Labor mobility and migration across countries and
continents is a result of push and pull factors in both the labor exporting and
labor importing or receiving countries. Labor-surplus countries generally have
lower wages and labor skills due to limited employment opportunities while
labor-deficit countries generally have higher wages and skills training.
If labor migration is heavily restricted via multiple
regulations and permits, taxes and mandatory contributions -- if not prohibited
outright -- the wage gap and income inequality between the labor-surplus and
labor-deficit countries will worsen.
If labor migration is less restricted, then the wage gap
and income inequality between the two group of countries will narrow or lessen.
And if such migration is fully allowed and assured, then global wages per
industry and sub-industry, wages per skills levels -- other things being equal
or held constant -- will move towards equilibrium or near-equality.
Remittances of nationals who are working abroad are among
the biggest sources of revenues of both governments and households for many
countries in the world today. The top five in remittance inflows worldwide are
India, China, Philippines, Mexico, and France. (See Table 1)
In Southeast Asia, learning the trade of labor migration
rather quickly aside from the Philippines are Vietnam and Indonesia. From 2004
to 2014 or in just one decade, Vietnam’s remittances have expanded 5.2 times
while Indonesia’s have expanded 4.6 times over the same period. Impressive.
In South Asia, besides India, Pakistan, and Bangladesh,
Sri Lanka and Nepal are also learning the ropes as well. Nepal in particular is
very dependent on remittances, which comprise nearly 30% of its GDP in 2014.
In Africa, Nigeria’s remittances have expanded nearly 10
times from 2004 to 2014 and Egypt’s have expanded nearly 6 times. In Europe,
Ukraine’s remittances increase over the same period was the fastest in the
world, expanded by almost 18 times.
The Philippines’ remittances expansion over the same
period was no longer huge as the big jump was experienced in the 80s and 90s.
There are differences in the figures by the World Bank (WB) and the Bangko
Sentral ng Pilipinas (BSP).
For instance, based on BSP data: 2014 remittances reached
$24.35B (vs WB’s $28.4B).
For 2015, BSP’s forecast is $25.3B while WB’s forecast is
$29.7B. The difference could be due to different accounting method used by the
WB that applies to other countries in its global database.
It should be noted that the numbers are only for
remittances that pass through the formal banking and remittance centers. They
do not include money that are brought in personally by the migrant workers when
they come home, or via relatives and close friends co-workers returning home.
Estimates of total remittances in the Philippines via
formal financial channels + personal/informal channels range from $35 to $40
billion in 2015 alone.
The Center for Indonesian Policy Studies (CIPS), a new
and independent, market-oriented think tank in Jakarta, is conducting a
comparative study on labor migration by the Philippines and Indonesia, with the
explicit goal of learning from the Philippine experience, especially in labor
protection during and after deployment.
Based on latest available data from the World Bank, of
the top 10 destinations for OFWs in 2013, four are in the Middle East, five in
the Trans Pacific Partnership (TPP) bloc, and Italy. (See Table 2)
The current low oil prices and approval of the TPP
Agreement will have initial and short-term negative impact on the deployment of
OFWs for two reasons.
One, Saudi Arabia and other Middle East economies will
demand less foreign workers because of their shrinking revenues from oil
exports. And two, the Philippines will temporarily lose out to Vietnam and
Malaysia in some services and labor mobility as they are TPP members and hence,
will benefit from lower tariff and non-tariff barriers (NTBs) by the big TPP
economies like the US, Canada, Japan and Australia.
There are several policy implications and reform measures
for the Philippines.
One, reduce the number of permits, procedures, taxes, and
fees for both manpower agencies and the prospective OFWs as the competition
from upcoming labor exporting economies will become more intense. In this
aspect, the Philippines should follow the lead of Vietnam, Indonesia, Pakistan,
Bangladesh, Nigeria, and Egypt.
The Philippine Overseas Employment Administration (POEA)
can shorten the process for private manpower agencies which have good track
records over the past 10 years or more.
Currently, the procedures and permits required of new
recruitment agencies and those that are 10+ or 20+ years old are the same.
Two, the Philippines should pursue its application for
TPP membership. Thailand and Indonesia are almost sure to apply for membership
in the next round of membership expansion, they will reap the benefits of
bigger market access, both goods and services, to the richer member-economies
of TPP.
Three, reduce the business bureaucracies, taxes and fees
in the Philippines so that more businesses, local and foreign, will come and
stay here. Then more and new local higher-paying jobs will be created, and this
will help absorb the workers and professionals from the Middle East who are
sent home due to cheap oil.
Bienvenido S. Oplas, Jr. is the President of Minimal
Government Thinkers, and a Fellow of the South East Asia Network for Development
(SEANET). minimalgovernent@gmail.com
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BWorld 38, Climate change and the need for cheap energy, January 14, 2016
BWorld 39, Coal and renewables complement each other, January 26, 2016
BWorld 40, CCT vs other welfare programs, SSS vs pension deregulation, January 29, 2016
Migration 20: Overseas Employment, Positives Outweigh the Negatives?, October 09, 2013
MERS-CoV and OFWs, Part 3, September 04, 2014
Migration 21: Why Do Many Filipinos Work Abroad? January 14, 2015
Foreign Aid 16: ADB on OFW Remittances, March 21, 2015
Labor Econ 15: Wages in Asia, Robots and OFWs, April 30, 2015
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