DEMAND AND SUPPLY By Boo Chanco
The Philippine Star 01/29/2007
The way our government spins the positive news about OFW remittances, they make it look like Ate Glue should get credit for all that. The worse part of it is the impression being made that sending our workers abroad is an important permanent pillar of Ate Glue’s economic program. If this is so, we have reason to worry simply because it is not sustainable. Sending workers abroad was supposed to have been a stop gap measure, something temporary while government works to get our domestic economy humming.
I have mostly considered the opinions of the Ibon Foundation a lot of leftist propaganda that cannot be relied on for real policy making. But this time, I completely agree with the view they expressed that "the growing dependence of the country’s economy on the money sent home by overseas Filipino workers (OFWs) has become alarming."
It is definitely alarming that the remittances of around $12.3 billion last year were roughly equivalent to 10 percent of the country’s gross domestic product. There are those who estimate the real figure at the $14-billion to $21- billion range, if other remittance channels are considered.
"The double digit mark makes the Philippines the most overseas remittance-dependent economy of any significant size in the world. This means that the economy continues to be kept afloat by the external and volatile OFW remittances, and not by a strong local economic capacity," an Ibon economist was reported to have said.
Government statements estimate that about two to three thousand Filipinos leave the country everyday to find jobs abroad. That is definitely a sign that government’s economic programs have failed to create jobs domestically. The scarcity of jobs indicates, as Ibon observes, "the economy lacks an internal dynamism that is able to productively harness and employ the Filipino workforce."
Quick cut to Vietnam, one of the fastest growing economies in the region today... According to the Financial Times, Vietnam is now experiencing a spectacular stock market boom. Interest from both Vietnamese and foreign investors fuelled a stunning market rally at the Ho Chi Minh City Stock Exchange.
Their one big problem however, is lack of qualified manpower. It is hard enough to teach communists the basics and the nuances of a strictly capitalist money making institution, they also have the general inability to communicate in English. I have a strange feeling that headhunters will soon be prowling the floor of the Philippine Stock Exchange to engage talent to help keep the bulls running in Vietnam’s stock market. We have some of the best analysts and traders in the region, after all.
The Financial Times article went on to say that unlike in many other Asian countries including ours, Vietnamese students abroad are starting to come home to provide the trained manpower to manage their country’s economic boom. But they don’t have the numbers their country needs. Our problem is, we have more than we need and many talented and trained manpower are merely fetching coffee or twiddling their fingers here while waiting for action.
Many of our bright young talents have grown tired of waiting and have joined the exodus abroad. This is also why OFW remittances have ballooned. The composition of our manpower export has started to shift from brawns to brains. They earn more and are sending back more. The danger however, is that this college educated types tend to assimilate well in their host countries and end up as permanent migrants... a total loss for our country.
Former banker Ramon "Ray" Orosa warned that in the long run, the " unfortunate consequence of their departure is to deprive our economy of the qualified labor needed in order to build a sustainable economy. The lack of qualified, competent labor has so grown that even foreign investors are now concerned whether to invest in the country due to the lack of qualified manpower."
Ray worries that "the declines in domestic investment implied a diminishing capacity to expand production and warned of a slowdown in the near future." In other words, go and enjoy their remittances now. But don’t get addicted to it. That’s just a short term benefit. Unless we are able to attract them to eventually come home and help rebuilt our country’s economy, we are going to be worse off in the future.
How do we get them to come home, or for that matter, keep them from leaving? According to a recent World Bank study, good governance will do the trick.
"What really helps putative migrants stay at home is not just higher wages but the prospect of fast, effective reform, bringing better public services and a dependable legal system." The final misconception is about what motivates migration, the World Bank study notes. " Everyone thinks it is all about income differentials, but actually it is all about expectations. Even in poor countries we can expect low levels of migration if people think that conditions there will improve," argues Brice Quillin, one of the report’s authors.
There are no ready-made solutions for effective migration policy, yet one possible route might be to combine short-term migration with incentives for return or circular migration. Circular migration could allow migrants to spend short periods of time abroad without creating new amounts of permanent migration.
Circular migration, the World Bank study asserts, will yield a ‘Triple Win’ for migrants and sending and receiving countries. Potential benefits of circular migration include: Receiving countries could fill labor shortages, increase revenue, and reduce social tensions related to undocumented and unmanaged migration; Sending countries would accumulate human capital that might otherwise be lost; and Migrants could increase their income, build human capital and financial savings, maintain links with their families, pay lower remittance costs, and create trade/investment linkages between countries.
Theoretically, returning OFWs constitute the great hope of our country for the future. Many of them have some savings that could spur countryside development. Their overseas experience has exposed them to more effective governance that would make them a force for improvement in our own governance as well.
Our big problem is how to get this circular migration going... how can we get our trained migrants back. As such, an effective OFW program should not be singularly focused on remittances but also on how we can use this phenomenon as an investment for our future, by getting our trained manpower back home.
The fast and easy answer is to get our government to drastically improve governance so that every Filipino will be so proud of his country and there would be no place in the world for him like home. But given the quality of our political leaders and the quality of our bureaucracy today, good governance is a dream. I want to think it shouldn’t be hopeless, unless we give up.
| Economic forecasts |
Albert Einstein dies and goes to heaven only to be informed that his room is not yet ready. "I hope you will not mind waiting in a dormitory. We are very sorry, but it’s the best we can do and you will have to share the room with others," he is told by St. Peter.
Einstein says that this is no problem at all and that there is no need to make such a fuss. So St. Peter leads him to the dorm. They enter and Albert is introduced to all of the present inhabitants.
"See, here is your first room mate. He has an IQ of 180!", says St. Peter.
"That’s wonderful!" says Einstein. "We can discuss mathematics!"
"And here is your second room mate. His IQ is 150!".
"That’s wonderful!" says Einstein. "We can discuss physics!"
Suddenly, another man moves out to capture Einstein’s hand and shake it. "I’m your last room mate and I’m sorry, but my IQ is only 80."
Einstein smiles back at him and says, "So, where do you think interest rates are headed?"
Boo Chanco’s e-mail address is bchanco@gmail.com
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