OFW remittances hit all-time high of $38.3B

Money sent home by overseas Filipino workers (OFWs) hit a record $3.73 billion in December, the Bangko Sentral ng Pilipinas (BSP) reported on Monday, bringing the full-year total to an all-time high of $38.3 billion.

December's count was 3.0 percent higher than the year-earlier $3.62 billion and $3.12 billion recorded in November 2024. The BSP, in a statement, said that it was driven by "remittances from both land-based and sea-based workers."

The 2024 tally, meanwhile, was also 3.0 percent higher than $37.21 billion recorded in 2023. It also exceeded the central bank's $34.5-billion target for the year.

Full-year remittances were equivalent to 8.3 percent and 7.4 percent of gross domestic product and gross national income, respectively.

In December alone, cash remittances rose by 3.0 percent to $3.38 billion from $3.28 billion recorded in the same month in 2023. For the full-year, these hit $34.49 billion, also 3.0 percent higher than the $33.49 billion registered in 2023.

The cumulative growth in cash remittances was attributed to flows from the United States, Saudi Arabia, Singapore, and the United Arab Emirates.

The US accounted for the biggest share (40.6 percent) of overall remittances for the year, followed by Singapore (7.2 percent), Saudi Arabia (6.4 percent) and Japan (4.9 percent).

Other countries that contributed to overall remittances were the United Kingdom (4.7 percent), the UAE (4.4 percent), Canada (3.6 percent), Qatar (2.8 percent), Taiwan (2.7 percent) and South Korea (2.5 percent).

The US accounted for the bulk as remittance centers in many cities abroad course funds to correspondent banks that are mostly in that country.

Sought for comment, Philippine Institute for Development Studies senior research fellow John Paolo Rivera said that the growth in remittances highlighted the continued role that OFWs play in supporting the economy.

"Sustained economic recovery in the US, Middle East, and APAC (Asia-Pacific) led to higher wages and employment opportunities for OFWs, boosting remittances," Rivera added.

"Also, the weak PHP (peso) against the USD (dollar) in certain months increased the monetary value of remittances, prompting some OFWs to send more money home."

Rivera also said that the adoption of digital remittance platforms had made transfers faster and cheaper, encouraging higher remittance flows.

Remittances are likely to remain a stable growth driver, he continued, amid more favorable exchange rates that could encourage higher remittance volumes.

"However, this can be disrupted by geopolitical tensions or economic downturns in host countries could affect job security," Rivera said.

"Overall, remittances are expected to maintain modest growth in 2025, barring major economic disruptions. The steady inflows will continue to support household spending, helping drive consumption-led growth."

Source: Manila Times

Household spending boosted by remittances

Overseas remittances substantially boost household spending and are dependent on a host of factors that include the exchange rate, unemployment and transfer costs, Bangko Sentral ng Pilipinas (BSP) researchers said.

In a discussion paper, researchers Veronica Bayangos and Cymon Kayle Lubangco noted that OFW remittances have long been a vital pillar of the Philippine economy, supporting household spending and foreign currency reserves, especially in economically challenging periods.

OFW households, they said, prioritize consumption over savings and investments. Migration status and educational attainment also influence where the money is used.

Immediate consumption also tends toward non-food, and "largely welfare-inducing" items such as health, education and housing, while allocations for productive consumption goods "shows that remittances are treated as transitory income."

"Our estimates reveal that receipt of cash remittances is positively driven by the number of OFWs abroad, unemployment rate, and the depreciation of the peso against the dollar," the researchers said.

"However, high regional wages and bank financial transaction costs reduce remittance receipts."

Remittances may cushion labor market shocks in the short term, but OFW households are also at risk if economic conditions in host countries also worsen, the researchers noted.

Financial development, meanwhile, was said to help raise remittances, but only if accompanied by increased financial inclusion and lower transaction costs.

An apparent decline in cash remittances, the BSP researchers said, can be attributed to a rise in the cost of sending money from abroad to the country.

As of the first quarter of 2024, 96.6 percent of surveyed OFWs families said they were using remittances for food and household needs. Allocations for medical expenses and home purchases also rose compared to the fourth quarter of 2023.

On the other hand, the proportion of households that used remittances for education, savings, consumer durables, debt payments, motor vehicle purchase and investments fell, the researchers noted.

Remittances have been relatively stable at 8.0 to 9.0 percent of nominal gross domestic product since 2017, they said, while cash remittances are slightly lower at 7.0 to 8.0 percent.

Cumulative growth for both types has trended downward, the researchers noted.

The US remained the largest source of remittances as of last year. The Philippines was among the top five five recipient countries at $40 billion, outpaced only by India ($125 billion), Mexico ($67 billion) and China ($50 billion).

The BSP researchers noted that while remittances are expected to grow by 3.1 percent this year, this could change due to an escalation in the US-Ukraine war and conflicts in the Middle Ease, volatile oil prices and exchange rates, and greater-than expected economic slowdowns.

A substantial decline would have an impact at both the macroeconomic and household levels, they said, with families likely to face reduced capabilities to meet education and healthcare needs.

Do Remittances Boost Household.pdf

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Source: Business World and BSP

Where Do Remote Talents in the Philippines Want To Work?

The Philippines has improved its ranking by 11 spots since 2020 in terms of being a career destination for foreign jobseekers. It has climbed to 56th place in 2023, from 67th in 2020 and 66th in 2019.

However, talent in the Philippines still displays a strong interest in relocating abroad for work. This is according to Decoding Global Talent 2024 by Jobstreet by SEEK, Boston Consulting Group, and The Network.

How the Philippines Was Ranked as a Career Destination

Decoding Global Talent 2024 is based on a survey of 150,735 respondents in the workforce from 188 countries, with up to 91 percent of them living in their country of origin. Up to 38 percent of the global respondents also have a bachelor's degree.

According to the study, "The global perception of the Philippines as a place of employment for those seeking opportunities abroad has seen a notable uptick, with its ranking improving by 11 spots since 2020, reaching number 56 in 2023. However, it is still far compared to top global countries and ranks low within Southeast Asia (SEA)."

Global respondents gave the following reasons why they chose the Philippines for work:

• welcoming culture and inclusiveness (52%)

• perceived good quality of life (45%)

• cost of living (43%)

• quality of job opportunities (43%)

• friendly environment (43%)

• work permit processes (23%)

• stability and security (23%)

The following factors, however, ranked low: opportunities for citizenship (16%), digitalization (16%), and healthcare (15%).

Among the job seekers expressing interest in working in the Philippines are those from Malaysia, Singapore, Indonesia, and even the U.S. and Canada.

Filipinos Still Want to Work Abroad

Despite these survey results among foreigners, up to 80 percent of Filipino talents have expressed readiness to relocate abroad for work. This number is higher than the rest of Southeast Asia, which has a 68 percent readiness, and globally, which has 63 percent readiness.

Reasons for Filipinos to work abroad:

• Financial and economic reasons (80%)

• general career considerations (65%)

• better overall quality of life (64%)

• concrete job offer (60%)

• personal growth and cultural experience (53%)

• better social system and healthcare (53%)

• better educational and training opportunities (45%)

• more interesting and challenging work (42%)

These numbers are all significantly higher than the SEA and Global average.

There is also a difference when it comes to the age of candidates. Globally, younger jobseekers tend to work abroad; but in the Philippines, this willingness to go to another country for a job cuts across all ages.

About 35 percent of Filipinos also said that they prefer to work abroad long-term, without plans of returning to the Philippines. This is another significant difference as overseas workers from neighboring countries keep three-year assignments and then return home.

The expertise of Filipino employees who are looking to relocate is very diverse. Up to 94 percent are in the craft professions, manual, and physical work; 90 percent are in research and laboratory; 87 percent are in engineering and technical industries; and 86 percent are in services and hospitality. Other significant fields include digitalization, education, business management, IT, design and art, and more.

Those in marketing and media are at the lowest percentage, with only 73 percent of them willing to work abroad.

Out of 80 percent of Filipino workers showing interest in international employment, 42 percent of them are hoping to move to Canada. Other countries they want to relocate to are Australia (39%), the U.S. (27%), Japan (23%), and New Zealand (21%).

Top cities to work in globally

It should be noted that the pandemic affected these interests. Back in 2018 and 2020, readiness to work abroad was at 96 percent and 91 percent, showing a huge decline in 2024. Filipino professionals are now also more eager to work remotely for a foreign employer with an 84 percent interest, above Southeast Asia and global trends.

These statistics are based on a survey of 6,498 workforce participants in the Philippines, 76 percent of whom had a bachelor's degree.

PH Decoding Global Talent 2024.pdf

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Source: Philstar