LAST week, the Bangko Sentral ng Pilipinas (BSP) released the monthly remittance data for May in a statement heralding their increase to $12 billion for the year-to-date period. For the month, the BSP said, remittances totaled $2.4 billion, an increase of 1.8 percent over previous May, with the cumulative five-month total representing a 2.7 percent increase over the comparable year-earlier period.
The BSP statement went on to discuss the sources of “the steady growth in personal remittances,” and noted that “The steady deployment of OF [overseas Filipinos]workers remained a key driver behind the sustained inflows of remittances,” pointing out that 211,799 OFWs were deployed in the first five months of 2016, according to POEA data.
Under current governor and all-around archetype of sovereign-level banking Amando Tetangco Jr., the BSP governor, has honed its delivery of key economic data to a keen practice that invariably provides reassuring news to the general public, but is infuriating to economic observers and business journalists. Data is typically released in the form of a bland statement late in the working day, sometimes as late as 4 pm, making follow-up difficult for reporters who at that point are perhaps only an hour or two from their stories’ deadlines. While the BSP is by no means dishonest or stinting in its disclosures—the complete data underlying the press statement is generally provided on its website within minutes of the statement being made—its handling of them ensures that the story the public hears and reads will be the most upbeat one possible.
The remittance data released last Friday afternoon is an excellent example. The story that reached the public in all the business news sources, including the present one, on Saturday morning was that an impressive total of remittances had accumulated during the first five months of the year, and that they were growing steadily due to the continuing deployment of overseas Filipino workers. The latter assertion is always backed by a random, impressively large figure plucked from another agency’s data. For the statement describing the May remittance data, it was the total number of OFWs deployed; last month, to support the remittance data statement for the month of April, it was the number of year-to-date approved contracts.
When one takes the time to look a little deeper into the data, however, the story is not as encouraging as the BSP would like us to believe.
The BSP provides basic data on remittances—month-by-month totals and percentage growth on a year-on-year basis—from the beginning of 2011. The full-year growth rates of remittances for 2012 through 2015, using 2011’s total of $21.922 billion as a starting point were, respectively, 6.5 percent, 8.6 percent, 7.5 percent, and 4.4 percent, an average growth rate of 6.75 percent. The cumulative growth rate for the first five months of the year in each of those years was 6.2 percent, 7.4 percent, 9.4 percent, and 8.7 percent, or an average of 7.93 percent, faster than the average full-year growth rate.
In terms of dollar value, annual remittances have increased from $21.922 billion in 2011 to $28.483 billion in 2015, a 29.93 percent expansion in five years, and averaged $2.108 billion per month during that time. The January-May total in those five years rose from $8.606 billion in 2011 to $11.674 billion, a growth of 35.65 percent, which again indicates that remittances typically expand faster in the early part of the year.
According to the PSA’s 2011 Survey of Overseas Filipinos (SOF), in 2011 there were 2.158 million OFWs. In 2012, that numbered had increased by 2.87 percent to 2.22 million. In 2013 there were 2.295 million, a year-on-year growth rate of 3.38 percent. In 2014, that number had increased to 2.32 million, a year-on-year growth rate of 1.09 percent. In the 2015 data that SOF released in April, there were 2.447 million OFWs, a year-on-year increase of 5.47 percent. Thus from 2012 through 2015, the average annual growth rate in the number of OFWs was 3.2 percent, with the overall expansion from 2011 to 2015 being 13.39 percent.
It is true that remittances did increase, both for the month and for the year-to-date period, compared with the corresponding periods last year. On a month-to-month basis, however, remittances declined for the second month in a row. A drop in remittances in more than one consecutive month is not unheard of, but it does not happen often; the only times it has in the past five years before now were in the middle of the year in 2011 and 2012, and in October and November of last year, months that were followed up by the biggest monthly remittance total ($2.726 billion) since records have been kept. And although current-year data from the POEA is a bit difficult to obtain, the indications from what is available are that the increase in the number of OFWs in 2016 will be close to the average annual increase over the past several years, about three percent.
However, the “growth” in remittances that the BSP focused on its disclosure is alarming. While it is indeed growth, it has decelerated rapidly, with the year-to-date growth rate being the second lowest in the past five-and-a-half years at 2.73 percent. The lowest year-to-date growth rate also occurred this year, in March, when it fell to 2.69 percent. Remittances are growing, but at a pace that is less than a third of the average at this time of the year, while at the same time, the number of OFWs is increasing at close to the average rate.
What it means is that, on a per capita basis, the productivity of OFWs has drastically declined, and that remittances on a gross scale have stagnated, or nearly so, and are perhaps even beginning to shrink. OFWs are sending less money back to the Philippines, which is a strong indication they are individually earning less. Why that is, exactly, seems to defy explanation; beyond a general sense that global geopolitical and economic turmoil has tightened conditions, and a largely anecdotal perception that the quality of the average OFW seems to be declining, no expert so far has been able to offer a clear answer. For a country that still relies so heavily on overseas exporting labor and relying on them to provide a significant chunk of its annual GDP, the question is one that policymakers should be rather anxious to clarify.