An Overseas Filipino is a common term that refers to a person of Filipino origin who resides outside the Philippines. This term also applies to Filipinos who live permanently abroad as well as to those who stay in other countries for a limited period for employment or education.
According to the International Labor Organization, there are approximately 11 million Filipinos overseas.
What is an OFW?
Overseas Filipino Worker (OFW) refers to Filipino migrant workers who live outside the country for a limited period for employment. According to a 2017 report by the Philippine Statistics Authority (PSA), an estimated 2.3 million OFWs are living and working abroad.
OFWs are said to be the modern heroes of the country because of their significant contribution to the growth of the Philippine economy. According to an economic report, remittances sent by OFWs accounted for 11% of the total GDP of the country in 2018. In fact, the Philippines is one of the top 5 economies in the world that benefit the most from remittances.
OFWs are also responsible for the surge in the volume of remittances that are being sent to the country.
Which is the best country to work for an OFW?
As many people say, the world is a global village and so is the labor pool. Demand in OFW greatly depends on the country’s requirements such as the type of employment, gender, education, and skillset.
According to statistics, most male OFW go to the Middle East for construction, mining, and oil-related jobs while women tend to go to Southeast and East Asia for domestic jobs. Meanwhile, in North America, OFWs work in professional jobs, including nurses, doctors, and other types of healthcare jobs.
According to the PSA, Saudi Arabia is the most preferred country for OFWs to work at 25.4%, others being UAE, Kuwait, Hong Kong, and Qatar.
North and South America account for only 5.4% of the OFW population but the highest remittance to the Philippines by country comes from the United States, followed by UAE, Saudi Arabia, and Canada. The United States and Canada combined contribute around 40% of the total remittances received.
Contribution of OFW remittances to the Philippine economy
Balance of Payments
Balance of Payments is one of the most important economic health indicators of a country. A surplus means the country has earned more money than it has spent during the period. A deficit means the country has spent more money than it has earned.
According to experts, remittances that are sent through the legal financial system are immediately caught in the country's balance of payments which is tracked by the central bank, Bangko Sentral ng Pilipinas (BSP). These remittances represent a significant portion of the earnings of OFWs that are being sent to their families back home.
Foreign Reserves
Foreign Reserves or Gross International Reserves (GIR) refers to the sum of all foreign exchanges, including foreign investments, foreign exchanges, gold, and special drawing rights (SDR).
According to experts, the GIR is a crucial component of the economy as it is often used to manage the country’s foreign exchange rate against excess volatilities.
Household Income
Household income pertains to the total gross income of all members of a household or family.
The receipt of remittances contributes to the incomes of the recipient households. Some households completely rely on remittances while others use remittances to supplement their existing income.
Standard of Living
Household consumption increases with an increase in income. Remittances are being used to improve their standard of living.
Purchasing Power
Purchasing power refers to the value of a currency against the number of goods or services that one unit of currency can buy.
OFW remittances help in bridging the gap between the poor and the rich by contributing to a growing middle class. With improved living conditions and more disposable income, the consumption of goods and services increases, which helps improve the economy.
The inflow of remittances can have a significant impact on the country’s economy. OFW remittances help in strengthening the nation's balance of payments position and in sustaining the surpluses on current accounts.
Even though working abroad is a great personal sacrifice - leaving your loved ones behind in order to seek employment with higher wages in a foreign land, the remittances sent by the OFWs are not only beneficial to the national economy of the Philippines but also household finances.
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