WB notes wrinkles in OFW no job placement-fee policy

The implementation of the country’s “no placement fee” policy for all overseas Filipino workers (OFWs) remains inconsistent, according to the World Bank.

In a Migration and Development Brief, the World Bank said placement fees paid by OFWs vary from as low as $5 in the Philippines to Saudi Arabia corridor, but as much as $100 for Philippines to Qatar job destination.

“The enforcement of the no-fee policy seems to vary across corridors,” the World Bank said. “Anecdotally, recruitment agents, at times, circumvent the no-fee policy by imposing additional charges for training.”

The World Bank also said the recruitment fees differ in terms of the gender of the OFW. Female OFWs in Saudi Arabia and Qatar pay lower recruitment fees compared to their male counterparts.

The report stated that, on one hand, female OFWs in Qatar earn an average of $421 a month while the total recruitment cost reached $459. Other costs, which include placement fees, reach $101 per female OFW.

On the other hand, female OFWs in Saudi Arabia earn $412 a month; total recruitment fee at $218; and other costs such as placement fees, $5 per OFW.

Male OFWs in Qatar, meanwhile, earn $712 a month and the total recruitment cost is $826. Male OFWs pay placement fees of $503.

In Saudi Arabia male OFWs earn $569 a month and have a $583 total recruitment cost, while the placement fee for these workers could be as much as $290.

“This could be indicative of the Philippines’s policy of exempting placement fees for its citizens hired to work abroad as domestic workers, caregivers and seafarers,” the World Bank said.

Meanwhile, the bank estimates that remittances from OFWs expected to reach $32.8 billion, making the country the second top remittance-receiving country in East Asia and the Pacific.

The World Bank said this indicates that OFW remittances will grow faster to register a full-year growth of 5.3 percent by year-end, slightly higher than the 4.5-percent increase posted in 2016.

Among major remittance recipients, India retains its top spot, with remittances expected to total $65 billion this year, followed by China with $61 billion.

“Declining remittances from Saudi Arabia have been more than compensated by increasing levels from other Gulf Cooperation Council  countries, particularly Qatar,” the brief stated.

Formal remittances to the East Asia and Pacific (EAP) region are expected to rebound by an estimated 4.4 percent in 2017, reversing its decline of 2.6 percent in 2016.

The bank estimates that remittances to low- and middle-income countries are expected to grow modestly by 3.5 percent in 2018, to $466 billion. Global remittances will grow by 3.4 percent to $616 billion in 2018.

The global average cost of sending $200 remained stagnant at 7.2 percent in the third quarter of 2017. This was significantly higher than the Sustainable Development Goal (SDG) target of 3 percent.

The report stated that two major factors contributing to high costs are exclusive partnerships between national post office systems and any single money transfer operator (MTO).

These MTOs, the report stated, stifle market competition and allows the MTO to raise remittance fees, as well as de-risking by commercial banks, as they close bank accounts of MTOs, in order to cope with the high regulatory burden aimed at reducing money laundering and financial crime.

“Remittances are a lifeline for developing countries; this is particularly true following natural disasters, such as the recent earthquakes in Mexico and the storms devastating the Caribbean,” Dilip Ratha, lead author of the Brief and head of Global Knowledge Partnership on Migration and Development , or KNOMAD.

“It is imperative for the global community to reduce the cost of remitting money, by eliminating exclusivity contracts, especially in the high-income OECD (Overseas Economic Co-operation and Development) countries. There is also an urgent need to address de-risking behavior of global banks,” Ratha added.

 

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