OFWs and the Philippine Economy

Article by: Liz Kang

Photographs collated by: Joshua Soroño


One out of every ten Filipinos works abroad. The money sent home from overseas foreign workers is key to economic growth in the Philippines, constituting about 10.2% of our GDP, according to Standard Chartered Bank. Consistent paychecks from OFWs (also called remittances) increase household incomes and, therefore, domestic demand for goods and services.

OFW Remittances % of GDPOFWs do more than play a vital role in the economy. OFW support is closely linked to disaster response, such as typhoon Yolanda relief efforts. According to Pinoy Abroad, OFWs in the United Arab Emirates “sent home some Dh 10,000 for [Yolanda] victims” in November 2013. That is more than 120,000 pesos. No wonder OFWs are considered patriots or heroes. But does their impact stop there? As always, there is a flip side to such a golden story.

 According to journalist Iris Cecilia Gonzales, “working abroad is no paradise because [OFWs] are separated from their children.” And while the social cost is high, the developmental cost is higher. Prod Laquian, professor at the University of British Columbia, says “the export of workers has prevented the Philippines from advancing as a self-sustaining nation… For the [Philippine] government, the easy money from foreign remittances is a major cause of its inability to pursue sound economic development programs.”

The hard reality is that OFWs may continue emigrating because of limited job opportunities at home. Therein lies the problem that the Philippines lacks a broad manufacturing base to offer medium-income employment. The manufacturing industry accounts for 8% of Filipino jobs, according to the Asian Development Bank (ADB). “Historically no economy has reached high-income status without reaching at least [an] 18 percent share of manufacturing,” according to ADB chief economist Changyong Rhee. Industrialization, he maintains, is a necessary step between agricultural and service-based economies. Right now, the Philippines is attempting to skip industrialization to move directly into service industries like tourism.

Applauding positive contributions by OFWs is wonderful. More challenging is how to broaden the Philippines’ domestic industrial base to absorb those OFWs yearning for job opportunities at home, and at no further cost to their personal lives.

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