Overseas Filipino Workers’

Remittances :Concepts and Measurement

1

Daisy M. Cabral

Department of Economic Statistics

Bangko Sentral ng Pilipinas

Outline of Presentation

OFW REMITTANCES

A. Contribution of Remittances to the Economy Trends

B. Profile of Remitters Stock Deployment

C. Statistical Measurement of Remittances BOP component (Income and Current Transfer) Estimation Method Data Sources

2

Outline of Presentation

STATISTICAL ISSUES

FUTURE DIRECTION

3

Contribution of Remittances

to the Economy

4

Level

(in US$ Bil) 1/

Growth

Rate

(%)

Remittances as % of:

GDP XGS FDI GIR DSB

2002 6.89 14.2 9.0 18.2 446.6 42.1 88.7

2003 7.58 10.1 9.5 19.6 1,543.4 44.4 95.3

2004 8.55 12.8 9.9 20.0 1,242.7 51.7 118.5

2005 10.69 25.0 10.8 23.9 576.5 57.8 142.2

2006 12.76 19.4 10.9 24.7 544.2 55.6 161.5

2007 14.45 13.2 10.0 25.0 493.5 42.8 202.0

2008 16.43 13.7 9.7 27.9 1,080.7 43.7 220.6

(J-Nov)

2009 4.06

(Jan-Mar)

2.7 - 26.9

(Jan)

16,162.5

(Jan-

Feb)

10.4

(Jan-

Mar)

235.8

(Jan)

1/ Cash remittances coursed through the banks

VALUE OF REMITTANCES

5

*/ Cash Remittances coursed through banks Source: BSP6

7.6

10.7

4.1

8.6

12.814.5

16.4

6.9

0

2

46

8

10

12

1416

18

20

'02 '03 '04 '05 '06 '07 '08 '09

Jan-

Mar

0

5

10

15

20

25

30Growt h Rat e (RHS)

OF Remittances */Levels (US$ million)

Jan-Mar

Growth Rate

(%)

2007 2008 2008 2009 2008 2009

Remittances 14,450 16,427 3,950 4,057 13.2 2.7

By Worker:

Sea-based 2,236 3,035 759 801 42.2 5.5

Land-based 12,214 13,392 3,192 3,256 8.0 2.0

By Country:

Asia 1,543 1,884 455 520 14.4 14.3

Americas 8,244 9,213 2,110 2,104 12.1 -0.3

Oceania 122 149 38 38 41.0 -1.1

Europe 2,352 2,659 731 758 20.1 3.7

Mid East 2,172 2,503 614 633 8.0 3.1

Africa 16 18 2 4 -56.5 123.4

Others 1 1 0 0 21.8 -72.8

OF remittances sustain growth

Profile of OFW Remitters

7

STOCK of OFWsin million

Source: Commission on Filipinos Overseas, DFA 8

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

5

5.1

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

Stock Growth Rate

Source: Philippine Overseas Employment Administration (POEA) 9

0

20

40

60

80

100

120

140

160

1996 2006 2007 2008

Professionals Service Production Others

Skills Diversification

Geographical diversification

Note: Flow data1/ Flow of OFWs during the year

Source: Philippine Overseas Employment Administration (POEA) 10

0

500

1000

1500

OFW Deployment (in

thous)

837 842 868 892 868 934 989 1063 10781377

99 '00 '01 '02 '03 '04 '05 '06 '07 '08

Americas

4%

Others

3%

Europe

6%

Asia

27%

Middle

East

60%

Channels of Remittances

Modes of Money Transfer

Banks

Non-Banks (e.g., door-to-door services

stores, money transfer operators, etc.)

Others (e.g, brought home by workers or

padala)

Statistical Measurement of

Remittances

Remittances as BOP Component

Income Account (under Compensation of employees)

include transactions of OFWs who are working forless than one year in the host economy and areclassified as resident OFWs (sea-based andperforming artists).

Current Transfer Account (under Workers’ remittances)

include transactions of OFWs who are working forone year or more in the host economy and areclassified as non-resident OFWs (all land-basedworkers except performing artists).

15

Cash Remittances (coursed through banks)

Estimation of Remittances in the BOP

Gross compensation of resident OFWs

(sea-based and performing artists)

(under Income Account) =

stock of resident OFWs * average

salary

(Multiplied by the raising factor)

Total Cash Remittances

(coursed through banks and informal channels )

Non-resident OFWs’ Remittances (land-

based workers excluding performing

artists)

(under Current Transfers Account) =

Total cash remittances less cash

remittance of resident OFWs (Residual)

Stock of OFWs

Monthly updating based on a moving total:

Stock t=1 = Stock t=0

+ number of deployed t=1

- number of workers with finished contract

Compensation of Employees (Income Account)

Seabased workersCE Sea-based = Remittances ÷ 0.80

(Contract requires remittance to beneficiary of 80% of basic salary)

Performing ArtistsCE Performing Artists =

[Stock of workers t=0 x average salary per worker t=0 ]

+

[no. of deployed t=1 x average salary per worker t=1 ]

–

[no. of workers with finished contract x average salary

per worker prevailing at time of their employment]

Workers’ Remittances (Current Transfers)

Residual of total remittances in cash after

deducting implied remittances of resident

OFWs

Sources of Data

Cash remittances: Bank reports

Undercoverage ratio: Survey of Overseas Filipinos

Remittances in kind: Survey of Overseas Filipinos

Limitations

Includes cash transactions only

Does not indicate purpose of remittance

Small amount transactions are reported in

lumped sum

Does not capture funds sent outside the banking

system

Country of origin may not reflect the real

source of remittance

Survey Of Overseas Filipinos (SOF)

The SOF is a nationwide survey that

seeks to gather information on Filipino

citizens who left for abroad during the

last five years.

A rider survey to the 3rd quarter round of

the Labor Force Survey

Limitations

The SOF does not ask for the total

salary received by the OFWs

The sampling design is not intended

solely for OFWs

Statistical Issues

Need to harmonize definition of residence with the SNA.

Present system of monitoring headcount of migrant workers

has limitations:

Difficulty of monitoring those with no valid work

documents/those counted as tourists upon departure.

Upward bias in headcount due to: mobility of workers in

landlock countries; returning workers with unexpired work

contract not covered in estimation; and those frequently

on vacation.

Need to measure the expenditures of Filipino tourists abroad

Future Direction

Strengthen current system of monitoring headcount of

migrant workers

Expand collaborative effort with the POEA to disaggregate

OFW database, particularly on:

monthly salary by skill

data on deployment of re-hires

Improve sampling design of SOF

Website: www.bsp.gov.ph

E-mail: bspmail@bsp.gov.ph