Remittances feed wealth gap

http://www.thestandard.com.hk/news_detail.asp?pp_cat=17&art_id=38407&sid=12245967&con_type=1Friday,

February 16, 2007

Billions of dollars in remittances by a huge overseas workforce are lifting many areas of the Philippines out of poverty, but an academic warns that millions of people are locked out of enjoying any benefits.

Manila and five other regions that account for most of the labor exports also have the country's lowest poverty levels, says University of Santo Tomas professor Alvin Ang.

But poverty levels increased 34 percent to 49 percent in regions where labor export is not a principal preoccupation, Ang's study finds.

The government estimates 30 percent of the Philippines population are poor. But World Bank data show nearly 40 percent of Filipinos live on US$2 (HK$15.60) a day or less.

Ang says his results support the hypothesis "that those who are migrating and working abroad are not poor" and that the remittances have multiplier effects in terms of education, health, housing [and] entrepreneurship" among others.

Instead of "leveling the regional poverty levels, it probably contributes to its worsening" in areas where workers do not have the skills and the resources to move overseas.

The Philippines started large-scale exports of construction workers and seamen in the 1970s amid a building boom in the Middle East.

Ang said deployments shifted in favor of lower-skilled service workers, including domestics, with the emergence of the so-called "tiger" economies of Asia by the late 1980s.

Since the 1990s, the information technology revolution and the graying populations of much of the developed world opened up job opportunities for highly skilled Filipino professionals and technical workers.

Ang said this raised the per-capita annual remittance levels by more than 500 percent to nearly US$11,000 in 2005 compared to about US$2,000 in 1988.

Since most of the migrating workers "are from relatively affluent regions, they may be worsening inequality among regions," he concludes.

He also raises concern that the remittance money flows "are causing sharp declines in agricultural production" because "it seems that labor would rather wait for the opportunity to [work abroad] than work in the farms."

And the bulk of remittance money appears to be sucked into consumer spending that has spurred the rise of giant shopping malls across the country, he notes. AGENCE FRANCE-PRESSE