Labor Export as Government Policy: The Case of the Philippines
By Kevin O'Neil
Migration Policy Institute
January 1, 2004
Few countries have as many of their citizens living abroad as the Republic of the Philippines, or depend so greatly on migration for their economic vitality. According to the government, more than 7.3 million Filipinos, or eight percent of the country's population, currently reside abroad. From 1990 to 2001, official recorded remittances alone averaged 20.3 percent of the country's export earnings and 5.2 percent of GNP, providing a lifeline for many families in a poor country that saw little economic growth in several of those years.
However impressive, these figures understate the role that migration plays in Filipino national culture and public policy. For more than 25 years, export of temporary labor has been an explicit response to double-digit unemployment rates. The government has developed a sophisticated policy regime to promote and regulate labor emigration. Migrants, and migration, are valued: Each year, the president celebrates Migrant Workers Day by awarding the "Baygong Bayani" (modern-day hero) award to 20 outstanding migrant workers who have demonstrated moral fortitude, hard work, and a track record of sending money home.
Although Filipinos have a longstanding tradition of migration to the United States and elsewhere, government activism to promote labor migration from the Philippines began in the mid-1970s, when rising oil prices caused a boom in contract migrant labor in the Middle East. The government of dictator Ferdinand Marcos, from the mid-1960s to the mid-1980s, saw an opportunity to export young men left unemployed by the stagnant economy and established a system to regulate and encourage labor outflows.
This system, which continues today, has both a private and public component. On the private side, licenses were issued to Philippines-based agencies to recruit labor for employers in Saudi Arabia, Kuwait, and other destinations. On the public side, the government established the agency that would later become the Philippines Overseas Employment Administration (POEA), in order to provide contract labor directly to foreign employers, maritime agencies, and governments. The changes had the effect of bringing the work of Filipinos abroad under the authority of the Philippine government. Whether recruited privately or by the government agency, workers and recruiters enter into a contract that is enforceable under Philippine law.
The establishment of democracy in 1986 reversed neither the Philippines' poor economic fortunes nor its outflow of migrants. Public policy towards migration changed only incrementally, despite increasing criticism from civil society and the Roman Catholic Church. In 1987, the government directed the POEA to be more active in the protection of migrant workers' rights and welfare.
In 1995, the trial and execution of Filipina migrant worker Flor Contemplacion in Singapore turned the protection of migrants' rights into a burning political issue. The incident prompted the government to temporarily withdraw its ambassador to Singapore, to hasten its ratification of the UN convention of the rights of migrant workers, and to reiterate the POEA's mandate to focus on migrant welfare and rights—measures that failed to satisfy many of the government's critics in civil society.
The changes enacted in 1995 also expanded the POEA's mission to include promoting the return and reintegration of migrants. However, this emphasis on return never dismantled the overall strategy of facilitating labor migration. As recently as 2001 the national Economic Development Plan stated that overseas employment is a "legitimate option for the country's work-force" and outlined a four-point strategy for promoting the employment of Filipinos abroad.
Meanwhile, the character of the labor migration has changed. Male migrants have been joined and are now almost outnumbered by women. The "tiger economies" of Asia now rival the Middle East as the major destination for temporary workers, while migrants who go to North America and Oceania are far more likely to stay on as permanent immigrants. The occupations of migrants have diversified to include professionals, factory workers, and domestic workers, while the tradition of Filipino construction workers, sailors, and nurses remains strong.
The Philippine government's goals have been remarkably clear and consistent: Migration should be promoted, but only for temporary work via regulated channels. The results have been mixed. The Philippines supplies an enormous amount of labor through regulated channels: 2.9 million "Overseas Foreign Workers" were abroad under official arrangements in 2000. However, these official, temporary flows coexist with other types of migration: The government estimated that another 1.8 million Filipinos were abroad irregularly in 2000 and that 2.5 million of its citizens had left for permanent residency elsewhere.
In theory, labor migration from the Philippines should be a smooth process, with the government playing a supportive and regulatory role throughout. The process begins with securing access to foreign labor markets. The government makes temporary labor migration a foreign policy priority in both bilateral and regional trade negotiations. This is an employment-driven strategy—securing the rights of its citizens to settle permanently abroad has never been a priority for the Philippine government. Host countries that have specific labor shortages but that discourage permanent immigration, such as many Middle Eastern countries, have been particularly good partners in this strategy.
At the same time that the government seeks to open official access to foreign labor markets, it also tries to prevent its citizens from using unregulated channels to migrate. In order to leave the country to work, Filipinos must be recruited by either a licensed recruiter or a government agency, or must have their contract approved by the POEA and enroll in the official benefits program. In 2000, 25,062 workers went abroad on these "independent" contracts. The government prohibits its citizens from overstaying a visa in a host country and maintains a list of workers banned from future contracts, in part to support its efforts to market Filipinos abroad as a high-quality "brand name" of migrant labor.
Protection of Migrants
Although the Philippine government has turned over most of the responsibility for recruiting workers to the private sector, it retains a regulatory role, with the stated purpose of protecting workers from abuse and discouraging illegal recruitment. In order to be licensed, a recruitment agency must be Filipino-owned, meet capitalization and bonding requirements, and not charge workers more than one month's salary as a placement fee. A Philippine consulate verifies the terms of each worker's contract with the foreign employer. Should the employer violate the terms of the contract, the Philippines-based recruiter is held responsible through an adjudication process after the migrant returns.
Outside of the contractual relationship, the government has attempted to hold entire countries responsible for the protection of its workers. In 2003, for example, the Philippines, along with Indonesia, temporarily suspended new deployments of domestic workers to Hong Kong after repeated cases of abuse. The Philippine government eventually resumed sending workers, but continued to support lawsuits brought by migrants in Hong Kong's courts.
Support to Migrants
With time, the government has discovered that carrots are more effective than sticks as a way of encouraging migrants to use official migration channels, to send money home, and to eventually return at the end of their contract. By migrating officially, migrants receive a number of subsidized benefits: pre-migration training on social and work conditions abroad, life insurance and pension plans, medical insurance and tuition assistance for the migrant and his or her family, and eligibility for pre-departure and emergency loans. Registration for these benefits, which are administered by the Overseas Workers Welfare Administration (OWWA), is compulsory and costs less than $200 per year. This is paid by the recruitment agency, presumably out of the worker's wages, or directly by the migrant, in the case of independent migrants and those whose contracts are administered by the POEA.
Remittances are a critical source of foreign exchange, and the government actively encourages migrants to send money home. For example, the OWWA issues an identification card to all official workers that is also a Visa card that can be linked to dollar or peso-denominated savings accounts in a consortium of banks. The card enables remittances to be sent at $3 or less per transaction.
Innovations such as the Visa card are the product of a slow learning process on remittances—as late as 1985, the government, desperate for foreign exchange, was attempting to force workers to send remittances via a mandatory remittance quota. The Philippines' history of overvalued exchange rates had created serious deterrents to sending remittances through official channels and the quota failed miserably. Since then, the government's policies have been more reasonable: it has maintained a market-based exchange rate, worked to make sending remittances via private banks cheaper and easier, and even offered tax-free investment programs aimed at overseas workers.
Many of the support services the government provides are also intended to promote continued ties with the homeland. The government sponsors tours of Philippine entertainers and supports schools in areas overseas with high concentrations of migrants. Psychological counseling services that emphasize maintenance of "Filipino values" are offered through a network of offices abroad. Recently, the government decided to allow overseas workers to vote in national elections, with voting theoretically conditional upon return within two years, and committed a significant amount of money to overseas balloting.
Since 1995, the government has also made support of the return of migrant workers part of its policy priorities. Recognizing the propensity for migrants to return with substantial amounts of foreign goods, the government started profitable duty-free shops for returned migrants. Other privileges granted to returning migrants include tax-free shopping for one year, loans for business capital at preferential rates, and eligibility for subsidized scholarships.
From a human and social rights perspective, it is difficult to say whether the Philippine government's policies have accomplished their goals of protecting workers' rights, encouraging return migration, and spurring economic growth. Compared to other nations in the region that export labor on a large scale, such as Indonesia, the Philippines has produced an orderly and well-protected flow of migrants, and overseas employment has undeniably raised the incomes of many Filipinos.
Advocates for migrants charge that the government's efforts to protect official migrants have been inadequate and that it has ignored the abuse and trafficking of irregular migrants. Further, some social commentators charge that the government's activist stance on migration has not converted irregular migration into regular migration, but rather increased migration of both types. Even by official estimates, undocumented workers constitute a large percentage of Filipinos abroad and most of them work in extremely vulnerable sectors, such as domestic work. A significant number of female migrants become victims of traffickers and are forced into the sex industry, a testament to the human rights problems that Filipino migrants continue to face.
Critics also charge that the economic benefits offered by overseas work have not brought about sustainable change and come with grave social costs. They lament the growth of a culture in which work abroad is viewed as the only way up, and they worry that the best-educated young Filipinos are often found working abroad. Equally seriously, critics claim that the extended absence of migrant parents has deprived Filipino children of parental support and guidance. Also, although temporary emigration has increased more quickly than permanent emigration, many returned migrants do not put their skills to work at home, but merely bide their time until their next deployment abroad. The poorest Filipinos are rarely able to migrate and studies show that migration aggravates income inequality in the Philippines. Migration has raised the incomes of some, say critics, but done little to create jobs at home.
Migration and remittances are, however, powerful economic forces in the Philippines that cannot be easily dismissed. Migration has unambiguously raised the income of millions of Filipino workers and their families. It has encouraged investment in education and training in a country where per capita gross national income was a meager $1,030 in 2001 and unemployment rates are high for skilled and unskilled workers alike. Filipinos overseas sent home over six billion dollars, or about 8.4 percent of national GDP, via formal channels in 2001. Migration makes a critical difference for many families: According to household surveys, about 17 percent of Filipino households receive remittances from a worker abroad temporarily and these households represent 25 percent of total household spending, figures that would rise if remittances from those who have emigrated permanently were included.
As more and more countries look to migration and remittances to drive their economic development, they will likely examine the Philippines' longstanding strategy of encouraging temporary labor migration as a potential model. The clearest lesson of the Filipino experience might be drawn from observing its evolution, and centers on the need for realism and flexibility in migration policy. The Philippine government has been unable to eliminate unwanted forms of emigration and when it has adopted coercive policies toward migrants, they have largely failed. Where it has understood the behavior of migrants, worked with that behavior, and given them positive incentives and support, its policies have fared much better.
Comments of the Honorable Patricia Santo Tomas, Secretary of Labor and Employment, Republic of the Philippines, at the "Conference on Migration, Development, and Public Policy," Massachusetts Institute of Technology, Nov. 31-Oct. 1, 2003.
Philippines Overseas Employment Administration, http://www.poea.gov.ph
Overseas Workers Welfare Administration, http://www.owwa.gov.ph
Philippine Migrants Rights Watch, http://www.pmrw.org
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