By Leo Jaymar G. Uy, Researcher

OFWs increase to 2.32M amid growth in lower-paid workers

Posted on April 30, 2015

MORE FILIPINOS took their talents to overseas job markets last year, further highlighting the role remittances play in the Philippine economy, with lower-paid workers accounting for a larger share of the total year-on-year while the proportion of professionals and managers declined.

The Philippine Statistics Authority’s (PSA) 2014 Survey on Overseas Filipinos showed the number of overseas Filipino workers (OFWs) increasing to 2.32 million last year, up 1.5% from in 2013.

The survey also showed that overseas contract workers, or those with working contracts comprised 96% or 2.2 million of the total while the remaining 4% or 92,000 worked overseas without a contract.

Laborers and unskilled workers, which continue to make up the largest group of OFWs, were 32.8% of the total, while clerks comprised 5.3%, rising from the 30.9% and 5.2% recorded the year before.

On the other hand, professionals accounted for an 11.4% share, declining from 11.6% a year earlier. Other segments which posted declines were technicians and associated professionals (6.1% from 7.6%); service workers and shop and market sales workers (16.5% from 16.6%); trades and related workers (12.8% from 12.9%) and officials of government and special-interest organizations, corporate executives, managers, managing proprietors and supervisors (2.5% from 3.5%).

Overall remittances from OFWs rose to P173.19 billion in 2014 from P162.37 billion a year earlier.

Laborers and unskilled workers accounted for P24.31 billion in remittances, up 6.4%, though on a per-worker average basis their remittances were flat at P38,000.

Plant and machinery operators and assemblers sent home P20.84 billion, up 33% and averaging P84,000 per worker, up from P71,000 each in 2013.

The Philippine economy has been characterized as consumption-driven with remittances said to be supporting household consumption, which accounts for around 61% of the country’s gross domestic product.

Remrick E. Patagan, research director at the Institute for Development and Econometric Analysis, Inc. (IDEA), said the trend “will likely to persist in the near- to medium-term.”

“On the demand side, the projected continued recovery in the global economy is seen to create more employment opportunities and increasing demand for Filipino talent. Initiatives aimed at liberalization and economic integration, including freer flow of labor, are also in progress,” Mr. Patagan said in an e-mail.

“On the supply side, the government continues to promote overseas employment and in a sense it has become ingrained in the local culture such that many Filipinos actively pursue and desire to work abroad.”

The research director added: “[T]he OFW phenomenon also provides an outlet for relieving socioeconomic pressures given limited employment and economic opportunities, along with pervasive social problems in the country.”

Asked on whether the growth of OFWs and remittances is a positive development to the Philippine economy, Mr. Patagan said: “It’s positive in a sense that it supports the domestic economy and contributes to its resilience. Remittances beef up our external position and spur economic activity, after all.”

He cautioned, however, on the country’s continued reliance on overseas labor and remittance flows.

“For one, our labor export policy has social implications such as on the integrity of families and the prevalence of absentee-parenting. There is also some evidence that remittances are contributing to socioeconomic inequality and that they may induce moral hazard both at the macro- and micro-levels. Moreover, remittances-driven consumption is not an appropriate model for our consumption-reliant economy,” IDEA’s Mr. Patagan noted.

“Consumption-led growth may lead to neglect of the task of improving the economy’s productive capacity through appropriate investments and industrial upgrading, among others.”

The annual Survey on Overseas Filipinos “aims to derive national estimates on the number of Overseas Filipino Workers, their socioeconomic characteristics and the amount and mode of remittances, in cash and in kind, received by their families,” the PSA said.

The survey covered those aged 15 years old and over and was conducted on persons working overseas from April 1 to Sept. 30, 2014. OFWs include those who were on working contracts, working visas or work permits. Those who had no working visas or work permits but were currently employed in other countries were also included in the survey.

Saudi Arabia was the leading destination with around 24.8% of OFWs, followed by the United Arab Emirates (15.6%), Singapore (6.4%), Kuwait and Qatar (5.3%) and Hong Kong (5%).