When you arrive at most airports around the globe, the VIP line is for celebrities, politicians and tycoons. In the Philippines, the VIPs are OFWs.
That stands for Overseas Filipino Workers, often referred to as the secret weapon of Southeast Asia’s third-biggest economy.
In my interviews over the years with leaders from Fidel Ramos (1992 to 1998) up until Benigno Aquino (2010- to 2016), the more than 10 million Filipinos working abroad and sending cash home were framed as vital economic stabilizers.
The roughly $30 billion they remitted last year stabilized the peso, smoothed out Manila’s balance of payments and supported consumption to keep many a provincial economy alive.
Far from being a secret weapon, Manila’s addiction to remittances is a growing vulnerability.
Far from being a secret weapon, Manila’s addiction to remittances is a growing vulnerability.
While useful in the short run, these hard-money inflows reduce pressure to create jobs at home. The windfall deadens the urgency to deregulate labor markets, tweak tax policies and improve education and training.
As a result, when Manila’s diplomats go abroad, one of their top priorities is getting allies to increase the number of visas — and the speed of processing — so the Philippines can export more of its best and brightest.
People should never be a nation’s main product. It creates a brain drain that depletes the local labor pool, reducing productivity and innovation in the long run.
To his credit, former President Aquino took some steps to slow the flow of labor leaking overseas, including population-control efforts despite pushback from the powerful Catholic Church.
Unfortunately, though, his rhetoric about a domestic employment renaissance proved more talk than action.
Enter populist rabble-rouser Rodrigo Duterte, champion of the little guy. Surely, he’s rolling up his sleeves to bring more of his diaspora home.
Nope, in fact he may be making Manila’s people-export addiction even worse.
It’s troubling, for example, that Duterte is setting up a Department of Overseas Filipino Workers Affairs and creating a bank for the diaspora.
It’s troubling, for example, that Duterte is setting up a Department of OFW Affairs and creating a bank for the diaspora.
On the surface, these seem pragmatic steps to offer direct outreach to overseas workers in an increasingly chaotic global scene -– Brexit, the Syrian conflict, terrorism and human-trafficking risks.
But they institutionalize a feature of the economy Manila should be phasing out. Regulatory capture risks abound here.
It doesn’t take a vivid imagination to see this new department and bank, as they try to increase power and resources, growing their OFW ranks around the globe to the detriment of the economy.
It’s not just low-wage earners leaving. A recent Asian Development Bank study found a 66% jump in people with university degrees fleeing to richer nations in the decade through 2011.
More than half of those workers moving to Organization for Economic Cooperation and Development economies came from the Philippines. Many more settle in non-OECD regions like the Middle East.
In travels during that time in the Middle East, Asia, Europe, Africa and the U.S., I’ve met countless OFWs.
Only a very tiny percentage say they’d be working away from their families — and often their children — in Dubai, Riyadh, Singapore or on a cruise ship ferrying Americans to the Caribbean if good work were available at home.
If Duterte wants to make good on his reputation as a populist, his administration should act fast to create millions of new jobs in manufacturing, tourism, mining and build on the success of the business-process outsourcing industry.
Making good on the infrastructure boom he promised would both generate employment opportunities and increase the nation’s competitiveness and attractiveness as an investment destination.
The Philippines could have a much brighter future if its main export were electronics, cars and home-grown inventions –- not workers.
(William Pesek is a Tokyo-based journalist, former columnist for Barron’s and Bloomberg and author of “Japanization: What the World Can Learn from Japan’s Lost Decades.” Twitter: @williampesek)
Brexit is not a world conflict its not also going to cause Asia or any where else an economic. In fact it maybe one answer to the Philippines export problem as it will now not be hampered by EU rules that are somewhat stupid in restrictions and blue and red tape. In fact I believe in the near future Britain being one of your bigest customers.
Another load of diatribe from this Japan based writer again. Looks like he is for the moment running short of "clever ideas" painting anything about China as black. This time it is a bit surprising that he is attempting to cast aspersions on Duterte when he would normally rally to the aid of the Philippines because of his being in the pocket of Abe who of course everyone knows is trying to bribe the Philippino government with a couple of rusty out of date coastal vessels to align with him against China! What is infuriating is, putting aside his insinuation that the Filipino government is very happy to see their countrymen leaving the country by the millions to toil for the rich people and the capitalists, and in consequence benefitting from the money being remitted back to the country, that the poor Filipinos are very happy to leave home, family and children for a year or more at a time, to chase for bigger bucks. Yes, no doubt about it. They are all after money, money to feed their children, their parents, their brothers and sisters, supporting them to go to school and to put a roof over their heads. They are no different from the Chinese from a 100 years ago, and they are no different from the Latin Americans, the Africans and the Indians. If their countries are economically well off, such an outflow of people will be negligible. No one wants to be away from their loved ones. In the case of the Philippines, its population has just surpassed 100 million!. And why? Because the Filipinos are very faithful Catholics and the Catholic church mandated against them using modern birth control methods (they can only use the so-called rhythm method which is not very effective). The whole of the western world feigned great horror to see the Chinese government mandated a very draconian one child policy. If not for this policy, China’s population today would have at least another 250 million more. Even then, it is still increasing. In the case of the Philippines, AND India(it will definitely surpass China’s population in another 5-10 years), and all the other poor countries, their population is exploding. But it would have been ok if it happens from a rich economic base as in the developed western countries. In the case of the Philippines, she has all along been mired in a rather low economic level. That is why the Philippines was for some years dubbed the "sick man of Asia". A few years under Aquino of the GDP averaging 7% means nothing when the increase is based on a very low level. And did the "improvement" benefitted the poor Filipinos. No they still streamed out in ever greater numbers, the women/girls work as domestic helpers in the Middle East, in Hk, Singapore, Malaysia, N.America and Europe and doing all the menial jobs in franchise restaurants, and the men worked in the oilfields in the Middle East and on many of the world’s merchant navy ships. Yes, of course the Filipino government should take immediate action to improve the country’s infrastructure, roads, trains, airports, more schools for the poor uneducated masses, more factories, more investments……………. The writer conveniently forgets that the Philippines is saddled with a very very serious drug problem which no previous administration made any serious attempt to tackle. It has been allowed to fester and fester. Drugs, violence and corruption go hand in hand. Corruption in the Philippine society is endemic as an accepted social norm. Administration of the country is compounded by the fact that the Filipino population is spread out living on many of its 7000 islands, among which one happens to be Muslim dominated, and which has been an albatross around the Philippines neck all these years in fighting the MOROS and now the ISIS. Yes, Mr. Pesek, smart aleck. Tell Trump or Abe or any of the western economic gurus and genious god’s gift to the world. Ask them how they can solve the Philippines problem in 3 or 5 years.
More local and foreign investments need to be maximised especially for new infrastructures like road, railway, ports, airports, industrial parks etc. to attract talents back to the Phillippines.
and if Duterte decides to accept the loans for all those needed infrastucture projects at interest rate which may possibly be a little higher, then our Mr. Pesek will scream horror that the Filipinos are so stupid to borrow so much money, that the taxpapers will be saddled with paying back for a long long time. But of course "our US and western dominated" World Bank and IMF, sorry to say, will not be prepared to lend, especially to a country like the Philippines which has such a politically risky climate!. While we do not and cannot possibly lend to you, NEITHER should you consider at all taking loans fron the Chinese. It is better for your country to remain the way you are. However, we are, as a gesture of our generosity and great friendship, more than happy, together with our ally, Abe, to give you as presents a few of our mothballed "buckets". We don’t have any more spare parts for these "antiques". Should their systems breakdown, which we would like to forewarn will certainly happen, we’ll have to have them manufactured one off each time. And that is assuming we still have the drawings for those parts! What we are trying to say is that, they will be expensive; VERY EXPENSIVE!
KOREA:
Do you know the leaked history of Korea’s Samsung and LG? The Korean Ministry of Science funded the innovation of those technologies from Japan’s Sony, Toshiba, Sharp and by pirating their best engineers with tripled salary… then asked the Engineers to create a similar product what they made in Japan through LG, Samsung and Hyundai.
Samsung and LG with the help of Korea’s Ministry of Science and Technology funded the massive innovation and created a product better than the Original features.. and they are successful… Korea is now the number 1 in the world for TV and Best gadgets screen technology used by Apple iPhone and Samsung Galaxy phones.
Government intervention is really important at this stage in the Philippine to create a better technology for exports.
CHINA:
China is known for imitation but now China’s product are getting better and as good as the original with better features than the original.. Cases of piracy, well it would just pass by the important is they should innovate the product to be more impressive than the original.
WHAT SHOULD THE PHILIPPINES’ DOST NEEDS TO DO THEN? —— > INNOVATION AND HELP THE INVESTORS FOR MASS PRODUCTION TO CREATE AN EXPORT QUALITY PRODUCT TO REPLACE THE OFWS
I think more than the availability of jobs, salary packages should be made more attractive and more competitive with the ever growing cost of living. Apart from that working conditions should be improved not only within the company. Take commuting to work for example. The horrendous traffic alone and the pathetic situation in our Metro rails would drive any hard working Filipinos quitting and fleeing.
The article is overlooking a key point. While most mature economies have a declining birth rate, the birth rate in the Philippines is still higher than average. The Philippines is filling the demand for young labor in many aging populations.
I have tried to do business in the Philippines, and it is hard. Harder than it needs to be. The corruption, the bureaucracy, it is all keeping business out. Fix that, and jobs will come .
So true..if only our government can provide jobs and higher wages we would rather stay in the Philippines to be with our beloved families..
That’s because our country has this protectionist 60/40 foreign ownership rule in our constitution in which you must only own 40% of your business and the rest must be owned by a Filipino and our country’s oligarchs are enriching themselves thanks to that. No wonder why our country’s FDI is so low compared to our ASEAN neighbors. Add to that are the countless red tapes and expensive electricity.