Each year, millions of global emigrants from the Philippines send billions of dollars in aid back home. Even in 2020 – a year of notable economic turmoil, Filipinos leveraged low fees and favorable currency exchanges, sending nearly $35 billion in remittances. Currently, the Philippines is ranked fourth in the world by money received from overseas, just behind India, China and Mexico. Filipino remittance is a large boon for many facing poverty in the Philippines. Throughout the pandemic, more than 2 million Filipinos fell into poverty, raising the poverty rate to 18.1%. During this period, severe job loss occurred, along with a sharp decline in tourism and a rapid rise in inflation. Even the number of workers going overseas decreased, placing more pressure on Filipinos already established and working around the globe.
Now, Filipinos continue to look to family living outside of the Philippines for support as the country attempts to recover from the pandemic.
A Brief History of Remittances in the Philippines
Though the roots of Filipino labor migration go back to the 17th century, the Filipino government began supporting the practice in the 1970s. At that time, rising oil prices were creating economic problems in the Philippines. However, the oil-rich Gulf countries needed workers to build infrastructure. The Philippine government established an overseas workers program with these countries to make use of the nation’s excess laborers.
During this period, it was men working in construction that made up the majority of Overseas Filipino Workers (OFWs). However, women soon took the lead. They rose to prominence as the demand for teachers, nurses, domestic workers and entertainers increased.
OFWs commonly send money from their paychecks back home to family, becoming a significant part of the Philippine economy. The World Bank has noted that remittance started at 1.5% of the nation’s GDP in 1977 and has risen since, peaking at 12.8% in 2005. In response to the growth of Filipino remittance, some Philippine businesses, like LBC Express, opened storefronts around the world to help OFWs send money and goods directly back home.
In recent years, the Philippine government has decreased programs encouraging citizens to work outside of the country. The government said it wants the decision to work abroad to be a choice instead of a necessity. Regardless, Filipino remittance remains high.
Filipino Remittance in the Modern Day
Remittance remains a strong part of the Philippine economy — most recently making up 9.6% of the nation’s GDP in 2020. However, the geographic concentration of workers sending money home has shifted to the West. In 2020, Filipinos living in the United States sent the most money back to the Philippines. Remittances from workers in the Gulf countries dropped by as much as 36% from their 2015 peak.
Yen Osborne, a moderator of the Facebook group “Filipino Community in Illinois,” spoke with The Borgen Project about her thoughts on remittance and its role within her online community. “It’s a great benefit to the families attending their financial needs,” Osborne said. According to her, it is normal for Filipinos to send a monthly allowance to their families living in the Philippines using a variety of online services and bank-to-bank transfers.
Osborne also raised concerns about the negative effects of people in the Philippines becoming reliant on remittances. “The bad side is people are getting lazy knowing they have a family member who sends them monthly [money],” Osborne said. At the same time, with exception of the pandemic, the Philippines’ economic growth has risen. According to the World Bank, the Philippines’ average economic growth increased to 6.4% in 2019, while foreign remittance in the country’s GDP grew to 9.3%.
Osborne concluded that remittance is ultimately a positive part of Filipino life. For her, it’s a part of “Filipino culture where we help our families.”
– Ryan Morton