Dollar remittances and social paralysis (or the flipside of Philippine overseas employment)

LAST Friday, the Bangko Sentral ng Pilipinas (BSP) happily announced that remittances from overseas Filipino workers (OFW) coursed through commercial banks from January to November last year reached US$9.7 billion, a 26-percent rise from last year’s US$7.7 inflows. The BSP attributed this double-digit growth in dollar remittances to two factors: the rising demand for Filipino workers abroad, particularly of skilled ones including nurses, doctors, teachers, engineers; and the continuing efforts by banks to capture these remittances through the formal financial channels.

“Remittances… coursed through commercial banks remained robust,” the BSP said, stressing that the total amount of dollars sent home by Filipino workers abroad in 2005 would reach almost US$11 billion.

Nice news, except that the BSP does not necessarily tell us the entire picture, particularly the social cost that the Philippine society is paying for those dollars. Majority of those who left the country’s shores in search for a dollar pay are women, leaving in their wake families devoid of motherly care and guidance. In many cases, the husbands who are left to care for the entire family here in the Philippines proved to be lousy parents, giving rise to drug use, high dropout rates in school, and juvenile delinquency among the children.

The experience of Mabini, a small remittance-dependent town 92 kilometers south of Manila, as reported by Carlos Conde, the local correspondent of the International Herald Tribune, highlights this tragically high social cost. The report noted that once their wives started sending dollars from abroad, most of the husbands stopped working, thus creating a culture of dependency within their households. The town is awash with cash from abroad but the money often ends up wasted on lavish parties, Manila shopping malls, binge drinking, and conspicuous consumption (e.g., cars, expensive appliances, and donations for a church bell costing millions of pesos). Unemployment in the community is high since people would rather wait for their chance to work abroad than do something productive locally. Many children are not able to finish college since a diploma is not necessary to land a domestic helper’s job in Italy.

The danger is that Mabini could, from all indications, prove to be a microcosm of Philippine society. In the last five years, the country’s economy—propped up by the remittance dollar—has shown to be capable to growing within the 5-6 percent range. Malls are rising at every corner to siphon off those remittance dollars, yet the larger picture seems to reflect a continuously fragile economy incapable of soaking up joblessness. In fairness, dollar remittances have given a lot of purchasing power that is propping up a significant part of the country’s manufacturing sector. Do you ever wonder why the average capacity utilization is at a four-year high of 81.4 percent? That’s because people are buying a lot of goods and services, thus creating a lot of employment. Nevertheless, dollar remittances alone have proven to be inadequate to propel the economy beyond the low-level equilibrium that it is trapped in right now—while creating a lot of social problems.

The signs of low-level equilibrium, nay social paralysis, are clear. On one hand, survey after survey from both the Pulse Asia and the Social Weather Stations show the continuing poverty and hopelessness of many Filipinos, particularly in the lower social strata. On the other, we often hear some people in the middle and the richer classes saying that “the Philippine economy has been growing quite decently in the last few years despite the country’s political problems.” And true enough, the property markets have been sizzling lately, indication that the country’s richer classes whose wealth are largely based on ownership and control of real estate properties are starting to make a killing off those dollar remittances.

These contrasting perspectives appear to be producing some sort of social paralysis, a kind of social complacency that takes away the urgency of pursuing painful but crucial economic and political reforms. The remittance dollars seem to have become manna from heaven that has taken away our ambition and our will to rise from the heap and join the rest Asia-Pacific community in the journey to development and real progress.

The main point here is that overseas employment is not the real solution to this country’s failure to achieve development. We acknowledge the importance of this sector—once upon a time it was truly necessary—but it can never be a substitute for internally-generated growth. And this one could only be achieved if we have the courage to address corruption in government, remove all barriers to entrepreneurial activities, collect the taxes to finance infrastructure development, and ensure transparency and predictability in the country’s regulatory environment. And while doing this, we need to address with greater urgency the growing social problem engendered by the remittance mentality in our midst.

I had the chance to interview economist and former planning secretary Cielito Habito’s story a few years ago and his story should serve as warning to all us. Habito’s wife runs a school in Los Baños and noticed that the most problematic kids are those whose parents are working abroad. Many of these kids—he said—are underachievers, lack motivation for school work, lack focus, and can’t seem to get along well with other students. To put a face to this observation, one need only recall that a few months ago, the Laguna police arrested the three young sons of OFW icon Flor Contemplacion for drug dealing, right from their home.

Habito said these experiences are alarming, considering that about 10 percent of Filipinos (i.e., about 8 million) are currently working abroad. If the situation in Laguna reflects the national trend, we have a social time bomb waiting to explode.