REMITTANCE-RECEIVING families should explore other sources of livelihood outside of labor migration to survive this pandemic and beyond, according to Uniteller Philippines.
In an e-mail to BusinessMirror, Uniteller Philippines President Noel Fernando Cristal said the expected decline in remittances this year should prompt overseas Filipino workers (OFWs) to create a long-term strategy that may not involve labor migration.
Cristal said a new strategy is crucial given that many OFWs are working in the global tourism, airport service, shipping and cruise industries that have been badly hit by the pandemic.
“With remittance being one of the key economic drivers for the Philippines, the decrease in remittance inflows could push many remittance-dependent families into increased uncertainty. In the longer term, Filipinos may have to look for alternative sources of finance beyond economic labor migration,” Cristal said.
With the pandemic causing problems in industries OFWs belong to, Cristal said the country is among the economies exposed to the ill effects of the pandemic.
Remittances, Cristal said, is central to boosting consumption in the Philippines. With a consumption-driven economy, the country’s GDP growth is also fueled by remittances.
Cristal added that a recent Central Bank survey stated that 80 percent of remittance inflows are directed toward consumption.
He added that financial literacy will also help OFW families. This means companies and the government must help OFW families do financial planning.
“While remittances can provide a financial lifeline for families back home, Covid-19 has demonstrated that being overly reliant on remittance payments as a means of survival is not sustainable,” Cristal said.
“It is therefore crucial to inculcate good saving habits especially amongst remittance receivers so that they are able to build sustainable wealth in the event of another crisis,” he added.
Apart from families, Cristal said the remittance industry must also adjust to the demands of being sustainable in an increasingly digital world.
He said the remittance industry must fully embrace digitization to be more resilient to future disruptions similar to the ongoing pandemic.
Cristal said sending remittances becomes difficult if digital alternatives are lacking or when people are unbanked or unfamiliar with digital alternatives.
“Enabling our customers to conveniently send and receive funds from the comfort of their homes would be critical and a must. Thus, going digital is imperative in order to continue the funds flowing from migrant workers to their loved ones and also to reduce costs of the remittance,” Cristal said.
With digital alternatives in sending remittances, Cristal said, this will bring down the cost of remittances allowing OFWs and their families to maximize their inflows.
This will also help achieve the Sustainable Development Goal (SDG) target of bringing down the transaction cost of remittances to less than 3 percent by 2030.
The Bangko Sentral ng Pilipinas (BSP) reported late Monday that OFWs were able to increase their remittances in June to compensate for decreases in the previous months due to the pandemic disruptions.
Total cash remittances during the month hit $2.4 billion, $175 million more than the level of cash they sent back home in June 2019. Their total June remittances was also $359 million higher than the volume sent in May.
Hit hard
Remittances—one of the Philippine economy’s pillars—were also hit hard by the global economic downturn due to Covid-19. Remittances started with a 6.6-percent growth in January, just before the pandemic becomes global. This 6.6-percent growth was trimmed to 2.5 percent in February as news of the pandemic spread.
Since February when it began mass repatriations of OFWs, the Department of Foreign Affairs (DFA) said more than 130,000 have come home, many of them losing jobs as the pandemic-induced lockdowns gouged economies around the globe, shutting down businesses.
March, April and May were the hardest for Filipino migrant workers. In March, remittances sent back home declined by 4.7 percent. The decline hit 16.2 percent in April, reversing gains seen in the first two months of the year. In May, remittances declined by 19.3 percent.