Coming home of game changers: Where do OFWs spend their money?

AS the Philippine economy grows will we see more overseas Filipino workers (OFWs) coming home.

At any given time, there are 2.3 million Filipinos working abroad. This is just the official number of Overseas Filipino Workers quoted by the Philippine Statistics Authority (PSA) and does not include the undocumented Filipinos.

The PSA reported that of this number more than half are female and one in three are in what are considered elementary occupations such as machine and lower service workers.

Most are in the Middle East and Asia, such as Hongkong and Singapore. Of course we have seen a shift in recent years and in many countries, such as Singapore, where domestic helpers as a percentage of total OFWs have fallen. Instead, there  are more office workers and professionals from the Philippines.

OFWs’ contribution

That said, the contribution of OFWs to the Philippine economy is valued at about 28 billion US dollars in 2017, an all time high. high. The Bangko Sentral expects even higher remittances in 2018.

This translates to roughly 10 percent of our current Gross Domestic Product (GDP), which is about the same as agriculture, and slightly lower than Business Process Outsourcing (BPO) incomes, which have already eclipsed OFW income as a percentage of GDP.

The advantage of OFW income is that it is a source of income that is flexible and allows the country to receive cash from sources outside its borders, and can do so even if the local economy is not doing as well. Consider it a direct injection clean cash into your books independent of your business.

Moreover, since it is denominated in foreign currency such as United States Dollars, this infusion bolsters our foreign exchange reserves.

Where does OFWs’ money go

The income goes often into real property investments, the education of children,  and vehicles for a comfortable life for their families. All the dollars spent act as a multiplier of the local economies where they live. The challenge, thus, is how to harness this income into further economic activity that allows the OFW to gain a stable livelihood without having to work abroad. Moreover, how this benefits more people beyond OFW families is government’s task.

New programs to benefit OFWs that can finally allow them home

What is going for OFWs are two things: the establishment of the OFW Bank and the institution of the Personal Property Security Act, that allows movable items such as motor vehicles to be used as collateral for bank financing.

This allows many OFWS, who do not own real property but are still in the process of doing so, to offer their movable assets as collateral to obtain the loans they need to start up business.

These two important reforms are expected to boost many local economies, especially those that have a high number of OFWs. This will allow OFWs to be entrepreneurs, using their skills and experience from other countries and apply them for further income enhancement, or the eventual coming home.

At home, our manufacturing and BPO sector continue to grow as foreign direct investment and tourism arrivals continue to grow. This creates an even bigger multiplier for the economy for the support industries needed by these sectors. This means more job opportunities at home for OFWS, giving them a choice to stay home.

The future of OFWS: New labor markets and ASEAN Integration

Recently the Department of Labor and the Israeli government signed a pact to allow thousands of Filipinos to work in Israel, while the Japanese government likewise allowed more foreigners to work and reside in Japan.  As the population of western countries age and decline, our young, language adept and skilled workforce becomes attractive.

This is expected to provide new sources of jobs for Filipinos, especially the skilled workers such as caregivers and hotel and restaurant workers. The incomes from these countries are also expected to be higher than the current countries of work.

Moreover, ASEAN Economic integration will eventually create a virtually borderless economy with our neighbors, giving Mindanao, in particular, the opportunity to provide workers to nearby Malaysia and Indonesia, and these same countries a course of labor for the country.

This is the new landscape of labor and work opportunity. As our country’s economy grows, we can expect less Filipinos choosing to work abroad, while more opportunities beckon. This means opportunity and choice, something that a comfortable life ought to bring.