our Philippine History
  8. Globalization (Neoliberalism) – The Road to Perdition in Our Homeland
  9. Resisting Globalization (WTO Agreements)
  10. Virtues of De-Globalization
  11. Our Filipino Kind of Religion
  12. Our Filipino Christianity and Our God-concept
  13. When Our Religion Becomes Evil
THE RECTO READER is presented in several postings. Click each to open/read:

NOTE: Recto's cited cases, examples or issues were of his time, of course; but realities in our homeland in the present and the foreseeable future are/expectedly much, much worse. Though I am tempted to update them with current issues, it's best to leave them as they are since Recto's paradigms about our much deepened national predicament still ring relevant, valid and true. In short, Recto saw the forest and never got lost in the trees.- Bert

Hi All,

News media reports that about 2500+ Filipinos leave the homeland each day to work mostly in menial jobs abroad; with about 10% (8 million) of the total population having left. [see also Key Statistics data from Bangko Sentral ng Pilipinas (Central Bank of the Philippines)

Lest we simply see statistical numbers, any concerned Filipino realizes that the diaspora has severe repercussions in the family of each Overseas Contract Worker (OCW)/Overseas Foreign Workers (OFW) and on society in general. The family being the mainstay of society.

The so-called leaders of our homeland, in business and government, do not care about the impact on the immediate families and society. In addition, the church hierarchy is afraid of necessary social transformation, thus sickeningly continue to preach piety, a promise of heavenly reward for temporal suffering and false hope, while they themselves enjoy their comfortable pews.

The attention is limited to the fact that the export of labor promotes the minimal economic and political stability in the homeland. This "stability," i.e., for continued business profitability by foreigners and their local partners; and for government coffers to be continually robbed by politicians and the military, can easily be destroyed should OCWs be forced to return home by economic or political conditions abroad.

The social volcano is relieved only by the remittances of our OCW/OFWs. Where the remittances are spent or used are not clear.

Below article from Malaysia is so relevant and true, especially the current and long-term downside costs or negative impacts --not easily appreciated by many-- of OCWs/OFWs on labor-exporting countries such as ours.

- Bert

UPDATED 1/13/2013:

As reported by Manila Bulletin 1/7/2013: The country gets an average of more than $1.7 billion in remittances from overseas Filipinos each month, helping to support the peso, balance of payments and foreign reserves.

[See other data on officially accounted remittances and foreign debts:(covers 2003-2012)


Workers’ remittances not a long-term boon
- PHAR KIM BENG, THE STAR, March 01, 2005, Malaysia

DESPITE the hype about globalization  the international labour movement remains tightly controlled. It is widely considered free trade’s last frontier. No country or multilateral organisation can bring the barriers down, a problem which lends itself to illegal migration.

Still, there are more than a dozen countries that dream of a totally liberalized international labour sector. The goal, not least, is to send their workers abroad by the hundreds of thousands; as is the practice of Indonesia and the Philippines.

This is not a bad plan, except for one vital detail that is clearly missing: These countries have no blue print with which they can bail themselves out over the long term. Once their economies are hooked to the remittances that they received from the workers abroad, they need them perpetually. 

The statistics on remittances on the economy are galling. To this day, the 12 countries that had begun exporting their workers abroad in 1970, continue to do so without much improvement to their structural economies.

Major countries receiving workers remittances include Mexico, Turkey, Egypt, Brazil, India, Morocco, Pakistan, Bangladesh, El Salvador, Jordan and Yemen.

According to the International Monetary Fund (IMF), the remittances have made up over a fifth of the gross domestic product (GDP) of Cape Verde, Eritrea, Mali, Jordan and Yemen, too.
Yet, these remittances have not made any positive structural impact for the countries to be more competitive. If anything else, they perpetuate the uneven economic ownership already prevalent in the country.

Filipina domestic helpers queuing up at the Philippines National Bank remittance center in Hong Kong. - In the case of the Philippines, its foreign workers are spread throughout the world, bringing in a total of US$41.6 billion over the last decade alone. This is nearly one third of the total remittances in the world, estimated by the International Labour Organisation (ILO) at US$115 bil in 2003.

To be sure, the Philippines’ share of the remittances could be higher. The World Bank and the Asian Development Bank (ADB) have both reported that the remittances in the Philippines are much higher than the recorded amount as workers have the means to repatriate money informally, too.

In 2003, the central bank of the Philippines reported a total remittance intake of US$7.6 bil. Together, these income remittances accounted for roughly 16% of the country’s total current account receipts and 10% of GDP. If the informal remittances were included, however, their share in the GDP would be significantly higher. In the words of one former Philippine senator: “The remittances are the only thing that kept the peso from turning into Mickey Mouse money.”

Today, the Philippines is the largest organised exporter of labour in the world, with 7 million nationals working overseas in more than 100 countries. They work as seafarers, nurses, domestic workers, teachers and factory hands, among others.

The money is handy, as most foreign workers send up to 45% of their salaries back home; sometimes eight to ten times a year, according to the IMF.

Research on the use of remittances shows that a large part of these funds are used for daily expenses such as food, clothing and healthcare. Funds are also spent on building or improving housing, buying land or cattle and buying durable consumer goods. Nevertheless, research has also shown that countries that rely on remittances cannot move up the value-chain.

This is because only a small percentage of remittances is used for savings and productive investments. In other words, remittances have little multiplier effect on income and employment creation.

In Bangladesh, for instance, a small proportion of remittances is used for investments in businesses (4.8%). An even smaller amount is used for savings (3.1%) and the repayment of loans (3.5%). Child education accounts for 2.8% of the invested remittances only. These numbers point to one solid fact: Exporting workers to developed countries do not qualitatively improve the economy of the sending countries.

Since most of the work is menial and labour-intensive, the growth rate in the total remittances is bound to be small. This is due to low labour mobility, where promotions or large pay increments are almost non-existent.

Again, in the case of the Philippines, a country that has by far excelled in sending its workers abroad, the annual growth rates of the income remittances, on a good year, is 0.3% only. As such, the net contribution of foreign remittances from middle class and professional workers to the macro-economic picture of a country is bleak in the long term.

For what it is worth, good economic policy begins at home; not in sending workers abroad, no matter how green the proverbial grass may be on the other side.

Although remittances received from abroad have been seen as the next best alternative to countries that are permanently looking for hand-outs or foreign aid, research has shown that once a country is “addicted” to remittances, it becomes a habit that is hard to wean.

  1. THE FILIPINO MIND blog contains 532 published postings you can view, as of December 12, 2012. 
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"Upang maitindig natin ang bantayog ng ating lipunan, kailangang radikal nating baguhin hindi lamang ang ating mga institusyon kundi maging ang ating pag-iisip at pamumuhay. Kailangan ang rebolusyon, hindi lamang sa panlabas, kundi lalo na sa panloob!" --Apolinario Mabini La Revolucion Filipina (1898)

"You show me a capitalist, I'll show you a bloodsucker" - Malcolm X, 1965

"Capitalism and altruism are incompatible; they are philosophical opposites; they cannot coexist in the same man or in the same society" - Ayn Rand, 1961

"The chief business of America is business" - President Calvin Coolidge, 1925

"The glory of the United States is business" - Wendell L. Willkie, 1936

"What else do bankers do -- walk-in and turn-off the lights in the country." - William Slee, 1978

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