Dilemma & Opportunity

Overseas Filipinos provide much-needed remittances but drain the country of human capital

The OFW (Overseas Filipino Worker) phenomenon represents a paradox for the country – providing vast resources in financial capital but presenting a long-term dilemma of a continuous brain drain that now spans generations. For decades now, the Philippines has been aggressively pursuing a manpower export strategy. So successful has this strategy been that today there are an estimated seven million Filipinos working abroad – either documented or undocumented. That’s almost 10% of the entire population. And that number is growing.

There probably is not a place on earth where you will not find a Filipino. In fact, it is a somewhat sad commentary on life that whenever a natural disaster strikes anywhere in the world, no matter how isolated the place is, chances are a Filipino may be one of the victims. Such is the length and breadth of the Philippine diaspora.

Ups & Downs. The upside of working abroad is earning the dollars but the downside are separated families and personal risk.

While the OFW trend is an open admission of the lack of opportunity in the country and a basic flight to prosperity, it is a phenomenon which the country cannot do without. OFW remittances have topped US$6 billion dollars a year since 1999 and are expected to hit US$9 billion for 2004 when the final numbers are tallied up. That just accounts for the official figures remitted through banks and financial institutions. An undisclosed amount runs through unofficial channels. To put those figures into perspective, OFW remittances are larger than annual tourism receipts, foreign direct investments, and portfolio investments – combined ! OFW remittances run a close second to the value-added for manufactured exports, our leading foreign exchange generator.

Most of the remittances originate from the United States, where overseas Filipinos are not really OFWs in the traditional sense but rather permanent US residents. They typically have higher level and better-paying jobs than OFWs and are not always transient or contract workers. Europe, Asia, and the Middle East are also key sources of remittances as are sea-based workers deployed across the world’s maritime fleets as seamen or cruise ship staff.

Remittances are now probably one of the major sources of income for many families. They certainly are a key driver of the domestic economy; many analysts believe remittances fuel private consumption. However, most of these remittances have not been invested in the right places. Although some OFW families have been spending the money on their children’s education, others have been arbitrarily splurging this capital on luxury items such as vehicles, house remodelling, vacations, travel, or shaky business ventures. Instead of utilizing remittances as tools for long term development, they are wasted because of lack of education and information for families on how and where to invest their money wisely. Moreover, for every Filipino who goes overseas, a family is torn apart. The effect on the social fabric and the family is a continually unfolding scene.

More recently, there are new risks which OFWs face. With the world becoming more dangerous, OFWs have become pawns in a geopolitical playing field. Nothing exemplified this more than the case of Angelo de la Cruz, a truck driver who crossed into Iraq on the job and was kidnapped. Instead of a ransom demand, an entire country’s foreign policy position was taken hostage as kidnappers demanded that the Philippines withdraw its troops from Iraq, even though they were placed in a non-combat role and were scheduled for a return to the country anyway.

Faced with a potential domestic political powder keg, the President had little choice but to call the troops back earlier than scheduled. Fortunately, de la Cruz was released unharmed but the nation’s reputation did not escape untarnished. Two more were taken hostage in Afghanistan and again in Iraq. One of them, diplomat Angelito Nayan on assignment with the United Nations in Afghanistan, was also released unharmed but the other, accountant Roberto Tarongoy, still remains in kidnappers’ custody.

While it is impractical – and too late – to reverse the effects of decades-old policy, it may be time to review the whole manpower export strategy. While it provides the necessary financial capital for the country, the loss and risk to human capital may ultimately be too much to bear for a country in need of human capital to pull itself forward.