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Can RP go beyond seeing OFWs mitigating economy’s shortfalls?

University of Santo Tomas

The decade that opened the new millennium may be remembered as the decade for a sector whose acronym-OFW (for overseas Filipino workers)-is a Southeast Asian country’s trump card, or flagship, for economic development.

Five years before the turn of the millennium, in 1995, the country wallowed in despair given the emotional and national stress the execution of Singapore-based domestic worker Flor Contemplacion brought. A new law on migrant workers, Republic Act 8042, was formulated, of which its 15th year is celebrated just recently, June 7.

OFWs then were largely known as the abused, vulnerable, and distressed compatriots. Their numbers then, over four million, were not enough to create a windfall of public consciousness. From the time then President Fidel Ramos declared a national pursuit for “NIChood” (NIC means newly-industrialized country), and the country was hit by the 1997 Asian financial crisis, Filipinos abroad did a Superman to save a flagging economy.

But come the ascendancy into power of Gloria Macapagal-Arroyo, and the global trend where billion-dollar remittances from over-200 million migrants worldwide created a global stir, the landscape changed. Annually there are new record-highs for deployed migrant workers and billion-dollar remittances to the Philippines. Rising also is the abused, vulnerable, and distressed compatriots and the numbers (while small compared to the annual deployment of migrant workers).


The decade that’s just passed will be known for many things. Outgoing President Arroyo and her officials at the government agencies handling overseas migration have put premium on the role of overseas Filipinos for development. The government tried its best to address the daily issues facing distressed migrant workers, as well as instituted controls to avoid further despairing situations facing overseas migrants. Even the efforts to save former Iraq truck driver Angelo dela Cruz, in exchange for the withdrawal of a small military contingent aligned with the United States, was worth the price of the country’s relations with the US.

New structures and policies were also set up and formed to address the socio-economic needs of migrant workers, such as the National Reintegration Center for OFWs (NRCO). Given also the popularity of remittances, and rising demand for private sector participation, the Bangko Sentral ng Pilipinas instituted a set of policies to regulate the remittance market, allow new remittance service providers (including telecom companies) to come in, and encourage Filipinos abroad to handle their money better and save and invest in the Philippines.

The foreign affairs department also had its own paradigm shift, even if the response was late given that RA 8042 (or the Migrant Workers and Overseas Filipinos Act) was enacted in 1995. In 2004, upon winning a national election, President Arroyo ordered the Department of Foreign Affairs to include overseas Filipinos as among the pillars of Philippine foreign policy. Thus, all of the country’s 80-plus embassies and consulates abroad are tasked to include serving domestic workers, caregivers, construction workers, undocumented or irregular migrants, among others.

Having a Philippine government that does all these programs and services to Filipinos abroad is something other governments do not have, says former Labor chief and Development Bank of the Philippines chair Patricia Sto. Tomas. “It makes sense to serve overseas Filipinos.”

But it doesn’t mean that the country is efficient in handling the migration phenomenon. As observed, while the government is trying its best to serve and protect Filipino citizens wherever they may be, the numbers and the global dispersion of Filipinos-over 8.1 million scattered in over 220 countries, says latest estimates from the Commission on Filipinos Overseas-may be too much for resources-strapped government agencies to handle. Some even observe that the interventions to distressed migrants are reactive. For example, while many civil society organizations have lobbied in the past to institutionalize a center and a holistic program on reintegration of returning OFWs, it took a Lebanon crisis in 2006 and the repatriation of droves of Filipina domestic workers to set up the NRCO.

Still, isolated impacts of the migration phenomenon to the Philippines prevailed: reduction in the number of poor Filipinos because of remittances, persistence of inequality, brain drain in some mission-critical sectors (e.g. medical, aviation, engineering), the booming of industries such as rural construction, banking, telecommunications, and real estate, and many more. And whenever the country faces an internal or an external crisis, such as the 2004 fiscal crisis and the 2008 global economic crisis (that dragged in until 2009), ask analysts from the World Bank and the Asian Development Bank who provided positive things to save the Philippines: overseas Filipinos.


When talk is about the Philippines, “overseas migration comes into mind,” observes economist David Bloom of Harvard University at an ADB-sponsored conference last April in Manila.

That’s what President Arroyo’s government did this millennium: whether consciously or unconsciously, the Philippine economy is now a “migration economy” even as agriculture and manufacturing continued to slump and services consistently rose. But like previous presidents from 1974, when former strongman Ferdinand Marcos enacted the Labor Code of the Philippines that included some policies related to the export of labor, overseas migration mitigated many shortcomings in the domestic economy.

Data from 2001 to 2009 cited in a recent policy study funded by the University of Santo Tomas showed why overseas migration alleviated the Philippine economy:

-Migration management. While the aggregated outflow of workers and immigrants rises, year-end pending cases on illegal recruitment and adjudication in the Philippine Overseas Employment Administration are becoming bulky;

-Labor market indicators. The annual outflow of temporary and permanent migrants is already half of the country’s unemployed workforce. Overseas migration did not also increase or decrease the number of unemployed at home, as even combining the efforts of deploying new-hire overseas workers and generating new jobs in the Philippines isn’t enough to keep stem the tide of homeland unemployment.

-Migration and the macro-economy. Remittances, on a nine-year average, are nearly a tenth of gross domestic and gross national product (GDP and GNP); are at least 14 percent of domestic consumption; and are a third visible major source of gross international reserves and the country’s external debt. The Arroyo government also saw remittances from overseas Filipinos being way, way, way ahead of foreign direct investment, portfolio investment, and official development aid. Imagine what would happen to our Balance of Payments if Filipinos did not remit to the country’s formal banking system.

-Migration and homeland social development. On the good side, remittances were able to reduce the number of actual Filipino poor. On the bad side, inequality wasn’t abated because of remittances, as those with financial capabilities are the ones able to migrate. Noticeably, given that the Philippine population is now 93 million, overseas migration also rises.

-Harnessing the development potential of Filipinos’ overseas migration. One would wish that there will be more savings and investments from Filipinos abroad that are directed at the Philippines. Amid the mid-decade trend to promote financial literacy to overseas Filipinos, overseas Filipinos’ savings and investments are currently not enough to create much economic impact.


Soon, Sen. Benigno “Noynoy” Aquino III, as president, will directly handle an entire bureaucracy’s commitment to overseas Filipinos’ protection and maximizing their socio-economic contributions. Will Noynoy do what her mother Corazon and presidents that followed her did as regards overseas migration and development?

Given how Filipinos’ overseas migration impacts on various areas of Philippine society, it may be time for the Philippines to develop a migration-and-development-system, not just a system that manages the outflow of people so that the homeland economy merely receives more remittances. Such a migration-and-development system will see the bureaucracy coordinated in protecting the welfare of overseas Filipinos and in maximizing the development potential of overseas migration. This can be an agenda for the forthcoming Medium-Term Philippine Development Plan.

The Philippines’ reliance on overseas migration and remittances seems systemic and high, yet one wonders why the country remains less developed all these years. This dependence on migration and remittances was the major migration-and-development outcome of the Arroyo government, and we wonder if the Philippines still has the capability to produce, and to hope for something better here at home.

We look then at how countries that previously sent labor, like Portugal or Korea, did it. The lesson from those countries is that the domestic economy boomed. The lesson also, as a leading migrant advocate said, is self-sufficiency that relies less on overseas migration and that even uses the resources from overseas Filipinos to buoy further, more than ever, the domestic capacity of the Philippines.

Such a vision on migration and development for the Philippines, while we cannot prevent people from leaving, surely complements individual overseas Filipinos’ dreams of a better economic future.

The author is also with the nonprofit Institute for Migration and Development Issues. Comments are welcome at

Filed under: Kwentong OFW, OFW Corner,

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