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By Juan T. Gatbonton, Editorial Consultant
Our labor-export strategy is another basic policy we should be
looking at closely. At last fortnight’s Ayala Corp. Economic
Forum, the University of the Philippines economist Ernesto Pernia
analyzed its relative costs and benefits, in a paper well worth our
policymakers’ attention.
Exporting people
Originally, labor export was a stopgap measure
that many East Asian states – including today’s South Korean
powerhouse—had to take up in the 1970s, while shifting from
import-substituting industrialization to a labor-intensive export
strategy. Most of our neighbors have largely given it up, as their
economies picked up speed and gave their workpeople more pleasant
alternative occupations. But, in our country, labor export has
become a prime development strategy. This year, remittances from
overseas Filipino workers should make up more than 10 percent of our
gross domestic product.
Unlike our vigorous neighbors, we simply have no
alternative. Because we have few competitive goods to trade, we
export warm bodies instead. Pernia notes that this policy was forced
on us by two policy failures.
First, we had kept up import substitution in a
closed economy even after our neighbors had shifted to an export
strategy. Second, we had failed to sustain the population moderation
policy that we had been among the first East Asian states to adopt
in 1969.
These two failures resulted in weak long-term
GDP growth in the face of galloping population growth. From 1970
until 2006, our individual incomes grew at no more than 1.45 percent
net—since over the same 36 years, population growth decreased only
slowly, from 3 percent to 2.1 percent.
Neighbors passing us by
At Independence, Philippine individual incomes had ranked close to
Japan’s. But Malaysia passed us by in the early 1970s, and
Thailand did too a decade later. Indonesia, from way down, caught up
with us in the early 1990s, and China zoomed past in the late 1990s.
Vietnam is growing by some 7.5 percent to 8 percent yearly; it too
might soon pass us by.
South Korea, China and Vietnam have all been
able to maintain growth rates that double the economy every 10 to 11
years. At its current growth rate, our economy doubles every 49
years.
Raising ‘super-maids’
Remember our offended outcries when
“Filipina” seemed to have become synonymous with “maid” in
Britain? President Gloria Arroyo— her creativity spurred by
necessity— now talks of raising “super-maids” for rich-country
markets.
How about the problem of “brain drain?”
Pernia cites research that shows how labor export is indeed creaming
off the finest of our nurses and blue-collar workers too fast for
our education system to replenish. And it is true that rich-country
migration policies cherry-pick doctors, engineers, managers,
computer literates and other highly educated people.
Pernia suggests we reform the financing of
tertiary education to recover some of the costs of educating young
people who migrate after finishing college. But he does not regard
brain drain either as an “unmitigated bane” or as a looming
problem—since Filipino migrants typically keep up their home ties.
Remittances ease poverty
This year, we should receive roughly $16 billion
in remittances from Filipinos abroad—equivalent to more than 10
percent of GDP and more than the earnings abroad that Indian,
Chinese and Mexican migrants send home. Remittances on this scale
have a strong negative effect on Philippine poverty: right now, they
ease its incidence by 1.6 percent.
The problem’s that the bulk of workers’
remittances go not to families in the poorest administrative regions
but to lower-middle and middle-class households in Metro Manila,
Central Luzon and the Southern Tagalog. To this extent, remittances
worsen our already acute income inequality.
Pernia downplays the much-commented on decline
in labor-force participation by remittance recipients. He notes that
this decline is balanced by a palpable increase in entrepreneurial
activity by families of overseas Filipino workers (OFW) —by
micro-enterprises for women and by self-employment for men.
He also notes that OFW families invest more than
average families do on health care and education for their
children—investments that are likely to pay large dividends in
future times.
Social costs of exporting labor
The economic literature confirms the social
costs that labor export imposes on cross-border workers and their
families. A Mexican study found that children migrants leave behind
are more likely to drop out of school or to take up narcotic drugs.
A Caribbean study found them more likely to suffer from depression
and withdrawal. And a Philippine study in 2005 found family
breakdown significantly higher in OFW groupings. Female OFWs
themselves are all too often subjected to violence, abuse and sexual
exploitation.
Substitute for policy reforms?
Of all the long-term costs of labor export,
Pernia worries most of all about the liability that the remittance
windfalls it makes possible would lull Filipinos into complacency
about the national condition and enable government to put off the
political and economic policy reforms that would enable our country
to find alternatives to labor export. He is right to do so: the
sacrifices that a generation of OFWs have made would come to naught
if our leaders do not use this stopgap they’re giving us to set
our economy right.
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