Remittance dependence stalls labor policy reform

MANILA, Philippines - The Philippine government’s long dependence on money sent home by overseas Filipino workers (OFWs) has stalled any true long-term labor export policy reforms, a leading economist said.

The government should rethink its labor export policies now that OFW remittances are expected to fall, former budget secretary Benjamin Diokno told GMANews.TV on Tuesday.

Owing to more displacements of migrant workers around the world, OFW remittances barely moved last January 2009 compared to the same period last year. (See story here)

“The economic crisis is an opportunity to revisit the labor export policy. Due to remittances, important policy reforms have been postponed," said Diokno, who also teaches economics at the University of the Philippines.

Billions of dollars worth of remittances sent home every year has created a false sense of security for the government to cure all its economic woes, Diokno further explained.

Despite the global economic crisis setting foot, OFW remittances, the lifeblood of the Philippine economy, posted a record-high $17-billion last year, according to the Bangko Sentral ng Pilipinas (BSP).

But at the start of the year, the BSP reported that remittances only managed to grow by 0.1 percent year-on-year to $1.27 billion from $1.26 billion. This growth was slower than the 15 percent posted in 2007 from $1.1 billion in 2006.

The Philippines’ unemployment figure also rose in January, indicating that an increasing number of Filipinos have felt the pinch of the economic crisis, analysts said.

The number of unemployed Filipinos jumped 2.855 million in January this year from 2.675 million during the same period last year, the National Statistics Office (NSO) said on Tuesday.

Although OFW remittances have kept the Philippine economy afloat, it does not create more jobs locally and is only prodding more Filipinos to migrate elsewhere for work, Diokno said.

“Our pattern of growth is a jobless growth where unemployment is rising while the economy is growing," Diokno said. “The economy is not creating enough jobs to supply the labor force."

Diokno added that the government should not be over-dependent on OFW remittances especially at a time when jobs of thousands of Filipinos abroad are in danger.

The Philippine government should focus more on diversifying its exports, veering away from the electronics industry, adopt and implement a strong population management program, and reform the tax system and budget process “to put more taxes on consumer goods and less on payrolls," he said.

Diokno also predicted that remittances would continue to slide this year between 10 and 14 percent compared to 2008. - GMANews.TV

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