State of Money Remittance to the Philippines

The Philippines is placed third on the list of countries to have received the maximum amount of remittances in 2017. According to a World Bank report published recently, the only two countries to have received higher amounts were India and China, both of which have significantly larger expat populations. The Philippines received 32.8 billion US dollars worth of international remittances in 2017, which were sent home by nearly six million Filipinos living and working abroad. This amount constituted a sizable 10.2% of the country’s national GDP.

The reasons for such a remarkable achievement by this comparatively small nation are easy to understand. The Philippine government has maintained a policy of skill exportation as a means of achieving national economic objectives ever since the 1960s. The prospect of starkly higher wages in developed countries has encouraged generations of Filipinos to travel abroad for work. In some industry sectors such as healthcare, the concept of working overseas was very well institutionalized; so much so that privately owned educational institutions cropped up en masse to impart the skills necessary for emigration and quickly became profitable businesses themselves. It seemed that several factors had colluded to create a culture of emigrant workers in the Philippines. This culture has endured for decades. To optimize the monetary yield from this culture of labor export the government formulated suitable policies. The Philippine Overseas Employment Administration (POEA) is a formal body which was first conceptualized in 1982 with the objective of encouraging the employment of Filipinos in other nations. In 1995 the Philippine government enacted the migrant workers and overseas Filipinos act to ensure the welfare of overseas Filipino workers (OFWs) and their families back home. Overseas employers must meet multiple criteria to qualify to employ OFWs. These criteria include the provision of minimum wages, humane working conditions, appropriate rest hours, off days, accommodation, medical care, life insurance, and others. Over time the government policies have kept pace with the changing economic climate to ensure that the rights of OFWs are protected and their returns in the form of remittances maximized. POEA even publishes a list of countries where Filipinos are not allowed to work since those regions do not guarantee the welfare of OFWs. Few other countries can boast such a structured, proactive and effective emigration program.

The current policy framework and economic climate in the Philippines encourages overseas travel for work. The number of Filipino expats grew consistently from just over seven million in 2000 to more than ten million in 2017. According to government estimates, as many as 30% of Filipino expats may be undocumented migrants. Only about a third of all Filipino expats qualify as OFWs, and only a small percentage have sent back remittances through sources monitored by the authorities. The government is implementing measures to improve this situation. Several channels are available to send remittances to the Philippines, as well as for the circulation of this wealth within the country. Understandably, some of these channels are informal. Experts have noted that Bitcoin and other cryptocurrencies are already being used for remittances. Cryptocurrencies are expected to play a larger role in the transfer of remittances to The Philippines, particularly from elsewhere in Asia. The top destinations for OFWs are the Americas, Middle East and some Asian destinations, notably Singapore and Hong Kong. The cost of remittances to The Philippines is uneven across world regions. Countries from where remittances to the Philippines cost the least are Singapore, Malaysia and Canada.

Labor migration in the Philippines has had some negative effects such as occasional local shortages of skilled workers and some amount of intellectual drain. There are also less visible long term social impacts related to the separation of families, with children frequently being raised by single parents. However, the more visible and readily tangible economic outcomes brought about by the significant amounts of incoming wealth are positive. Economic growth, greater purchasing power for the average Filipino consumer, and a rising standard of living are made possible by the state of remittances. Factors such as population growth, the distribution of urban agglomerations and limited local employment prospects as a function of the state of the Philippine economy have driven emigration in the past. This trend is expected to continue well into the future. Government programs continually strive to ensure the welfare of OFWs and to add to the skill base of Filipino workers. With this effort the percentage of skilled migrants is steadily increasing. Owing to all these factors annual remittances to the Philippines are expected to grow in total, as well as in per capita terms, over future years.

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