The Philippine Labour Export Policy: OFWs, Remittances, and Resilience

Among the large Filipino diasporas throughout Canada are Overseas Filipino Workers (OFWs), temporary migrant workers with Filipino citizenship. Migrant labour has long been established in the country, dating as far back as the 16thcentury when Filipino natives were contracted by their Spanish colonizers as skilled workers to support the Galleon Trade. While the first quarter of the 20th century witnessed the permanent migrant settlement of Filipinos in Hawaii and the farm belts of the United States, migrant labour in the 1970s was characterized by a shift from permanent resettlement to temporary relocation to  diversified destinations, including Canada, Australia, Europe, and the Gulf States. Marcos, in addressing domestic labour shortages and general economic crises, adopted an export-oriented, foreign investment-dependent economic policy through Presidential Decree 442 in 1974, which created agencies intended to export Filipino labour overseas. What was meant as a temporary solution to crises has now become institutionalized in the Philippine economy, best reflected through remittances received in relation to the country’s gross domestic product. 

Defined as the transfer of funds from an overseas worker to their country of origin, remittances have the capacity to catalyze economic growth given their multiplier effects on individual and household consumption and investments.

Such is their prevalence that the IMF and the OECD report that remittance values have surpassed official development assistance and foreign direct investments as the largest source of external financing in some developing countries. Remittances are thus largely dependent on the economies of host countries, and crises induce an inverse multiplier effect to what is desired. Against the backdrop of a far-reaching global crisis, in the Philippines, where remittance inflows as a percentage of its GDP have historically lingered between 9 and 10% in the last ten years,  a relative decline in remittances is imminent. Indeed, the Asian Development Bank describes the disproportional insecurity of migrant and casual workers, owing to their lack of contracts and the subsequent bargaining power this renders. In addition to this, the repatriation of temporary workers, coupled with international travel bans, is anticipatory of a slump in remittances.

Amidst the crisis, the Asian Development Bank projected a 23-32% decline in remittances in 2020, relative to the year prior. The Bangko Sentral ng Pilipinas (BSP), the nation’s central bank, proposed a more modest projection of a decline of 5%. What had transpired, however, was a defiance of these projections, with remittances dropping only 0.8% compared to 2019 levels. In a crisis where essential workers and front liners were appointed vanguards of public health, Filipinos were willing and able to serve. The overrepresentation of Filipinos in health services is eminent. Statistics Canada reports that nearly one third of immigrants in health services occupations, including nurses and aides, hail from the Philippines. Further, to satisfy the labour export policy, the number of Philippine nursing schools has proliferated.  Indeed, this is manifested in Canada’s healthcare landscape, with three-quarters of Filipino workers having obtained their degrees elsewhere.

The resilience of remittance patterns can then be attributed to the integral role of Filipinos in necessary industries.

Secretary Imelda Nicolas of Metropolis Asia Pacific – a consortium of migration and development experts from the Asia Pacific region – adds that during times of crisis, both at the national and global levels, Filipinos tend to send more to their families back home. 

Sustained remittance levels despite the circumstances are not isolated to the Philippines, as the World Bank reports that low and middle-income countries received a combined USD $540 billion in 2020, only $8 billion less than the year prior. BSP’s recently reported 4.9 % increase in year-on-year cash remittances, amounting to USD $2.51 billion, is a telling feat that could perhaps be supported by the trend toward digitization. The development of new technological infrastructures in the realm of digital financing, including new remittance frameworks, are aimed at improving activity in remittance corridors. The emergence of international money transfer services eliminates the reliance on traditional banking schemes and cash payments, providing convenience in a time of turmoil. The institutionalization of remittances as a primary method of inflows is also demonstrated through state actions, with the government deeming remittance service providers as essential services, thus allowing them to operate throughout  lockdowns. Further, BSP coordinated with remittance service providers to temporarily waive remittance fees in light of the global crisis.

Remittance-dependent economies, such as the Philippines, are reliant on the monumental role of the OFW in fulfilling inflows. Simultaneously, OFW’s are reliant on their host countries, presenting critical space for the latter to assert its role in facilitating global remittances. In 2014, Canada commissioned an external assessment of its remittance market, which determined that most remittance services in Canada opt for the more expensive option of cash-to-cash transactions for the convenience of their end users. It also noted the relatively low regulations imposed to service providers within the remittance landscape. To demonstrate  its commitment to a better remittance framework, Canada, together with the G20, and through the Global Plan for Financial Inclusion, has committed to the continued evaluation and monitoring of National Remittance Plans, as well as the reduction of remittance costs. 

Secretary Nicolas notes that 2024 marks the 50th year of the Philippine labour export program as institutionalized by the 1974 Labour Code. While a deceleration in labour exports may not yet be witnessed in the coming years, Filipinos aspire for a Philippines that is able to provide sustained employment and fair living wages. Cognisant of the upcoming 2022 presidential elections, she notes the pivotal role that can be assumed by succeeding governments in spurring economic growth to support its citizens, including the development of neglected sectors such as agriculture and health care. Afterall, the labour export policy was only meant to be a temporary solution. In this way, migration becomes a genuine choice instead of a necessity.


Petruska Soriano is an MA candidate at the Norman Paterson School of International Affairs, pursuing a field concentration in international organizations and global public policy with a  specialization in data science. She obtained her BA (Hons.) in International Relations and Political Science from the University of Calgary. Her research interests include international organizations, diaspora politics, fragile states, and strategic studies. She currently works as a Global Partnerships Intern for the University of Calgary.

Photo Credit: Twitter account of Canadian Prime Minister Justin Trudeau

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