April 15, 2013 - Shorenstein APARC, FSI Stanford Q&A
Overseas Filipino Workers become economic heroes
Homesickness, long hours, and demanding employers—many Filipinos who migrate to another country for temporary employment make personal sacrifices and face daunting working conditions.
To their family members receiving much-needed supplemental income and to the Philippine government bolstering its foreign reserves, they are the “new heroes.” Remittances from Overseas Filipino Workers (OFWs), as they are officially called, are now the country’s second largest source of foreign reserves, beating out foreign direct investment in terms of percentage of GDP. The government has even established an annual award to honor its most distinguished OFWs.
Marjorie Pajaron, the current Asia Health Policy Postdoctoral Fellow in Developing Asia, has been studying the significant economic benefit of OFW remittances to Philippine families and to the economy. She spoke recently with Shorenstein APARC about her research, which she will present at a seminar on May 9.
How many people from the Philippines are going abroad for temporary employment, and where are they finding work?
In 2008, OFWs numbered 2 million—representing 2 percent of the country’s total population. Fifty-one percent of these migrants were male, and 49 percent were female. Twenty percent went to Saudi Arabia; 14 percent to the Arab Emirates, Singapore, Hong Kong, Japan, Qatar, and Taiwan; 9 percent to Europe; and 8 percent to North and South America.
Where OFWs work depends on gender, education, and the type of employment. Many men go to the Middle East for construction-, mining-, and oil-related jobs. Women tend to go to Southeast and East Asia for caretaking and domestic jobs. In North America, most Filipino migrants work in professional jobs, including as nurses, doctors, and as other types of healthcare workers.
What is the “typical” profile of an Overseas Filipino Worker?
It often depends on the type of job. Healthcare professionals, for example, tend to be younger because they go abroad directly after graduation. Most of the nursing schools in the Philippines are linked to hospitals in the United States or Europe.
In general, overseas workers range from recent graduates to the median working age, from approximately 20 to 45 years old. Because of the large fixed cost associated with temporary overseas employment, families that are better off or who have the means to raise funds are those that are able to send family members abroad.
Most OFWs come from Manila or the surrounding urban areas. In the study I conducted, only 17 percent of rural households could afford to send a family member abroad. Usually several village families will pool together their resources, with the informal agreement that they will be repaid.
On average, male migrant remittances equal twice the amount sent by female migrants, who more frequently work in unskilled positions. For example, a well-educated man working in the Middle East in the construction and transportation industries earns higher than a woman working in a domestic position in Singapore. Some OFWs are overqualified in terms of education, but because of economic opportunity they decide to work abroad.
Do remittances provide short- or long-term economic benefits for families?
The benefits are both short and long term. Remittances can provide immediate assistance as needed, such as rebuilding after a natural disaster. From a longer-term perspective, many remittances in the Philippines go toward education, which is a form of human capital investment. Many families also invest in real estate, buying houses and land, and they also purchase durable goods, such as cars and appliances.
How do remittances benefit the country’s economy?
After exports, foreign remittances are actually the second largest source of foreign reserves in the Philippines. In 2006, remittances ranked even higher than foreign direct investment in terms of percentage of GDP. Some scholars have conjectured that OFWs have helped close the gap between the poor and the wealthy in the Philippines by contributing to a growing middle class. This is why migrant workers are called the “new heroes.” They sacrifice a lot by working in what are often unfavorable conditions. Because of the system of helping their families, they are also helping the entire country.
In your research, you have also looked at how rural farmers cope with natural disasters. What motivated you to study this issue, and what have you found based on recent years?
Farmers are the poorest of the poor in the Philippines, and since the country is in the Pacific Ring of Fire it is frequently hit by natural disasters, including earthquakes, typhoons, and drought. Filipino farmers are very vulnerable because most cannot afford to install irrigation. Instead, they have to depend on rain and their crops are continually susceptible to changes in the weather. There is limited government assistance available to them, and they do not have any formal insurance. In addition, they cannot take out loans because they do not have the collateral. So, I have been looking at how they survive after a natural disaster. The only possible explanation is that they depend on their networks of family and friends.
I had expected to find that they also depend on their family members abroad, but I have discovered that very few have been able to send relatives abroad in the first place. So this cannot be considered a reliable source of support. Instead, they seem to mainly rely on family members who have migrated to Manila and other cities.
There is much more work to be done on this issue. Studying how rural residents survive is important given they have limited access to formal credit, capital, and insurance markets; and government aid and transfers may also be limited or non-existent.