Reintegration programs needed for returning OFWS

Many people consider our overseas Filipino workers as modern-day heroes because they help keep the Philippine economy afloat as they secure the basic needs of their own families. Their economic contribution, through dollar remittances, sometimes exceeds the flow of foreign direct investment. The Bangko Sentral ng Pilipinas said net FDI inflows in 2019 reached $7.65 billion. OFWS sent home a record $33.5 billion in remittances last year. OFW money boosted household income and consumption in 2019, accounting for 9.3 percent of the gross domestic product and 7.8 percent of the gross national income. However, the impact of remittances on the economy goes beyond GDP numbers. OFW remittances have contributed significantly to boost the country’s foreign exchange earnings and strengthen the nation’s balance of payments and foreign reserves.

Now the bad news: The World Bank said global remittance flows will tumble 20 percent this year as the Covid-19 pandemic drags the world economy through a recession, deepening hardship for families in poor and developing nations, including the Philippines.

The projected fall, which would be the sharpest decline in recent history, is largely due to a fall in the wages and employment of migrant workers, who tend to be more vulnerable to loss of employment and wages during an economic crisis in a host country. Remittance flows are expected to fall across all World Bank Group regions, most notably in Europe and Central Asia at 27.5 percent, followed by Sub-saharan Africa at 23.1 percent. Remittances in South Asia are expected to decline 22.1 percent; the Middle East and North Africa, 19.6 percent; Latin America and the Caribbean, 19.3 percent; and East Asia and the Pacific, 13 percent. (See, “World Bank: Virus, oil price dip hurt remittance flows,” in the Businessmirror, April 22, 2020)

In a Migration and Development Brief titled “Covid-19 Crisis Through a Migration Lens,” the World Bank said remittances by overseas Filipinos still have not slowed to date at 4.8 percent in January and 4.4 percent in February. However, the World Bank cited the estimate made earlier by former Socioeconomic Planning Secretary Ernesto M. Pernia that remittances would decline by 20 percent to 30 percent due to the pandemic. “We do expect a decline in remittances, particularly from OFWS engaged in tourism-related businesses. This comes up to only about 4 percent to 5 percent of remittances,” said Neda Undersecretary for Policy and Planning Rosemarie G. Edillon.

Factoring oil prices in the estimates would adversely affect remittances of millions of OFWS working in oil-producing countries in the Middle East. In a stunning development on Tuesday, the cost to have a barrel of US crude delivered in May plummeted to negative $37.63. It was at roughly $60 at the start of the year. Based on the 2018 National Migration Survey of the Philippine Statistics Authority, majority of Filipinos who work abroad went to the Middle East. Data showed around 20 percent of all Filipinos who migrated abroad in the past five years went to Saudi Arabia. Another 15 percent went to the United Arab Emirates; 7 percent went to Kuwait; and another 7 percent went to Qatar.

In a recent Ateneo de Manila University Policy Brief, Ateneo Center for Economic Research and Development Director Alvin P. Ang and Institute for Migration and Development Issues Executive Director Jeremaiah M. Opiniano estimated around 300,000 to 400,000 OFWS will be laid off or suffer pay cuts due to the pandemic. Ang and Opiniano said this will likely cut the remittances from OFWS by 10 percent to 20 percent or as much as $3 billion to $6 billion, “the steepest decline in remittances in Philippine migration history.” This means remittances could only reach $24 billion to $27 billion this year from $33.5 billion in 2019. Recruitment industry veteran Lito Soriano, on the other hand, said declines in remittances will only reach less than $3 billion.

Although the Labor department has rolled out the DOLE-AKAP for OFWS, which provides one-time financial assistance for displaced land-based and seabased OFWS due to the Covid-19 pandemic, there’s a need to put in place reintegration programs for returning migrant workers. These programs should identify what training or retooling is needed for the OFWS upon their return. This is just one way to turn the country from a remittance economy to become a producer economy. We must make use of the skills acquired by our migrant workers while working abroad.