Philippine economy

‘Gone in a snap’: OFW families bear brunt of weak peso

Michelle Abad
‘Gone in a snap’: OFW families bear brunt of weak peso
The weakening peso means more pesos to a US dollar. But is it really good news?

MANILA, Philippines – Twenty-year-old Jamaica It-it has more on her mind than her studies as a second year college student in San Jose del Monte, Bulacan. She also faces the constant challenge of making funds last as long as possible for her family. 

Jamaica, the eldest of four siblings and mother of an 11-month-old baby, is the household’s de-facto financial manager. She’s in charge of setting the household’s budget and does the grocery.

Dati po, pag nag-grogrocery po ako, yung P1,000 po halos marami ka nang mabibili. Pero ngayon, ‘yung P1,000 po parang P100 na lang – na isang snap mo lang ng kamay, wala na agad,” she said.

(Before, when I would do the grocery, P1,000 would buy you a lot of things. But now, P1,000 feels just like P100 – with the snap of a finger, it’s all gone.)

Jamaica is the niece of Ging*, who works as a domestic worker in Saudi Arabia. Ging pays for Jamaica’s tuition and books, but sometimes, when they really need it, Jamaica asks her for extra funds for other household expenses.

The Philippine peso fell to its weakest ever at P59 to $1 on October 3. Families of overseas Filipino workers (OFWs) remitting in US dollars, or even other currencies, may welcome the development at first, as they receive more pesos to a dollar. But rising prices in the Philippines wipe out whatever was gained in the remittance.

The peso may even drop to P60 to P62 per dollar as early as this year, according to ING Groep NV, Bank of the Philippine Islands, and eMBM Services. According to a Bloomberg report, the peso slumped more than 13% in 2022, and is one of the worst performers in Asia. 

The difficulty of Jamaica and Ging’s family is only one of the manifestations of how OFW families are bearing the brunt of the weakening peso. OFW families may think of the higher exchange rate as an opportunity to earn, but rising prices here at home have also paced, if not outpaced, the strengthening of the currencies they are remitting from abroad. OFW families continue to experience difficulties trying to afford comfortable living.

‘Masarap lang pakinggan’

Catherine*, a barista also from Bulacan, receives P15,000 a month from a sibling based in the United Arab Emirates. The money goes to another sibling’s schooling and the family’s food budget, rent, and utilities. Other expenses are paid for by other family members.

But even if she belongs to a multi-income family, Catherine said it is still not enough. 

Wala kaming maipon kasi kahit tumaas ang palitan ng pera, tumaas naman ang mga bilihin sa Pinas,” said Catherine when asked about the high exchange rates. (We cannot save because even if the exchange rate has risen, prices in the Philippines have gotten higher as well.)

From October 2021 to October 2022, the peso depreciated 16.38% against the UAE dirham, based on rates from the Bangko Sentral ng Pilipinas.

Masarap lang pakinggan kasi ‘mataas ang rate’ pag na-convert na sa peso, pero bawi lang din pag ginastos na sa Pinas (It only sounds nice because the “rate has increased” when [dirhams] are converted to pesos, but it gets offset when you spend it in the Philippines),” said Catherine.

Meanwhile, Jamaica can’t even have snacks at school like she used to. She uses what would be spent for food to save for transportation expenses instead.

At the stand outside Jamaica’s college, turon (sweet fried banana rolls) used to sell for P5. But since she began attending on-site classes as the COVID-19 pandemic eased, turon now costs P15 a piece.

Kapag may naiiwan sa pera na binibigay ni Tita Ging, hindi ko na ginagawang baon na pang-snack. Pang-pamasahe na lang. Kumakain naman ako sa bahay (When there is extra money from Tita Ging’s remittance, I don’t use it anymore for snacks. I use it for fares instead. I can just eat at home),” said Jamaica.

Jamaica takes a tricycle and a jeepney going to school. While the tricycle fare has gone back to the pre-pandemic price of P12 for students, the jeep fare has increased from P8 to P11. The P23 total fare is doubled when she goes home from school. Fortunately for Jamaica, her school’s hybrid set-up only calls for students to come to campus twice a week.

Ging’s main obligation to Jamaica is her tuition – P6,000 per semester. Ging has her own partner and daughter to take care of in Norzagaray, another town in Bulacan province. Because Jamaica knows Ging’s first priority is elsewhere, she refrains from asking more from her.

Minsan po, gusto ko sanang humingi, pero minsan nahihiya na din po ako, kaya ginagawan ko na lang din po ng paraan (Sometimes I want to ask from her, but I get embarrassed to ask, so I just find a way to make it work),” said Jamaica.

‘Gone in a snap’: OFW families bear brunt of weak peso
Symbolic, practical impacts of weakening peso

Take away the rising prices, the weakening peso is “beneficial” to OFWs and their families in general, as dollars earned and remitted mean more in peso terms, according to Carmel Abao, Center for Migrant Advocacy board member and Ateneo political science professor.

From the point of view of employers and businesses overseas, Abao said that a weakening peso means cheaper foreign products – in other words, they need fewer dollars to buy commodities in pesos. OFWs become symbols of commodities, as they sell their labor to employers.

“Like commodities, the cost of hiring overseas workers is cheaper when the peso depreciates,” said Abao. “We don’t – and shouldn’t – think of OFWs as commodities but that’s what they practically are in the larger scheme of things, i.e., in the global supply chain of labor or the global labor market.”

The impact of the weak peso also becomes practical as it hurts the local economy which relies heavily on imports (for example, oil, which now costs more pesos to purchase). This pushes Filipinos to migrate, Abao said.

“A weakened local economy means less jobs and incomes here – and higher prices here. That means OFWs will have to remit more since their families will have to rely more on these remittances to survive,” she said.

Migs Lizaso, a Filipino babysitter based in Switzerland, has experienced having to double her remittance just for her relatives in Taguig to get by for a certain period of time.

In a September 19 episode of Rappler podcast At Home sa Abroad, Lizaso said that 100 Swiss francs once converted to around P4,700, which was good to last for 10 days. Now that the exchange rate has risen, her 100 Swiss francs now equals more than P5,800.

Ang laki, malaki siya kung tutuusin. Pero not even five days, ubos na. Kaya ang nangyayari, before, 100 Swiss francs, okay lang. Parang makakahabol ulit for the next [10 to] 15 days. Ngayon ‘yung 100 Swiss francs, I need to add another 100 more para mag-fit sa one week nilang expenses,” said Lizaso.

(It’s big if you think about it. But it does not even last for five days. Before, 100 Swiss francs was enough for the next 10 to 15 days. But now I need to add another 100 more just to fit their one-week expenses.)

“OFWs will think they are paid more when in fact they are not – their value just diminishes when the peso weakens. So, for the same amount of remittances in dollars, they are able to send more in peso terms. But vis-à-vis the wages in host countries, the wages of these OFWs will be cheap, perhaps even cheaper,” said Abao.

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Attempts to protect OFWs’ remittances

In the House of Representatives, lawmakers are attempting to find ways to protect OFWs’ remittances. There are at least nine bills in the 19th Congress seeking to do this. 

In one version filed by Pampanga 3rd District Representative Aurelio Gonzales Jr., financial intermediaries must impose a 50% discount for OFWs sending money to their immediate family members. In another version filed by Tarlac 2nd District Representative Christian Tell Yap, there is emphasis on requiring money transfer service providers to actively disclose fees so that OFWs do not get blindsided by the amount of money deducted from what they send to their loved ones.

But is this as easy as it sounds? Some of the country’s national agencies in charge of strategizing for a stronger economy have expressed reservations about the bills.

“We pose reservations on this proposal as this will result in a reduction of government revenues…. This will also pose administrative difficulties as tax administrations may have to require additional requirements from both OFWs and the financial intermediaries to check and verify claims of the deductibility,” said Department of Finance (DOF) legislative liaison specialist Jeanne Guinto during an October 13 hearing of the House committee on overseas workers affairs.

Guinto said that in a previous position paper on the version of the bill filed in the 18th Congress, the DOF estimated government losses to be between P2.8 billion to P3.5 billion. 

Foreign Undersecretary Eduardo de Vega also questioned the feasibility of mandating discounts, as “we can’t impose rules on [foreign] banks” where OFWs remit their salaries. De Vega also called attention to non-OFWs who remit funds, such as Filipino permanent residents or dual citizens. 

The perk being exclusively for OFWs may seem unjust for those who are not temporary migrant workers, De Vega said.

Cushioning impact

So what policies can the government implement to really help OFWs and their families cope with the economic crisis? Abao said monetary policy has to be revisited, and geared towards strengthening the peso. It also boils down to providing more jobs in the country.

Jamaica hopes the Philippine government can somehow find a way to increase OFWs’ salaries.

Kasi pagdating po sa Pilipinas, lalo na po ngayon na ‘yung Pilipinas is nasa krisis po na ang laki-laki ng mga bilihin, tumataas po ‘yung bilihin kada araw, ang hirap para sa family ng isang OFW ‘yung magtipid tapos kada buwan lang po ‘yung suweldo ng OFW,” she said.

(When it comes to the Philippines, especially since the country is in crisis with prices soaring every day, it’s so difficult for an OFW’s family to save, as [some] OFWs only send their salaries once a month.)

Abao also highlighted an “ethical consideration” in the government’s response to the weak peso: “Why put the burden of keeping an entire local economy afloat on the backs of workers who, in the first place, had to leave because the local economy left them with no job opportunities?”

“OFWs thus have to fend for themselves and at the same time save a weak local economy.” – with reports from Yana Uy/Rappler.com

*Names have been changed at the individuals’ requests for privacy.

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Michelle Abad

Michelle Abad is a multimedia reporter at Rappler. She covers overseas Filipinos, the rights of women and children, and local governments.