At Large
Using their money
By Rina Jimenez-David
Philippine Daily Inquirer
First Posted 02:17:00 10/14/2008
Filed Under: Economy, Business & Finance
Wasn’t it just a few weeks ago, just as the bad news from abroad came trickling in, that our officials were assuring us that we were relatively safe from the harsher impacts of the global economic meltdown?
One of the “bright spots” in our economy, we were told, were the remittances from our overseas workers—excuse me, call them “expats,” our President pleads—which have been shoring up our reserves for well over a decade. But look what’s happening now. With banks and other financial institutions toppling over like dominoes, swiping savings, retirement funds, investments and insurance plans along with them, the bad news has finally washed ashore.
Overseas Filipinos, especially members of the upwardly mobile middle class in the United States, Canada, Australia and other such destinations, are feeling the squeeze. And when hard times hit, remittances—money sent home to family to build a house, send a youngster to school, or fund a business—are one of the first items to go. Even more dire for Filipino workers in Hong Kong, Singapore, Malaysia, the Middle East and other places, where most of them work either in construction or services, including domestic work, employers are having to tighten their belts, searching for areas where they can cut back.
Unfortunately, one of these areas is the salary paid to workers. Maids, especially, are vulnerable, since they are still viewed as “luxuries,” whose labor allows the formerly stay-at-home spouse to seek more productive work outside the home, or else live a life of ease. But with hard times come more hard-edged attitudes, and employers of domestics may find paid domestic labor a superfluous expense.
A news story in Monday’s Philippine Daily Inquirer quoted leaders of migrant organizations expressing fears of massive layoffs and forced repatriation of Filipino workers. What future awaits them in a country that not only cannot offer them jobs but is even dependent on their earnings abroad?
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What a difference a few months make.
Last July, the Economist Intelligence Unit conducted a study sponsored by Western Union, a major player in the remittance field, entitled “Building a future back home: Leveraging migrant worker remittances for development in Asia.”
At the time, to quote the authors, “remittance flows from migrant workers [have been] expanding rapidly in recent years, [and] there is growing interest in how these funds can be harnessed for broader economic development.”
Most studies have found that the earnings remitted back home by migrant workers have been used mainly for consumer spending, with the possible exception of education. Much of the blame has been laid at the door of the families at home, who end up “squandering” the wages of family members abroad on appliances and perks like cell phones. But the Western Union study also found that some of the blame falls on inefficient systems and indifferent government bodies.
“Some serious gaps remain in the understanding of how migrants can be encouraged to invest in their home communities and perhaps raise living standards, thereby reducing the outward flow of labor,” the authors said.
To illustrate how much remittances have grown in significance, the study notes that “remittances from migrant workers are fast outpacing official aid flows and even foreign direct investment (FDI) as a source of external finance for many developing countries. Most remittances are sent directly to family members to cover everyday living expenses ranging from food and clothing to education. In recent years, researchers and development economists have identified collective remittances—whereby migrant workers pool funds together to invest in infrastructure projects or businesses in their home communities—as an important phenomenon.”
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Efforts to pool the earnings of migrants and overseas workers are cited in the report, including efforts among Filipino-Americans from a region (say, Ilocos), province (say, Pangasinan) or town to build funds for local projects like schools, irrigation systems or clinics. Mexico has also been particularly adept at tapping the strengths of community associations to facilitate development at the local level. But these efforts are still nascent, too small-scale and scattered to have an impact at the national level, and may even make governments even more remiss in their duty to provide basic services to the people.
Authorities could carry out steps to better harness remittances, the report said. Among them:
• Establish permanent programs for attracting and leveraging remittances.
• Promote organization among both migrants and remittance recipients.
• Put emphasis on capacity building, especially among the local community.
• Consider the potential for macroeconomic policies to magnify the impact of remittances, with governments considering remittances in their economic development plans.
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One can’t help wondering what the situation would be today if governments, at both the national and local levels, had worked to better harness “remittance power” earlier in the game, long before the economic tsunami threatening this source of income had broken out.
But doing nothing seems to be an even worse alternative. Perhaps now, while the economic gloom and doom is but a distant shadow, we should begin steps toward making better use of this money. At the very least, we shouldn’t let the wastage continue. The private finance sector, for one, could step in with packages to help returning overseas Filipino workers to maximize their savings and start businesses of their own, now that employment abroad looks ever more iffy.
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