Filipinos’ dependence on remittances strain family relations: study

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Filipino domestic workers encountered difficulties in sending remittances due to 'restrictions' by the HK government, Uniteller execs said

Filipinos who have relatives working abroad tend to depend heavily on remittances they send instead of looking for alternative sources of income, a study by a US-based money transfer processing company said.

The study “Both Sides of the Coin: Side One, The Receiver’s Story,” released by Uniteller on Dec.17, 2019, showed that 72 percent of Filipino households who participated in the survey will mainly ask for money from migrant workers when they fell short of funds.

When they cannot get the money, 53 percent said they will have to sacrifice basic needs.

This dependence on remittances from overseas Filipino workers (OFWs) has strained the relationship between them and their families, with 41 percent of Filipino respondents saying their increasing reliance on money sent by relatives who work abroad has placed “emotional stress” on their families.

Fifty-four percent, on the other hand, said it has affected their personal relationship with the sender. The sender suffers from the pressure, while the receiver experiences stress.

The Philippines is one of the top countries in the world whose economy is mostly buttressed by remittances. Personal remittances reached US$27.6 billion by October 2019, a hike of 4.3 percent from the US$26.5 billion sent from January-October 2018 according to latest statistics from the Philippine Central Bank.

The remittances came from Filipinos working in the US, Saudi Arabia, Singapore, Japan, United Arab Emirates, the U.K., Canada, Germany, Hong Kong and Kuwait.

In Hong Kong, OFWs – over 200,000 of whom work as domestic helpers – sent over US$ 600 million in remittances in 2019.

Receivers have the say

It is the receivers, however, who have control over how the remittances are used. A staggering 82 percent of Filipino respondents said they decide how the money should be spent.

This reality, however is also discernible among respondents from Vietnam (99 percent), Indonesia (95 percent) and the Philippines.

“This debunks the assumption that senders automatically have the most sway in how their money is spent,” the study said.

For the Filipinos, the remittances mostly go to day-to-day needs (25 percent) and loans and bill payments (25 percent). The rest of the money is spent on education (13 percent) and medical needs (11 percent), while 13 percent goes to savings.

This 13 percent for savings, which is also the same rate for India, is the lowest among the countries included in the survey, however. Receivers in Indonesia, for one, save up to 15 percent of the remittances they get.

“While remittances can provide a financial lifeline for families back home, there can be issues where recipients can become overly reliant on this source of income as a means of sustaining their livelihoods and not as a means of furthering their wealth,” the study pointed out.

The Philippine irony

The access and availability of remittances have resulted in the improvement of life of most of the 1,911 recipients surveyed for the study. But this does not ring as true for respondents from the Philippines, as only 71 percent said this applies to them, as compared to Indonesia’s 95 percent.

The irony here is that remittances make up the bulk of the monthly income of Filipinos, while the opposite goes for Indonesia.

“By providing excess liquidity, remittances can ease the credit constraints of unbanked households in poor areas and potentially fund investments in education or businesses to lift families out of poverty. Out of the countries surveyed, most say the money they receive significantly improves the quality of their life. Interestingly, this statistic is highest in Indonesia (95%), where remittance money makes up the lowest portion of monthly income, and lowest in the Philippines (71%) where the make-up is highest,” the study said.

The good news is the Philippines posted the highest percentage when it comes to having interest in knowing how to better manage their finances, with 75 percent of Filipino respondents saying they want to “learn and cultivate good financial habits.”

“We see efforts by governments in some of these countries, such as the Economic and Financial Learning Program (EFLP), an initiative by Bangko Sentral ng Pilipinas, the Philippines’ central bank, that looks to promote greater awareness and understanding of essential economic and financial issues for Filipinos. These are welcomed steps in ensuring greater financial literacy and education among communities but clearly there is room to do more,” the study said.

A total of 1,911 regular recipients of remittances from low-income households were surveyed for the study, with an average yearly income of US$3,000.