When will ‘turning point’ in labor migration come for RP?

THERE is no better time to celebrate family gatherings than during the holidays. In the Philippines, it is the most opportune occasion for overseas Filipino workers (OFWs) to come home and reunite with loved ones.

A family with one or even two members away for work during most of the year has been common among Filipinos — so common and widespread that OFWs are now the ones keeping the economy afloat with over a billion dollar worth of remittances every month.

This, however, was not exactly the scenario government officials conjured up when the overseas employment program was launched over 30 years ago. In fact, sending Filipino workers abroad then was deemed to be only temporary while development strategies are undertaken in the country.

The supposed temporary nature of labor migration follows that a certain “turning point” or “migration transition” is to be expected. According to Fair Trade Alliance executive director Dr. Rene Ofreneo, this stage happens when the net emigration of citizens of a labor-sending country starts to decline in both absolute and relative terms.

The former labor and employment undersecretary explained that reaching this tipping point does not necessarily mean that there will be no more OFWs. “There will be more who will be retuning home or will be going to the labor-sending country than those who will go abroad,” Ofreneo said.

In the mid-1960s, the so-called tipping point happened in Japan. The country at the time was hailed as the “miracle economy of the East” after an economic slump at the end of the Second World War.

In 1981, South Korea, a major labor-exporting country, had about 150,000 contract workers in the Middle East. After almost a decade, this number went down to 8,000 in 1990. By this time, South Korea had already reached transition and became a newly industrialized country.

In the case of the Philippines, a turning point in labor migration is also anticipated primarily because the government introduced overseas employment as a temporary program.

Overseas employment as ‘temporary’

The promotion of labor migration, which began in the 1970s, was intended as a stop-gap measure needed to reduce unemployment while the Sicat-Virata economic model of a labor-intensive export-oriented (LIEO) production based on foreign investments and borrowings had not taken off, said Ofreneo. (Gerardo Sicat was then Marcos’s socioeconomic planning secretary while Cesar Virata was finance minister.)

At the same time, the Middle East began to boom and employment opportunities there were available. This led to what was popularly known then as “manpower export,” a “temporary program” under the late dictator Ferdinand Marcos.

After Marcos’s downfall in the four-day Edsa People Power revolt in 1986, newly installed President Corazon Aquino also reaffirmed sending Filipino workers abroad. Instead of using the word “temporary,” overseas employment was referred to as an “interim program.” For various reasons, Ofreneo noted that the LIEO economic model did not take off and that the ensuing economic problems in the 1980s further deepened the country’s dependence on the supposed temporary program.

In 1995, in the aftermath of the Flor Contemplacion execution in Singapore, the Gancayco Commission recommended the immediate phasing out of OFW deployment in vulnerable jobs such as domestic helpers in East Asia and the Middle East. Congress heeded the recommendation by enacting Republic Act No. 8042, which reaffirmed the State’s policy that “it does not promote overseas employment as a means to sustain economic growth and achieve national development.”

The turn of the new millennium, however, saw the number of migrant workers growing in all job categories. To work abroad, under the Arroyo regime, is a legitimate — if not popular — option for all. This time, the government came up with the term “managing migration.”

The target of one million migrant workers deployed every year was also included in the Medium-Term Philippine Development Plan (MTPDP) 2004-2010. So far, since 2006, this target has been achieved. From 50,527 in 1975, the number of OFWs deployed grew and grew each year until it reached over a million OFWs deployed annually in recent years.

Source: POEA

OFWs and the financial crisis

As of December 2006, a total of 8.2 million Filipinos are working abroad with the majority holding temporary (3.8 million) and permanent (3.5 million) jobs. Close to a million, meanwhile, are irregular in status.

Source: POEA

The current recession in the United States and in some parts of the European Union is bound to affect migrant workers. This could also lead to a slowdown in the country’s economic activities.

Instead of growing at 11 percent this year, University of the Philippines economics professor Benjamin Diokno wrote in a previous BusinessWorld column that the country’s exports are expected to grow, at best, at four percent. This has resulted to some factories closing or operating at less than full capacity.

Moreover, OFWs — the country’s other export — are also at risk due to the decreasing demand for labor in crisis-affected countries, Diokno said.

Just last November, close to 400 Filipino workers employed in export and manufacturing firms in Taiwan were reportedly laid off due to the financial crisis.

Filipino construction workers might also lose their jobs as the construction boom overseas slows down and eventually comes to a halt. In the U.S., car manufacturing plants, factories, department stores, restaurants, fast-food outlets, coffee shops, and other businesses are closing. As a result, many Filipino-Americans might lose their jobs too, which means lower remittances for their families and relatives in the Philippines, Diokno added.

UP School of Labor and Industrial Relations (SOLAIR) Dean Jorge Sibal said that the current situation needs preparation, not only on the part of the government and industries, but also on the part of workers, ordinary citizens, and most of all, the Filipino consumers.

“We can do a lot of things. The simplest that I can think of is to patronize products made in the Philippines,” Sibal said. “The government can also do a lot of things to save our enterprises and the jobs of our countrymen.”

For one, Sibal suggested that products and services should be re-examined especially if these are much lower than those of other Asian countries. Taxes against traders should be higher than those who are producing goods and services in the country, he said.

Long overdue ‘turning point’

Counting three decades now, a turning point in labor migration has yet to be achieved. A major factor is that a turning point is tied in with the success of the country’s development strategy.

“The trouble is that the structural transformation of the Philippine economy appears like a never-ending work in progress,” said Ofreneo. Under the LIEO economic model, the country is projected to become a major exporting country like South Korea in the 1980s. But due to several restrictions during martial law, the World Bank, at the time, suggested that the Philippines was “not open enough.”

To expand the LIEO economic model, the country pursued the World Bank’s “structural adjustment program” (SAP), which called for the “all-out liberalization” of the economy through privatization, deregulation, reduction of tariffs, removal of import restrictions, etc.

This has resulted in the country’s significant success in the electronics industry. From almost $3 billion worth of exports in 1990, the country’s electronic export reached over $30 billion by the end of the decade. The electronics industry has created around 300,000 jobs and brought in around 800 companies, 40 industrial parks, four export processing zones (Baguio, Bataan, Cavite, and Cebu) and two special economic zones (Clark and Subic) in the country.

Ofreneo, however, pointed out that it was only in electronics that the country has done well in. “The gains have been very limited while the pains are everywhere, concretely reflected in the disappearing jobs in the stagnating industrial and agricultural sectors,” he observed.

In fact, the highest rates of unemployment and underemployment were recorded during the SAP decades (1980s–1990s). (See Table 3)

Source: National Statistics Office

OFW-centered development strategy

A new development paradigm that is OFW-centered is needed to achieve a turning point, said Ofreneo. “I believe in the concept of a ‘turning point,’ but I (would) never believe that it will happen under a neoliberal economic policy regime. There is just no way that you can achieve that.”

Citing the cases of successful export countries like Japan, South Korea, and Taiwan, the former UP SOLAIR dean pointed out that these countries never pursued the World Bank-style of a structural adjustment program. These countries had strong industrial policies and local champions. As an example, he said that China has become an export champion by not following the World Bank model.

Ofreneo also acknowledged the need to mobilize OFW savings. For more productive investments, current initiatives of OWWA and non-governmental organizations on entrepreneurship must be considered. He added that then Vice President Teofisto Guingona’s proposal to structure a financial product for OFWs is also worth looking into.

Moreover, addressing development downsides such as brain drain, poaching of “mission-critical personnel,” and the “Dutch disease” syndrome is crucial.

“The turning point will only be reached after the successful transformation of the economy into a sustainable one,” Ofreneo emphasized. “But in order to achieve this kind of economy, problems at home must be addressed first.”