Money sent home by overseas workers: blessing or curse?
MANILA, Philippines – In a sense, two of the Philippines’ most notable overseas workers face destiny this week. One is Mary Jane Veloso, who left home carrying a backpack, was given a borrowed suitcase filled with heroin, and is due to be shot in Indonesia. The other is Manny Pacquiao, a 65-kg light welterweight who faces the richest paycheck from a prizefight in history in Las Vegas.
They are hardly typical overseas workers. But in a sense they represent the variegated tapestry of at least 10 million Filipinos, 1.8 million of whom left in 2013 alone for overseas jobs, sending home US$23 billion to their families, contributing 13.5 percent to the domestic economy – an astonishing third-largest segment of the country’s gross domestic product.
The Philippines pound for pound is the biggest recipient of inward remittances, despite being outweighed in population by bigger countries. Numerically it is the fourth largest after China, India and Mexico. The question is whether this is a good thing, or if it stunts domestic industries, starves important labor sectors – particularly healthcare in the Philippines – disrupts families and provides a cushion that shields governments from taking hard decisions to move their economies forward.
The Philippines is hardly alone. Across the region, a huge flow of remittances has helped to reduce poverty levels, mostly through increased spending on food and other essential items, housing, and education. According to the Asian Development Bank, it is estimated that remittances helped reduce the poverty level by 1.5% in Bangladesh, 5% in Indonesia, and 2% in Vietnam from 2000 to 2005.