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OFWs – The Strong Pillars OF The Philippine Economy

September 26th, 2019

Remittances by Overseas Filipino Workers

Many people in developing countries leave their homes and families to seek employment abroad. While the pain of moving away from near and dear ones is always there, the world outside often offers better chances for making a livelihood. Improved working conditions, higher wages, and an overall enhanced lifestyle are powerful reasons to emigrate.

Such migrants capitalise on the opportunity to move more freely in a globalised world. After years of working abroad, some even gain citizenship from their adopted countries while others continue working as expats. Regardless of their nationality or citizenship, a large chunk of the income they earn flows back to their families in the form of remittances.

Every year high volumes of remittances are sent by millions of Overseas Filipino Workers (OFWs). Philippines believe its expat population is the country’s top ‘export’. About 10% of the country’s population works abroad, undeniably a significant portion of the Filipino workforce.

These OFWs transfers money to the Philippines via direct remittances to their family who live in the home country. There is a heavy dependence on remittances in the Philippines, as the latest data from 2019 suggests.

In this article, we shall celebrate the spirit and success of OFWs, while also discussing the question many of us have:

How do OFWs contribute to the Philippine economy?

OFWs make up one of the largest group of expat workers in the world. Although a small nation in terms of territory and population, when compared to many of its neighbours, the Philippines stands an impressive third when it comes to inward remittances from across the globe. In this regard, it is next only to India and China.

The Philippines has a population slightly over 100 million, of which over 5 million were working abroad. While the US and the middle-eastern countries were traditionally the most favoured by OFWs, recent trends have shown an inclination towards Scandinavia and Canada owing to their higher lifestyle index.

As of 2018, a total of USD 25.8 billion was sent home by OFWs. Of this huge amount, remittances from the US accounted for a whopping $9.6 billion.

Positive effect of OFWS to the economy

Obviously, OFW remittances shape the macroscopic economy of the Philippines. But they offer many far-felt and deep-rooted microscopic benefits too. OFW remittances still provide the growth that matters most in the lives of Filipinos. The money goes straight to households, to relatives, families, and friends – who use them to better their lives to finance food, shelter, education, and entrepreneurial pursuits.

Money transferred by Filipinos from all over the world accounts for at least 10 percent of the country’s GDP. It is the second largest source of foreign capital after value added exports like electronic components, and a major source of private consumption, which in turn accounts for 75 percent of the GDP.

Now that should surely answer how OFWs help the economy of the Philippines!

Other areas of impact

The impact of remittances on the Philippine economy goes beyond GDP numbers. OFW remittances have contributed significantly to the country’s foreign exchange earnings. In doing so, these remittances have contributed to strengthening the nation’s position regarding balance of payments, bolstering the surplus on current accounts.

Inward remittances augment the total income of the recipient households. If the household already has a source of domestic income, it adds to the disposable income. With more income, household consumption rises. This goes in different directions – from basic needs to an improved consumption basket of food, clothing, leisure, and then some luxuries. There’s no denying that most families enjoy an improvement in their standard of living.

An important element of this phenomenon is the effect on the typical household’s educational choices. Families now have more opportunities to offer better quality education to children. This is arguably one of the most crucial impacts of OFW remittances on the economy. While OFWs send money to the Philippines regularly, these remittances impact not only regular household chores but also their loved ones’ future.

For some families living below the poverty line, it can be incredibly difficult to pay off bigger bills like house mortgage, higher education fees, etc. OFW remittances come in as an indispensable aid. The families of OFWs can avail proper healthcare, make better lifestyle choices, and live a more comfortable life – all because of the remittances. Not just on a macroscopic level of the national economy of the Philippines, OFW remittances also make things easier at very microscopic levels of household finances. Let us see how things can be made easier for them.

Also Read: Bringing H.O.P.E. To The Children Of Talubin Elementary School

Making things easier

Remittances coming in such huge numbers are hard to ignore even in microscopic detailing. Many debates have been sparked over high transaction charges. With OFWs contributing so heavily to the nation’s growth, it seems fitting that the government should make some allowances for them. Considering the large amounts sent by OFWs to their families, high fees could amount to a tidy sum. International money transfer organisations and the industry as a whole are working towards bringing down the cost of remittances that will eventually benefit the OFWs sending money back home.

Millions of OFWs use Xpress Money to send money to the Philippines so their families can benefit from their hard work. With instant transfers, low transfer fees, zero backend charges, and the largest agent network in the Philippines, Xpress Money is a brand that is focused on helping OFWs make the most of their hard-earned money.