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WB study: OFW money lifting families out of poverty
Posted: 2:09 AM | Oct. 25, 2005
Inquirer News Service

MONEY remitted by overseas Filipino workers (OFWs) is lifting many Philippine households out of poverty by boosting funds for education, health and entrepreneurship, a new World Bank study has noted.
The study, titled “International Migration, Remittances, and the Brain Drain,” includes a detailed analysis of household survey data in the Philippines, Mexico and Guatemala.

The chapter on the Philippines says households with OFWs tended to be wealthier than others in terms of per capita income based on 1997-1998 data. It said that in June 1997, a month before the Asian financial crisis set in, 5.9 percent of Philippine households had one or more members working abroad. Fifty-one percent of these households landed in the top 25 percent of the national household income per capita distribution while 28 percent were in the next-highest quartile, it said.
Only nine percent of Philippine households with OFWs were noted to be still living below the poverty line.
The average per capital income of OFW households was estimated at P20,235 ($778) during the pre-Asian crisis period as opposed to ordinary households, which had a higher poverty rate of 31 percent and a lower per capita income of P11,857 ($456).
The study further noted that a currency exchange shock similar to the peso devaluation against the US dollar during the Asian crisis could lead to increases in household remittance receipts and in total household income. A 10-percent improvement in the exchange rate leads to a drop of 0.6 percentage point in the poverty rate, it noted.

Households enjoying a more favorable exchange rate were also more likely to start a business, particularly in transportation and communication services, and manufacturing, which were activities involving considerable fixed costs in vehicles and equipment that could become more affordable in the wake of positive exchange rate shocks, the study pointed out.
Those investing in transportation services were likely to venture into taxi and minibus operation while likely manufacturing activities include small activities such as mat weaving, tailoring, dressmaking and food processing, the study said.
“The fact that the exchange rate shocks stimulated such investments suggests that the shocks are likely to have persistent and positive effects on household well-being over the long term, in addition to their leading to reductions in current poverty,” it said.
The study also found evidence of positive spillovers to households without OFWs in terms of gift-giving.
Other key findings of the WB study were:
• 31 percent of OFW household heads have college or higher education, compared with just 20 percent of non-OFW household heads.
• 23 percent of OFW household heads work in agriculture, compared with 38 percent in all other households.
• 68 percent of OFW households live in urban areas, compared with 58 percent of non-migrant households.
• Saudi Arabia is the biggest single destination of OFWs, with 28.4 percent of the total. Hong Kong (China) comes in second with 11.5 percent. The only other economies that account for six percent or more are Taiwan (China), Japan, Singapore, and the United States.
• OFWs have a mean age of 34.5 years; 38 percent are single and 53 percent are male. The two largest occupational categories are production and related workers, and domestic servants, each accounting for 31 percent of the total.
• 31 percent of OFWs have achieved some college education, and an additional 30 percent have a college degree.
To address rising unemployment and balance-of-payments problems, the Philippine government initiated an Overseas Employment Program in 1974 to facilitate the placement of Filipino workers abroad. At first, the government directly managed the placement of workers with employers overseas, but soon yielded the function to private recruitment agencies and assumed a more limited oversight role. Doris Dumlao, with INQ7.net

Overseas cash transfers reshape Philippines countryside
First posted 08:06pm (Mla time) Oct 23, 2005
By Cecil Morella
Agence France-Presse

BILLOCA, Ilocos Norte — In this impoverished rural corner of the Philippines, traditional one-room thatch houses are giving way to modern brick homes with glass windows, tiled roofs, and giant courtyards — the product of a housing boom fuelled by remittances from overseas workers.
As the northern Philippines marks the 100th anniversary year of the first batch of its sons who went to work abroad, a fresh flood of greenbacks is swamping this sleepy village by the shores of Billoca lake, triggering furious development.
Large houses in shades of mint, ecru, cream, or old rose threaten to swallow up the paddy fields. Farmers gleefully oblige the newly rich by selling their plots for up to 12 times what they worth before the construction frenzy.
“This was only the first big house to be built. Now you see them all around the lake,” says Rodolfo Ramos, whose uncle built his 150,000-dollar dream home five years ago on a one-hectare (2.47-acre) lot of rice paddy and woods.
His uncle plans to retire here soon after decades serving as steward for navy ships based in the US port of San Diego.
“He was poor once, just like us. His family lived in a one-room bamboo shack with a wood-burning stove,” Ramos tells AFP. “Without the US Navy they would have stayed that way.”
Various cousins and neighbors have also sought their fortune abroad, from caregivers in Canada to domestic helpers in Hong Kong and Spain; part of the army of four million Filipinos who now work abroad sending back an estimated eight to 24 billion dollars back home every year.
Even Ramos’s 24-year-old eldest son has joined the exodus, one of tens of thousands of Filipino seafarers on the world’s merchant fleets.
Tax rates on land south of the lake has risen four-fold over the past year because of the huge demand.
“We bought this place for 1,300 pesos (23.21 dollars) a square meter (10.764 square feet) and we considered ourselves lucky. Now land around here goes for 1,800 to 2,000 (32.14-35.71 dollars) per square meter,” says Rizal Parbo, who runs a garden and landscaping business that caters to the newly wealthy neighbors.
A nephew who works at a Hawaii hotel put up the capital.
Josephine Silao’s elder sister, based in southern California, had one side of a hillside carved out so she could build a sprawling bungalow close to the northeastern shore of the lake.
Twenty-six major Philippine banks have followed the gravy train by opening branches in Laoag, the capital of Ilocos Norte province, said the governor, Ferdinand Marcos Jr.
“I would venture to say that if you want to buy dollars, they would be cheapest here because of the volume of remittances,” Marcos tells AFP.
“Some families have not one but two members abroad,” he says. “The result is beautiful houses, plus they also start businesses, which is good.”
Trapped in a dry, narrow coastal plain on the northwestern section of the main Philippine island of Luzon, the people of the Ilocos region caught the travel bug early on and blazed a trail that millions have followed.
The first workers sailed off to work in the sugar cane plantations of Hawaii in 1906 from Salomague, a forlorn port 350 kilometers (217 miles) north of Manila, says Ferdinand Dumlao, a special assistant to the Ilocos Norte governor.
“That is how we set our foot in Hawaii, and now we are a strong political force in Hawaii,” Dumlao says.
He says the governor of Hawaii, Linda Lingle, many of whose constituents are the descendants of the Ilocano plantation workers, plans to visit the Ilocos region on January 7 next year to unveil a centennial marker at Salomague Point.
Ramos says his grandfather Nicomedes Galacgac was among the first Billoca residents to work the Hawaii cane fields. His younger brothers Alberto and Victorio soon followed him, and another brother Pelagio also went after World War II. The eldest and the youngest prospered and never returned, but the fun-loving Alberto had kidney surgery and returned to a life of poverty here.
“Grandpa Kides was the first. Ox-drawn carts hauled their luggage to the port. They said this road was a mere dirt path at the time,” Ramos says, gesturing to the concrete highway outside.
Aside from escalating property prices, Ramos says the new wealth has also boosted agricultural output in these parts.
“Now that local folk are going abroad, capital is more readily available. Before we used oxen and our bare hands, but now tractors and other farm implements make the work less burdensome,” he adds.