Two-Three Million Filipinos Saved From Poverty by Remittances

Two to three million more Filipinos would have fallen below the poverty line if not for remittances received from Overseas Filipino Workers (OFWs.) That's according to Ernesto Pernia, a former chief economist at the Asian Development Bank (ADB). Pernia said remittances were able to reduce the country’s poverty incidence by 3 to 4 percentage points, which translates to around 2 million to 3 million Filipinos according to an article from the May 4, 2011 online edition of ABS CBN news.com.  (photo from Flickr)Filipino children

The ABS CBN report states that the reduction in the number of poor Filipinos would have been higher according to  Pernia  if not for the “inequality” effect that was observed among households receiving remittances. Usually, he said, richer households get the bulk of overseas remittances every year.

“Most OFWs  originate in the Philippines’ more developed regions [and] smaller shares [come] from poorer regions. Likewise, the bulk of remittances go to the richer regions [and] smaller shares [go] to the less-developed regions. Hence, richer regions develop faster than poorer ones, worsening regional imbalance or inequality,” Pernia explained.

Based on Pernia’s findings, as much as 50 percent of international remittances are sent to the three richest regions in the country. The National Capital Region (NCR) which consists of the Metro Manila area, the country’s richest region, accounts for 18 percent to 27 percent of total remittances from 1995 to 2004.

The second region,  Southern Tagalog, consists of the provinces of Aurora, Bantagas, Cavite, Laguna, Marinduque, Oriental Mindoro, Occidental Mindoro, Quezon, Rizal, Romblon, and Palawan which accounts for 18 percent to 22 percent.

The third region indicated by Pernia is Central Luzon, located north of Manila, and includes the cities of Balanga, Malolos, Meycauayan, San Jose del Monte, Cabanatuan, Gapan, Munoz, Palayan, San Jose in Nueva Ecija, Angeles, San Fernando, Tarlac, and Olongapo and  accounts for 12 percent to 15 percent of total remittances between 1995 and 2004.

If not for the sacrifices made by these Overseas Filipino Workers and the remittances they send back home, millions of Filipinos would be suffering under even harsher conditions that already exist in the Philippines. Though OFWs are often underpaid and work in extremely difficult conditions separated by their families for years at a time,  they are the backbone of the economy of the Philippines. Again, it would a far better situation for them and their loved ones if the Philippines government would provide jobs for them in the Philippines. But until that day happens, if it ever does, those remittances continue to feed and clothe millions of Filipinos.

42 comments

  1. Hi Dave: I really feel for the hardships of the OFWs. When I’m waiting for my flights from and to the U.S., I hear so much of their stories. Most of the OFWs that I have met are Filipinas. I also have cousins who are Filipina nurses in Saudi Arabia.

    One criticism that I have with the Filipino families left behind (with the exception of the young children and the old) is that they don’t help themselves and just wait for the remittances of the OFW. When the OFW can no longer work they return home without much to fall back on. I hope that the OFW will save up some of his/her income and not send all of it back home so that they’ll have something for retirement.

    1. Roselyn, Dave

      Its sad that alot of them support family members that are more than able to work and then they have no money to support themselves when it is time to come back to the Philippines to retire. I think they are doing themselves and there family a big disservice by supporting them. It gives them no incentive to want to work. I can understand for medical/education, but other than that it hurts them. Have a nice day.

      1. Hi Papa Duck: I can understand both Tagalog and Cebuano (not fluent in speaking) and while sitting to have meals in McDonald’s, I can’t help but overhear college students who have parents as OFWs. These young people talk as if money flows from the streams abroad. They are hanging out with their gangs (“barkadas”) instead of studying. They are also busy texting, or hanging out in internet cafes. When I was a college student in the U.S., I worked for the University part-time (36 hrs. per week) and earned all the money that I needed to complete college and still finished second in my class. (I did lived at home to save money.) These college students are hanging out in these places in the middle of the day! They are not thinking about the hardships of their parent(s) as I did at their age.

        1. That’s interesting, Roselyn. Maybe that explains why I see so many college students hanging out at the local McDonald’s in Iloilo whenever we visit one (which is often.) Guess I better brush up on my Tagalog and Hiligaynon. Too bad they don’t seem to appreciate the sacrifices their parents working abroad are making.

          1. Amen, and amen. My wife’s sister works her butt off in New Jersey as a maid and babysitter for a wealthy family. She sends most of her money home to her two worthless kids, who text and play on Facebook all day, go out at night, and get pregnant and have illegitimate babies. No worries – Mom will keep sending money. Well, when Mom decides to return home, whenever, there will be no money saved and, let me guess, the kids’ll be whining.

      2. Kind of reminds me, Papa Duck, of how the welfare system and Social Security Disability used to work in the States. Why work if the government is going to pay you for doing nothing or because you have a “disease” like alcoholism and get SS benefits. My youngest brother, now deceased, was an alcoholic, and collected Social Security disability. All that did was enable him to buy more booze.
        And in the Philippines, why work if some relative overseas is going to support you?

        1. Dave

          It’s sad about your brother. They did him wrong. When we get new arrestees alot of them have the EBT Cards and a pocket full of money. That really gets under my skin when i see that. It should be stopped after they are in jail for a certain period of time. Take Care

  2. Well said Papa Duck and Roselyn. There are many OFW children in my town, and many as Roselyn described have high expectations and expensive tastes. One family consists of 3 adult men (married with children and still breeding). All are unemployed and supported by a 50 something mum who worked as a caregiver in the US.

    One girl who lived in Norway got sick of relatives taking her efforts for granted that she told them to put a block of ice on a bucket of water, then put their feet in it for 12 hours so they can see and feel what she has to put up with in order to provide for them. I doubt it would have made a difference, as once dependency sets in, it is pretty much hard to shake off.

    A friend of mine who used to work in the middle east tells of many sad stories of depression to suicide, just from the stress of demands for money from home. Here in Australia, the OFWs are treated better. But they chose to live in crowded conditions to save money to send home.

    1. Hi Christine: I am a university educator in the U.S. and we have personal family finance courses for our students. I believe that our educational system in the Philippines needs to be revisited to facilitate the changes that the current society is presently facing; one of which is the OFW situation.

      I believe that change can be made through the educational system. I know that just opening my mouth in the U.S. would not be of help at all. When I retire (which I planned to be in the Philippines), I definitely planned to have some type of program implemented in a university environment such I mentioned. My hope is that educators may visit some internet sites (such as Dave’s) and would implement some type of personal financial management program and personal responsibility, before my time is up in the U.S.

      I do help family members, but only for those who help themselves such as a young cousin who lacked the funds to take her nursing exit exams. I looked over her grades and decided to fund her efforts. She would be an OFW, however. My only hope is that she will look after herself and not be worn out by the others in the family.

      1. I think that you have a good plan, Roselyn. A personal family finance course in the Philippines at the university level and addressing the OFW situation is a great idea. Thanks for the plug for my site. Folks like Dave Starr and others have been trumpeting the plight of the OFW for quite some time, but since my wife spent years as an OFW, it takes on a personal meaning for me.

        You’re wise to help only those that demonstrate some kind of responsibility such as the young cousin. Very kind of you.

        1. Hi Dave: My late parents were former professors in the Philippines; hence, my university contacts. My credentials as a professor in the U.S. will open places for me which I intend to use in a positive way when I get there. I actively assist my students in the U.S. to get management positions in my area of study. I have been successful in their placements. I could be useful in the Philippines as well.

          1. Roselyn, I am so thankful there are people like you that use your education and position to help those in need. I would harbor a guess that you are the only university professor to read this website, and I am grateful for your insight and input and for putting up with my lack of political correctness. I am sure you are carrying on the tradition of your parents.

    2. Well, Christine, I guess this is a product of human nature no matter what country you live in. If someone is going to support you, and you don’t have to do any work in return for that support, dependency does set in (just loved your “married with children and still breeding” line :-))

      Yep, the story of the OFW in Norway is a sad one, and I, too, doubt that the relatives she supported didn’t get the message. Too bad.

      I’ve heard some of those stories of OFW suicide in the Middle East. Very harsh conditions there. Very sad.

  3. Frankly, I think that figure is rather low … astoundingly low, from I observe personally. I’m active in my local home owners association, and have a bit of insight into how many are working, or living off investments, and how many are waiting for someone, anyone to send the money for the month. (Hint. Not many work).

    I have an acquaintance who operates a little “under the table” car hire service. He makes money when someone hires him, when they don’t, he doesn’t. But no worry, the family has a steady income stream … the 80-year-old mother who works as a domestic helper in California and sends most of her salary home for beer, expensive kiddie parties and other “essentials” of life. AT least two, maybe three separate families live under that roof, ‘milking’ the old lady’s paycheck … she’s like Maxwell House … good to the last drop.

    How much can an 80-yo woman actually work? Well my guess is, the family she has worked for in California for many years just keeps her on as an act of kindness (plus to hide the fact they haven’t paid her Social Security taxes for thirty years or so.

    The son, my car service buddy, was a bit upset a few months ago … seems like Mom had told him she was going to send a couple million Pesos for a new van … he already had the color picked out … but she’s been a little sick (of course, she has no medical insurance either, that’s how rich people in California save money, you see, times are touch in the USA) … and now the money won’t be forthcoming.

    \This is the part of Philippine culture that really shocks. I can deal with the duck embryos and lizard poop, no problem. But to think of being in my 50’s and living from paycheck to paycheck of my 80-yo mom … I never asked my mom to buy me a car when I was 20 and she was 40 … I have big trouble wrapping my head around that.

    1. Dave, what an absolutely shocking story! This guy depends on his poor 80-year-old mother for the bulk of his support along with other family members? And the grandson gets ticked off because his lola can’t come through with the two million Pesos for his new van because she was sick? Incredible! Totally unacceptable!

      1. Dave and Dave Starr,

        Sad story. My beautiful asawa (MBA) worked as a (under paid) maid in Manila when she was 16. The family, who didn’t work, had a relative in California who supported them. MBA really liked the person when she visited the Philippines. I am wondering if it is the same person.

        1. The Sainted Patient Wife also worked as an maid in Manila, Jack, before going overseas to work in Singapore and Taiwan. Sounds like your MBA had a similar California connection as the one in Dave “Super” Starr’s story.

    2. Dave, stories like you just related are plentiful, and it makes me angry because I have seen the sacrifices of these OFWs. Even here in Australia, the Filipina women who had married Australian men are pressured just the same by their families. A friend of mine who lived in Cebu was blatantly told by her mother “did you not married your Australian husband so you can help us?” – after my friend became exhausted of the never ending requests for money. And we’re talking of a young non-working mum who has just given birth. I sometimes think that the efforts to send that one child to college is really so that one child can support everyone when he/she will get work upon finishing college.

      For many years, Filipinos pride themselves with close family ties. Nowadays, I only ever see the “family ties” if there is money that holds them together, such as your story of the 80 year old who kept on working to support her family. I wonder how many in her family would line up to wipe her ass if and when she becomes incapacitated??

      1. Hi Christine & Dave: When my Filipina mother died in an auto accident in Cebu and at the same time, my father had a heart failure in a hospital, none of my mother’s family members (who she supported) came to help!

          1. Hi Christine: This scenario is sad, but true. If not for the hired help (non-relatives) that we had in place to care for my elderly parents, we would have been in trouble (big time) as all my parents’ children were in the U.S. My two brothers (one elder and the other younger) sacrificed their time for the care of my father and the burial of my mother. (My father died two weeks after my mother died.) Both brothers were able to take leave of absences without pay from their jobs. I in the U.S., shouldered all the unpaid hospital and the burial expenses of both parents. One of us has to transmit funds from the outside, and I felt that I had to step up to the plate as I could not leave my job for the funerals. Where were my mother’s nephews and neices who my parents have helped so much? Nowhere…only to appear at the funerals where they demanded housing, meals, and fares to go back home! My brothers were so pissed.

          2. I had no doubt that what you related were true. And it is probably common because just about everyone I know here in Australia and in the Philippines have experienced something similar or knows of someone who has experienced it. It seems kinship only exists if there is money. A very sad indictment of our original culture Roselyn.

          1. Roselyn

            It’s beyond comprehension how your parents were totally disrespected. All that was done for your family and thats the thanks they receive. Its so heartbreaking. Then have the nerve to ask to be supported while there and for the trip back. Your parents were so lucky to have such good, loving and responsible children. Of course that comes from doing such a good job of raising by your parents.

          2. Hi Dave and Papa Duck: We’ve learned so much from the passing of our parents. It changed my brothers and I. Sadly for our eldest sister, she elected to distance herself from us. She did not want to assist in the responsibilities in the end of life of my parents. Her reason is that she is a single parent and she has her priorities. My parents helped her the most and they financed her attorney’s partnership when she first begun her law profession in California. She did not pay them back for the cost of the partnership. I believe that my parents would have been disappointed.

            1. Sad to hear about your sister, Roselyn. I lost my Mother over four years ago to cancer, and it’s indeed a life-changing experience for those left behind. My 78-year-old Father is still around working and living in Las Vegas. Though your parents probably would have been disappointed in your eldest sister, they have your brothers and yourself to carry on their good works.

      2. Sadly, you might have a point, Christine. Are “family ties” in the Philippines being held together by remittances sent to the folks back home by OFWs? Perhaps in some cases that unfortunately might be true.

      3. Christine

        It’s sad the pressure that was put on the young mother. I think sooner or later more and more OFW’s or families married to foreigners living abroad will start standing up to there families and not be pressued to support them. I like that last sentence. Pretty blunt, but true. Have a nice day.

  4. Hi Dave,

    I feel very lucky since my wife’s family work. We do send money but most of it is invested into making money. You hear many horror stories that are true but I am sure that their are positive ones also. I am proud of her mom and I know that what we send makes their life easier and helps keep them out of poverty with the soaring inflation.

    There was a moving story on GMA yesterday about a homeless college student who worked to pay for the tuition for his aviation mechanic school. I have a good friend in Ormoc that works 7 days a week to put his daughter through college. His daughter is very aware of her parents sacrifices. I am sure there are many more stories like this.

    1. Good to hear some good stories like the ones you have just shared, Jack. I’m sure there are a lot more of those positive stories, also. I know my wife put in many years as an OFW and paid off the house and property we currently live in at “The Compound.” If not for her sacrifice, we still might still be living in the States and not the Philippines. No house payment (or car payment) just gave me some extra incentive to make the move.

  5. In the past I have been very generous to my girlfriends large family, but no more. They were always asking for money, more often than not telling me a load of BS, and it got to the point where they just expected to rock up to the house with their hands out. I moved from Bataan back to Manila to get away from them. I have enough money to support my girlfriend and her young son, not enough to support the whole clan.

    1. Murray, I understand exactly how you feel. Though my asawa and I would like to stay in Guimaras, we will probably be moving to another location in the Philippines in a couple of years or so. One reason is the lack of good hospital facilities and another factor is exactly what you have experienced. Too many relatives stopping by and asking for money.

      1. Hi Dave and Murray: Just to share my parents’ strategy to have some peace from the family. My late parents’ main residence is in Cebu City in Labangon. They had another country residence in Cagayan de Oro City (5 miles away from my father’s only brother). The homes are gated and have a live-in housekeeper. The compound in Cebu has two condos at the front and the main house is at the back. The compound in Cagayan is similar in arrangement as Cebu, but much larger. My older brother who is the estate administrator and part-time resident of the Philippines has found himself in the same situation as my parents. (He is retired from the U.S. navy. He runs away from relatives from my father’s side and from his own wife’s side.

        1. Murray, Dave and Roselyn, I just realized that these are issues that I am going to be burdened with if and when I move to the Philippines in future. This is the part of the Filipino culture that I just detest. They either don’t care or don’t realize how hard we work in the west for our $$, and that we might earn high $$ here, but the cost of living are also high. No matter what I say, I still get treated like a walking ATM. I really think that the Filipino culture of asking for money from overseas based relatives or relatives married to Kanos are just a game, see if they can get away with it. What do you guys think?

          1. Hi Christine: My brother has stopped giving money away. He said some of the relatives have stopped speaking to him. His advice to us when we retire in the Philippines, is to hire non-family members if we need help (just as my parents did). If we give help to someone, make sure that we can afford it. In his words, “no one will pick you up here if you fall”. Make sure that your main residence is away from your relatives to have peace in your household.

          2. โ€œno one will pick you up here if you fallโ€

            That is very true Roselyn. Over the years, my mum allowed relatives (nephes, nieces, and even just kababayan from Cebu) to stay at our house in Manila – all for free!- fed by her and financially supported by her for jeepney fares etc, while they looked for a job.
            Mum then had a mild stroke last year. Not one of those extended family ever offered a peso, even as a token to help with her medical care. Mum fully recovered without outside help. Of course she still allows everyone who wants to stay at our house. She never learns.

            Hiring non-family members is a good idea, Roselyn. I think my brother (who lives in Cebu) do now anyway, simply because he can’t find family members with good work ethics!

        2. Sounds like your brother has a good solution to the problem, Roselyn. My wife and I are seriously considering a move just outside of Iloilo in a couple of years or so where a new hospital and mega shopping center is being built. It would require our relatives in Guimaras to travel over an hour to reach us via pump boat and jeepney. I really like your brother’s arrangement

          1. Dave, I hope an hours travel is enough. Would it bother you if your wife’s relatives stop talking to you, like what happened to Roselyn’s brother?

            1. I think an hour’s travel will cut down on the relatives’ visits, Lance. First they have to take a jeepney ride to the dock in Guimaras, get on the pump boat to Iloilo, and take at least two jeepney rides to reach our possible new destination in Iloilo. Would it bother ME if my relatives stopped talking to me personally? Not in the least bit.

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