A little rant about economic contributions

Michael Alan Hamlin

Posted on December 6, 2012

Does it seem curious to you that the National Economic and Development Authority (NEDA) singles out overseas remittances when announcing how fast the economy is growing, but lumps IT-BPO—the nation’s most efficient job generator at home—into a basket of miscellaneous services? About 10 million overseas Filipino workers (OFWs) remitted $15.57 billion in the first three quarters of 2012. The World Bank forecasts total remittances for the year of $24 billion.

Given these numbers, it’s not hard to understand why NEDA places such prominence on the contribution of OFWs to the economy, and its “inclusive” effect on the masses, presenting a trickle down opportunity to partake of the fruits of economic growth. In a statement announcing the Philippines’ impressive 7.1% third-quarter expansion NEDA secretary Arsenio M. Balisacan said remittances increased precisely 4.2%.

By contrast, Mr. Balisacan said IT-BPO grew because miscellaneous services grew by 10.2%. Miscellaneous?

This year, the Business Processing Association of the Philippines (BPAP) forecasts a 20% increase in revenues to $13.4 billion—close to 60% of the World Bank forecast for remittances. The industry—which includes a wide range of industry verticals and business services—will employ 722,000 full-time employees. That’s not far from $20,000 in export revenues per IT-BPO knowledge worker.

By contrast, each OFW, on average, sent home $2,400. That’s not an unimpressive number, but demonstrates that the Philippines can do much better economically by creating solid jobs at home instead of sending so many bright, hard-working individuals overseas. And since IT-BPO is so clearly a strategic, high-value source of jobs and export revenues, it ought to at least get the same level of respect from government’s economic managers as OFWs do.

What harm does it bring to lump IT-BPO into miscellaneous services when measuring economic growth? To answer that question, it’s necessary to ask one: “What harm does it cause to single out OFW remittances when reporting economic growth? For one, this is not a prestigious club. The Philippines is the third-largest recipient of remittances from citizens working overseas after India and China, with populations ten times larger. It’s roughly at par with Mexico.

But forget about prestige. By promoting the virtues of working abroad, nations undermine the virtues of working at home. For governments that can’t seem to create an environment that attracts job-generating investment, sending its citizens out into the world is a relief valve. It allows these governments to skirt their mandates, at least for a while, until the day of reckoning arrives.

More fundamentally, if a nation’s citizenry doesn’t think its country is worth living in—and its greatest aspiration is to go abroad and earn—that perspective becomes self-fulfilling. Generation after generation of talented young people race through their youth so that they can leave. And those who can’t leave stay and live in increasing frustration, in anguish over their failure to leave and enjoy the prestige of living abroad.

There’s nothing wrong with living and working abroad, of course. I’ve done it for 40 years in Asia, and mostly in the Philippines. It’s a wonderful way to educate yourself and expand your personal and professional world. But there is something wrong when more than 10% of a nation’s population is working overseas, and many more desire to do so because they don’t have the faith that their country will provide jobs.

To be fair, the administration of President Benigno S. Aquino III, in my view, is making good progress in restoring genuine pride in the Philippines. Economic results like those announced last week help. But the availability of jobs is the bottom line, as Mr. Balisacan himself noted in his statement. A Bangko Sentral ng Pilipinas survey conducted in July showed that the “greater availability of jobs and more employment” was a factor in consumers’ positive outlook.

Each IT-BPO job contributes to the creation of between two and three other jobs in other industries—such as transportation, entertainment, retail, real estate, and many others—whereas each $2,400 sent home by OFWs contributes primarily to consumption, rather than production. Sending OFWs overseas like a commodity export is economic addiction. It feels good for a while, until it doesn’t.

Mr. Aquino recently said that deciding to work overseas should be a choice, not an economic necessity. If the president believes working and living at home is such a priority, NEDA should, too.

(Michael Alan Hamlin is the managing director of TeamAsia and a Manila-based author and commentator. His latest book is High Visibility: Transforming Your Personal and Professional Brand. Write him at mahamlin@teamasia.com and follow him on TwitterFacebook and LinkedIn. Copyright © 2012 Michael Alan Hamlin. All Rights Reserved.)

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