Chapter 2. The Philippines’ migration landscape

The Philippines has a long history of emigration. Indeed since the 1970s the government has actively facilitated overseas working to deal with high unemployment on the one hand, and extended support to overseas Filipino workers on the other hand. Today emigration is part of Filipino culture. This chapter gives a brief overview of migration in the Philippines: its drivers and impact, who the migrants are and where they have gone, and what programmes and support migrants receive in the different phases of the migration process. It also examines what data are available and where the gaps lie. Finally, it lays out the policy and institutional framework covering emigration, immigration and return migration.

  

The insertion of overseas employment in the 1974 Labor Code provided the legal basis for launching an overseas employment programme as a temporary intervention to deal with rising unemployment and eroding foreign reserves (IOM and SMC, 2013). Few people could have anticipated that overseas employment would become an enduring feature of Philippine society. From some 36 000 workers deployed in 1975, the spectacular growth – more than 1.8 million workers deployed in 2013-14 (POEA, n.d.) – in the migration of overseas Filipino workers (OFWs) and the accompanying rise in remittances prompted a consideration of international labour migration as a sector deserving specific policy attention. For the most part, policies concerning overseas employment were aimed at facilitating overseas employment, creating a remittance-friendly environment, and promoting the protection of OFWs. The linking of international migration with development policies is fairly recent. Even as the volume of migration increased, the Philippines has consistently maintained that overseas employment is a temporary strategy. In fact, Sec. 2 (c) of the Migrant Workers and Overseas Filipinos Act of 1995 (Republic Act or RA 8042) states that the “State does not promote overseas employment as a means to sustain economic growth and achieve national development.” 1

Other sectors, such as civil society, considered this statement to be out of step with what they see as the government’s facilitation, if not outright promotion, of labour migration. Under the administration of Gloria Macapagal Arroyo (2001-10), the Medium-Term Philippine Development Plan (2004-10) specifically mentioned for the first time a target of sending overseas a million workers every year (NEDA, 2004). This move affirmed a view of the Philippines as a labour “broker state” (Rodriguez, 2010) and stoked concerns that migrants’ welfare may not receive the attention it deserves. The administration of Benigno Simeon Aquino III (2010-16) re-established the priority of migrants’ welfare. Item 10 in his 16-point agenda – his social contract with the Filipino people – states that his administration will strive to “create jobs at home so that working abroad will be a choice rather than a necessity” and to extend welfare and protection for those who choose to work overseas (Aquino III, n.d.).2

The Philippines’ long experience with international migration means it has created institutions, policies and practices to govern various aspects and phases of the phenomenon, and a culture of migration has been firmly established in society (IOM and SMC, 2013; Asis, 2006). Although there are concerns and anxieties attached to migrating overseas, on the whole migration is valued, particularly as a vehicle to promote family well-being.

This chapter describes the migration landscape in the Philippines, setting the scene for the chapters and analysis which follow. It outlines current trends in migration, and reviews what the existing research tells us about the key issues linked to migration in the country. It also reviews the role of migration in national development policies, the status of migration-related policies and the institutional framework for managing migration.

A brief overview of migration and remittance trends in the Philippines

International migration since the 1970s has unfolded under six presidents (Ferdinand Marcos, Corazon Aquino, Fidel Ramos, Joseph Ejercito Estrada, Gloria Macapagal Arroyo and Benigno Simeon Aquino III), during which time the Philippine economy went from promising to problematic and back to promising. For most of the last 40 years, the economy has followed a boom-and-bust cycle against a backdrop of political changes – martial law from 1972 to 1981; protest and dissent between 1983 and 1986 following the assassination of opposition leader, Benigno Aquino, Jr.; the restoration of democracy in 1986; and coups d’état and political crises throughout the 2000s. Globally, these events reflected broader changes, such as the oil crisis in the 1970s, structural adjustments in the 1980s, the economic crisis in Asia in 1997, the food crisis and global recession in 2008, and a range of conflicts and disasters. The economic picture brightened in the 2000s. According to the World Bank (2014), the economy has shown sustained growth for the period 2004-13, with an average GDP per capita of 3.4%, a marked improvement over the average growth rate of 1.4% for the period 1950-2003. From the “sick man of Asia”, the Philippines has recently transformed into an emerging economy. This positive turn has been attributed to strong macroeconomic fundamentals resulting from reforms in the financial and public sectors.

Nationwide polls conducted by Pulse Asia between 2006 and 2010 indicate some 20% of Filipinos (peaking at 29% in 2006) had intentions to migrate. This fell to 9% in the July 2010 round, which coincided with the beginning of the new government (Dizon, 2010).

Emigration continues to increase

The 1970s were an important decade in contemporary international migration from the Philippines. It was a period associated with immigration reforms in traditional countries of settlement and the demand for workers in the oil-rich countries in the Gulf Region. The former opened up opportunities for permanent settlement, while the latter initiated the Philippines into international labour migration. Since then, international migration from the Philippines has increased and has become part of the country’s culture. Data from the United Nations indicate that there were an estimated 5.3 million Filipino migrants in 2015, around 5.3% of the Philippines’ total population (Table 2.1). The United States is the most common destination country, receiving 36% of Filipino emigrants in 2015. Other destination countries (in order of their share of Filipino emigrants in 2015) include the United Arab Emirates, Canada, Saudi Arabia, Australia, Japan and Kuwait.

Table 2.1. Key emigration statistics for the Philippines, 2010 and 2015

2010

2015

Total population (in millions)

93

100

Stock of emigrants

4 656 379

5 316 320

% of emigrants to total population

5.0%

5.3%

Destination countries (%)

United States of America

38%

36%

United Arab Emirates

10%

11%

Canada

11%

10%

Saudi Arabia

9%

9%

Australia

4%

4%

Japan

5%

4%

Kuwait

2%

3%

Source: UN DESA (2015), Trends in International Migrant Stock: The 2015 Revision, database, www.un.org/en/development/desa/population/migration/data/estimates2/docs/MigrationStockDocumentation_2015.pdf.

The estimates of the number of emigrants provided by the CFO are twice as large as UN estimates. Within the Philippines, the estimation of the stock population of overseas Filipinos is an inter-agency effort co-ordinated by the Commission on Filipinos Overseas (CFO). Data on the stock population of overseas Filipinos have been available since 2000, and stood at 10 238 614 in December 2013, roughly 10% of the total population (Table 2.2). Between 2000 and 2013, this 10% share has been maintained. Overseas Filipinos, as outlined in Table 2.2, consist of permanent migrants, temporary migrants (largely temporary migrant workers or OFWs), and migrants in an irregular situation (described below). Although the stock estimate is widely used, it is not without problems.3

Table 2.2. Stock estimate of overseas Filipinos, 2000-13

Year

Permanent

Temporary

Irregular

Total

2000

2 551 549

2 991 125

1 840 448

7 383 122

2001

2 736 528

3 049 622

1 625 936

7 412 086

2002

2 807 356

3 167 978

1 607 170

7 582 504

2003

2 865 412

3 385 001

1 512 765

7 763 178

2004

3 204 326

2 899 620

1 039 191

7 143 137

2005

3 407 967

2 943 151

626 389

6 977 507

2006

3 568 388

3 093 921

621 713

7 284 022

2007

3 693 015

3 413 079

648 169

7 754 263

2008

3 907 842

3 626 259

653 609

8, 187 710

2009

4 056 940

3 864 068

658 370

8 579 378

2010

4 423 680

4 324 388

704 916

9 452 984

2011

4 867 645

4 513 171

1 074 972

10 455 788

2012

4 925 797

4 221 041

1 342 790

10 469 628

2013

4 869 766

4 207 018

1 161 830

10 238 614

Source: Commission on Filipinos Overseas, www.cfo.gov.ph/downloads/statistics/stock-estimates.html.

Permanent migration is at its highest rate ever

Starting in the 1970s – when reforms in traditional settlement countries removed immigration barriers to non-Europeans – large numbers of Filipinos migrated to resettle in the US, Australia, Canada and New Zealand. Filipinos have since become a major immigrant group in these settlement countries. Permanent migration is largely driven by family reunification. Data on permanent migrants have been recorded from 1981, soon after the creation of the CFO in 1980. The most recently available data are for 2015, which registered the highest outflow ever – at 92 998. Data on registered emigrants from 1981 to 2015 reveal the following: the US is the primary destination for permanent migrants; emigrants are mostly female; those in the ages 20-39 comprise the largest share (41%), those below 15 years account for a sizable 21%; the majority of permanent migrants are single; about a third (30%) have completed tertiary education and up; and most were not employed prior to emigration.4

Permanent migrants include international marriage migrants, a category which is dominated by women. CFO has been keeping track of participants in marriage migration since 1989. Between 1989 and 2014, just under 500 000 Filipinos – overwhelmingly women – migrated overseas to join their foreign spouses, mainly in the US (43.3%), Japan (24.2%) and Australia (7.9%). This type of migration has received policy and advocacy attention because of concerns over the welfare of women – in the 1980s, it was associated with the mail-order bride phenomenon; in the 1990s, its possible links with trafficking prompted interventions to protect women marriage migrants. An interesting development is the rise of Asian countries – notably, Japan, Chinese Taipei and Korea – as major destinations for marriage migration from the 1990s (earlier in Japan). While these countries are otherwise cautious of migration (and the permanent settlement of foreigners), marriage migration provides a pathway for permanent residence and citizenship in these destination countries.

Temporary migration estimates vary

Data on the stock of temporary migrants are available from two sources: CFO and the Philippine Statistical Authority-National Statistics Office (PSA-NSO).5 The CFO’s estimate of temporary migrants is based on data on OFWs legally deployed by the Philippine Overseas Employment Administration (POEA) and other sources, while the PSA-NSO’s data come from the Survey of Overseas Filipinos (SOF). A rider to the Labour Force Survey, the SOF goes back to 1982 although its design and name have changed over the years (Asis, 2008a). The SOF refers to OFWs as Filipinos working overseas in the six months prior to the survey as reported by the sampled households. In general, the CFO estimate of temporary migrants is larger than that based on the SOF (Asis, 2008a). Note that temporary migrants in the CFO estimate are not only legally deployed OFWs, although they account for the largest share in this category of migrants. In 2013, CFO reported 4.207 million temporary migrants, while the 2013 round of the SOF counted 2.295 million (PSA, 2013). In 2014 and 2015, the SOF counted 2.228 million and 2.377 million overseas contract workers, respectively (PSA, 2014a and 2015).

Irregular migration and trafficking are difficult to measure

CFO’s stock estimate is a source of information on overseas Filipinos in an irregular situation, a type of migration which is difficult to measure. Data are based on reports provided by Philippine Foreign Service posts, but the methodology used is not known, hence these figures are at best indicative or ballpark figures. Trends in irregular migration since 2000 can be divided into three periods: 2000-04, when irregular migration accounted more than 10% of the total overseas Filipinos (for 2000-03, it was as high as 20-25% of the total); 2005-10, when it declined to less than 10%; and 2011-13, when patterns of irregular migration fluctuated. The decline since 2005 reflects the impact of the amnesty, crackdown and repatriation exercises implemented by destination countries such as Malaysia and Korea. Malaysia (particularly Sabah or East Malaysia) has consistently ranked as the destination of the largest population of Filipino migrants in an irregular situation. As of 2013, there were 448 450 Filipino migrants in an irregular situation in Malaysia (CFO, 2016).

Data on trafficking in persons are also difficult to capture. One source of data on trafficked persons is the National Recovery and Reintegration Database established by the Department of Social Welfare and Development. For the period 2000-13, 1 665 cases were recorded in the database (IOM and SMC, 2013). Based on the US State Department’s assessment of anti-trafficking efforts by governments since 2001, for the most part (including 2013, 2014 and 2015), the Philippines has been ranked as Tier-2, and it slid into Tier-2 watch list for the years 2004, 2005, 2009 and 2010 (IOM and SMC, 2013).6 In 2016, the Philippines was upgraded to Tier 1, which means that it has acknowledged the existence of human trafficking, has made efforts to address it, and meets the US Trafficking Victims Protection Act’s minimum standards. The increase in the number of convictions of traffickers and number of victims rescued, more resources allocated to the Inter-Agency Council Against Trafficking, and judicial reforms, among others, improved the Philippines’ ranking in 2016 (US Department of State, 2016).

Student migration is modest

Student migration from the Philippines remains modest compared to other Asian countries such as India, China, Japan and Korea. In 2014, UNESCO estimated that some 11 454 tertiary-level Filipinos were studying overseas.7 Data on student migration from the Philippines are not collected, and thus far there are no policies on this type of migration. Although the current numbers may be small compared to permanent migration and temporary labour migration, they may increase in the future, which will have implications for brain drain and brain gain.

Remittances make a significant contribution to the economy

Increasing migration has been accompanied by increasing remittance inflows. Remittances to the Philippines breached the USD 1 billion mark in 1989 (IOM and SMC, 2013). As Figure 2.1 indicates, the economic crisis in Asia in 1997 and the global recession in 2008 did not result in a decline in the volume of remittances. The diverse geographical distribution and occupational profile of OFWs also serve as a shield from economic highs and lows.

Figure 2.1. Remittances continue to grow, 1995-2015
Total remittances (USD million) and remittances as a share of GDP (%)
picture

Source: World Bank (2016), World Development Indicators (database), http://data.worldbank.org/data-catalog/world-development-indicators.

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The remittance story is not complete without referring to the proactive and persistent efforts of the Bangko Sentral ng Pilipinas (Central Bank of the Philippines) to improve the remittance environment, as a result of which remittance charges have fallen, service delivery has speeded up (especially through the use of technology), rural banks have been allowed to operate a foreign currency deposit unit, and financial services have been expanded for remitters and beneficiaries (see Annex D, IOM and SMC, 2013).

Contrary to popular perceptions, remittances have been put to good use – for the renovation or construction of houses, the schooling of children and other family members, purchase of consumer durables, savings, and starting a business. Investments, particularly the kind which generate employment, have remained very modest, however. Financial education programmes, information services8 and capacity building of local governments are some of the initiatives aimed at harnessing the use of remittances for investments.

What are the key issues and knowledge gaps?

As noted previously, the Philippines has only recently started making the links between migration and development policy (see also Asis and Roma, 2010; Asis, 2008b). An earlier country report prepared for this project surveyed the literature on the impact of migration on the following sectors: agriculture, labour market, trade, investment, financial services, education and skills, health,9 social protection and environment (Asis, Tigno and Ducanes, 2014). The four sectors selected as the foci of the research in the Philippines are: labour market, agriculture, education and investment and financial services. This section reviews the key migration and development issues emerging from the literature on these four sectors.

Overseas employment is a strategy for rural households to diversify income

According to the 2010 census, more than half (54.7%) of the Philippine population live in rural areas (PSA, 2013). Agriculture has lagged behind industry and services in terms of contribution to the GDP. Not surprisingly, the country’s poor are largely in the rural areas (Briones, 2016). Rural households may try to move out of poverty through agricultural entrepreneurship, entering the rural labour market or the non-farm economy, or they may opt to migrate to towns, cities or other countries (FAO and IFAD, 2008). Agriculture is highly sensitive and vulnerable to environmental changes. The effects of weather events on crop yields as well as farm price volatilities add to uncertainties which may drive rural households to either spread the risks or consider other options to supplement or replace income from farming (Geron and Casuga, 2012). The option to move (especially internationally), however, is constrained and determined by a variety of factors that are often resource-related, such as land ownership, human capital, financial resources, and availability of information.

The migration of family members can supplement income from farming. Migrant remittances have been shown to compensate for the low incomes of households from rice farming in the Philippines (Paris et al., 2009; see also Gregorio and Opiniano, 2011). Among the three countries that were studied – the Philippines, Thailand and Viet Nam – Paris et al. (2009) found that the Philippines had the highest share of rural households receiving remittances. Households with OFWs were found to have hired in more external labour than family labour, suggesting the transition of family members to non-farming functions. OFW households may also use remittances to shift to non-agricultural options. Findings from other studies in various countries suggest that migration can hasten the movement out of agriculture or make agriculture secondary to off-farm activities (FAO and IFAD, 2008).

A study by Gregorio and Opiniano (2011) confirmed that migration has not been factored into rural development policies and programmes. It also indicated that civil society organisations in the agriculture sector do not have much engagement with overseas Filipinos and migration issues. The results of their household survey indicated improvements in farming assets and properties made possible by remittances and provide jobs to other rural residents. However, some of these farming families may leave farming in the future. Also, the benefits of remittances may increase the disparities between households with OFWs and those without.

Constraints identified in the agricultural sector include infrastructure, i.e. paved roads, electricity and piped water (Malaluan and Dacio, 2001); access to credit (Geron and Casuga, 2012); and diversification (Briones and Galang, 2013). Chapter 5 in this report presents the IPPMD analysis of migration and agriculture.

Job-skills mismatch, unemployment and emigration are interconnected

The lack of employment opportunities in the Philippines is commonly mentioned by migrants and aspiring migrants as the reason for deciding to work abroad. Data on the employment situation and labour migration trends suggest close links between migration and the labour market.

Between 2013 and 2016, labour force participation rates stood at around 64%, falling to 63.3% in the latest round (July 2016). During this period, unemployment fell from 7.2% in 2013 (PSA, 2014b) to 5.4% in July 2016 (PSA, 2016). The underemployment rate is higher, hovering around 19% in the earlier years (PSA, 2014b) and declining to 17.3% in July 2016. As of July 2016, youth unemployment (15-24 years old) continues to be huge, comprising 48.2% of the total unemployed (PSA, 2016).

Unable to find employment at home, the Filipino youth are turning to international labour migration as an alternative. Young people (the 15-24 age group) are mostly interested in migrating for work, but also for studies and to experience other cultures (Asis and Battistella, 2013). The Pinoy Youth Barometer survey found four out of ten young Filipino students planning to work abroad after graduation. Their top three motivations are: to send remittances to their families (75%); to experience other cultures (72%); and the lack of opportunities in the country (67%). Even young children (8-10 years old) nurture intentions to migrate someday (ECMI/AOS-Manila, SMC and OWWA, 2004).

However, young emigrants are likely to land jobs in the low-skilled sectors, largely in production or services, which are the jobs in high demand overseas. Thus, when young Filipinos migrate because of a lack of opportunities in the domestic labour market, their employment options overseas are not any better (Asis and Battistella, 2013). Given the demand for workers in low-skilled occupations, university educated Filipinos are likely to experience brain waste or de-skilling in their overseas employment (Battistella and Liao, 2013). The concentration of young migrants in low-skilled occupations also calls for vigilance in ensuring their protection in the workplace. Getting started in low-skilled employment also has implications for their long-term employment prospects and broader development issues.

Continuing outmigration has also raised concerns about brain drain – an issue which has been discussed since the 1970s, especially in the context of the emigration of doctors, nurses and other health professionals. An early study concluded that the emigration of health professionals did not lead to brain drain; instead, their migration reflected the domestic labour market’s inability to absorb these professionals (Pernia, 1976). More recently, Tan (2009) qualified that brain drain occurs when the education and training system is unable to replace the departing workers. She noted the expansion of tertiary educational institutions, post-secondary technical and vocational schools, and training centres, which produce large numbers of graduates, but only a few high-quality institutions produce well-prepared and high-quality workers.

The oversupply of workers with general skills is part of the unemployment scenario in the Philippines, especially among the youth.10 Enrolment patterns in tertiary education hint at the mismatch between education and the labour market. Many students (60%) are concentrated in just three disciplines: business administration, education and engineering and technology, and medical and allied programmes (with nursing accounting for the largest share). Private higher education institutions are quick to respond to perceived opportunities in the labour market here and abroad (especially the latter). Programmes preparing students for in-demand jobs proliferate. Without regard to the quality of training, these institutions produce large numbers of graduates who cannot be absorbed by the labour market at home or overseas. The job-skills mismatch is illustrated by the oversupply of nurses and seafarers in the country. Meanwhile, the public health sector needs more health professionals but cannot afford to hire more nurses because of funding constraints (Asis and Roma, 2010).

The Commission on Higher Education (CHED) has intervened to remedy the distortions in the education system. In 2010, CHED imposed a moratorium effective academic year 2011-12 on the opening of new programmes in the following oversubscribed courses: business administration, nursing, teacher education, hotel and restaurant management, and information technology (CHED Memorandum Order No. 32, Series of 2010). Earlier, in 2004, it issued a moratorium covering all applications for first year level offering of all maritime programmes filed after 23 February 2004 at CHED Regional Offices. This was later amended by CHED Memorandum Order No. 47, Series of 2009 which limits the moratorium to BS Marine Transportation and BS Marine Engineering programmes (other baccalaureate and graduate programmes are not included). To address weaknesses in higher education, CHED issued a policy-standard to enhance the quality assurance system of higher education institutions in the Philippines through an outcomes-based and typology-based quality assurance (CHED Memorandum Order No. 46, Series of 2012).

The Enhanced Basic Education Law of 2013 (RA 10533) is a key educational reform under the Aquino administration. Known as the K-12 programme, it defines basic education as covering kindergarten, six years of elementary, and six years of high school (four years of junior high school, Grades 7-10, and two years of senior high school, Grades 11-12). The additional two years in high school will make Philippine basic education comparable with other countries. Its adoption is, to some extent, influenced by migration considerations. The two-year deficit in Philippine basic education has posed difficulties for Filipino workers in having their training recognised in foreign labour markets.

The Technical Education Skills and Development Authority (TESDA) has been very much involved in international migration through providing training and skills certification of migrant workers. The agency is expanding and strengthening technical vocational education and training (TVET) programmes and is incorporating entrepreneurship in its programmes. To promote better job-skills matching, the Asian Development Bank recommends: i) improving the relevance and quality of TVET programmes; ii) strengthening certification frameworks; and iii) providing employment services, such as career guidance and coaching for school-leavers. More broadly, more broad-based employment generation across different sectors is needed; in the past six years, about 80% of new jobs in the Philippines were in the service sector (CNN Philippines, 2016).

Chapters 4 and 6 in this report present the IPPMD analysis of migration, education and labour market.

Migrants are remitting but not investing

On a macro level, the high level of remittances sent home by OFWs has propped up national savings, which according to the World Bank have already exceeded 30% of GDP. The Philippines has also had a current account surplus since 2004 (Figure 2.2). However, the investment rate has not kept pace and has even been declining, indicating that remittances are not being funnelled into investments (Desierto and Ducanes, 2013).

Figure 2.2. The Philippines’ current account balance is healthy
picture

Note: CA: current account; GNI: gross national income; GDP: gross domestic product.

Source: Bangko Sentral ng Pilipinas (BSP).

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Investments can increase job creation and diminish the pressure to work abroad. Opportunities for investment can also encourage return migrants to channel remittances and savings toward development initiatives. This will not only facilitate migrants’ reintegration, but can also contribute to jobs generation. Thus far, however, various rounds of the Consumer Expectations Surveys conducted by the Bangko Sentral ng Pilipinas reveal low levels of investments by remittance-receiving households.

The low propensity of migrants and their families to invest must be considered in the broader context. The Philippines has a poor investment record overall. In the past 30 years, the investment-to-GDP ratio has averaged only 21% (and investment-to-GNP ratio has averaged only 19%). This is lower than other ASEAN (Association of Southeast Asian Nations) countries due to historically poor governance (de Dios, 2009; Desierto and Ducanes, 2013), uncompetitive exchange rates, low savings rates, and poor infrastructure, among others.

Several initiatives had been implemented to promote investment in the Philippines. Following the Omnibus Investment Code of 1987, the Foreign Investment Act (RA 7042) was adopted in 1991, and RA 8179 of 1996 further liberalised the conditions for foreign investments. A new bill (SBN 35), introduced by Senator Cynthia Villar in 2014, aims to provide incentives to investors, such as direct and indirect tax incentives. Strengthening of institutions, anti-corruption efforts and the use of technology have enhanced the country’s rankings in recent years (e.g. in the Global Competitiveness Report 2014-2015 [Schwab, 2014] and the Doing Business Report 2015 [World Bank, 2014]), However, as noted in the Global Competitiveness Report 2014-2015, infrastructure and labour market inefficiencies and rigidities remain weak (Schwab, 2014). Out of ten indicators set by the World Bank, the Philippines got negative marks for five: protecting investors, dealing with construction permits, getting credit, trading across borders and enforcing contracts. On the other hand, it did receive positive marks for starting a business, getting electricity, registering property, paying taxes and resolving insolvency (Torres, 2014).

Poor investment means a dearth of quality employment opportunities in the country, increasing the incentives to emigrate. Agriculture still accounts for more than one-third of total employment, while industry – where higher productivity jobs are more likely to be found – accounts for only about 16%. About half of total employment is in services, but jobs in this sector vary very widely in terms of quality. It is worth noting that the regions with the largest share of overseas workers are in CALABARZON and NCR, which also happen to be the centres of manufacturing in the country.

The low level of capital in the country potentially means high marginal returns to new investments because of untapped opportunities – this could be an incentive for those with savings, such as OFWs, to invest. There are mixed findings on the effect of remittances on investment (including spending on human capital and durable equipment), with some claiming that remittances raise the share of education and health care in total spending (Bird, 2009; Pernia, 2008; Tabuga, 2007).11 Increased remittances can raise spending on durable goods and children’s education and on investment in capital-intensive entrepreneurial activities (Yang, 2005). However, the results of these studies have been critiqued for possible methodological flaws (Ducanes, 2013).

The linkages between migration and investment are mentioned in several sections of the Philippine Development Plan 2011-2016 Mid-Term Update (NEDA, 2014). This recognises that migrants’ savings and investment can be boosted by proper training, hence financial education is important. Appropriate financial instruments can also encourage migrants and their families to invest a portion of their savings.

Chapter 7 in this report presents the IPPMD analysis of migration, investment and financial services.

What role does migration play in national development strategies?

After more than 40 years of policies supporting sustained labour migration, migration governance is now expanding to examine how migration can be more linked to development. Among the migration-related agencies, the CFO has actively worked on “responding to the challenges of migration and development” since 2010. The Philippine Development Plan 2011-2016 (NEDA, 2011) is noteworthy for including 60 migration-related provisions spread across seven of its nine chapters. Among others, the plan recognises the failure to achieve inclusive growth as a factor in the outflow of skills and talents, the importance of promoting the protection of OFWs, the contributions of remittances to the economy, leveraging remittances for economic development, and brain gain, among others.

The Philippine Development Plan 2011-2016 Mid-Term Update, which reviewed progress towards the above development plan, noted that “[t]he country has achieved remarkable progress in sustaining its growth momentum, even exceeding Plan growth targets” (NEDA, 2014). But achieving inclusive growth remains elusive. Close to two-thirds of GDP were accounted for by just three regions (all in Luzon: the National Capital Region, CALABARZON, and Central Luzon). While the government has achieved a 7-8% GDP growth rate and an investment-to-GDP ratio of 22%, targets to reduce unemployment to 6.8-7.2% and poverty incidence to 16.6% have fallen short. As of 2012-13, unemployment was at 7.0-7.1%, while poverty incidence stood at 25.2% (NEDA, 2014). Thus, the second half of the plan aims to achieve sustainable and inclusive growth that will generate productive and decent jobs and reduce the multiple dimensions of poverty. This includes generating jobs for 14.6 million Filipinos by 2016,12 reducing unemployment to 6.5-6.7%, underemployment to about 17%, the incidence of income poverty to 18 to 20%, and the incidence of multidimensional poverty to 16-18% (NEDA, 2014). The targets also include improving access to health, education, water, sanitation, and secure shelter, among others. The productive sectors are critical for shaping the economic growth outlined in the second half of the plan. Industry and services are seen as the main drivers of growth and sources of employment in the years 2014-16. The goal is to increase investments in these sectors by 36% between 2012 and 2016. Noting that about one-third of the country’s labour force is in agriculture, the next three years (2014-16) aim to increase productivity, enhance forward linkage with industry and services, and improve resilience to risks in this sector.

Migration is discussed in the Mid-Term Update in relation to realising the investment potential of migrants, social protection, enhancing border security, and the need to amend the Philippine Immigration Law. The plan sees migration as contributing to development: remittances are acknowledged as boosting gross national product (GNP), improving the country’s current account balance, and fuelling consumption. Overseas Filipinos are viewed as possible investors. The need to develop financial instruments and services and the creation of an investor-friendly environment are proposed to promote the investment by overseas Filipinos. The plan also notes that the migration of Filipino workers is indicative of the lack of employment opportunities at home. Attention to welfare and protection issues is also highlighted. For example, in cultivating relations with foreign nations, “[p]aramount consideration shall be paid to ensuring the welfare and protection of the millions of Filipinos working overseas” (NEDA, 2014). The plan also intends to address migration by women, particularly those in domestic work; illegal recruitment and trafficking, especially trafficking of children; social protection of OFWs; the separation of migrants and their families; protecting the family from the social costs of migration; and brain drain. In other words, the plan considers both the gains and the costs of migration. This appreciation of the benefits and costs of migration were also mentioned by selected stakeholders in earlier research (see Asis and Roma, 2010).

Policies governing labour migration are well-established

As a country of origin, the development of institutions, legal frameworks and policies concerning international migration in the Philippines has largely focused on emigration, particularly international labour migration. The Philippines has built a reputation in migration governance for having a twin approach of facilitating labour migration and extending protection to migrant workers before migration, while they are abroad and upon their return to the Philippines. Most interventions are therefore aimed at promoting the protection and welfare of migrants.

Filipinos who migrate permanently to other countries, fiancés and spouses of foreign citizens, participants of exchange visitor programmes, and au pairs must register with the Commission on Filipinos Overseas (CFO). These groups of migrants are required to undergo pre-departure orientation and counselling (which is group-specific); compliance with this requirement is checked by the immigration officer at point of departure. Filipinos migrating to work overseas undergo more procedures and deal with several government agencies because of the elaborate regulation that has developed around international labour migration. The Migrant Workers and Overseas Filipinos Act of 1995 (RA 8042) provides for the protection of migrant workers at all stages of the migration process. It was amended in 2007 (RA 9422), which repealed the deregulation provisions (sec. 29 and 30) and in 2010 (RA 10022), which strengthened the protection measures. The law is further elaborated in the POEA Rules and Regulations for land-based migrants (2002) and seafarers (2003); both were revised in 2016.

Licensed recruitment agencies mediate between foreign employers wanting to hire Filipino workers and Filipino workers aspiring to work overseas. The employment agency must be owned by a Filipino national and must be licensed by the POEA. The license can be revoked if requirements are not met or if the agency is found guilty of illegal practices in the recruitment of migrant workers. The lucrative business of recruiting migrants has triggered the proliferation of employment agencies – there are more than 800 for land-based workers and close to 400 for seafarers.

The goal of protecting OFWs is promoted through the provision of information,13 campaigns against illegal recruitment, imposing a ceiling on the placement fee collected by private employment agencies from migrant workers,14 the joint and solidarity liability between the employer and the employment agency and the provision of mandatory insurance to be paid by the employment agency. Two protective measures are particularly controversial. The first pertains to the policy that “the government shall deploy and/or allow the deployment only of skilled Filipino workers” (RA 10022 sec. 1g). In fact, most Filipino migrants are unskilled workers, employed in the production sector or in domestic work. Concerns over the protection and welfare of women migrants in domestic work have led to efforts such as the 2006 Household Service Workers Reform Package which was aimed at professionalising domestic work, the labour agreement reached with Saudi Arabia in 2013, and the ratification of the International Labour Organization (ILO) Domestic Workers Convention, 2011 (No. 189). The second concerns the deployment only to countries that provide protection to migrant workers (RA 10022, sec. 3). This requires the Department of Foreign Affairs to certify countries that provide protection to migrants. But in fact only a small number of countries have been considered unsafe and they are not the major countries of destination of OFWs.

While OFWs are abroad, they are protected through various services co-ordinated by Philippine embassies and consulates. The Office of the Undersecretary for Migrant Workers Affairs, which is responsible for the legal representation and repatriation of OFWs in crisis situations, is under the Department of Foreign Affairs. In countries where there are large numbers of Filipinos, Philippine embassies and consulates oversee a Migrant Workers and Other Overseas Filipinos Resource Center, with functions such as counselling, information and legal representation. The protection of overseas Filipinos is considered the highest priority of Foreign Service posts, which are tasked to operate as a team, under the leadership of the ambassador.

A variety of programmes and services for migrants and their families are provided by the Overseas Workers Welfare Administration (OWWA), which is a welfare fund built up with contributions paid by employers (in practice, the USD 25 membership fee has been passed on to workers). Membership in OWWA entitles migrants and their families to disability and death benefits and education and training programmes (including scholarships for dependents of OFWs).15 As a welfare fund, OWWA does not receive a funding allocation from the government. Other stakeholders are very critical about this. On 10 May 2016, President Aquino signed into law RA 10801, An Act Governing the Operations and Administration of the Overseas Workers Welfare Administration, which further boosts the government’s efforts to promote the protection of OFWs. Known as the OWWA Charter, the law provides government funds to shoulder the operational and staff expenses of OWWA, which frees up more funds to support programmes and services to migrants and their families. The OWWA Charter also specifies reintegration as a core programme of OWWA, and as such, it transfers the National Reintegration Center for OFWs from the DOLE to OWWA.

To ensure access to social protection, OFWs are required to pay their health insurance contribution to PhilHealth and they are encouraged to be members of the national Social Security System (SSS).

Protecting overseas workers entails transnational action

The Philippines pursues international, regional and bilateral actions for promoting the protection of OFWs. As a founding member of ASEAN, the Philippines has led the discourse on migration within the region. In 2007, the ASEAN Declaration on the Protection and Promotion of the Rights of Migrant Workers was adopted. Negotiations are at an advanced stage in adopting a binding instrument. With the establishment of the ASEAN Economic Community (AEC) in 2015, the free flow of skilled labour should be implemented as part of the pillar on creating a single market and production base. Towards this end, countries are working on Mutual Recognition Arrangements (MRAs) in the services sector.16 However, the MRAs will not ensure automatic circulation of the highly skilled, as many obstacles remain in terms of visas and permits. In addition, the MRAs are limited to eight professions: engineers, architects, nurses, doctors, dentists, accountants, surveyors and those in the tourism industry.

At the international level, the Philippines has ratified most of the humanitarian and ILO conventions related to migration. It has also entered into bilateral agreements with several countries of destination. Often, such agreements take the form of memoranda of understanding (MOU) which are mostly about facilitating the employment of migrants – they are less specific concerning protection issues.17 The 2013 agreement forged with the Kingdom of Saudi Arabia concerning the recruitment of Filipino of domestic workers is a breakthrough because it was the first time that Saudi Arabia inked an agreement with a labour sending country.18

Return, reintegration and remittance investment programmes are still a work in progress

Since labour migration is temporary, the return and reintegration of OFWs is an important aspect. Reintegration has already been considered in the Migrant Workers and Overseas Filipinos Act of 1995 (RA 8042), which provided for the establishment of a Replacement and Monitoring Center. The policy remained mostly on paper, however. In 2007, the National Reintegration Center for OFWs (NRCO) was established. Sec. 18 of RA 10022 further defined its functions and partnerships with other government agencies, service providers, international organisations and other stakeholders. The operations of NRCO were further strengthened by the allocation of funds and staff to carry out its functions which include, among others, developing programmes and projects for livelihood, entrepreneurship, savings, investments and financial education for return migrants and their families; coordinating with relevant stakeholders in the development and implementation of programmes; and conduct research in support of policy and programme development.

Initiatives aimed at unleashing the potential of return migrants in promoting knowledge transfer include the pioneering Balik (Return) Scientist Programme, introduced in 1975. A recent variant is the Balik Turo (Teach Share) programme in co-operation with the Philippine Nurses Associations – it aims to promote teaching and learning through the circular migration of nurses. Opportunities to share knowledge and expertise are also among the ways the Filipino diaspora can help to support development in the Philippines.19 CFO has been running the LINKAPIL (Lingkod sa Kapwa Pilipino or Service to Fellow Filipino) Programme, which, since 1989, has served as an avenue for overseas Filipinos to support welfare and development programmes in the Philippines. Between 1990 and 2012, LINKAPIL received over USD 50 million which went into supporting various programmes in the Philippines (e.g. disaster relief programmes and scholarships, among others).20 CFO and NEDA co-organised the Remittances and Development Council, a multi-stakeholder policy and advisory body dedicated to creating a safe and efficient remittance environment in the country.21

Under the Joint Migration and Development Initiative, CFO has pursued capacity building of local government units in selected regions to enable them to integrate migration into their local development plans. It has also promoted the empowerment of overseas Filipinos through financial literacy programmes. In collaboration with the Western Union Foundation and the United Nations Development Programme, it has launched the Philippine Financial Freedom Campaign, an online facility which aims to provide financial education (e.g. how to save and investment tips) to overseas Filipinos and their beneficiaries.22

What is the institutional framework governing migration?

The governance of migration is a multi-agency undertaking:

  • Immigration is the mandate of the Bureau of Immigration (BI). The Philippine Immigration Act of 1940 provides the legal basis for policies concerning the admission and stay of foreign nationals. The Department of Justice, through the BI, is the institution responsible for immigration matters. Immigration policies are mostly about enforcement and border control. No specific programmes have been devised for the integration of immigrants into the Philippines. Several bills proposing to update the Philippine Immigration Act have been filed in Congress, but they have been overshadowed by other issues.

  • Permanent migrants are the responsibility of the Commission on Filipinos Overseas (CFO). Created in 1980 by Batas Pambansa 79, CFO is mandated to maintain the links between permanent migrants and the Philippines. At one point, CFO was under the Department of Foreign Affairs; later, it was placed under the Office of the President. In 2010, CFO became more involved with migration and development issues and this policy turn resulted in more engagement with the Filipino diaspora and various stakeholders.

  • Temporary migrant workers come under the Department of Labor and Employment (DOLE) and its attached agencies, responsible for specific aspects of overseas employment. The Philippine Overseas Employment Administration (POEA) was established in 1982 and is tasked with the regulation of the employment agencies, the regulation of the migration process, anti-illegal recruitment programmes, and the adjudication of complaints filed against employment agencies. The Overseas Workers Welfare Administration (OWWA) was established in 1977 and is a welfare fund for the benefit of migrants who pay a membership fee. It oversees the Pre-Departure Orientation Seminar (PDOS) which is mandatory for migrant workers. The POEA and OWWA have migrant worker representatives on their board of directors. The National Labor Relations Commission (NLRC), established by the 1974 Labor Code, is a quasi-judicial body with original and exclusive jurisdiction over claims concerning the employee-employer relationship. It adjudicates in particular claims of migrant workers concerning payment for the unfinished portion of the contract.

  • Return migrants are dealt with by the National Reintegration Center for OFWs (NRCO), tasked with the reintegration of OFWs and the promotion of their local employment and entrepreneurship.

The Department of Foreign Affairs is responsible for the release of passports and for providing assistance to overseas Filipinos through the Foreign Service posts. Assistance in time of crisis and for repatriation is provided by the Office of the Undersecretary for Migrant Workers Assistance (OUMWWA). Other departments assume specific responsibilities in the governance of migration: the Department of Health for health insurance, the Commission on Higher Education (CHED) for the verification of educational training of migrants, the Technical Education Skills Development Authority (TESDA) for training programmes and skills certification, and the BSP for remittances.

Inter-agency co-operation is highly relevant. Such co-operation is already mandated by law in regard to the fight against illegal recruitment (RA 10022, sec. 16, d.2), in the provision of free legal assistance (RA 10022, sec. 8), in the assistance to overseas Filipinos through the Migrant Workers and Other Overseas Filipinos Resource Centers, which are present in selected countries (RA 10022, sec. 12), the reintegration of OFWs (RA 10022, sec. 10), and the Shared Government Information System for Migration (RA 10022, sec. 13). However, inter-agency co-ordination remains a challenge in practice.

The momentum for integrating migration into national development plans has been strengthened by the creation of the Sub-Committee on International Migration and Development (SCIMD) within the National Economic Development Authority (NEDA) in 2014. Envisioned as a “platform that will provide policy coherence (between national and sectoral development policies) and promote institutional coordination,”23 the SCIMD includes members from the Department of Labour and Employment, Department of Foreign Affairs, Department of Interior and Local Government, Union of Local Authorities of the Philippines, and the National Anti-Poverty Commission.

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Notes

← 1. Republic Act No. 8042, Migrant Workers and Overseas Filipinos Act of 1995 http://www.poea.gov.ph/laws&rules/files/Migrant%20Workers%20Act%20of%201995%20(RA%208042).html

← 2. A Social Contract with the Filipino People: Benigno S. Aquino III Platform of Government (http://www.gov.ph/about/gov/exec/bsaiii/platform-of-government/)

← 3. The varying estimates produced by UN DESA (see Table 2.1) and CFO stem from their different methodologies and data sources. The CFO estimate is based on: i) primary sources, i.e., registration data of emigrants and other clientele of CFO (for permanent migrants), overseas deployment data from the Philippine Overseas Employment Administration (for temporary migrants, specifically legally deployed OFWs) and consolidated reports (including estimates about irregular migrants (submitted by more than 80 Foreign Service posts to the Department of Foreign Affairs; and ii) secondary sources, census and other data from various host countries. The Country Migration Report (IOM and SMC, 2013) also discusses the limitations of the formula in estimating the stock population and problems in the definition of permanent migrants. The latter includes “Filipino immigrants and legal permanents residents abroad, Filipino spouses of foreign nationals, Filipinos naturalized in their host country, Filipino dual citizens and their descendants.” The definition, thus, includes non-Filipino citizens. The UN DESA estimates are based on censuses and use the foreign-born population or foreign citizens to produce the estimate. UN DESA also indicates if the number of refugees is included in the estimate of international migrants. For countries where no data are available, the number of international migrants is obtained by imputation. For details, see UN DESA (2015).

← 4. For details, see “Statistical Profile of Registered Filipino Emigrants, 1981-2015”, http://cfo.gov.ph/downloads/statistics/statistical-profile-of-registered-filipino-emigrants.html.

← 5. The PSA was created by the Philippine Statistics Act of 2013 which was signed into law on 12 September 2013. The PSA merged the former National Statistics Office, National Statistical Coordination Board, Bureau of Agricultural Statistics and Bureau of Labor and Employment Statistics into one organisation.

← 6. The Trafficking in Persons (TIP) Report is an annual report issued by the U.S. State Department’s Office to monitor and combat human trafficking. The TIP report rank governments into one of four tiers based on the extent of government action to combat trafficking. A tier 2 ranking indicates that a country does not fully meet the Trafficking Victims Protection Act’s (TVPA) minimum standards but are making significant efforts to meet those standards. For more information see http://www.state.gov/j/tip/rls/tiprpt/2016/index.htm.

← 7. Global Flow of International Tertiary Level Students: http://www.uis.unesco.org/Education/Pages/international-student-flow-viz.aspx

← 8. For example, see the Balinkbayan portal launched by CFO in 2010 (www.balinkbayan.gov.ph).

← 9. The health sector is implicated in migration in two ways: the outmigration of health professionals (which is commonly perceived as resulting in the shortage of health personnel, especially in rural areas) and the health of migrant workers. As regards the latter, in 2015 the Department of Health established the Migrant Health Unit at the Bureau of International Cooperation and organised the Philippine Migrant Health Network. In November 2015, the Strategic Plan for the Philippine Migrant Health Program 2016-2022 was finalised; in March 2016, Administrative Order (AO) No. 2016-007 on the National Policy on the Health of Migrants and Overseas Filipino was issued.

← 10. According to the Asian Development Bank, unemployment among university graduates is increasing in Southeast Asia; it is highest in Indonesia and the Philippines (ADB, 2011).

← 11. Atleast one study found no such positive influence (Ang, Sugiyarto and Jha, 2009).

← 12. Generating jobs for 14.6 million Filipinos by 2016 is an enormous challenge. Assuming continuing GDP growth at above 5% will generate good jobs for 2.2 million Filipinos between 2013 and 2016, there will still be 12.4 million Filipinos without a job, for whom the options would include seeking work overseas, work in the informal sector, or self-employment (World Bank, 2013).

← 13. The Philippines has developed various information programmes for migrant workers. They include the mandatory pre-departure orientation seminars, which have been supplemented by pre-employment orientation seminars provided in various areas in the Philippines and, as well as post-arrival orientation seminars undertaken by some embassies and consulates. Recently, POEA has launched online pre-employment seminars for professional migrants and domestic workers.

← 14. The government allows employment agencies to collect a fee from migrants, but limits it to the equivalent of one month salary. Since 2006, the government imposed a no placement fee policy for domestic workers. The co-operation of employment agencies in destination countries is crucial in reducing recruitment costs. The strong opposition of the migration industry has kept the government from ratifying the ILO Private Employment Agencies Convention, 1997 (No. 181), which stipulates that private recruitment agencies shall not charge any fees or costs to workers.

← 15. See www.owwa.gov.ph.

← 16. MRAs for the following professional services have been signed: engineering, nursing, architecture, surveying, medical practitioners, dental practitioners, accountants and tourism professionals (http://www.asean.org/storage/images/2015/October/outreach-document/Edited%20MRA%20Services-2.pdf).

← 17. See http://www.poea.gov.ph/laborinfo/bLB.html and http://www.poea.gov.ph/laborinfo/bSB.html for bilateral agreements concerning land-based and sea-based OFWs.

← 18. For details on the Agreement on Domestic Worker Recruitment between the Ministry of Labor of the Kingdom of Saudi Arabia and the Department of Labor and Employment of the Republic of the Philippines, see http://www.poea.gov.ph/laborinfo/agreement/2.pdf.

← 19. Information concerning these matters are available on the Balinkbayan portal (www.balinkbayan.gov.ph).

← 20. See www.cfo-linkapil.org.ph.

← 21. See http://cfo.gov.ph/other-programs-initiatives/remittance-for-development-council-redc.html.

← 22. See http://pesosense.com.

← 23. Draft Resolution (Series of 2014), “Approving the Creation of a Sub-Committee on International Migration and Development” (provided by NEDA).