The Philippines is well-known across the world as a labor exporting country that supports its Overseas Filipino Workers (OFWs), frequently sending them overseas as guest workers. Overseas Filipino Workers, a term created by former President Corazon Aquino in 1988, are commonly referred to as “Bagong Bayani,” or “modern-day heroes” in English. They are regarded as heroes not just for keeping our economy afloat, but also for their sacrifices. Working as an overseas worker in another nation entails various hazards, danger, and, of course, the emotional struggle of being apart from their family. Furthermore, OFW’s heroism is made even more hazardous by the COVID-19 outbreak. The precarity of an OFW’s remittances prior to the pandemic is a significant factor in the country’s economy.
Read More: Why are OFWs Heroes of The Philippine Economy? | Bria Homes
The phrase “overseas Filipino worker” refers to a Filipino migrant worker who is temporarily residing in another nation in search of employment. From the early years, Filipinos have been known to cross borders in search of work, but the first large-scale migration recorded took place between 1906 and 1934, when over 100,000 Filipinos were transferred to the United States to labor in pineapple farms in Hawaii and in Alaska. At a later time, By the 1970s, what began as a temporary abroad assignment had become permanent. As rising Middle Eastern countries boosted their investment, employment policy measures gained popularity.
Filipino outmigrants are expected to reach 6.1 million by 2020, nearly tripling the amount from 1990 of two million. Since 2000, the Philippines has been one of the top destinations for global immigration. On average, at least 50% of Filipino migrants have settled in North America, with the remaining 18% in Asia. In the Filipino immigration in the Middle East increased from 20.1% in 1990 to 27.7% in 2020. Nonetheless, even While the overall number of Filipino migrants has increased, the Philippines’ percentage of total world migrants has decreased has fallen since 2015.
The Impact of Covid-19 Pandemic on OFWs
To halt the spread of the COVID-19 pandemic, global health procedures and border control are being implemented. Measures and travel restrictions were enacted, halting people’s movement. Migrant laborers, many of those had previously been rendered susceptible due to lockdowns and quarantine procedures, these policies have a disproportionate influence on them. For low-skilled migrants working in hazardous environments preserving cleanliness and living in tight quarters with limited sanitary facilities and keeping social distance criteria was extremely hard.
The OFWs were one of the victims of the COVID-19 Pandemic, their numbers declined drastically as the overall number of overseas Filipino workers (OFW) deployed in 2020 has decreased. From a projected 2.16 million OFWs in 2019, around 550 thousand employees traveled abroad in 2020, a 75% decline.
The Weakening of Peso to Dollar
For the past several weeks, news of the Philippine peso’s continued devaluation has worried many about the country’s economic predicament, with some balancing the advantages and hazards of depreciation. Prior to this, the Philippine peso’s value fell substantially in the second quarter of 2022, reaching an 18-year low of Php 56.37 to USD 1 in July. From the end of 2021 level of 50.999 to $1, the peso was devalued by 15.7 percent to a new record low. Throughout that time, the peso was the lowest in Southeast Asia, as the falling currency fueled public worry about the Philippine economy’s prospects. Today’s slow peso, on the other hand, can only be understood in the context of domestic and international economic events caused by the peculiar circumstances of the COVID-19 pandemic.
Those earning in dollars, notably OFWs, exporters, and business process outsourcing organizations, stand to benefit from the peso’s decline as the value they earn is more whenever they exchange dollars into pesos. Hence, OFWs are motivated to send more dollars in the Philippines, as the devaluation of the peso means that more pesos are exchanged for each dollar generated. That is why people who rely on remittances from overseas, such as Overseas Filipino Workers (OFWs) who earn money in foreign currencies, profit when the peso falls in value since they receive more pesos for each dollar transferred to them.
Higher OFW Remittances for the month of August
As a result, the Bangko Sentral ng Pilipinas (BSP) reported the number of US dollars returned home by OFWs to their families in the Philippines increased at a quicker rate of more than four percent during the month of August. The recorded OFW remittances, which is the total of net employee remuneration, personal transfers, and capital transfers between families, was observed to increase by 4.3 percent to $3.02 billion in August from $2.89 billion the previous month. Furthermore, the report from the BSP attributed the increase to a 4.7 percent increase in remittances sent by land-based workers with one-year or longer contracts to $2.31 billion from $2.21 billion, as well as a 3.1 percent increase in remittances sent by sea and land-based workers with less than one-year contracts to $650 million from $630 million.
Furthermore, the increase in the number of OFW remittances has been ascribed to the fact that Filipinos are now in the ‘ber’ months, when they are already preparing for the forthcoming Christmas season, which is the most anticipated yearly occasion for every Filipino. The report added, that OFW remittances and conversion to pesos are likely to seasonally increase in (the fourth quarter), in preparation for the holiday season and spending, a continuous trend witnessed for many years/decades; this might seasonally strengthen the peso exchange rate, particularly near the end of the year. In accordance with this, the Philippine government encourages OFWs to invest their present funds because their income is increasing in terms of peso to dollar valuation. The government hopes that our OFWs will have enough resources to return home and start a small company so that they will not be working away from home indefinitely.
Read More: 5 Financial Tips for OFWs Returning to the Philippines | Bria Homes
The Underlying Threats for OFWs
On the contrary, some economics’ experts contradicts that the benefits received in remitting pesos is actually beneficial for OFWs. According to Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., “any benefits gained by OFWs and their families/dependents as a result of higher peso earnings for their US dollars/foreign currencies may be offset/negated by increasing prices/inflation.” Families of overseas Filipino workers (OFWs) who remit in US dollars or other currencies may first appreciate the move since they will get more pesos per dollar. However, rising prices in the Philippines cancel out any gains made through remittances.
Finally, experts are also warning OFWs of the possible economic recession, as the world’s wealthiest countries push the rest of the globe into recession, and global unemployment is expected to rise by 50 million, many Filipinos working abroad will be affected. Some may lose their jobs, others will have their earnings lowered, net deployment overseas will slow (though it is still predicted to be positive), but everyone is adjusting to the possibility that their money and jobs are less secure than they imagined even a few months ago.
