LOCKED INTO LOW PRODUCTIVITY<\/p>\n
It can also be argued that remittance inflows tend to justify labour export as a long-standing government policy. This risks locking the economy into a low-productivity equilibrium, where labour migration serves as a pressure valve for weak domestic job creation.<\/p>\n
Remittances can raise reservation wages and dampen local labour supply in certain sectors, reinforcing structural weaknesses \u2013 particularly in agriculture and other labour-intensive activities \u2013 unless accompanied by robust domestic investment and industrial or service expansion. In addition, in 2024, nearly half of overseas Filipinos were in \u201celementary occupations\u201d such as domestic work.<\/p>\n
Moving away from this system necessitates a strengthening of the domestic economy and labour market so that workers do not see the need to go abroad in the first place. Already, there is empirical evidence showing that in regions of the Philippines where wages are higher than elsewhere, remittances are lower.<\/p>\n
Yet, with a plethora of low-paying, low-productivity service-sector jobs, and a dearth of manufacturing and industrial activity, the current government has still not engaged in systematic rethinking and restructuring of the Philippine economy.<\/p>\n
Finally, remittance inflows can be made more productive by nudging households to spend more on investments (for example, education, health, housing) rather than just immediate consumption. Greater financial inclusion and literacy can help overseas Filipinos\u2019 families to maximise the remittances they receive.<\/p>\n
Remittances remain critical for the Philippine economy. But it is high time that the economy diversified and relied on new growth drivers \u2013 not only because remittances are insufficient as a development strategy, but also because prolonged dependence on labour migration carries significant social and economic costs.<\/p>\n
This urgency is heightened by a rapidly changing global economy, where digitalisation and the green transition are reshaping production, employment, and sources of wealth in ways that offer opportunities for the Philippines to seize domestically rather than continue exporting its labour.<\/p>\n