OFWs: Evolving the Beast of Burden into the Tip of the Spear

I was doing a leisurely read on a humdrum topic which has become staple fodder of Pinoy melodrama and revenue – OFWs. It used to be a surreal topic, until I became an overseas Pinoy myself. I faced the same challenges – homesickness, isolation, finding my way around, building new social networks – and was fortunate enough to have mentors who showed me the ropes. From a feeling of guilt if am not making sacrifices for the “common good” to a sense of fulfillment in achieving a personal win. For the first time, I am able to define myself in terms of myself – not what my parents want, not what my cousins, barkada, kapitbahay, masahista, driver, maid, mom’s acquaintances, dad’s acquaintances – not having the entire barrio to tell you what you should do with your life. I, me, myself – on my terms. Oh by golly, the silence is sweet, priceless. From a person expected to conform you are given personal responsibility – no social nets, no kaibigan, kapatid, kamag-anak, koneksyon – you rise and fall on the basis of merit.

The overseas world is cruel and unforgiving BUT also highly rewarding – violate the law and you go to jail, be lazy and you starve, be proactive and you advance in life – you cannot afford to be tamad, you become more judicious in your budget, you become more conscious of the law, and you become more cognizant of the power of thinking individuals.  By then, you can already clearly see the glaring differences in cultural attitudes and perspectives – the culture of excellence against the culture of mediocrity, the culture of bahala na and the culture of proactiveness, the culture of tolerance and the culture of irrelevance. The results are glaring too – clean, wide, well-lit, well maintained streets, courtesy of the taxpayers money well spent   – and the pot-hole ridden narrow road with a superficial improvement on the road shoulder – and the sign “Project of Congressman Nognog” or something. You mention this in conversations with the people back home – and the conversation just goes into one ear and out the other.

As you know by now, we overseas Filipinos are just beast of burdens. We are the carabaos of the Filipinos back home. Because we are already overseas, our only job is to work – and send money home, and keep our mouths shut. Yessirree, the OFW is the carabao of the Filipinos back home. We toil and break our backs in foreign shores so our countrymen can have the pleasure of voting for slackers, thieves, drunkards, bozos, and all creatures of the night. We OFWS are beasts of burden who after engineering the roads of the most powerful nations on the planet have no right to say about how lousy our engineering is at home, what can be done to set it right – no sir, we have no such right. OFWs are beasts of burden whose only role is to make the palamunins and merons back home happy – how dare you OFWs speak ill, go back to the coal mines and work for us. Sino ba kayo, mga OFWs lang kayo, mga carabao lang namin kayo so, nasa malayo na kayo, you don’t know what’s going on here, just send the darn money.

Guess what mofos – this kabaw ain’t puttin up with that crap no more – never have, never will, never – not now and not in the future.

Anyway, this time around, what caught my eye was a comment in the World Bank blog – Remittances and the Philippines’ economy: the elephant in the room” by Eric Le Borgne. To summarize, Eric attributed the country’s so-called resilience to the global recession to remittances. Specifically he wrote:

Many reasons explain the country’s resilience, including policy and regulatory reforms that responded to the lessons drawn from the Asian crisis. However, there is one key factor driving this resilience.

It is, you guessed it, remittances. The fairly stable 10 percent of GDP sent back home year-in and year-out for the past six years from overseas family members is key to the health of the Philippines economy. Not only does it boost private consumption (from the purchase of basic necessities to big ticket items such as cars and housing – private consumption accounts for over 75 percent of GDP), it also lifts foreign exchange reserves, the current account, and deposits in the banking system.

He also sounded out was the real possibility of OFWs loosing their jobs, which in turn can affect remittances, which in turn affects, GDP. For those of us (including me) whose last true encounter with the word was in an economics class (eyes barely open after being in an all-nighter at the disco, the kanto, reviewing for finals in a “major” course), here’s a quick review of what GDP and why it is important from Investopedia (aha, akala nyo hanggang Wiki copy-and-paste lang ago, I have diversfied to include Investopedia.. huli ka…LOLs)

What is GDP and why is it so important?

The gross domestic product (GDP) is one the primary indicators used to gauge the health of a country’s economy. It represents the total dollar value of all goods and services produced over a specific time period – you can think of it as the size of the economy. Usually, GDP is expressed as a comparison to the previous quarter or year. For example, if the year-to-year GDP is up 3%, this is thought to mean that the economy has grown by 3% over the last year.

Measuring GDP is complicated (which is why we leave it to the economists), but at its most basic, the calculation can be done in one of two ways: either by adding up what everyone earned in a year (income approach), or by adding up what everyone spent (expenditure method). Logically, both measures should arrive at roughly the same total.

The income approach, which is sometimes referred to as GDP(I), is calculated by adding up total compensation to employees, gross profits for incorporated and non incorporated firms, and taxes less any subsidies. The expenditure method is the more common approach and is calculated by adding total consumption, investment, government spending and net exports.

As one can imagine, economic production and growth, what GDP represents, has a large impact on nearly everyone within that economy. For example, when the economy is healthy, you will typically see low unemployment and wage increases as businesses demand labor to meet the growing economy. A significant change in GDP, whether up or down, usually has a significant effect on the stock market. It’s not hard to understand why: a bad economy usually means lower profits for companies, which in turn means lower stock prices. Investors really worry about negative GDP growth, which is one of the factors economists use to determine whether an economy is in a recession.

LeBorgne also sounded out a heads-up – if recession becomes global, OFWs will take a hit – and along with it – the Philppine economy.

But as the wealthiest countries drag the world into a recession, and world unemployment is projected by the International Labor Office to potentially increase by 50 million, many Filipinos working overseas will also be affected. Some will loose their jobs, others will see their incomes reduced, net deployment overseas will decelerate (though still expected to remain positive), but all are adjusting to the risk that their income and jobs are less secure than they thought even a few months ago.

Then, my curiosity (which can kill a cat with nine lives) got really amped when I read the comment by el joma. Here goes:

Help to Understand Remittances as a Percent of GDP
Submitted by El Joma on Thu, 2009-07-02 20:51.

dear eric,

may i ask for your kind guidance in understanding two points?

1. when you say that above that “private consumption accounts for over 75 percent of GDP” how do you compute that?

2. how can it be said that the philippines’ annual remittances worth us$18.6billion (estimate for 2008 by world bank:

http://siteresources.worldbank.org/INTPROSPECTS/Resources/RemittancesData_March09-Release.xls) is calculated at 11.6% of the philippine gdp.

i tried to verify this the following way:

1. i got the philippine gdp for 2008
(http://222.127.10.196/cgi-bin/st2.cgi?/eds/db/national/national/national_accounts_phil_a.sc) but found that it was in pesos: php1,432,088,000,000.00

2. i got the official average peso dollar exchange rate for 2008 (http://www.bsp.gov.ph/statistics/spei_new/tab25.htm):
php44.4746:us$1.

3. when i divide php1,432,088,000,000.00 by 44.47 i get us$32,200,132,210.29.

4. when i divide the us$18.6billion with the us$32.2billion, i get

57.7%, not 11.6%

now verifying even further: the world cia factbook (https://www.cia.gov/library/publications/the-world-factbook/geos/RP.html) places the philippine estimated 2008 GDP at us$320.6billion (based, it
says, on purchasing power parity) or us$168.6billion (based on the official exchange rate).

could you help me to understand how it can be said that the philippine remittances of 2008 is 11.6% of its gdp?

thank you very much!

el joma
iloveapu.blogspot.com

I was thinking I may need to get hold of resident AP Vulcan, BenK to help get to the bottom of this. Did OFWs really account for 57.6% of GDP in 2008 and not 11.6% as previously claimed? Even at 11.6%, I was already seeing an angle. Bear with me on this My answer is this – the GDP used was incorrect – the “correct” GDP – the figure used by the WB as GDP anyway is $167B, so $18.6Bdollars divided by $167B will put you in the vicinity of 10%. Dang, I was so excited to see the 57% because the angle would have been explosive! But, I had to check and verify – and truly enough – it’s indeed 11% of GDP.

This got me to bringing up my spreadsheet, plugged in some numbers, and came up with Table 1 – which contains the Philippines Labor Force, Remittances, and some ratios.

Table 1 - Labor Force, Remittances, and GDP

The OFW’s “Undiscovered/Untapped” Power of the Purse

My layman’s interpretation of Table 1 are the following:

  • OFWs make up 6% of the labor force,  their remittances, account for 11% of the GDP.
  • Average remittance per OFW is 214% times higher than the income of a domestic worker.
  • Assuming that remittances are on the average 20% of an OFW’s budget – a per income comparison shows that an OFW makes roughly 1,072% higher than a domestic worker.

What’s the So-What factor behind these numbers?

These numbers imply the  following:

  • OFWs are in essence a minority community – 6% of the total labor force, 2% of the Philippine population.
  • OFWs are highly productive and are able to achieve more with less effort, and less resources.
  • OFWs are globally competitive. When you get a job overseas that means you went through the eye of the needle and bested other competitors not just from the host country itself – but other competing countries as well – China, Mexico, and India.
  • OFWs have yet to become a potent force for political change. There is a nascent sporadic “awakening” but it’s not there yet.
  • The economic might is already there – 11% of GDP from 6% is no mean feat- a few more nudges in its evolution and it can have self-awareness of its capacity to effect political change. After all, if the OFWs economic might can prevent a recession, why don’t we take this a notch higher – use the economic might to bring about political change.
  • Given that OFWs account for 6% of the labor force, if we make up a jump and tie this into the herd mentality where it shows that only 5% are needed to steer a herd into a direction. If the trapos use the bandwagon effect, I say use the bandwagon effect, this time around with truth as its content and not the misinformation peddled by the trapos.

For short, it’s about time to remind our fellow OFWs, we have a role to play, we can put up and become enablers of the dysfunction – or we can put a stop to this culture of mendicancy and steer our country towards greatness.

We, Pinoy OFWs have been in the forefront of finding solutions for the worlds most powerful economies – we are being paid so that their economies become efficient and profitable. And yet, here we are, powerless and unheeded for one simple “crime” – for exhorting our country to cast off its blinders and arise from apathy. The world’s strongest economies listen to the advice of the Pinoy OFW, except for their very own Filipinos in the Philippines ( nation with a weak economy) – and we wonder why the Philippines remains weak.

OFWs, ball is in our court.

Hanggang kelan tayong magiging kalabaw at palabigasan?

Solutions… Solutions… Solutions…

There are many attempts to provide piecemeal solutions – kanya kang linya – spiritual, medical, educational. These are good and well meaning, but if the OFWs are out to effect a meaningful and permanent good – it will be in the way of strengthening institutions, of reshaping policy to keep it in step with the modern world, of bringing in and utilizing the best practices in their various arenas of expertise – and that takes political muscle.

There are many attempts by trapos to supposedly provide solutions for OFWs. Funds of whatever nature at kung ano ano pa. Ayos rin yan. Subalit sa wari ko, natatakot ako sa mga funds na yan, baka nanakawin lang ng mga politikong ibinoto ng mga kabayang walang pakundangan sa kinabukasan – basta manalo lang yung sikat.. at hindi yung angkop at karapat dapat, subok, matapat, matino, matuwid.

I am waiting for that moment when the OFWs flex their muscles as a cohesive community for national change – and say “cogito ergo sum” – I think, therefore, I am.

When that day comes, the OFW ceases to be brutes, beasts of burden – they shall have become the tip of the spear that pierces the forces of reaction so that the forces of positive change can finally get to the task of national renewal, rebirth, re-engineering – the greatest revolution of all – through the ballot.

p.s. Tip of the Spear – The sharp pointed part does not necessarily do all the work but, without it the spear itself is not a spear but a blunt stick. The tip is the first to go in, the part that starts the process for the rest of the spear to do its job and bring down the prey. (source: DoD)

Advertisements

6 comments

  1. Well looks like I’ll be an OFW a few years from now.

    You know, when we finally abandon our old feudal safety nets we just might be nostalgic of being too nice.

  2. hey guys 🙂

    being an OFW does give you a certain perspective. seeing things done differently and earning a voice to affect change in the ‘real’ world was a revelation when i first got here. and of course, a better appreciation of freedom can do wonders for your personal outlook in life. i’ve recently read this article on this blog:

    http://www.iamburaot.com/2010/03/non-conforming-with-dick-gordon/

    never mind the music that comes up once you are on that blog itself; it’ll give you a headache and never mind that it bashes Gordon. what i realized though after reading this post is that i did have a different way of going and thinking about things when i was in the Philippines. i had a very different understanding of freedom then as opposed to now. i do hope i wont loose the edge once i go back to the ‘tropics.’ i’d still like to be part of that tip that’ll bring down the prey.

    good luck on that free… 🙂

  3. …by the way, bongV; great article 🙂

  4. I dare say on my recent article on GRP.net that OFW “contribution” to the Philippine economy is nothing more than a myth:

    Consumer spending obviously benefits the the capital-rich sectors of the economy such as the Chinoy-owned businesses that sell products that consumers want. However, like the mobile phones, karaoke machines, and flat-screen TVs that OFW families partake of using their easy-come remittance receipts, debt is also a product sold by the capital-rich to the capital-poor. But unlike consumption of nondurable goods and services which results in mere cash outflow for OFW families, the acquisition of debt creates enduring liabilities for them and the capital-poor. The accounting principle at work here is quite simple — debtors acquire liabilities when they take on debt while creditors acquire assets when loaning funds. And it is the relatively greater purchasing power of OFWs (compared to local Filipino consumers) that enables them greater access the debt products sold to them by capital-rich creditors. As OFW families acquire debt and Chinoys extend credit, the difference between OFWs and Chinoys is further accentuated.

    Tabla-talo. Beyond that, the only thing OFW remittances contribute on a macro-scale to the Philippine economy is mere swishing around of money that ultimately produces very little and builds nothing.

  5. B0:

    That is an answer to the question – What happens to the $18.6B after it is remitted?

    The amounts which bear watching are:

    1 – Transaction fee and its derivatives –
    1-1 – Intermediation fee of the financial intermediary; (Banks owned by oligarchs)
    1-2 – Government fees on remittance transaction; (Government policies dictated by oligarchs)

    2 – The actual remittance itself and its applications
    2-1 Consumables – groceries, utilities, nondurable goods (retail outlets, utility companies owned by oligarchs)
    2-1 Investments – properties (banks owned by oligarchs, real estate development by oligarchs)
    2-2 Savings and Retirement (in banks owned by oligarchs)

    These same moneys have made the oligarchs prosperous – a way needs to be found where OFWs fund flows get channeled less to the oligarchs and spread to OFW-dominated institutions, OFW-owned rural banks, OFW-owned retail stores, OFW-owned credit/retail/manufacturing/distribution cooperatives.

    OFWs are currently consumers overseas – but they can also be potential marketers of Philippine products; in instances where the products need improvement – the OFW can provide the reality check to the manufacturing side about market preferences; procure the commodity and close the transaction. Every time I visit the oriental stores – I see mangosteen, lansones, rambutan – from Thailand. And this gets me asking why aren’t we competing in this market. I asked a friend once – he said, no we can’t compete – they have everything. My gut tells me, we should find out why we can’t compete and address this matter so we can bring down product cost, increase margins, and generate a sustained revenue source. The oligarchs find the market too “small” – this where OFW SMEs can step in. I’d hazard a guess that most of OFWs are prone to operate as single proprietorships and shy away from economies of scale that cooperatives and corporations can achieve – we need to get out of our comfort zone and start competing smartly, we can’t be infants forever.

    But that can only happen when OFWs become aware of themselves as a market.. and as a driver for growth and investments – until then beasts of burden will wind up working all day long – and the oligarchs wind up as the end-destination of OFW funds – instead of … OFWs themselves.

  6. […] topic.Powered by WP Greet Box WordPress PluginThis is a continuation of my previous post on the beasts of burden – the OFWs.  We look at the current practices, and how we can improve it to bring about a […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: