Boost human capital development – ADB

MANILA, Philippines — The Philippines should step up its efforts in developing human capital, especially for repatriated migrant workers who need to be reintegrated in the overall economy.

In its latest working paper, Manila-based Asian Development Bank (ADB) said the unprecedented return of overseas Filipino workers (OFWs) has posed growing challenges, particularly the implications for remittances, income and employment.

In 2020, hundreds of thousands of Filipinos returned home to the Philippines because of COVID-19, significantly impacting the economy as the country remains heavily reliant on overseas remittances to boost household consumption.

Amid the return of OFWs, ADB principal economist Jong Woo Kang and consultant Ma. Concepcion Latoja maintained that the government should commit to develop human capital amid remittance reliance.

They noted that returning OFWs would have to be reintegrated or re-included in the society and economy, which means the success or failure of the reintegration process largely depends on the migrant’s willingness and readiness to return.

The ADB experts argued that there are social costs to exporting labor, even as remittances have significantly benefited the economy and even if allowing Filipinos to work abroad eased domestic labor woes.

“What sustains progress is human capital development. Regardless of how long or short migration will be used for development gains, the Philippines should not falter in its commitment to scale up investments in human capital,” they said.

Kang and Latoja noted that this can be done by ensuring resource availability for quality education and training, promoting skills diversification, reinforcing workplace adaptability, inculcating responsiveness to labor market changes, and reinforcing the infrastructure needed to increase work opportunities and widen its accessibility.

The researchers emphasized that reintegration programs can be improved to serve as channels of development for OFWs who return with different levels of skills, competencies and experiences.

Aside from promoting skills development, reintegration modules may be developed to harness the skills of OFW returnees to help their communities transition to more self-reliant microeconomies.

Studies showed that 52 percent of OFW returnees are interested in upgrading their skill sets through training.

Kang and Latoja maintained that OFW returnees who decide to stay for good must come to terms with the reality of the pandemic and the challenges it has brought to them and to the country.

They said OFW returnees must be ready with skills and patience in navigating income opportunities in the domestic market.

Currently, reintegration programs are overseen and implemented by the Department of Labor and Employment and the Overseas Workers Welfare Administration. The ADB experts said successful reintegration hinges on the ability to generate income.

Since 2000, the Philippines has been among the top sources of global migrants. At least 50 percent of OFWs are working in the Middle East.

As a major migrant-sending country, the Philippines is among the top remittance-receiving economies in absolute value at $34.9 billion and per capita terms at $325.

Although inflows were initially estimated to decline by 5.2 percent or $1.8 billion in 2020 because of the pandemic, data showed that it only went down by less than one percent.

Remittance inflows are not a direct component of gross domestic product, but their impact on consumption affects final output through the remittance multiplier effect.

It is estimated that remittances contribute $0.40 to GDP for every $1 of inflow.