Value of OFWs is not in $12-B annual remittance

By Willy E. Arcilla

Philippine Daily Inquirer

Posted date: January 14, 2008

MANILA, Philippines–THERE IS AN an urgent and pressing need to arrest if not reverse the chronic brain drain led by the millions of OFWs and emigres by addressing their reasons for leaving: The lack of opportunities at home to improve their quality of life and provide for a better future for their families.It is lamentable to hear top government leaders celebrating the exodus of OFWs in anticipation of their monthly remittances that only feed private consumption spending.

Economists must agree that the value of OFWs is not $12 billion per year, which translates to a paltry $100/month assuming a combined 10 million OFWs and emigres.

The real economic value of OFWs is reflected in the National Income Accounts of their host countries, not to mention in tax revenues they pay diligently. This holds true whether they render services in medical health in North America or in construction in the Middle East; whether they pilot the world’s jetliners or ocean-going vessels; and whether they are investment bankers in Singapore or caregivers of the children of investment bankers in Hong Kong.

Arguably, the real economic value of OFWs and emigres is vastly more substantial than the monthly remittance of $100. Imagine therefore if the country can benefit directly from OFW contributions to their host nations. The value of our GDP must be easily double if not nearing triple our official records.

These 10 million include the best and the brightest Filipinos who are able to compete globally–all of whom have come to realize that they can fetch higher compensation for their skills and talents. Those who claim that local companies cannot afford to pay higher salaries must remember the consolidated net income of the country’s top 1,000 corporations reached P500 billion in 2005 alone–not to mention the cumulative earnings in the years before and the average 25-percent growth for the past two years.

By attrition therefore, the country has been left with second-tier talent, which, coupled with the deterioration in the quality of education that produces unqualified and unemployable college graduates, is resulting in a loss of competitiveness.

Values vacuum
It may not be presumptuous to say that OFWs may also possess stronger values in terms of work ethic and competitiveness, discipline and perseverance, integrity and accountability–by virtue of the demands of working in a foreign land amid an increasingly competitive global marketplace–and therefore, the Philippines has not only been suffering a serious brain drain, but perhaps more worrisome is a values vacuum.

As a result, what is left is a nation of consumers because the productive workers drive the wheels of industry of their host countries (instead of the Philippines’), remitting enough only for their families’ domestic consumption.

Therefore, while most developing countries are enhancing the intellectual capital of their people like high-tech India (not just call center agents); achieving surpluses in food production and becoming a global agricultural powerhouse like Vietnam; or strengthening their manufacturing muscle like China, the “superfactory” of the world, the Philippines has become the “supermarket of the planet,” content with buying virtually everything from the world in shop-till-you-drop mall sales or amusing ourselves with being the world’s leading cell phone texters.

Perhaps the most harmful side effects of the OFW diaspora are the incalculable social costs of physical separation between families, the basic unit of any society–many of which have ended in marital infidelity and broken homes, juvenile delinquency and lack of values formation, and employer abuse.

Reversing brain drain
How can this brain drain be reversed and how do you rechannel the contribution of Filipinos to the national economy instead of just driving the economic growth of their host countries?

1. Encourage profit-sharing and share-ownership among businesses because workers who are part-owners are more productive. They will drive revenues and cut costs on their own. Even the government can promote this by levying lower income tax rates for companies that practice profit-sharing.

As workers are provided with the opportunity to be the best they can be, and rewarded for their entrepreneurial spirit, they can be dissuaded from leaving to earn higher salaries–only to work for foreign bosses.

2. In parallel, there is the need to reduce the cost of living that will make the local cost structures more competitive to attract more foreign investors and generate more employment and higher incomes. This will require a maniacal focus on achieving not only self-sufficiency but surpluses in food production that can be exported; drastically reducing power costs by evaluating alternative forms including nuclear energy; higher investments in physical infrastructure (without the S.tandard O.perating P.ayola); upgrading the quality of education beginning in nursery, and extending the number of primary-to-secondary years in line with global standards; providing affordable medicines plus quality health care; and redistributing land for the landless and homes for the homeless which all contribute to promoting a climate conducive for foreign and local investments.

3. The single most important factor that can encourage reverse migration or a “brain gain”–the absence of which is precisely the very reason why our countrymen have left–is inspirational leadership in government similar to the legendary examples of Asia like the great Mahatma Gandhi, Deng Xiao Ping, King Bhumipol Adulyadej, Lee Kuan Yew, Park Chung Hee, Mahathir Mohammad.

While the greatest triumph of the Philippine economy in the last four decades has been the OFW phenomenon, the greatest tragedy will be if their children and grandchildren will continue to be OFWs themselves because government leaders, economic planners and industrialists failed to capitalize on the priceless self-sacrifice, precious “borrowed time” and hard-earned remittances to build a strong agricultural base and a globally competitive industrial sector that should have provided food and livelihood at home.

(The author is president of Business Mentors Inc., a management consultancy firm, and regional director of ZMG Ward Howell, a leading provider of human capital solutions.)