Filipino Remittance
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
Photo: Flickr

Poverty in the Philippines
As of 2015, poverty in the Philippines was prevalent with 22 million Filipinos living in the depths of poverty. That equates to one-fifth of the population. Poverty presents itself in a vicious cycle affecting mainly the uneducated population who tend to live in large family units. These family units usually have only one head of the household who provides income for the entire family.

The Filipino government is actively trying to speed up its poverty reduction plan. Its long-term goal is to be able to provide more economic prospects, which in turn would help many of their citizens earn a higher and more stable income. A World Bank report has shown how this economic growth helped decline the rate of poverty. Poverty in the Philippines dropped from 26.6% in 2006 to 21.6% in 2015.

Key Programs to Help Reduce Poverty in the Philippines

Some factors that resulted in the drop in poverty are the expansion of jobs outside the agriculture sector, government transfers and getting qualified Filipinos to help through the Pantawid Pamilyang Pilipino Program. This particular program which is a government cash-handout project has helped reduce poverty by 25%.

Most of the Philippines experience massive typhoons and armed conflict. These scenarios are a real struggle for the everyday worker who, even after a long day, still goes back home poor. Due to these factors, many citizens end up leaving behind farm work and going to find work in manufacturing hubs in the urban areas of the country. These jobs outside the agricultural dome have accounted for two-thirds of the progress in reducing poverty in the Philippines.

One of the key strategies to help bring down poverty in the Philippines is providing birth control to the poor. In a radical move for the heavily populated Catholic country, the President made readily available birth control to nearly 6 million women who cannot afford it.

Providing birth control is a powerful tool for families who now have full control over family planning. The hope is that by giving the women and family units more control, they will have fewer children. This, in turn, will mean that families can provide more responsibly. This new policy will help the government reach its goal of reducing poverty by 13% by 2022.

The current Filipino population is at 104 million and continues to rise at an alarming rate of 1.7% each year. This new law will enable families to control how many children they want. It will also hopefully take down the population rate to 1.4% each year once the law undergoes full execution.

Government Hopeful About Achieving its Aim

Even though the Philippines have worked hard in the past to reduce their poverty and keep up with their neighbors China, Vietnam and Indonesia, they still have a long way to go. Marak K. Warwick of The World Bank believes that with a solid foundation there is a reason to be optimistic that the Philippines can achieve its goal.

The goal of the Philippine government is to create more jobs, improve productivity, invest in health and nutrition while focusing on reducing poverty. If the government is able to execute its plans successfully, it is capable of reducing poverty in the Philippines by 13% to 15% by 2022.

– Jennifer O’Brien
Photo: Flickr