(Last of three parts)
The multinational bank Morgan Stanley issued a most optimistic forecast for the remittances that Overseas Filipino Workers (OFWs) will send to the Philippines in 2021. As the whole Philippine economy still struggles under the weight of lockdowns and delayed availability of the vaccines against COVID-19, once again Filipinos overseas are expected to deliver the goods by propping up domestic expenditures through an increase in their remittances by an above-average growth of as high 7%. Over the last 10 years, these remittances, which account for as much as 10% of our GDP, have grown by an average of 3% to 5% annually. After the world recovers from the pandemic, I expect that growth rate to accelerate to 5% to 8% annually in the next five to 10 years. My reason for optimism is that the pandemic has highlighted the great need of the developed world for our migrant workers, especially in the sectors of health and wellness and in the care of the aged.
During the pandemic, dozens of articles appeared in the international press about “the severe cost of the world’s baby bust.” In an opinion piece by Jeremy Grantham with the aforementioned title (Financial Times, March 13) we read the following warnings: “We are in a global baby bust of unprecedented proportions. It is far from over and its implications are gravely underestimated… The worldwide fertility rate has already dropped more than 50% in the past 50 years, from 5.1 births per woman in 1964 to 2.4 in 2018, according to the World Bank. In 2020, the 20% shortfall below replacement rate in US fertility, together with low net immigration, produced the lowest population growth on record of 0.35%, below even the flu pandemic in 1918. … Many countries, including Italy, South Korea and Japan, are predicted to see their populations drop by more than half by the end of this century… The coronavirus pandemic is also having a profound incremental impact, with provisional fertility declines of 5 to 15% in most developed countries. South Korea recently reported a 2020 fertility rate of 0.84, the lowest rate ever recorded for a major economy.”
This demographic crisis besetting practically all the developed countries in the world means tremendous pressures on pension programs and social security systems because of the related ageing problem. It also means shrinking domestic markets. For a country like the Philippines that is still enjoying a demographic dividend (half of our population are less than 24 years old), it opens up great opportunities for our unemployed and underemployed workers to supplement the labor forces of these richer countries, especially in those sectors requiring personal services that were most challenged by shortages during the pandemic, i.e., health, wellness, caregiving and domestic services in which Filipino workers have a distinct competitive advantage over other nationalities. It is important for both our Government and the private sector to discern and exploit these opportunities both over the short run (the next two to three years) and in the long run (over the next decade or so).
In an article that will be part of a book that will soon be published, Dr. Bett Esposo Ramirez, a top researcher on OFWs at the University of Asia and the Pacific, asked the question “What jobs await OFWs after the pandemic?” To answer the question, she first examined data on the pre-pandemic placements of OFWs provided by the Philippine Overseas Employment Administration (POEA). The statistics show that before the pandemic, land-based OFWs were mostly in elementary occupations — jobs with simple and routine tasks requiring the use of hand-held tools and physical effort. There was an increase in the top skills in which Household Service Works (HSW) increased by 7.51% annually, Nursing Professionals by 17.96%, while manufacturing laborers decreased by 10.76%. Over the last 10 years or so, the majority of our OFWs were in work that required them to be with people, such as care for the elderly, the sick and children; babysitting; selling goods in streets and public places; serving customers in restaurants or cruise ships. Many others performed tasks that are essential to daily living such as cleaning, washing, and care of apartment houses, hotels, offices, and other buildings.
Will there be a significant change in demand for our OFWs after the pandemic? Dr. Ramirez provides some clues by examining the case of Japan, the large nation with the oldest population in the world with one-third of its citizens already over the age of 65, and a large number of them living up to 100. By 2030, the country’s workforce is expected to fall by 8 million, leading to a serious labor shortage. Even before the outbreak of the pandemic, the Japanese government already identified 14 labor sectors needing low-skilled workers in the next five years. Legislation to this effect was approved by Prime Minister Shinzo Abe. The list includes nursing care and the cleaning of buildings; agriculture; fishing industry; food and beverage manufacturing; seafood processing; construction; ship building; marine industry; car maintenance; airport ground handling; aircraft maintenance; lodging and hospitality.
Such a list could apply to practically all developed countries suffering from similar labor shortages such as France, Italy, Spain, and Germany in Europe and Hong Kong, Macau, Taiwan, and South Korea in Asia. These are the countries we should be especially targeting for our OFWs. In the next two to three years, we should be very proactive in mobilizing our three sectors — Government, business, and the academe — to help retool, upskill and reskill our huge labor force in these and other sectors so that Filipino workers will be on top of the list of those who will be considered by these developed countries for possible short or long-term employment in their respective sectors that will suffer most from labor shortages. We should begin with the more than a million Returning Overseas Filipinos (ROFs) who have survived the pandemic and are healthy enough to return to their former places of work or to other countries in need of their services. They and other aspiring OFWs can be given short courses in the various languages of the countries where they plan to apply for work. To serve as a guide in determining which host countries should be especially targeted, in 2019 of the total remittances of $32.80 billion sent by OFWs, the US accounted for $11.10; Hong Kong (China), $5.36 billion; United Arab Emirates, $4.10 billion; Saudi Arabia, $4.10 billion; South Korea, $2.48 billion; Canada, $2.4 billion and Japan, $1.17 billion.
Already some enterprising work placement firms are importing German, Japanese, and other foreign language instructors to give crash courses to nurses and other health workers in the different languages of the countries that are most affected by labor shortages because of the demographic crisis. We have a large pool of unemployed and underemployed people in our labor force (approximately 13 million) who, in the short run, can be equipped with the low-level and middle-level skills identified by the Japanese Government to address their labor shortage. This means giving the highest priority to the types of educational and skills training programs that are under the purview of the Technical and Skills Development Authority (TESDA). Industry associations, in tandem with educational institutions, can also organize these training programs. The Philippine Business for Education (PBEd) is taking the lead in these initiatives.
A longer-term challenge we have to face is the ongoing educational crisis characterized by the very low quality of education our children and youth are getting in our schools, as evidenced by the very low rating they get in international tests in reading comprehension and numeracy. Our students obtain the lowest scores in the Indo-Pacific region. If we do not meet this challenge, our country is sure to be caught in what is known as the Middle Income Trap which will prevent us from ever graduating to First World status, like many countries in Latin America. This serious educational crisis has been worsened during the pandemic when some 2.7 million students had to drop out of school, when millions of children are suffering even more from malnutrition and undernutrition (damaging their brains permanently) and when those who are enrolled are having serious difficulties adjusting to online learning made necessary by the pandemic because of lack of digital tools and services. This is an issue I will address in a future series of articles.
Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is Professor Emeritus at the University of Asia and the Pacific, and a Visiting Professor at the IESE Business School in Barcelona, Spain. He was a member of the 1986 Constitutional Commission.