Pay-rolling’ system for OFWs proposed

MANILA, Philippines - As the peso continues to appreciate against the dollar, recruitment companies are proposing the re-imposition of the “pay-rolling" system of sending remittances to help overseas Filipino workers (OFWs).

Lito Soriano, president of LBS E-Recruitment Solutions, said that pay-rolling system, which requires OFWs to remit 70 per cent of their monthly pay back home, will dramatically reduce the cost of remittance fee.

Apart from reducing remittance fee, the pay-rolling system would also increase and speed up the flow of remittances into local banking sector.

“With this kind of system, service charges will drop since there will be a one-time charge only for the employer abroad sending the funds for the payroll of the local manning agency that will in turn deposit the salaries for the intended beneficiaries in their bank accounts," Soriano explained.

According to Soriano, even service contractors with construction projects overseas are also amenable to the system since it would lessen the banking costs with the remittance of salaries and local banks will earn through the “float of the dollar proceeds" before converting the funds to pesos and depositing the salaries in the accounts of workers.

“This was the most efficient form of sending the salaries of workers in the ‘70s since the costs were lower per worker and the dollars were captured by the banking system, which in turn increased the dollar reserves during the time of President Marcos when the country had a dollar reserve crisis, Soriano said.

He said the Department of Labor and Employment and the Philippine Overseas Employment Administration (POEA) already issued this policy but it covers only the manning companies.

Jonathan Ravelas, Banco de Oro market strategies said they are expecting the peso to further strengthen against the dollar in the next quarter.

But he admitted that a strong peso has its advantages and disadvantages.

“The most to be affected are OFWs but [a strong peso is] good for the government," Ravelas said during a presentation at the three-day seminar sponsored by the Economic Journalists Association of the Philippines (EJAP) last Saturday.

Meantime, Soriano called on the government to hold a national summit on remittances to discuss the system and other measures that could reduce the cost of remittance fee. - GMANews.TV

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