The Philippines is composed of 7 150 islands, with 94 million population growing at 2.3 percent every year. Every year, about 800 000 young people being looking for work in a contracting and job-scarce Philippine economy with a meager pay regime. The unemployment rate is pegged at 12 percent; while 1 out of 5 employed Filipinos are underemployed. The quality of life in the Philippines measured through the Human Development Index remains poor.
This decline in the quality of life is due to the worsening economic and political crisis in the Philippines. Due to the widening unemployment rate and the meager wage regime accompanied by increasing prices of commodities, Filipinos seek greener pastures abroad. Everyday, more than 3 000 Filipinos are forced to work overseas.
The Outward Push Factor
There are many reasons behind the Filipino labor diaspora. To make things a little bit simpler, let’s catalogue these reasons into two major categories — the outward push factor, and the outward pull factor.
For now, let’s talk about the outward push factors.
1. Unstable economic situation in the Philippines
A stable economic landscape capable of supporting a robust pay regime (salary/wage system) is lacking in the Philippines. This lack of stability is due to the Philippine government’s absence of appropriate development policy (e.g. proposed alternatives are agrarian reform and national industrialization). The present development tool of the Philippine government, as noted by scholars and global leaders like Former US Ambassador to the Philippines Kristie Kenney, is focused on labor export policy. We are treating labor as a goods for trading.
Side-by-side with the labor export policy is the setup of the Philippine economy geared towards services rather than towards manufacturing. The Philippine economy is a service economy. This gives rise to many consequences detrimental to labor such as the so called ‘race-to-the-bottom’ in terms of wages and salary (leading to lower wages), contractual employment, and poorer benefits or lack thereof (e.g. right to assemble and association, medical benefits, vacation, etc.).
We’ll talk about this consequences in-depth as we move along.
2. High unemployment and underemployment rate in the Philippines
Due to the service-economy character of the Philippine economy, new jobs in the Philippines have become ‘global’ in character. These kind of jobs require command in the English language, and expertise in dealing with people. These jobs are part of the business process outsourcing (BPO) industry.
Unfortunately, the education system is not yielding enough graduates due to high dropout rates in the country (due to social exclusion). This leads to more and more people unable to find jobs where there is an abundance of it – the BPO sector.
The abundance of jobs in the BPO sector is the ultimate symbol of the service economy that we have. Many BPO workers declare they are underemployed (as compared to the degree they got in college) owing to the fact that there are no career opportunities for them aligned to their chosen field of specialization in college.
Perennial high unemployment rate has been a chronic problem in a country that produces almost a million college graduates on courses that are deemed popular but whose demand is on decline. Fresh graduates join the labor force, thereby increasing the competition for jobs available. Worse for elderly job applicants, many companies seek fresh graduates instead of talent qualifications probably because salary and benefits are not good enough for experienced work force.
3. Low salary at home
The country’s minimum wage is the lowest in Asia. Yet, the prices of goods in the country like water and electricity, are also the highest in Asia! The service economy the Philippine has, has driven wages and salary to the bottom.
This race to the bottom of wages is due to the government’s effort to attract more investors or businesses to the country. For the same reason, the government cannot raise the minimum wage.
The single biggest reason why Filipinos are willing to go abroad for work is the generally low salary offered by employers in the Philippines. Even jobs that are sought after and in demand in certain parts of the world like nurses, engineers and teachers are paid poorly.
4. Too much contractualization
The high unemployment rate in the country brings due advantage to employers who simply hire people on contractual basis. From mall sales ladies to fast food servers, the practice is widespread in the country. This brings a great deal of job insecurity for those who are employed under such conditions.
Contractualization gives employers much leeway in terms of committing to benefits regular employees receive. Contractualization also weakens trade unions, consequently keeping labor under control (trade unions tend to be noisy about labor standard violations).
Filipinos inherently don’t mind receiving basic salary, as long as there is security of tenure. However, such type of work arrangement is hard to find for many sectors, knowing that the supply of workers always outstrip the demand for their services.
5. Poor benefits for workers in the Philippines
Local employers prefer to contractual employees because it is easier to let go of them and — a labor loophole in the country — no health benefits and accident insurance coverage necessary. While the coverage of government’s social services (SSS, Pag-IBIG and PhilHealth) is generally applied as employment benefits, the monthly contribution can significantly reduce a low-paid workers take home pay. High unemployment rate ensures a steady flow of applicants, no matter how lame the job offer is. Such unfair situation keeps employers happy almost all the time.
8. Discrimination in job hiring in the Philippines
This is a sad fact that local job applicants have to deal with. Again this has something to do with the glut of available workers willing to get paid lower salaries and not enjoy benefits and paid holidays. Employers tend to pick the “best” candidates but they’re not necessarily the most qualified for the jobs. They are usually those aged between 21 and 30, graduates of schools like University of the Philippines or Ateneo de Manila, and are at least five foot tall for women, even if the job nature doesn’t require them. It’s the preference of age and pleasing personality over skill and competitiveness. The process leaves qualified but overage applicants in the dark and decide to go abroad.
9. High Withholding Tax
The Philippines has a high income tax rates for employees. In many cases they are withheld from salaries that if the advertised salary is P10,000, take home page might just be around P3,500 per 15th and 30th after all sorts of BIR withholding taxes, SSS premium, Pag-IBIG fund and other monthly obligations to the government.
The Outward Pull Factors
1. Higher Wages Abroad, Plus Weaker Philippine Currency
It’s no secret that the single most reason Filipinos seek employment abroad is the greener pastures in foreign land. Basic wages are relatively higher in many countries compared to here in the Philippines.
Moreover, for Filipino overseas workers with families in the Philippines, the value of their compensation abroad doubles, or triples when remitted to the country due to the weaker Philippine peso.
And believe it or not, OFWs are now covered by better protection, offered advantages (hotel offers only valid to OFWs, special lanes for overseas workers at airport and discounted health insurance premiums to name a few) in addition to being heralded as the nation’s new breed of heroes. Heroes in the coffers of the country, pumping in billions worth of remittance dollars. Even ABS-CBN’s TFC offers front-row seats to balikbayans just to watch Showtime.
2. Better Working Conditions
With some exceptions, there are go-to countries for overseas Filipinos to work due to their excellent working conditions. For example, health professionals in the Philippines prefer to work abroad after graduation due to lower patient-doctor ratio, better technology, and better pay and benefits abroad.
3. Global Filipino Communities
Working abroad is tantamount to a chance to get an immigration visa and opportunity to migrate the entire family.
Also, it’s not so lonely to work abroad anymore. Before, going overseas is like sentencing oneself into exile to a hostile land. No friends around, will need to deal with unfamiliar language, weather and food. But now times have changed, many overseas Filipino communities have mushroomed all over the world: Tokyo, Barcelona, Sydney, Dubai, Singapore, New York and more. Cultural programs, tours of Filipino entertainers have brought the overseas Filipino workers closer to home. Not to mention the cheaper long distance rates and availability of the web to communicate with loved ones.
To crystallize these, take this for example.
For example, the Philippines’ health human resource accounts to more than 8 percent of the country’s labor force. Yet, the Philippines has become the No. 1 exporter of Nurses and No. 2 exporter of doctors next to India (NIH, 2004). Even doctors become nurses abroad.
The outward push factors are clear – meager wage, no hazard pay, and overtime pay, low coverage on health insurance, stressful work environment, slow promotion, and limited employment opportunities (not to mention peace and order). This means that there is less incentive to remain and work in the Philippines. This explains why in spite of the oversupply of nurses vis-à-vis domestic demand we still lack nurses at home, because 85 percent of employed Filipino nurses is employed abroad. Also, 80 percent of public physicians have taken up or enrolled in nursing schools in order to be hired abroad.
The outward pull factors are clear, too – higher wage, better benefits, lower nurse/doctor to patient ratio, more advanced technology, more opportunities for personal development and a chance to get an immigration visa and opportunity to migrate the entire family! This means more incentive to work abroad than at home.
The Philippine government on the other hand, relied on this labor diaspora through its Labor Export Policy to hold up its economy as remittances prop up the falling peso in order to pay the balance in trade deficits and foreign loans.
Likewise, the government through its labor export policy defuses social tension by exporting its underemployed and unemployed citizens abroad. And truth be told, this is a lucrative business. In 2005, the remittances of OFWs of US$10.7 billion (P545.7 billion) amounted to:
• More than the five top 2005 merchandise exports
• More than ½ of the 2005 national budget (P907B)
• 100 times more than all Foreign Direct Investments
• 10% of the GDP
• 9.5% of the GNP
• 3 times more than 2001 US military aid
This vice resulted into dependence on foreign markets, political subservience to foreign policy dictates of the dominant economic powers – given our commitments to the General Agreement on Trades in Services which basically requires privatization, deregulation and liberalization basic social services at home such as education and health!
Without a sustainable and self-reliant domestic economic base, the Philippine government will perpetually export its human resources to foreign masters in exchange for much-needed revenue at the expense of the rights and welfare of its workers and its people. Ultimately, the Philippines’ Labor Export Policy is rooted in the failure of the government to boost its own economic and political development through genuine agrarian reform and the creation of a modern industrial base to make the local market vibrant, prosperous, and stable. The fiscal crisis and the ballooning national debt; the unbridled corruption and lack of accountability; and the political crisis that worsen daily, prevent the Philippine government from addressing its national crises with long term definitive solutions – ergo, the unending epic of Philippine underdevelopment and Filipino migration.
Health has become a commodity: subject to trade and profits (i.e. medical tourism, labor export, etc.) and the national government had abandoned its responsibility to ensure the health of its people.