Human Side Of Economics


(Part 5)

Assuming that we attain the National Economic and Development Authority’s (NEDA) Ambisyon Natin 2040 goal — that within the next 20 years we shall progress from being a low-middle income country to high-middle income and finally to high-income (First World) — will there still be millions of Filipinos seeking employment abroad as OFWs? My answer is “yes.” The only difference is that by then, the driving force for Filipinos to work abroad will no longer be their dire poverty at home but their free choice to live in a foreign land and, if they still have close relatives left at home to support financially, to be able to earn substantially more than what they would receive if they stayed at home, even if not at poverty levels.

As we shall see in greater detail below, a nurse who is already receiving P50,000 monthly today is definitely not living in dire poverty. She and her family, if any, already belong to the high-middle income households as do millions of other families. In fact, it is expected that two to three years from now, the entire Philippines will be categorized as a high-middle income country. Why would such a nurse still want to go to work abroad? The answer is economic in nature. If she makes the extra effort to learn Japanese, German, or Finnish, she can earn anywhere from $1,500 to $2,000 monthly (equivalent to about P84,000 to P112,000 at today’s foreign exchange rate). In the United States, the going rate is already $5,000 monthly. It is obvious that there is an economic incentive to work abroad for a nurse, especially if she is still young and unmarried.

Because of very serious labor shortages in more developed countries all over the world, what Filipino workers and professionals can earn if they go to these countries will always be substantially more than what they will be able to earn in the Philippines, even if they are already compensated at home at levels commensurate to a First World economy. The reason is that the Philippines will still have a relatively young and growing population 20 years from now, thus keeping wages and salaries at relatively lower levels as compared to the other developed countries that will be suffering from acute labor shortages because of the problem of demographic decline and ageing.

This is especially true in the healthcare and hospitality sectors. It is estimated that by 2030, the world could be short of 12 million nurses. The problem, though, is even now it is estimated that the Philippines has a shortage of nurses to the tune of 127,000, which is expected to more than double to 250,000 by 2030 if the Government, working in tandem with the business sector and the academe, are not able to implement measures today that will significantly increase the supply of nurses.

As enumerated in an editorial of one of the dailies entitled “Solving the shortage of nurses,” some such measures are: helping those who failed the nursing board exams meet the standards established to officially become healthcare workers; adopting an updated curriculum that will allow nursing students to enter the workforce and take on more responsibilities even while still pursuing their nursing degree; inviting nonpracticing nurses to take up their profession; conducting exchange programs with other countries (especially the US, the UK and Australia where there is no language problem for Filipinos) to improve the quality of teaching and facilitate skills transfer; and implement a flexible short-term masteral program to increase the roster of qualified instructors in nursing and medical schools.

The editorial cited also complimented private initiatives to address the shortage: “Also worth encouraging are partnerships between academic institutions and medical networks, such as one recently forged between the Ayala Groups’ AC Health and the Yuchengco family’s Mapua University. Under the partnership, qualified students of Mapua will be allowed to train in the facilities of AC Health’s Healthway Medical Network, one of the country’s largest private operators of clinics and hospitals. The partnership is seen to help build up a medical workforce that is more resilient and better-trained in the latest hospital technology.”

On July 11, the Commission on Higher Education (CHED) announced that it would create new healthcare positions in order to help ease the nursing shortage in the Philippines. Together with the Technical Education and Skills Development Authority (TESDA), CHED plans to create certificate programs that will produce healthcare assistants and associates who need not have college degrees. These skilled health workers will relieve nurses of the tasks they perform such as checking on the blood pressure and temperature of the patients. There are functions that can be performed by what can be called healthcare associates and healthcare assistants who can acquire the appropriate skills in much less time than the five years required for a nurse to acquire a bachelor’s degree. The Marcos Jr. government is currently working with the Private Sector Advisory Council and the Department of Health to identify the tasks that nurses should not perform anymore.

CHED Chairman Prospero de Vera also said that the long-term solution to the nurse shortage is the lifting of the 10-year moratorium on the creation of new nursing programs, which took effect last year. There are already 54 universities that have applied to open nursing programs. For immediate action, the government will help unlicensed nurses pass their licensure exams. Only 50% of those who take these exams pass. Some of these unlicensed nurses who have spent five years studying to obtain their license could also be reskilled to become healthcare associates or assistants. A positive twist was given by Chairman De Vera to the exodus of Filipino nurses. He said that this means that we are producing world-class nurses. Echoing this observation, President Ferdinand Marcos, Jr. said that the Philippines has become a victim of its own success as the world has sought the help of Filipino health workers, resulting in a shortage of local health professionals in the Philippines.

What is true in the nursing profession can also be applied to other occupations in which there is a serious shortage of skilled workers. For example, Japan is making an extra effort to promote international tourism as a major engine of growth, but many hotels cannot operate at full capacity because of the shortage of workers. Through the upskilling of underemployed Filipino high school graduates, or even college graduates, through TESDA-type short courses, the Philippines can supply Japan with the skilled workers they need. As Japan is expected to lose some 800,000 people yearly because of population decline, the shortage of workers in their hospitality industry will only get worse and the wage differentials between the two countries in this sector will only widen, making it even more attractive for Filipinos already working in the hospitality sector to seek job opportunities in Japan.

What is true of Japan as regards acute shortages of service workers because of the rapid ageing of the population is true for many other countries like South Korea, Japan, Spain, Germany, and the UK. It is therefore easy to explain why the phenomenon of OFWs will not disappear for as long as we want to forecast the future.

(To be continued.)


Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is professor emeritus at the University of Asia and the Pacific, and a visiting professor at the IESE Business School in Barcelona, Spain. He was a member of the 1986 Constitutional Commission.