The Maid Exports; Misguided Perceptions About The Migration Economy

The Maid Exports; Misguided Perceptions About The Migration Economy

I recently received a forwarded email depicting the country as such in a miserable gloom and doom state and that we are surviving on ‘exporting maids’. The sophistry of the epistle is largely a political propaganda aimed at personality based politics rather than an objective view of economic impact of migration.

According to the Philippine Daily Inquirer ``Remittances from Filipinos working abroad in the five months to May rose 19.2 percent year-on-year to 4.0 billion dollars, the central bank said…Around 8 million Filipinos are working abroad, and the central bank expects them to send home as much as 9.4 billion dollars of their earnings this year, up 10 percent from last year.” Further it is also reported that some 500,000 workers left the country for higher paying jobs abroad.

Remittances today account for nearly 10% of the country’s GDP and has kept the economy afloat. These are usually spent by families and or dependents on food, clothing, basic utilities, shelter, education, health and other services. While it is true, that this is PARTIALLY an offshoot to the lack of jobs at home, I think the whole episode of migration is a GLOBAL PHENOMENON ARISING FROM THE GLOBAL DEMOGRAPHIC TRENDS rather than a simplistic ‘blame your government thing’.

Top 5 Remittances from Migrants

The table above courtesy of BBC, shows of the top 5 states with the remittance from migrants where even the emerging market growth ‘poster child’ India is shown as one of the major beneficiaries.

Migration is largely a function of division of labor, where declining fertility ratios in industrialized nations have brought about labor shortages thereby the attendant requirements to absorb emigrants despite some political and cultural resistance as seen by the recent France vote against the EU constitution.

Further, it is also a story of welfare states. With the aging population growing more than the working force, welfare benefit payouts are expected to exceed premium inputs leading to government budgetary imbalances or fiscal strains. This means that either the government increases its taxes, or cut benefits or provides incentives to its citizens to have more babies (e.g. Singapore) or allow for immigrants to fill the gap or a combination of the above.

This need for foreign workers could be exemplified by the direct hiring of nurses by United Kingdom http://www.nursinguk.nhs.uk/, where Filipina or Indian or Spanish nurses can apply online.

Demand will simply find its own supply. This is clearly evidenced by the mushrooming nursing and caretaker schools all over the country to meet the rising labor export demand. With the country’s surplus labor, the unemployed can all retool or reinvest in themselves to get a ticket out of the politically crazed country.

Put differently, even if the Philippines would have a ZERO unemployment rate, the migration flows to industrialized countries will CONTINUE depending on the opportunities presented by global demographic trends, the fiscal concerns of welfare states and most importantly the PRICE FUNCTION OF LABOR or the real wage differential considerations among the concerned nations.

Globalization supported by technological breakthroughs in information and communications has highlighted on the cost or price variable hence the emergence of the offshoring/outsourcing phenomenon and the growth story of emerging market economies. Labor therefore is not exempt.

Finally, the personality based government blame game is totally misguided simplistically believing that a change of administration will solve all the problems thereat.

Most citizens expect that government should provide for food, job, shelter, welfare, other social benefits and everything else under the sun. However, by doing so they fail to comprehend that HAND OUTS, DOLE OUTS AND OTHER SOCIAL BENEFITS DON’T COME FOR FREE. There is NO such thing as a free lunch! Either the government PRINTS more PESO or BORROW more DOLLARS or PESO to fill such requirements. The ramifications of such actions are higher consumer prices and or the debasement of the local currency which would effectively lead towards efforts to legally EXTORT more money from its tax paying citizens by the government and or benefit cuts. Such is the vicious cycle of continued dependence on government sponsored boondoggles.

In short, no matter WHO sits as the head of the country, more government presence to please short-term demands of voters who largely refuses to pay taxes equates to a lower standard of living.

Understanding and capitalizing on global dynamics is a far better approach than the fallacious and myopic moralizing on ‘Maid Exports’.