(Part 2)
If we factor into the total overseas Filipino workers (OFW) remittances what the returning workers bring with them in actual foreign exchange (and not to mention the goods in kind called pasalubong), it is estimated that total annual flow is already more than $40 billion, 10% of GDP. For 2025, I forecast the exchange rate to be at P58 to P59 to a US dollar, given the larger balance of payments deficit that will result from a slowdown in exports resulting from the protectionist policies of the Trump Government, especially if the 20% tariff recently announced is the final number. I consider it a benefit to our consumer-oriented economy that the peso depreciates from its stronger position at the beginning of the year. It is also unfair that the relatives of the OFWs will be financially prejudiced by a strong peso after all the sufferings of their relatives abroad.
The foolproof engine of growth that is the OFW remittances has a long history. As Dr. Veronica Ramirez, Full Professor of the University of Asia and the Pacific (UA&P), will recount in her Magisterial Lecture, way back in 1962, the Philippines entered into a bilateral agreement with Nigeria, which started the recruitment of engineers, doctors, and teachers. From 1975 to 1982, some 7,000 teachers left the Philippines to work in Nigeria.
In 1968, the US Navy employed more Filipino men in the US military bases in Southeast Asia and the Pacific. They were then offered to live in the US after their tour of duty.
In the 1970s, already the Martial Law years under President Ferdinand Marcos, Sr., the Middle East became the top destination country for Filipino migrant workers as a result of the oil prices and the increasing demand for infrastructure projects.
It was also the beginning of the strong demographic dividend that the Philippines enjoyed as a result of fertility rates as high as six children per fertile woman. It was providential that, despite aggressive efforts of the World Bank and the US Agency for International Development (USAID) to introduce population control programs in the Philippines, family planning never became widespread among the Philippine masses for cultural and religious reasons. Unlike most of its Asian neighbors today, the Philippines continues to have a young and growing population which enables it to satisfy both the domestic and foreign demand for Filipino workers. Despite the fertility rate having dropped to below replacement at 1.9 babies per fertile woman, the relatively high fertility rate over the last 20 years has resulted in a young and growing population at least for the next 20 years, a period long enough for the country to catch up with its Southeast Asian peers in per capita income. Indeed, in two years, the Philippines is expected to finally become an upper-middle income economy.
It was in 1974, after he declared Martial Law in 1972, that President Marcos Sr. launched the overseas employment program dubbed “Development Diplomacy,” an exclusively directed labor export program to the Middle East. At the start, Filipino male workers were employed in construction projects and as labor sub-contractors, mostly in Saudi Arabia. It didn’t take long for women to follow.
In the 1980s, thousands of Filipinas left the country as tourists for Italy, Spain, and Greece but were really directed to work as household service workers in the Middle East. Thus there was a significant increase in Filipina domestic workers abroad.
In the 1990s, there was a marked decline in construction workers in the Middle East. The same decade saw the rise of the so-called Asian Tigers, i.e., Singapore, Taiwan, Hong Kong, and South Korea. These economies suffered serious labor shortages and turned to migrant workers from the less developed Southeast countries like the Philippines and Indonesia.
The health, sales, manufacturing, and other service sectors continued to employ mostly females. In the 1990s, there was more demand for skilled workers such as nurses, healthcare, and IT personnel. Female migration increased as a response to the demand for teachers, nurses, domestic workers, and entertainers. From the 1980s through 2024, Japan recruited thousands of entertainers or overseas performing artists who were classified as professionals. By the year 2000, overseas household work remained the number one occupation for Filipino women overseas.
It was in 2004 that the Philippine Government set a deployment target: one million migrant workers every year. This was included in the Medium-Term Philippine Development Plan 2004 to 2010 of the Arroyo Administration. However, the succeeding Administration of Noynoy Aquino removed the deployment target in its 2010-2016 Philippine Development Plan and instead committed to create more jobs locally, declaring that “Migration should be a choice rather than a necessity.” In 2006, the Household Service Workers (HSW) Reform Package set the age of employment at 23 years, and the minimum pay at $400 monthly.
It is worth pointing out, however, that top Filipino professionals as well as business executives have also been “Overseas Filipino Workers.”
One of the most outstanding examples is PLDT Chairman Manuel V. Pangilinan who was recently bestowed with the Gintong Alon Leadership Award from the Philippine Association of Hong Kong. The speech he delivered (which was published in this paper) was entitled “An Ode to the OFW Spirit.” Mr. Pangilinan is the role model of outstanding Filipinos, both knowledge and technical workers, who become OFWs out of pure choice and not necessity. Although they may be a small portion of the OFWs, they prove that Filipinos can hold their own in the global market for top executives, entrepreneurs, scientists, and technical workers.
Despite the sometimes-exaggerated lamentation on the poor quality of Philippine education, we have produced people like Mr. Pangilinan who have headed top positions in multinational enterprises all over the world as well as founded their own businesses. I can cite the examples of dozens of Filipinos from my generation who were promoted to very high managerial positions in such global enterprises as Citibank, Procter & Gamble, S.C. Johnson, Unilever, Coca-Cola, Nestlé and many others.
Let me quote some inspiring lines from the address of Mr. Pangilinan: “…the significance of these remittances goes beyond their sheer size. There is no more cost to your country to earn these revenues from you. They are 100% value added to the economy — like economic cocaine injected into the veins of our nation… As OFWs, we continue to be charged with doing our appointed tasks with quality and excellence — no matter the place or the time. To hold up to the world the Filipino greatness of heart and spirit, of courage and compassion. You are our country’s bright lights of hope — worthy of emulation and valued for your immense performance.”
As our economy moves from low-middle income status to that of a upper-middle income one (possibly in the next two years, before the end of the Marcos Jr. Administration), there will be many more cases of people like Mr. Pangilinan who worked as an “OFW” in Hong Kong for 22 years out of sheer choice and not necessity. This we can attribute, not only to our continuing to produce high-quality professionals like Mr. Pangilinan as well as excellent technical workers, but also to the fact that we are among the very few countries in the Indo-Pacific region that are still blessed with a young and growing population, the demographic dividend that world leaders like Elon Musk highly appreciate.
(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.