The old narrative about OFWs is passé

We usually think of OFWs as “modern day heroes” and it’s so easy to see why. The dollar they send back home is the linchpin that’s preventing the Philippine economy from disintegrating. They work so hard in foreign lands, suffer loneliness and isolation, and some got abused by their employers—all in the name of the dollar or euro that they desperately need to feed their families, send their kids to school, build dream homes and ultimately prop up the economy. But blogger and writer Jessica Zafra has an interesting counterintuitive take on this in her review of Chito Rono's film "Caregiver":

“Hey, we’re not exactly sitting by the pool sipping banana daiquiris either. Most of us work, all of us have problems. It is also possible to experience alienation and isolation in your homeland. How about a little respect for the Pinoys who stick around and do the best they can in truly trying circumstances? No one has a monopoly on suffering, but everyone has a unique story. We need fresh insights on the Pinoy experience at home and abroad, ...”

Oo nga naman.

What social observers often miss is the fact that the narrative about OFWs may have changed. We often refer to OFWs as economic refugees driven to foreign shores by want and desperation. These days, however, a significant proportion of OFWs are high paying professionals (medical professionals, engineers, software engineers, artists, skilled workers, among others) who are attracted by a host of factors other than economic. It’s the brave new world of globalization and our professionals, the crème de le crème of society who may actually have lots of opportunities here, are exercising their options to enrich their lives by experiencing how it is to live in foreign cultures and climes. It’s a decision no different from those Americans, Koreans, and Europeans who settled here in the Philippines for the love of the warm weather and the beautiful beaches.

With the advent of technologies like Internet chat, global roaming, SMS, video conferencing, voice-over-internet calls, it’s possible that the imagined negative social impact of labor migration on family cohesiveness may not actually be that alarming. Maybe, maybe not. But what I'm trying to say is that the old story line by now should be passé and we need to appreciate that.

Philippines "rejoins" the Asia-Pacific region

I was in Laguna Technopark last Thursday when the government announced the Philippine economy grew by 7.3 percent in 2007, boosted by the 7.4 percent fourth quarter surge, the highest rate since 1976. I say not bad! Finally, we have “rejoined” the Asian community of fast growing countries.

I say “rejoined” because analysts always thought the Philippines seems to have been behaving like a Latin American country, with our politics prone to coups attempts and instability and economy that tended to enjoy sudden boom and busts. Now, we have reached a new level, 7 percent, after starting at a 5-6 percent GDP growth band from 2003 until 2006.

As expected, some practitioners of the Dismal Science were quick to downplay the numbers, saying the country’s economic performance this year might not be sustainable given the continuing risks posed by rising crude prices and the looming economic recession, an economic slowdown, in the US.

There is this economist from the UP School of Economics who has been going around since 2004 that the country could never achieve beyond 4 percent. He has been proven wrong all the time, but this time after hearing that the country’s GDP reached 7.4 in the fourth quarter, he stressed the country would achieve just around 4 percent in 2008. Here we go again!

The matter about economic recession in America is certainly a serious question. Unfortunately, even economist in the US are at a loss whether or not there is indeed a recession, how serious is it going to be, and whether or not it’s going to bring the global economy down. “When America sneezes, the rest of the world catches cold,” says the old dictum. And it was true then because when Americans stopped buying shirts, food, cars, gadgets, or just about anything, the factories from the rest of the world stopped humming, thus rendering thousands, if not millions, of workers jobless.

That nugget of wisdom, however, may not be true today because the world is no longer the same place that it was two or three decades ago. Now, analysts worldwide talks about “decoupling” or the capability of other economies in the world, including emerging economies like China and India, to growth despite the weak American economy. These countries could take on the role of growth drivers in the same manner that China has been boosting the economy of Japan and Australia through her rising imports of machines and raw materials iron ore, petroleum products, coal and other commodities. China now has also become a major destination for Philippine exports, a market that has become almost as huge as the America.

And more importantly, while emerging economies are riding on the wave of global trade expansion, many of them, including the Philippines, has been growing largely on the strength of domestic demand. It’s even true for China and India as much as it is for the Philippines. So the conclusion here is that, the recession in the US may or may not cause colds in the Philippines, and if it does, it might not be so severe co cause serious complications.

Realistically though, the number crunchers at the National Economic and Development Authority (Neda) believe that a full-blown recession could indeed affect us significantly. Augusto Santos, acting director general of Neda, says should America suffers a one-percentage point contraction from its current growth rate, the Philippines gross national product will shrink by 1.764 percentage points. That is huge.

But that’s assuming that neither America will do anything to lick the recession nor the Philippines address to boost the local economy and cushion the impact. But who knows, US President George Bush’s $150 billion stimulus package, wherein government will mail checks to Americans for them to spend it and prop up the American economy, might just work? And if we do our homework here, say continue spending for badly economic infrastructure, as we should, as we are doing right now, the Philippine economy might just get out of this in a decent shape.

One interesting thing about recessions is that statisticians, and therefore policy makers and the general public, know about it only when it’s long underway. It’s because of the time lag in the collection of statistics. So if there’s a recession in America, the Philippines should already feel it.

The GDP figures seem to show that with the 3.7 percent contraction in exports from a growth of 2.2 percent last year. “Net factor income from abroad” that measures remittances of Filipino expatriates working abroad also has declined. And yet the Philippine economy managed to surge to a 7.4 percent growth rate in the fourth quarter, on the strength of other sources of growth (eg., domestic demand, mining, construction, agriculture and fishery, outsourcing, among others). There are even signs of recovery in investments from the private sector as shown by the rise in fixed capital formation—an indication that business are constructing buildings, buying machines for the factories, and upgrading their equipment.

So let’s see!

Til snow falls on Manila: a chat on globalization and labor migration

Jenny: So how’s Manila now?

I met Jenny in California early this year through a Japanese girl, an accountant working for one of the big global accounting firms operating in Silicon Valley. Over dinner she told me she has several colleagues from the Philippines. She called several numbers and voila and I had an appointment the following day at Starbucks near our hotel in downtown San Jose. Jenny came in a runners’ outfit, clutching a book “The World Is Flat.” We walked around town for hours discussing Philippine politics, economy and globalization. We checked some bars and other things that the Valley of Hearts Desire could offer during the night and promised to keep in touch but we failed to reconnect after the Jefferson Fellowship. Her message through Yahoo Messenger the other day therefore was a pleasant surprise.

Jenny landed in Silicon Valley three years ago after a stint at one of the leading accounting firms in Manila. Her ticket was her accounting expertise and her mastery of the computer, SAP and other enterprise management software. Her parents moved to San Francisco fifteen years earlier but she didn’t follow because she was finishing a post-grad in economics at the University of the Philippines. And she loved the beaches. Until the big offer came.

Dave: Bubbling as ever. Politically, I mean

Jenny: As usual. That’s my frustration there really. I thought GMA was better than Erap so I supported Edsa Dos. It turned out we simply replaced him with someone as corrupt. But oh, I miss the beaches, I love Boracay!

Dave: And then we just had this Trillanes caper…

Jenny: But hey, the Philippines, or at least the GDP figures, have been doing quite good lately!

Dave: You mean you are actually following the trends here?

Jenny: Yup! I’m a frustrated economist, remember? Haha!

Dave: There are new growth drivers: outsourcing, mining, food and beverage, electronics, telecommunications, and financial services. Past reforms seem to have started bearing fruits. Globalization seems to have become a stabilizing force.

Jenny: Been reading about these. And ah, I remember you mentioning about a paper on that at the University of Hawaii. Could you send me an electronic copy?

Dave: Sure, here’s the link:http://davidllorito.blogspot.com/2007/06/globalization-as-stabilizing-force-in.html

Jenny: Thanks. Interesting analysis. Amazes me because our politics there has never been that conducive. I also heard about this “economics delinking from politics theory” from [Congressman] Salceda. Do you think he’s accurate?”

Dave: Honestly, I’m not sure. I’m trying to look at it myself. But the guy has some points.

Jenny: How did those people at the University of Hawaii reacted to your paper?

Dave: Mixed, but some are incredulous.

Jenny: Or even hostile, haha!

Dave: How did you figure that out, hehe?

Jenny: “Haay, Dave!, I’ve met lots of migrant Pinoys here who think that way.

Dave: When I presented that paper, I thought they’d be happy to hear some positive news besides the usual negative ones that they get from media. Many of them were disappointed that I didn’t tell them the usual horror stories. Weird!

Jenny: Probably a psychological thing. Many of those, not all, who left the country decided on the conviction that the country is hopeless, so when they hear that things are improving a bit, it unnerves them, irritates them.

Dave: Really? Why?!

Jenny: They are used to hearing about all the negatives, and there are lots of them in media, and they are happy because those stories tend to support the reasons why they abandoned ship. Now here comes some positive news that to them seems to question the basis of their decision to leave. But yeah, it’s weird.

Dave: In fairness, they are well-meaning people. They do sincerely believe the only way out for the Philippines is for every one to migrate. So they use every opportunity to petition relatives and convince friends to migrate. A friend in New York once told me to take up nursing or become a mortician. Or I could be a plumber in Australia. Be practical, he said. Ha ha ha!

Jenny: Ay totoo yan! [That’s so true!] Ha ha ha!

Dave: After that talk, someone asked if I was telling them to return to the Philippines. ‘Of course not,' I answered. 'Why should you; the Philippines doesn’t have snow yet,’ and all the participants burst into laughter.

Jenny: Ha ha ha ha!

Retirement villages: Pinoy's superb people's skills find a niche

ON Tuesday, BusinessMirror ran a report that Angeles City Mayor Francisco Nepomuceno is eyeing the establishment of retirement villages in his hometown to boost development in the area. Wise move, we say.

Projects like these are among the most feasible for local governments, as these require less capital while easily generating tangible economic benefits down at the grassroots. It’s a good thing that the Philippine Retirement Authority (PRA) has recently included Angeles City in its list of “destination havens.”

Establishing retirement villages is like hitting several targets with one stone. The construction sector and its affiliated industries would surely perk up. Retirees usually favor places that are essentially less urbanized; hence, the jobs to be created by retirement villages would benefit local rural residents in terms of increased requirements for labor—not just skilled caregivers and health and wellness workers, but also construction workers, plumbers, food caterers, restaurant workers, masseuses, janitors and golf caddies, among others.

Currently, many of our medical professionals (nurses, physical therapists, doctors, medical technologists) leaving for jobs abroad cite the limited economic opportunities in the country. Retirement villages would necessarily need more medical professionals (especially doctors and nurses), hence, there would be incentives for them to stay.

Why do we have to send them abroad if we could just bring in the retirees from the United States, Japan and Europe for our nurses to care for? It’s probably one of the best ways to boost tourism as the retirees here would likely attract visits from their relatives from their countries of origin.

What’s good about retirement villages is that they are environmentally benign. Retirees would necessarily desire a very good environment, thus there is an incentive for the host communities to maintain clean and safe surroundings. There would be more economic motivations for communities to preserve and conserve watersheds, clean rivers and plant more trees.

But it bears stressing here that developing retirement villages is not as simple as it seems. Retirement villages should be planned carefully, taking into consideration the special needs of retirees. These places, while many of them should probably be close to the sea and sun, should have easy access to health facilities, good urban and cultural centers, sports facilities and other amenities. They should also be communications-ready, meaning foreign retirees used to computers and e-mailing or cyber-chatting would be looking for telco services.

Retirees should also have good opportunities to mingle with the local community while ensuring their safety. Many retirees, being well-educated and having retired from challenging jobs, would be interested to interact with other people and, possibly, even do pet projects with them.

All these factors suggest that the local governments and the private sector should delineate their roles well. The LGUs should assume enabling roles while allowing the private sector to plan, construct and develop these retirement villages, based on certain global standards. An enabling role for the LGUs and the government, in general, means that local legislators would have to pass supporting policies (especially on proper land use, waste management, conservation, improved town management, traffic, etc.) to ensure the success of these villages. (Note: drafted as editorial for BusinessMirror, 14 Nov 2007)

Holding up half the sky from the depths of hell?

“People are more violently opposed to fur than leather because it’s safer to harass rich women than motorcycle gangs.”—Unknown

Congratulations, therefore, are in order for all the women: our mothers, daughters and sisters! And certainly, the entire society deserves credit as well. The Philippines’ 2007 Gender Gap Index ranking indicates that culturally, the Philippines has come a long way from a feudal past when parents thought society should not invest in women’s education and personal advancement because they were going to be married off anyway and will stay in the homes of their husbands. These days we are increasingly seeing the influential roles being played by women in Philippine society, be it in civil-society organizations, business or politics.

Indeed, it’s a fitting tribute to women in a society that is increasingly relying on its women to move the economy forward. If we look deeper into the numbers, it’s obvious that our new growth drivers—outsourcing, electronics and overseas labor migration—are mostly “manned” by women. Increasingly, we are sending more skilled professionals going abroad. They are mostly medical professionals, caregivers and artists who are predominantly women. We are increasingly sending abroad information-technology professionals, many of whom are women.

But on hindsight, some of these trends are not necessarily favorable to women and society as a whole. For one, it means we are increasingly sending abroad women who are sorely needed to give motherly care for our own children. The fathers and relatives could probably supplant the mothers, but reality—or at least the common anecdotal evidence in our immediate community—seems to indicate that households with single parents are not always the best environment within which children should grow up in. Horror stories about teenage pregnancy, alcoholism and drug abuse, even incest, among OFW families are too common to ignore.

That many of the women have to go beyond the borders to become breadwinners indicate that, increasingly, women are disproportionately bearing the burden imposed by a flawed economic strategy that traces its roots to the 1970s. Nothing is wrong with labor migration per se, but if it’s the only thing that keeps the economy afloat, as is the case of the Philippines lately, something must be wrong somewhere.

It means women are being forced to take roles and so much risk they probably wouldn’t want to take if only there were more options within the country. We are specifically referring to caregivers and domestic help, mostly women, who are prone to abuse in alien cultures. Isn’t that another form of oppression?

A recent episode in the multiawarded TV documentary Probe Team dwelt on human trafficking, and the stats were appalling, bearing out what we just had a hunch about all this time, i.e., that the Philippines ranks also among the top five countries from where originate victims of human trafficking, especially young women. This shouldn’t be surprising. For many decades, it had been quite easy for unscrupulous recruiters and the network of traffickers to ship out young, unsuspecting, unsophisticated poor women from the countryside, promising them jobs in the Middle East or some Southeast Asian destination (usually Malaysia or Indonesia), only for them to find themselves stranded in some brothel, broke and broken, their documents all tampered with or forged, and thus no good for any decent job.

Until recently, it wasn’t surprising to find queuing up at the Naia an illiterate woman bound for Kuwait or some similar destination, there to work as a domestic.

The government early this year bucked massive protests by setting a floor wage of $400 for domestics, at the risk of losing a big chunk of the overseas market to nationalities that will bite at cheaper rates. Policymakers justified this by saying it was one way of discouraging a surge of OFWs in such low-end positions, which attract the more vulnerable types, anyway, and encouraging deployment of better skilled—hence, more educated and less risky to abuse—workers. Last time we checked, the controversial policy seems to be working in this wise, although the recruiters are complaining because the deployment is declining.

To be fair, the government may be right after all on this score, but until then, it should keep pursuing the line that one can’t build an economy on the backs of its women, especially those prone to all forms of abuse, while tearing, because of their absence, the social fabric back home. Let’s hope next year’s gender index will show even better results.

The looming talent crisis in the Philippines

‘Brain drain” is a reality that the Philippines has to deal with squarely. And we should deal with it now.

As we have discussed in our recent five-part series on the issue, brain drain has gone mainstream, affecting all sectors of the economy, especially hospitals, airlines, mining, manufacturing, information technology, the performing arts, journalism, the armed forces, aviation, weather forecasting, hotels, advertising and accounting. It has negatively affected both the public and private sectors.

Name any profession these days, and chances are one could immediately hear complaints about companies finding it too hard to find or retain “the right people” for the simple reason that the best ones are leaving for better-paying jobs abroad. It has become a major headache among private companies and even a greater problem within government bureaucracy.

Gone are the days when employees are expected to stay with the company for the rest of their lives. These days, employees, especially the highly skilled ones, are in constant search for employers that can give them the best working environment, the best pay package, the best experience, and training that could even enhance their skills—companies that could give them the excitement of doing “the next big thing.”

With the rapid flow of information, national borders have become meaningless—more so because Filipinos, having imbibed the culture of both the East and West by virtue of our historical experiences, could easily adapt in any cultural environment.

Make no mistake about it, the trend toward greater global labor mobility is not just related to the personal decisions of individual employees and the greater ease to travel beyond national borders. The corporate world has also contributed to this trend.
In the ’80s, “corporate downsizing” became the trend as companies tried becoming “lean and mean” to cope with global economic slowdown and greater global competition brought about by the emergence of “newly industrializing economies.” Suddenly, the old labor-management ethos of “lifetime employment” and “company loyalty” vanished as hundreds and thousands of workers lost jobs across the globe.

Recent literature on labor migration says the term “brain drain” is old-fashioned given the mounting evidence for brain gain and “brain circulation,” a phenomenon described by AnaLee Saxenian, dean of the University of California Berkeley School of Information, as the tendency for skilled migrants to return to their native lands as entrepreneurs and bridges for investments and technological diffusion while maintaining their links with the US.

This is certainly an emerging trend in Ireland, Israel, China and India, and to a limited extent, the Philippines.

But we continue to call it “brain drain” because the diaspora of skilled professionals from the Philippines is likely to get worse before it could get better. The push and pull factors are strong as ever.

On the one hand, the continuing tales of corruption in high places (the latest of which involves the national broadband deal and cyber education project with the Chinese government), low pay and the continuing perception of lack of appreciation by many company managers of local talents, especially in areas like the medical profession, are among the major push factors.

On the other, demographic transitions (more people getting old) in countries like the US, Europe, Australia and Japan, and growing expenditures for health facilities in Middle Eastern countries, are forcing governments in said countries to open their labor markets to Filipino medical professionals (mostly nurses, doctors and medical technicians).

High crude prices are enriching the Gulf States, translating to a flurry of investments in commercial centers, oil rigs and platforms, thus attracting thousands of construction workers, architects, engineers and managers.

And more important, in this age of the knowledge world, even governments are actively seeking talents across cultures, hoping to maintain their economic edge. The governments of the US, Singapore, Canada, New Zealand and Australia are actively recruiting from all over the world, including the Philippines.

All these trends are beneficial to skilled professionals and technical people. The skilled ones now have more options in life. But soon these trends are going to hurt emerging industries that are dependent on the supply of skilled labor, like outsourcing, finance and mining. Give it three years, says one corporate executive, and skilled workers would really be a real problem, unless the private sector and the government could cook up policies to address the problem.

The Philippines is a democracy. We can never stop people from seeking happiness beyond our borders. The only way the country can effectively address the problem, therefore, is by raising the supply of skilled labor for both the local and global labor markets.

Talent war hits the Philippines hard

By David L. Llorito, with Jesse Edep & Louise Francisco (Researchers, BusinessMirror)

When the management of Fairchild Semiconductors, a global electronics firm, offered industrial engineer Manuel Villa, 32, a management job in Singapore three years ago, he didn’t hesitate to grab the offer. Not only was the pay great—five to six times higher than what he is earning in the Philippines—moving to Singapore, he believed, could also open doors for future career advancement.

“The No. 1 factor [for my decision] was exposure—the opportunity to work and be trained in a different culture, in a headquarter-corporate level setting, which should open a lot of other doors for me in the future,” Villa explains. “It will greatly help my marketability should I decide to pursue a position in our US office or other companies, either in Singapore, other countries, or even back home in the Philippines.”

Fairchild has multiple operations in the region, including South Korea, Penang in Malaysia, Suzhou in China and Cebu in the Philippines. Since most of the sites are in Asia, the company decided it was time to set up a regional office.

“Singapore is the central and best location. A group was formed, by picking out specific individuals already working for the company, to form the pioneer team. I was one of those picked and endorsed from the Cebu site,” boasts Villa.

Villa is a typical beneficiary of what human-resource experts describe as the intensifying global “war for talent,” as companies—both local and foreign—fight tooth and nail for skilled workers all over the world. And while the stiff competition for talents is benefiting Filipino professionals, private companies are concerned that the loss of local talent would hamper the competitiveness of the domestic economy as companies find it hard to match the offers from multinationals.

A growing concern
In a study by Grant Thornton International released by the accounting firm Punongbayan & Araullo (P&A), 43 percent of Philippine companies picked the scarcity of skilled labor as the “major roadblock” to their expansion plans. Last year, only 15 percent of Philippine companies complained of the same problem.

With the steady exodus of the country’s best and brightest, it was only a matter of time, the study warned, before local businesses would begin to show signs of strain over the brain drain.

“The results this year clearly reflect the problem that employers across industries are experiencing, which is the draining of our local talent pool,” says P&A’s managing partner and chief executive Greg Navarro. “Even in the accounting practice, we are struggling to compete with foreign firms that see the Philippines as a good resource for highly trained, English-speaking certified public accountants.”

Indeed, official statistics from the Philippine Overseas Employment Administration shows that the country has been practically bleeding talents. Since 2000, the Philippines has been sending an average 79,000 professional and technical workers, 500 managers, 4,000 clerks and 70,000 production workers a year, many of whom are college graduates.

Within the same period, 10,000 nurses have left the country each year for Saudi Arabia, the United Arab Emirates, the United Kingdom, Ireland, the US and other destinations. On average, close to 13,000 caregivers, many of whom have nursing backgrounds, have left the country annually, many of them going to Taiwan, Israel, Canada and the United Kingdom. Japan and South Korea were the favorite destinations for performing artists, averaging 55,000 a year, while IT workers have been leaving at the rate of 300 a year to countries like Saudi Arabia, the US, Malaysia, Singapore and the United Arab Emirates.

The actual deployment of IT workers should be higher as most of them who are now working in countries like Singapore and Malaysia were directly recruited by their would-be employers. Others simply packed their bags and applied directly to companies. It’s so easy to do so because Singapore, being a member of the Association of Southeast Asian Nations, does not require visas from travelers from the Philippines.

“There are many Filipinos here [in Singapore], especially the professionals, middle-income class,” says Villa. “They are into IT and other fields as well, like management, restaurants and hotel-related, engineering, and logistics. Besides domestic helpers, I have met Filipinos working as waiters, department-store personnel, clerks, engineers, managers, academicians, church workers, airline personnel and others more. The Filipino population here has already reached 120,000, and still rising.”

Affecting all sectors
Analysts used to think that the diaspora of professionals only affected a few sectors of the Philippine economy, like seafaring, aviation, engineering, construction and nursing. But in the last three years, it has started to affect almost every sector of Philippine society. The Philippines is sending journalists to Singapore, Saudi Arabia and the United Arab Emirates; engineers and oil-rig workers to Nigeria, Russia and the Gulf states; speech and physical therapists to the US; and mining engineers and geologists to Australia and China. There are now Filipino accountants in Silicon Valley in California, and some are heading for Australia.

According to the Personnel Management Association of the Philippines (PMAP), industries suffering from high turnover rates these days include pharmaceuticals, banking, consumer goods, hotels and restaurants, electronics and semiconductors, and telecommunications and computers. About 33 percent to 59 percent of employees leaving their jobs in these industries, according to a PMAP survey, went abroad.

“In just 12 months, we lost about a dozen human-resource officers to other companies,” says a human-resource officer for a pharmaceutical company.

Even the public sector is increasingly being affected by the war for talent. The country’s weather bureau and the Mines and Geosciences Bureau are losing weather forecasters and geologists to the private sector here and abroad. The Department of Science and Technology (DOST) is hard hit as well. Sources from the DOST reveal that out of almost 3,000 scientists with PhDs in various scientific disciplines, almost 500 have already left the country in the last few years.

Even the military has not been spared from this phenomenon. Sources from the Philippine Army say the Australians are currently recruiting Filipino soldiers.

“They [the Australians] know that Filipino soldiers are well-trained in the different occupational specialties—infantry, cavalry, armor, signal, engineer, etc.—which makes them competent and efficient and can communicate or verbalize very well,” says an Army officer who doesn’t want to be identified. “The Armed Forces of the Philippines is using American military doctrines, and it is compatible with Australian military doctrines.”

The military officer adds that the Australians are luring Filipino soldiers with citizenship offers. Filipino soldiers are also being recruited because of their exposure in asymmetrical warfare or counterinsurgency operations. “For several decades, our soldiers have been fighting the NPA [New People’s Army], secessionists and terrorist groups. The Australians do recognize this Filipino talent,” the officer says, adding that Filipino soldiers who once served as United Nations peacekeepers “established connections during their tour of duty and after they retire or resign, they join the US or UN as civilian contractuals.”

Peter Goellnicht, principal migration officer of the Australian embassy here in Manila, however, denies that Australia is recruiting soldiers from the Philippine Armed Forces. In an interview, however, he admits that he is aware of “a couple” of former Filipino soldiers who were granted visas on the strength of their professional qualifications as soldiers.

Drivers of the global talent war
Noel de Luna, country manager of Mercer Consulting, a global human-resource company, attributes this increasing competition for workers in the Philippines to demographic changes in the US and the Asia-Pacific.

“There’s a war for talent out there because China is growing so fast and its population is aging,” says de Leon. “Japan also has an aging population. If you look at the demographic profile, its working population has been going down since five years ago. But the trend about rising demand for skilled workers is really Asia-Pacific-wide.”

In a region-wide survey by Mercer Consulting this year, de Leon reveals that 50 percent to 77 percent of companies in Japan, South Korea, China, Hong Kong, Taiwan, Singapore, Malaysia, Thailand, Indonesia, Vietnam, Australia and New Zealand have expressed hiring intentions even as many of them are experiencing double-digit attrition rates.

“And where are they going to get new talents? Naturally, many of them would recruit from the Philippines,” says de Leon.

Besides demographic factors, the larger forces of globalization seem to be the bigger explanation. In a paper entitled “Global Competition for Skilled Workers and Consequences,” Manolo aAbella, a Bangkok-based labor-migration expert formerly connected with the International Labor Organization, says that the raging war for talent results from the growth of global supply chains as liberalization of trade policies has made it possible for transnational companies to move production to cheaper locations.

“The emergence of these global production structures have been everywhere, accompanied by greater movements or transfers of technical and managerial personnel,” says Abella. “Another important development has been the growth of informal as well as flexible forms of employment, opening markets for foreign workers willing to enter occupations or sectors abandoned by natives.”

Still another factor is the rapid expansion of the knowledge economy and the demand it has created for a ready supply of young IT professionals, he adds.

According to economist Dieter Ernst, senior research fellow of the East-West Center based in Honolulu, the trend towards “downsizing” among American firms, is also a major factor. Ernst explains that because many American companies operate on a very lean staff, they have to scramble for specialized skills once demand from buyers shifts to new products that require new technologies.

“For many high-tech companies, competing for scarce global talent has become as major concern,” says Ernst. “As a result, global sourcing for knowledge workers now is an important global manufacturing and supply chain strategies. The goal is to diversify and optimize a company’s human-capital portfolio through aggressive recruitment in global labor markets.”

But what’s adding fire to the global talent war is that countries, especially those suffering from low population and labor-force growth, are engaged in systematic recruitment in response to the growing skills scarcity. The US, Canada, Australia and Singapore are among the most aggressive.
Canada and Australia have been offering permanent residence and citizenship as incentives for skilled migrants. Through its H1-B visa, Americans have been luring IT workers to Silicon Valley. Middle-East countries like Saudi Arabia and the United Arab Emirates have been giving temporary admission to skilled engineers, welders, pipe fitters, accountants, journalists, and advertising people from the Philippines and other Asian countries. Australia has also been using its universities as “academic gates” for attracting skilled migrants from all over the world.

Singapore has an office, Contact Singapore, that actively recruits talents from all over the world, offering incentives to would-be immigrants to become permanent residents and eventually become citizens.

“The government does encourage permanent residents with good standing to stay,” says Villa. “They extend all of the basic services they offer to their citizens, including medical services, wherein the social system will help you pay only a fraction of the medical costs. There are tax exemptions—tax rebate payouts—if the government performs well and has a budget surplus.”

Winners and losers
Certainly, skilled workers like Villa are the main beneficiaries of this global competition. Because of the increasing scarcity of talents, vulnerable companies are upgrading pay scales for their skilled workers in an effort to stave off staff piracy from other companies.

Patrick Marquina, an associate consultant for Watson Wyatt, a human-resource firm, notes that this year, 148 companies in manufacturing, business-process outsourcing, banking and other industries operating in the Philippines have raised their pay scales by an average of 9.21 percent, almost three times over the country’s inflation rate. Rising pay scales, Marquina explains, are particularly high in outsourcing and IT-related businesses.

Mercer-Philippines, another human-resource outfit, confirms the trend in a similar survey. Floriza Molo, information product solutions business leader, said 180 companies involved in the consumer, computer and telecommunications, pharmaceutical and other industries have, in the past year, increased their pay scales by an average of 8.13 percent and forecasted an 8.34-percent pay hike in 2007.

“In the Philippines, the scarcity of skilled workers has led to continuous increase in compensation and benefits for all the industries,” says Molon. “Though most companies remain conservative in giving increases, overall national competitiveness has driven local companies to compete with multinationals to be more aggressive in terms of base pay and giving premium to the employee.”

Analysts and corporate executives are worried that the continuing diaspora may hurt the country’s prospects for development. A critical mass of native people, Abella explains, is necessary to create new knowledge and technologies that are essential for progress.

“Experience has richly shown that human capital, rather than natural-resource endowments, is the key to economic development,” says Abella. “The current competition for the highly skilled has naturally raised alarms that it will further aggravate the problems of developing countries in creating a critical mass of professionals and technical workers needed to raise productivity.”

From OFW to Pinoy Expat: analyzing the Malu Fernandez controversy

Global talent has never been more mobile, thanks to changes at the national, regional and international levels which have eased their flow across borders. Many countries, developed as well as developing, have designed policies and programs to attract talented people as students, temporary workers and immigrants. —Gerry Rodgers, Director, International Institute for Labour Studies, International Labor Organization

Ex·pa·tri·ate (n): somebody who has moved abroad; a citizen who has left his or her own country to live in another, usually for a prolonged period.—MSN Encarta Online Dictionary

WHY don’t we discard the term “OFWs” and use “Filipino Expat” instead?

“Filipino expat” is a neutral term used by most countries in the world, and free from the harsh and bitter narratives that characterized the evolution of the descriptor for the hardworking overseas Filipino.

The use of the term OFW (overseas Filipino workers)—and the social narratives behind it—may have gone out of date, and may account for why the blogosphere blazed in sheer hatred and venom when a certain Malu Fernandez denigrated Filipinos working abroad and typologized class stratification in Philippine society in terms of Jo Malone-versus-Charlie/Axe.

It’s possible that many OFWs now are wearing Bulgari or Gucci or Poison by Christian Dior or Chanel No. 5, hence the global moral outrage. In fact, what the matapobres in this world failed to realize is that the composition of expatriate Filipinos working abroad has slowly but surely undergone a profound transformation.

For decades we were sending many unskilled workers all over the world, after those heady days of the ’70s when the cream of our construction workers were tapped by Saudi Arabia and other Middle Eastern countries to build their infrastructure.

But then there was the wave of entertainers, mainly to Japan, and the domestic help—with many of the unskilled ones going to the Middle East and many of the college -graduate types, such as teachers—landing in Asia (primarily Singapore and Hong Kong) and Europe (Italy and Spain).

Unfortunately, besides the downside of labor export in terms of losing some critical skills for nation-building, the past decades were also littered with stories of abuse, primarily because of labor systems that were skewed in host countries. It was only in recent years, thanks to pressure from multilateral organizations, that host countries have worked more closely with labor exporters like the Philippines to substantially reform their work and wage systems.

These days, the share of skilled professionals (including those in the health field, such as nurses), technicians, managers, investors, engineers and accountants, among others, to the overall number of people leaving for work abroad are rising—partly owing to a deliberate, initially criticized state policy early this year to set floor wages for deployed domestic help in a bid to prevent labor importers from targeting uneducated, hence easily exploitable, workers.

Hence, if one looks at the distribution of Filipino expatriates abroad, one wouldn’t be surprised to have workers wearing varied types of fragrances, from the cheapest to the most expensive, befitting their economic status. .

This observation may find resonance in the fact that nearly half of the buyers of condominiums and properties in the prime areas of Makati and Fort Bonifacio, as well as in cities outside Metro Manila, are expatriate Filipinos. Why is the property sector on the upswing these days? Why are bookstores, boutiques and gadget shops selling expensive stuff proliferating? It’s the money from expatriate Filipinos. There is no longer any basis for the matapobres to look down on expat Filipinos anymore. Not that they were ever justified to do so anyway.

The typical narrative about the OFW is Angelo de la Cruz, that scrawny desert-truck driver begging for Philippine officials to bring the troops home so his captors would spare his life. It could also be Flor Contemplacion, the maid convicted for murder of a fellow Filipino maid in Singapore.

Their narratives—even when they were still called OCWs or overseas contract workers—are stories of privation and hopelessness, tales that particularly recurred during the ’70s and the early ’90s. From the perspective of the media covering the Philippines and even from many among us, the term OFW has come to be associated with images of despair and backwardness.

These narratives, however, have started to get obsolete since the late ’90s as more and more Filipino professionals and skilled labor are joining the global labor markets. Horror tales of maids getting raped are still there, but stories about successes of professionals abroad has also become prominent.

For every story about abused maids, there are several others about hotshot engineers, doctors, nurses, information technology professionals, accountants and bank managers making it big in the global scene. It’s now a mixed picture, one that won’t fit into the simplistic Jo Malone-versus-Axe class struggle format of Malu Fernandez.

There are many reasons for this phenomenon that goes beyond the usual Filipino-as-economic-refugee thesis. A significant part of this new trend is caused by global dynamics.

For instance, demographic change in advanced countries has prompted rising demand for medical and other professionals, and the Filipinos responded to this opportunity quite well. High crude prices brought riches to oil- and gas-producing countries. They are recycling these petrodollars in exploration and development, as well as the construction of rigs and oil platforms, and are hiring an increasing number of Filipino engineers, architects, geologists, mining engineers and skilled construction workers. That explains the double-digit growth of remittances each month in the last three years.

The rise of the knowledge economy is probably the most important factor. Global companies operating from Asia to Africa have realized that in this brave new world, competitiveness requires smart employees with good ideas in between their ears. Making money now is more about applying ideas to produce value; and it’s so easy to achieve that goal by bringing together critical masses of bright heads from various cultures. To produce graduates with “the global culture,” universities across the globe are recruiting professors from different countries to ensure “cultural diversity.”

It’s not only companies that are massively recruiting people; some countries, in fact, consider it part of their “national interest” to recruit people from various cultures. Countries like the United States, Canada, Australia, Singapore and New Zealand are among the most aggressive recruiters.

The world has changed—courtesy of globalization—and it’s making much of our biases, assumptions and perspectives about Filipinos working abroad obsolete. It’s time for us to appreciate and acknowledge this trend.

(Note: I originally wroted this piece as editorial for BusinessMirror, 10 Sept 2007)

Asia Times: Filipino diaspora goes up the value chain

“Overseas opportunities for English-fluent professionals are rising, and the lure is hitting the Philippines especially hard where the brain drain is carrying away professionals from virtually every sector of the economy. From the IT industry to health care, journalism, geosciences and the armed forces, the exodus is on.”

Please read the rest of this story of mine in Asia Times Online.

The world loves globalization but Filipinos have mixed feelings

For all those dramatic protests by “civil society groups,” the world, it seems, favors globalization or integration of the world’s economies. That’s the conclusion of the recent survey conducted by the World Public Opinion.org.

“Majorities around the world believe economic globalization and international trade benefit national economies, companies, and consumers. But many think trade harms the environment and threatens jobs and want to mitigate these effects with environmental and labor standards,” says the report.

As usual among the latest fervent supporters are export-oriented countries. Says the report:

“The highest levels of support are found in countries with export-oriented economies: China (87%), South Korea (86%) and Israel (82%). Positive answers fall below 50 percent in only three countries, though such responses outweigh negative replies by wide margins. The greatest skepticism about globalization is found in Mexico (41% good, 22% bad), Russia (41% good, 24% bad) and the Philippines (49% good, 32% bad). In the United States, 60 percent think globalization is mostly good and 35 percent call it mostly bad.”

The result on the Philippines is surprising because the Philippine economy has been benefiting from outsourcing, electronics exports and overseas work. In fact, more than 60 percent of the Philippine GDP, some people say, is accounted for by the globalized sectors of the economy. That’s a huge puzzle for me.

Is it possible that more Filipinos are seeing that the globalized sectors of the economy are benefiting only the urban centers and the educated classes? Probably. After all, only people who have skills are able to work in outsourcing. Also, it’s probable that most of those who leave for better-paying overseas work are from lower middle class and the people who are already better off.

Moral lesson? Labor migration and the OFW phenomenon, while they offer choices to individuals and made many families richer, is no panacea when seen from the national perspective. We still have to have more things going on in here in the local economy to really solve our domestic problem re jobs and poverty.

From brain drain to brain circulation

"Forget the brain drain—today’s highly skilled migrants circulate between the US and developing countries, creating technology businesses and spreading prosperity along the way".—AnnaLee Saxenian, dean and professor of the University of California School of Information

ON Wednesday, an executive from a leading company providing software solutions to semiconductor companies worldwide urged the country’s leaders to tap the Filipino professional class in the United States to boost the local electronics company.

“You should bring home Filipino engineers working in the United States. There are hundreds of them out there,” G. Ravichandran—sales account manager for South Asia of the Singapore-based Cadence Design Systems providing electronic design software solutions worldwide—told the local electronics industry leaders at a symposium, stressing that the same approach has worked wonders for economic powerhouses China and India.

That proposal makes sense.

The Philippines is currently deep into assembly, test and manufacturing of electronics and semiconductors, shipping out more than $30 billion of such products for original equipment manufacturers worldwide.

Industry experts say there is a need, though, for the Philippines to go up the value chain, including integrated circuits design and research and development. All this, for the country to remain competitive vis-à-vis new players like Vietnam.

Going up the value chain, however, means hiring more skilled engineers. That’s where the problem lies. Our education system is producing only hundreds of engineers while the industry probably needs thousands of them. They need experience in chip design but there are only a dozen companies doing this. There are several start-ups and small design houses close to Ateneo and the University of the Philippines campuses, but most of these firms have weak financial muscle to make it big.

That’s the reason we need to tap into the skills and networks that are probably available in the United States, especially the Silicon Valley. Sounds ambitious, some people would probably say, but it might just work.

Well, it actually worked in another context. Ever wondered why economies like Israel and Taiwan developed so fast economically and technologically since the ’80s? It’s because they sent their young minds to study in Stanford, Santa Clara University, Carnegie Mellon and the University of California in the ’70s to study and learn mathematics, computer science, engineering, and business management.

Thinking then that they had nothing to do back home, many of those students stayed and worked in the Silicon Valley, as well as in other major cities for years.

But after working for several years in the US, many of these bright guys started their own companies and eventually started operations in their homelands. Many of them went straight home, bringing with them their fresh technologies and business savvy while retaining their links in Silicon Valley.

That explains why both countries are currently world beaters in electronics, with the Israelis emerging as the world’s leading player in cryptology, defense electronics and cybersecurity.
Do you know why China and India is rising as economic powerhouses? Because they are also doing what the Taiwanese and Israelis did.

Through the networks that the Indian and Chinese students forged in Silicon Valley, these returnees—called “sea turtles” in China and “NRI” or nonresident Indians in India—they set up operations in their home countries doing chip design, software development and manufacturing after working for about a decade among technology companies in America.

Having the experience, technological savvy and linkages in the Silicon Valley, these returning Indians and Chinese didn’t have to worry about start-up capital since venture capitalists in the Valley are just too eager to finance their new projects.

In China, it really helped that the State, so eager to leapfrog the development ladder, attracted them through financial incentives, as well as the establishment of technology parks, where they can do research in collaboration with their friends and colleagues in the Silicon Valley.

AnnaLee Saxenian, dean and professor of the University of California School of Information, calls these skilled migrants who crisscrossed continents to form companies in the US and their home countries the “new Argonauts,” a reference to Greek mythology where Jason and his band sailed the high seas in search of wealth and adventure. Because of these new Argonauts, brain drain—Saxenian stresses—has become more like “brain circulation,” that is, benefiting both developed and developing countries.

The case of the electronics industry in Taiwan and the mainland illustrates how these new Argonauts are transforming regional economies. Many of these engineers and tech guys start out to establish companies designing systems and chip architecture in Silicon Valley. Then they do value-added IC design and advanced manufacturing in Taiwan while they do regional distribution and low-cost manufacturing in China.

Do they need capital? No problem; the same guys could tap venture capitalists in Silicon Valley. Do they need managerial supervision or better business models? No problem; venture capitalists who infuse money actually provide mentoring. After a few years, the venture capitalists get their money 10 times the original amount they have invested through exit strategies that include acquisition or initial public offering. Everybody is happy.

Moral lesson? The Philippines should look at the possibility of mobilizing our own Pinoy Argonauts, not just in the electronics and industry but also in other spheres of the Philippine economy. We have close to 10 million overseas Filipinos abroad, and many of them are working as medical professionals doing research in life sciences and biotechnology. They could complement the country’s strength in biotechnology.

The Department of Science and Technology has its “Balik-Scientists” program, which encourages Filipino scientists already based abroad to render services to the country in their expertise in science, and thereby help in the country’s development. The government could broaden this program by including professionals in other fields.

There are also several Filipinos doing venture-capital work in Silicon Valley; they could probably help in assisting local technology start-ups. There are lots of possibilities that the county’s movers and shakers in the business community should explore. In fact, the country’s leaders both in the private and the public sector should make it part of the country’s economic strategy for development.

(Drafted as editorial for BusinessMirror, 8 June 2007)

The looming talent crunch for knowledge process outsourcing

ASK the executives from the country’s leading knowledge process outsourcing (KPO) companies and they will tell you the Philippines will soon suffer a serious talent crunch.

Give it three or four years, said one KPO executive, and we will feel the pain of that talent scarcity, unless the universities, educational system, industry and the government could sit down together and develop a modus vivendi to address the challenge.

Too bad because KPO is where the future of the country’s fast-growing business process outsourcing (BPO) lies. And its continuing growth would determine the extent to which the country could hold on to its talents, many of whom are being pirated for jobs in Singapore, the United States, London, the Bahamas, and even the Gulf states.

KPO is Integreon Managed Solutions—owned by the Ayala family—doing market research, risk analysis, business plans for global investment companies, legal firms and investment houses. KPO is Thomsom Philippines doing bond and equity research, perception studies, loans and project finance and facilitating investment deals and providing financial analysis to Fortune 500 companies. And it’s about Deutsche Knowledge Services providing high-end accounting and financial services for Deutsche Bank Group Worldwide.

It is a high value-added form of outsourcing that employs high-end skills, expertise and judgment. We are talking here about hot-shot MBAs, software engineers, accountants, management engineering experts and mathematicians doing a lot of think work.

This is in contrast to most BPOs where workers simply follow detailed processes and procedures determined by firms and companies in the United States.

Right now industry sources say there are probably around 5,000 people engaged in KPO. But this number is rising. Thomson Philippines’s staff, for instance, is expected to grow by 10 percent this year. Integreon is set to open a 250-seat KPO in Makati. And there’s another KPO that is hiring people at the rate of 50 talents a month.

Many more are hiring. The problem is that talents these days are getting scarce. It’s a roadblock the country should remove if KPO is to attain its full potential. The scarcity of talents is due to several reasons.

First, there is an ongoing war for talent these days. The country’s labor market has totally globalized such that it’s a lot easier for other countries to lure talents off the Philippine soil. These days, an accountant with four years experience and good knowledge of SAP, one of the leading business software that competes with Oracle, could command as much as a seven-digit salary. The Singaporeans, however, are willing to pay double that amount.

What makes it hard to keep them here is that such talents are being sought by headhunters for the big accounting firms like Deloitte Touche Tohmatsu, Ersnt and Young, KPMG and Price Waterhouse. These four are willing to pay top dollar including family relocation to places like New York, London, the Bahamas and other financial centers of the world. And it’s so easy for local talents to leave because they are usually just in their mid-twenties, many of whom are unmarried and therefore excited by the high adventure of working in the world’s financial centers and global cities.

Second, the country’s educational institutions are increasingly lagging behind the requirements of the business community. For instance, KPOs are in dire need of people with specific skills in enterprise resource planning, process mapping engineering, financial markets, process control, international financial reporting system, Oracle, SAP, and the Sarbanes-Oxley financial and accounting disclosure system.

Yet most accounting graduates are simply taught the generic accounting principles and skills that are increasingly becoming obsolete. The same is true in many other technical professions like engineering.

And the third reason is that some educational institutions are resisting change and innovation being proposed by the industry. They are just too risk-averse to invest in new curricula, facilities and equipment.

One KPO executive, for instance, noted that the state schools like the University of the Philippines are suspicious of the industry’s efforts to introduce reforms in the curriculum, as its Board of Regents feel such changes would constitute “violation of academic freedom.”

In fact, many schools, even until now, think that the problem of KPOs as well as BPOs in general are the private sector’s problem and not of the university system, whose mission is to provide “holistic” and general education to the young.

Of course, universities like Ateneo and La Salle are supposedly responding to the industry’s needs, but these two universities alone cannot redress the talent scarcity. The entire educational system must pull in weight if only to maximize the economy’s gains and spread the benefits of job opportunities fostered by outsourcing.

It’s no exaggeration to say that the future of this country is at stake in the timely redressing of this problem. As it is, we’ve missed so many boats and we can’t afford to miss the opportunity to be a major KPO player in the world.

We missed the opportunity in agrarian revolution by dilly-dallying with the implementation of the agrarian reform law that created uncertainties, thus driving away potential investments in farms. We missed an export-led revolution in the ’80s and the ’90s, catalyzed by flows of Japanese and Taiwanese investments, by shielding the manufacturing sector with dirigiste policies.

And now, we could miss the services revolution if we dilly-dally with our response to the growing opportunities offered by outsourcing.

We always think India whenever we hear the word “outsourcing.” The truth is that Ireland pioneered in outsourcing and sophisticated financial services long before India did, and is now among the countries with the highest per capita incomes ($48,604), next only to Luxembourg ($80,000), Norway ($64,000), Iceland ($52,000), and Switzerland ($50,000).

Some economists are smirking about a services-driven growth, but India followed the same path and has grown at 7 percent to 10 percent a year in the last decade.

Now, the Philippines has a crack at a similar chance and one wonders why policymakers and the educational system are not moving heaven and earth to ensure that our initial success in outsourcing is sustained.

Of course, we don’t have to abandon our farms and factories; we just have to put in place certain initiatives like upgrading the education system to make the services sector competitive. These same policies can actually enhance the global competitiveness of the rest of the economy.

Right now, policymakers in both public and private sectors are content to say the BPO and KPO sectors are growing at 50 percent a year. Had we taken care of the problems in the educational system, these sectors, according to industry experts, could have been growing by 100 percent to 200 percent, thus cutting the rate of joblessness. (An earlier version of this was prepared as editorial for BusinessMirror, 27 March 2007)

A winter of discontent for our weathermen and what can we do about it

FIRST, it was doctors becoming nurses to take jobs abroad. Then, pilots, geologists, mining engineers and information technology professionals seeking greener pastures beyond the borders. Now, weather forecasters are also leaving the country in search of a better—pardon the pun—climate.

Now, this one should really hurt because weather forecasters provide a very essential—nay strategic—public good: that of providing weather data and forecasts. A lot of life-and-death decisions are made both by the private and the public sector based on these data and forecasts. Information about typhoons, storms and floods save thousands of lives.

They also help producers, government planners and private business minimize the negative impact of natural disasters. Weather and climate data help soldiers and cops in the fight against terrorists and communists. They help exporters, importers, logistics firms and shipping companies plan the movement of goods and services. And of course, these services are getting important by the day as we suffer, with the rest of the world, the effects of climate change.

The literature on global warming says that increasingly, weather and climate all over the world will be less predictable. That spells danger for the country, and only a good weather-forecasting capability can help us cope with these changes.

But since our weather forecasters are being lured by talent poachers abroad, it’s crucial to confront this problem squarely now. The solution is simple but the country’s policymakers, both from the public and private sectors, need to have a change in mindset, a paradigm shift.

At the outset, it’s clear that our weather forecasters need more material rewards for their skills and we may have to give it to them. Since this country pretends to be a democracy where individual pursuit of happiness is paramount, no one should even think about physically preventing them from leaving. That is their right. But before anyone in our midst accuses them of greed, “materialism” and “lack of patriotism,” let’s put this problem in broader context.

The problem of weather forecasters leaving the country simply reflects Philippine society’s lack of appreciation of scientific talent and science in general. Many scientists work in government agencies providing services and promoting national development. Strategic activities like defense, weather forecasting, research and development, crop protection, plant breeding, biotechnology are only among the few examples. They are a special people who push the frontiers of knowledge.

They are special because they are among the brightest in our midst; people who spend long hours in laboratories and workshops to generate information, knowledge, and technologies that are vital to development and progress; and their supply is normally scarce. They are virtual gems, treasured in many countries in the world.

Not in the Philippines. For long, policymakers have been treating scientists like ordinary people with ordinary needs. Take note how the salary-standardization program has prevented them from getting wages substantially higher than those of janitors and security guards. Most agencies they are working for are poorly funded.

The budget of the Department of Science and Technology, for instance, has practically stayed the same in the last several years. That is why we find many scientists in these agencies doing excruciatingly demoralizing administrative and armchair “research.”

No wonder, most of them dream of moving abroad, temporarily or permanently, so they can really do what they love: honest-to-goodness scientific research and some dignity of being a “scientist.” It is sad to note that in just one DOST agency, at least 40 of its scientists and researches have gone abroad or have joined private companies last year.

But can a poor country like the Philippines really match the offers abroad? Where can it get the money?

Local decision makers keep raising this issue, but they entirely miss the concept of “purchasing-power parity.” A dollar can actually buy more goods and services here than it could in places like Singapore and the US because of differences in living standards.

So if government policymakers want to raise the weather forecasters’ pay, they don’t really have to match the offers abroad dollar-for-dollar. All they have to do is to figure out that parity or the minimum levels by which our weather forecasters and scientists could feel some dignity while serving their country well.

That means, they can spend long hours in the laboratory without fretting over a leaking roof at home, the next tuition installment for their children or the health insurance of their family. Or about having to catch the MRT because, for all the long years of service, they can’t even afford a second-hand car.

For meteorologists, for instance, we should immediately put together a training program, or even a scholarship program, for aspiring scientists. This can be done pretty easily—granted policymakers take immediate action—since we could actually train forecasters from many applied science disciplines. Many forecasters actually came from engineering. This training program should be a continuing process so those who leave for greener pastures can easily be replaced.

Let’s face it; we are in the age of globalization, where national borders are meaningless. There’s an ongoing war for talent all over the world, particularly in the Asia-Pacific Region, and scientists are rational beings who respond to economic incentives. That’s a fact of life in a world that is—to use Thomas Friedman’s term—getting flatter by the day.

Certainly, the question of where to get the money is a valid, albeit a minor question. The more relevant question is: Do we badly need them? If the answer is yes, then we have already solved the problem. If we think we really need them here, we will mobilize resources for them. We will put our money where our heart is. There are actually lots of unproductive expenditures in the government from where to draw those resources.

On a broader front, there is really a need for a greater appreciation of our scientists. These people are globally mobile, often interacting with peers worldwide through seminars and fellowships. Hence, many of them know how miserable their standards of living are compared to their counterparts in, say the Asia-Pacific Region. Thus, they are the most vulnerable to recruitment by foreign companies that not only offer generous pay but also access to topnotch research facilities, tools and working environment.

If we can attend well to our scientists’ needs, we will send market signals to our bright students in science high schools that hard sciences actually pay materially. Then we can attract more of them to the science profession and ease the scarcity of scientists and technical people. If young kids see that science is cool, we will stop hearing complaints about “brain drain” and skills shortage. Right now, many of these science high-school graduates are taking nursing, mostly egged on by families looking to get dollars abroad. But this need not go on forever. (Note: The original version of this piece was written as editorial for BusinessMirror, 23 March 2007)

The Philippines and labor migration: a country in denial?

THIS country is in denial and its “modern-day heroes” are the victims of this mental dishonesty.

Each year, overseas Filipino workers send home more than $14 billion, thus propping up the Philippine economy. They have been doing this for more than three decades, and there’s a surfeit of literature to show that sending them there was a deliberate move to shore up the Republic.

In fact, the late foreign affairs secretary Blas F. Ople, who was described, in his role as the labor minister under Marcos, as the architect of the labor export policy—was paid tribute just last Monday when the President inaugurated the National Reintegration Center for OFWs at the Blas F. Ople Development Center in Intramuros. For all the criticism later heaped on the “indiscriminate” sending of workers abroad, the labor export policy had actually served the country well when Mr. Ople first thought it up in the ’70s, as it provided the country a source of good jobs for its skilled workers and foreign exchange at a time when it was needed.

And yet, surprise of surprises—it turns out now that the State denies that the Philippines is promoting overseas employment as a means to sustain economic growth.

Since the days of the Marcos dictatorship, the state has constructed an elaborate mesh of laws, bureaucracies, regulations, procedures and promotions programs for those who seek jobs abroad. And yet Republic Act 8042, better known as the Migrant Workers and Overseas Act of 1995, says “the State does not promote overseas employment as a means to sustain economic growth and achieve national development.”

Even more surprises: our own intellectuals are in denial. These days, an old terminology is being resuscitated and blamed by some practitioners of the Dismal Science as the cause of the country’s failure to industrialize. The surging flow of dollars to the economy, these people say, is causing the “Dutch Disease”—referring to the rapid appreciation of the peso, rendering the local industrial and agricultural sectors less competitive.

The “disease” arose from the Dutch experience in the ’60s following the discovery of oil in the North Sea. The surge of dollar revenues from oil flooded the Dutch economy, causing a rapid rise of its currency, and the collapse of many of its industries that couldn’t compete with cheaper imports. Naturally, many were jobless.

Now, some analysts are using the Dutch experience to allude to the local context. Do these people seriously want to project OFWs as a negative factor since their dollars sent here are causing the appreciation of the peso, squeezing the exporters profits and preventing industrialization?

It gets worse: some wonder if the country would have been better off without the OFWs. In a recent conference on international labor migration, one of these Dismal Science practitioners speculated that had not a single Pinoy left the country for an overseas job, we could have achieved a “real revolution” that could have ushered in “real reforms” like “real land reform” and better debt management.

Sure. Easy to say that now, when our leaders can boast about being able to pay foreign debts in advance, and the central bank cites an unprecedented level of 4.7 months’ worth of imports in the GIR. Or when OFW money is propping up every single sunshine industry in town and reviving traditional, dying sectors.

Meanwhile, not to be outdone, sociologists recently coined the term “the culture of migration” to describe the tendency of some families to base career decisions on the dynamics of supply and demand for jobs in the global marketplace.

Yet this much is clear: many of those who left the country felt “the system” has failed them. Rather than be a baggage to society, they decided to be part of the solution in the only way they know how: work their butts off in foreign lands and send money back home. For a long time, “experts” kept saying their remittances stabilize the economy. And yet they are still being blamed for causing “Dutch Disease!”

It’s this attitude of “denial” lately that must account for policy recommendations like taxing the OFW remittances and exacting a levy on countries that hire our nurses, as if we are the only ones “exporting” manpower. It’s a policy recommendation that will surely kill the goose that lays the golden eggs.

Seriously, will the Philippines really be better off without the OFWs? Are they really causing a Dutch disease in these parts? Is the “culture of migration” bad? Let’s answer these points one by one.

First, those who believe the country may have been better off without OFW remittances should know that the only group that ever really had the capability to mount a “real revolution” are the communists. History and experience in similar countries show past Marxist uprisings to be dismal economic failures, not to mention the violence engendered: i.e, of the revolution eating its own children. Our neighbors Malaysia and Indonesia, which had bad experiences in communist insurgencies in the ’50s and ’60s, would likely shun the idea of having a “Marxist state” in the neighborhood, and may be tempted to support movements for either secession or Islamic revolution à la Afghanistan. These "intellectuals" should be careful what they wish for.

Second, are OFW monies causing Dutch disease? Certainly, the rapid rise of remittances boosts the peso, in turn squeezing exporters’ profits. But a deeper look shows the rising peso is directly related to poor infrastructure, high energy cost and the crisis of confidence owing to lack of political stability. There are not enough investors so fewer people need the dollars. It’s really as simple as that. The OFW phenomenon is partly a consequence of lack of competitiveness and not the other way around.

Finally, a “culture of migration” is not necessarily bad. Contrary to popular belief that OFWs just waste their money on conspicuous consumption, recent empirical studies say they actually invest their money in houses and lots, farms, health and education. If you doubt, listen to the Bangko Sentral guys, who’ve been describing them as increasingly “finance-savvy,” or the PSE and the Treasury, which hold road shows for equity picks and retail bonds.

If indeed, OFWs are causing Dutch disease, certainly we could always tell them to park their dollars abroad. Of course, they will send most of their dollars because their families need the money for the children’s education and health—services their government has underprovided. But if they indeed stopped sending, that would also create problems for the financial system.

Another option is to raise the savings rate to lessen the pressures for exchange appreciation. But raising the savings rate would also mean we may have to introduce more competition in the banking sector. Do our leaders have the balls to institute reforms in the banking system?

The ultimate solution really is for the country’s leaders to boost competitiveness of the manufacturing sector. There is no secret to this. Tried-and-tested solutions include investments in efficiency-enhancing infrastructure, reforms and investments in education, and a stable political system.

But then, these things seem hard. Far easier, it seems, to focus on pat analyses, like blaming the OFWs, the only sector that ever really did something concretely good for the economy. (Note: I wrote this piece as editorial for the BusinessMirror, 12 March 2007)

Restricting skilled labor migration is absurd!

SUMMARY: “Labor is just like capital in a free market place. Investors will take their money to where it will get the best return. Workers will take their skill to where it will get the greatest reward… Thus the proposal that government ought to ban or in any way restrict the migration of aviators and aircraft mechanics is simply absurd and ridiculous,” says former Senator Ernesto Herrera. Please read the entire post.

It’s nice to know former senator Ernesto Herrera has taken the cudgels for overseas Filipino workers who are likely to be hit by the proposed travel ban or moratorium on skilled Filipino workers. In the recent employment summit, the Department of Labor and Employment (Dole) and the Philippine Overseas Employment Administration are contemplating of said measures supposedly in the name of “national interest” and “public welfare.” Senator Herrera calls these proposed policy “ridiculous” stressing that government “cannot effectively prevent Filipino pilots and aircraft maintenance engineers from leaving the country, should they decide to seek greener pastures abroad.”

Could the government restrict or control workers deployment overseas? The government thinks it could. Could the government prevent Henry Sy or Lucio Tan from bringing out their money for some investments in China or elsewhere in the name of national security or public welfare? Definitely not. What the government bureaucrats are contemplating therefore is simply another form of double standard. It’s unfair and unjust.

Would the migration of labor not kill the local companies that need these skills? Of course not.

ICTSI example
Take the case of the International Container Terminal Services, Inc (ICTSI), a Filipino global ports management company. ICTSI operates a lot of ports here in the Philippines and abroad, specifically international container terminals in Suape, Brazil; Port of Gdynia in Poland; Naha in Okinawa (Japan); and Madagascar. Because of ICTSI’s global reach and apparent success in port operations, it has taken the attention of “poachers” who are on the lookout for skilled workers particularly in areas of port management, operations, and administration; port development and construction; and port planning and programming.

Dubai World Ports, one of the largest port operators in the world based in the United Arab Emirates, practically knocks on the doors of ICTSI to pirate its employees. The numbers of employees being “raided” each year could sometimes reach 30, many of them highly skilled gantry crane operators. Captain Francis Andrews, ICTSI’s senior vice president and operations manager of the Manila International Container Terminal, says this “raiding” of ICTSI skilled staff each year gives them problems but it doesn’t disrupt their operations. This is because, he explained, its employees are multi-skilled; the company could easily redeploy them to other functions when the need arises. Also, the company keeps on training more people each year in anticipation of rising demand for skilled operators of port handling equipment worldwide. Besides continuous in-house training, ICTSI also provides productivity incentives for container handling equipment operators so that their employees get more money as their efficiencies improve. Families of these workers are also given attractive incentives including medical and dental benefits. Thus given the choice between working abroad and staying with the company, many of its staff would rather not leave for the added incentive of being with the family and being able to watch the kids grow.

A thousand ways to retain staff
There are a thousand and one ways to retain staff without resorting to coercive measures. The fear that only journalists will remain in this country if we open the floodgates to overseas jobs is understandable. The latest statistics say the current number mining engineers, geologists, and geodetic engineers would not be enough meet the demand for these skills in the next four years. The Dole blamed low labor supply on few tertiary schools offering said discipline and even fewer students who passed the board examinations. The reason for this trend is that in the last several decades, mining (prior to the Mining Act of 1995) were stagnant for lack of fresh investments. It’s only after the Supreme Court declared the constitutionality of the Mining Act that allows 100 foreign equity ownership (through the financial and technical assistance agreement) when the mining industry has started to hire more skilled professionals. Give it a few more years and soon smart kids will flock into this profession.

Filipino worker as No. 1
Ask Professor Eduardo Morato of the Asian Institute of Management about skilled labor migration and he will tell you that the real problem lies with local capitalists. Citing a recent survey by AIM in tandem with the Switzerland-based Institute of Management Development, Morato said Filipinos is Number 1 in the world in terms of skill and competence. Yet Morato complains that local business owners do not know how to motivate their employees. Their idea of a good employee is someone who works hard, is meek as a lamb, and gets slave wages. That’s the reason why headhunters and multinationals are always on the lookout for skilled Philippine professionals whom they could pirate. They know that if they could put in a better working environment, the Filipino professional would always excel and contribute a lot to the company.

Moral lesson? Local employers and the government should change their mindsets. They should stop looking at the skilled Filipino working class as “surplus” to be employed at the lowest price. They should start looking at the Filipino working class as an asset to the country, people whose skills are appreciated and valued for the good of the country.