State Exaction and Corruption: Robbing the Filipino Migrants Twice

State Exaction and Corruption: Robbing the Filipino Migrants Twice Introduction To migrate is a human right. It is the right to go anywhere as one pleases with the option to work or even settle in another country. It is supposed to be an individual and well-thought out decision. However, this assertion was proven false in the autobiography of Carlos Bulosan, one of the Ilocanos who joined the 1st wave of Filipino migrants to the US. The book entitled America is in the Heart was about his awakening as he and others (Filipinos and other nationalities) suffered exploitation, oppression and discrimination as migrant workers. The contemporary stories of migration include the hanging of Flor Contemplacion in Singapore; the imprisonment of the young Sarah Balabagan and a frail mother like Mary Jane Ramos in the Middle East; the coming home of mentally disturbed women; and the untimely death of hundreds per year. Thus, Bulosan s life story has multiplied into hundreds, then thousands and now in millions. Yet, today, the Philippine government remains mouthing the double-talk of keeping the overseas employment program as a stop-gap measure to arrest the problem of unemployment and underemployment in the country. This is a lie amidst facts that overseas employment is serving the neo-liberal polices of globalization, particularly, the policy of cheap and flexible labor; an export industry in boom that provides relief to the backward and underdeveloped Philippine economy; and a lucrative business for the government and the profiteers. The presentation will attempt to present the exploitative scheme of overseas employment that include state exaction, government fees, exorbitant recruitment fees, and in the process show that the government is its top gainer. It will also outline the situation of Filipino migrant workers and their current response to their problems. The Institutionalization of Overseas Employment Program Migration of Filipinos started internally and eventually involved going abroad. From the rural areas, families move to urban areas to find a living because of poverty and dislocation due to inadequate opportunities, land-grabbing and militarization in the countryside. Early process of going abroad involved the likes of Bulosan who left for the US to become apple-pickers or as crew of fishing boats. Then, some professionals went to the US and Europe, while others joined the US Navy and Army during the Second World War. Many of them finally settled in the US. It used to be an easier process that only required getting a passport and applying for a tourist or employment visa. But working abroad took a new turn in the seventies when the Middle East countries, especially the Kingdom of Saudi Arabia, hit an oil boom. These countries became host to hundreds of thousands of Filipino skilled and manual labor. Since then, Filipino workers are now present in 197 host countries. 1

At the same time, the economic and political situation in the country was deteriorating. The economic hardships that led to growing political dissent were used by former President Marcos to declare Martial Law in 1972. A situation that allowed further abuse of power under a dictatorship that exacerbated the situation of the Filipino people and all the more pushed them to seek greener pastures abroad. Thus, the push-pull factors that dictate migration came into full play. The migration of Filipinos was not anymore individually or in groups, but a massive outflow. The opportunities of work abroad served as the answer to the economic hardships and political oppression in the country. As bread-winner s regular remittances in US dollars were sent to their families, the amount of remittances grew from millions of pesos then to billions of pesos now annually. Faced with major financial problems of balance of paymentcs due to trade deficit and ballooning foreign debt, the Marcos dictatorship saw the remittances of Filipino workers abroad, as a huge and steady source of much needed foreign currency. Surely, since then, the in-flow of dollars from overseas employment kept the Philippine economy afloat. In 1974, the Marcos administration started the institutionalization and systematization of the program of exporting Filipino workers. The Philippine government became the manager of labor export and served as the biggest recruitment agency as it merged agencies with dealings in overseas work into the Philippine Overseas Employment Administration (POEA). This agency is tasked to supervise the recruitment process of workers and the implementation of the plan to seek more "markets" for Filipino workers. At the same time, Marcos created the Welfare Fund Administration and authorized the mandatory collection of a maximum of US$25 per deployed worker. Since then, through the established system, the process and documentation for overseas contract worker (OCW) became longer, more tedious and expensive. Regulation, as it is called in bureaucratic parlance, allowed red tape and the collection of fees. Marcos projected the overseas employment program as a stop-gap measure to address the unemployment and underemployment problem in the country. However, from the seventies until the fall of Marcos dictatorship in 1986, labor export has assumed permanence as a pillar of the Philippine economy. Corazon Aquino who took over a plundered national coffers and an economy in much worse condition included in her recovery program the dollar remittances of Filipinos overseas as a prime source of foreign exchange. And as if to appease them, they were called the new economic heroes of the country. On the other hand, Ramos dared to include during the Asia Pacific Economic Conference (APEC) meeting in Manila in 1995 a workshop on Internationally Shared Human Resources. He was about to declare overseas employment as a growth strategy when Flor Contemplacion, a domestic helper in Singapore was hanged. This triggered national protests highlighting the exploitation and violation of human rights of OCWs. As a response, the Magna Carta for Migrant Workers and Overseas Filipinos ACT of 1995 of Republic Act No. 8042 was passed. The Act renamed OCWs into Overseas Filipino Workers (OFW) and the state acknowledged the 2

responsibility on the protection and welfare of OFWs. Yet, since that enactment of the law, OFWs have been in a worse situation. Still Ramos did more to strengthen the labor export. His administration established the Manila Economic and Cultural Office (MECO) in Taiwan to actually supervise the sending of OFWs there, as a new market. Aside from POEA, MECO is undertaking marketing and recruitment activities. He also signed Executive Order 195, series of 1995 for the implementation of Medicare coverage for OFWs and authorized mandatory collection of nine hundred pesos per worker upon deployment. The short stint of deposed President Estrada further systematized the sending of Filipinos abroad. His administration activated the Technical Education for Skills Development authority (TESDA) as an institution that will prepare domestic helpers, entertainers and other type of workers for export. It also spent public funds in the promotion of overseas recruitment through a program called Job Fair, which brought to the provinces including the grounds of the Palace the marketing of Filipinos by inviting recruiters and employers to choose from the pool of skilled workers. Three Departments of government such as; the Department of Labor and Employment (DOLE), the Department of Foreign Affairs (DFA); and the Department of Trade and Industry (DTI) coordinated this program. The current administration of Gloria Macapagal-Arroyo (GMA) in her early pronouncements is continuing the lie regarding the temporary nature of overseas employment. She candidly advised OFWs to stay abroad until the local economy became ready to absorb them. She even promised during her first State of the Nation Address (SONA) to create 1 million jobs. However, she did not elaborate that the promise includes overseas deployment. The truth is that there is no new solution to the high rate of unemployment and underemployment under the neo-liberal policies of deregulation, liberalization and privatization or the regime of imperialist globalization. Yet, she cannot keep hiding the true color of her administration as a promoter and implementor of globalization. In her recent foreign trips, GMA started declaring the OFWs as Overseas Filipino Investors (OFI). This is because she is about to declare a policy shift in labor migration. The paper declared that government has to shift from "managing" the flow of labor migration to "promoting" labor migration as a growth strategy. Along the framework of globalization this policy shift means: 1. A more aggressive marketing of the Filipino as a global worker and the Philippines as a human resource center and to therefore put in place mechanisms that will make him globally competitive; 2. To gear the education and training system towards global demand for skills; and 3. To strengthen the overseas employment industry and structures by providing support at par to other export-oriented industries. This administration said that it must take advantage of the introduction of the General Agreement on Trade in Services (GATS), and similar instruments like the ASEAN Framework 3

Agreement on Services (AFAS) and the APEC Mutual Recognition of Skills and Professional Qualifications Projects, which recognize that human resource is a basic strength in global economy. It believes that given the experience in overseas employment it can transform the program to fully take advantage of the opportunities of "movement of natural persons," which is Mode 4 of GATS. To the GMA technocrats, labor migration is the last frontier and trade in services is a new and exciting area where the country has lots of opportunities to excel. Daring to expound that the country should not repeat the history of our loss in the trade of goods, they proposed to pursue every avenue to push the edge on the Filipino as a global worker and labor as the sunshine industry in export. However, that edge is the willingness of government to comply with the policy of cheap labor, marketing productive stock of labor force at very low price. But this is precisely is the continuation of our historical subservience to foreign interest, from the export of cheap raw materials to the export of people as commodities, thus consolidating the globalization formula. As a matter of fact in 2002, during Labor Secretary Patricia Sto. Tomas s term, a memorandum of agreement was entered into by the Philippine government and the Kingdom of Saudi Arabia effectively lowering the hiring rate of OFWs from the previous minimum of $200 to only $150 per month (which is only equivalent to the minimum pay in Metro Manila). The Lucrative Business of Labor Export Labor export is indeed attractive, a sunshine export industry, not only now, but since it started. What else could be the reason why government has to 'institutionalize, systematize and continuously strengthen the program,' despite persistent feedback that it is a source of national shame due to massive abuses on Filipinos by foreign employers. The generated foreign exchange, government revenues, and employment by exporting people are beneficial to the survival of every administration, a source of grease money and income for bureaucrats and politicians and easy money for private profiteers. Yes, the export of people has taken the front seat as trade of goods continues to slide backwards. Overseas employment is an indispensable component of the Comprehensive Employment Plan of government Overseas employment is the single highest employment generator for the country. As of 2004, there were about 8.08 million Filipinos living or working overseas and everyday, almost 3,000 workers are employed abroad. For many years, more Filipinos are actually employed overseas than the increase in local employment. For example, in 2000, at least 842,000 workers were deployed, while local employment went down by 290,000 (recorded number of laid-off workers). The total number of employed fell to 27.452 million from 27.742 million in 1999. Thus, the unemployment rate for the year 2000, could have been much worse at 13.9%, instead of the recorded 11.2% if not for the overseas employment. We have not even accounted for the undocumented overseas workers, which are approximately 30% of the documented OFWs. TABLE 1. Statistics on Overseas Filipino Workers and Labor Situation 4

YEAR 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 Overseas Deployment (000) 615 686 697 720 654 660 748 832 837 842 868 892 868 934 989 1063 1078 Change in Local 702 782 686 650 644 1510 529 197 1068-290 Employment (000) Unemployment Rate 10.6 9.9 9.3 9.5 9.5 8.6 8.7 10.1 9.8 11.2 10.3 10.6 11.0 11.3 8.1* 7.8 7.4 *Change in definition of employment statistics The promise of Macapagal-Arroyo during her SONA last July to generate 1 million jobs is possible only with the inclusion of labor export. It is said that DOLE is working on a marketing target of 80,000 overseas deployment per month, which are 960,000 jobs abroad in a year. Increasing dollar earnings from the Filipinos overseas keep the Philippine economy afloat The dollar remittances through the banks per year have reached US$14.45 billion in year 2007 from US$1.5 billion in 1991. The UN estimate is US$8 billion annually. This does not even include overtime pay and allowances and of course, the remittances through informal channels and of the undocumented workers. TABLE 2. Remittances to the Philippines (in billion US$) YEAR 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 Remittances 1.5 2.2 2.22 2.94 3.87 4.24 5.74 4.92 6.79 6.0 6.03 6.89 7.58 8.55 10.69 12.76 14.45 GNP Growth 0.34 1.27 2.62 5.26 5.5 6.9 5.2 0.1 3.6 4.21 1.9 2.4 3.2 6.9 5.4 5.4 7.9 GDP Growth -1.02 1.57 2.12 4.39 4.76 5.48 5.43-0.54 3.23 3.9 1.9 3.0 2.3 6.4 5.0 5.4 7.2 Person al Consumption Growth 2.3 3.3 3 3.7 3.8 4.6 5 3.4 2.6 3.5 na 1.7 2.7 3.4 3.1 3.6 na Sources: BSP, NSCB (GNP and GDP in constant prices) The dollar inflows from overseas workers provided boost in the Gross National Product (GNP) growth and in fact, saved the GNP during periods of negative growth in the domestic economy or the Gross Domestic product (GDP). In 1991 and 1998, despite negative-gdp, the GNP managed slim positive growth rate because of the foreign exchange from overseas Filipinos. Amidst recession characterized by high unemployment and underemployment, the Philippine economy registered a consumption-led growth due to rise in personal consumption expenditures. Rising consumption despite slump in local economy indicates that families are getting outside support, the remittances from relatives abroad. The Family Income and Expenditures Survey (FIES) revealed that at least 6% of Filipino families are receiving income from abroad and 6 of 10 of these families are living in urban areas. The national coffer is raking billions of pesos from various fees paid by OFWs in relation to their overseas employment. This means that services for OFWs are revenue centers of the government. 5

A study by the government revealed that documentation process for overseas deployment involves 76 signatures. Aside from POEA that issues the overseas employment certificate, there are ten other government entities involved in the whole documentation process for deployment. Employment certificates are authenticated by the Regional Trial Court; diplomas and transcripts of records are authenticated by the Department of Education, Culture and Sports (DECS) or the Commission on Higher Education (CHED); board ratings and board certificates are authenticated by the Professional Regulation Commission (PRC); birth and marriage certificates are authenticated by the National Statistics Office (NSO); medical certificate authenticated by the Department of Health (DOH). Authentication of these documentary requirements likewise follows a process involving Authentication Unit, Legal Office (AULO)- Malacanang, DFA and the foreign embassy concerned. Added to this is securing a passport and/or seaman s book/ artist record book, and necessary clearances (National Bureau of Investigation (NBI)/Police) and obtaining medical and skills tests. (Annex A) However, the solution that was identified by the GMA administration is to further systematize but setting-up One-Stop Shops that will house all these involved agencies. To obtain all of the above documents/signatures and to cover other, as shown in Table 3, estimated cost per OFW is P 15,400.00. If this amount is multiplied by 1,078,000 as the number of OFWs deployed in year 2007, total revenue for the government was more than P16 B. This amount could be higher due to Executive Order No. 197, which was signed by deposed President Estrada, directing all government agencies to increase by minimum of 20%, all charges for government services. But this is still a low estimate since about twice of the number of deployed workers are going through the same process but failed to get deployed abroad. TABLE 3. GOVERNMENT FEES 76 Signatures at an PhP 7,600 average of P100@ Passport 650 POEA fee (US$100 x P50) 5,000 OWWA fee (US$25) 1,250 Medicare 900 PhP15,400 / worker x 1,078,000 workers (2007) Php 16,601,200,000 This computation does not also account for the notarial services, authentication and verification fees paid by worker in foreign currency to the various Philippine Embassies. For example in Hongkong, under EO 197, the Philippine Embassy will earn HK$ 178,500 per day for verification fee (HK$212.50 per contract at 600 contracts per day). The same amount of HK$212.50 is being collected for notarial services. Likewise, passport renewal on site costs more. Again in Hongkong, a passport costs HK$510 to HK$595, compared to P500-750 in Manila, allegedly for using better quality paper. 6

The Ramos administration, through House Speaker Jose de Venecia, tried to win the OFW family votes during the 1998 presidential election through the passage of a tax exemption law for OFWs. However, the Bureau of Internal Revenue (BIR) issued a memorandum requiring OFWs to apply for tax exemption and required penalty of P1, 000.00 for failure or late application. Government Institutions such as; OWWA, OWWA Medicare Program, Pag-ibig Fund (Home Mortgage and Development Corporation), and the Social Security System (SSS) cover the welfare services and social security of OFWs. But of course, all of these require not once but repetitive payments. OWWA is collecting a mandatory fee of US$ 25 or its equivalent in Peso, which follows the fluctuation in the exchange rate. Medicare fee is P900.00 per worker, while Pag-ibig and SSS membership are optional (though there have been moves to make the same as mandatory). TABLE 4. Overseas Workers Welfare Administration Annual Income 1996-2000 YEAR 2000 1999 1998 1997 1996 Fee Collection P550,378,847.50 P501,195,208.06 P483,582,354.03 P327,012,511.00 P268,207,248.00 Interest Income 153,225,301.80 145,755,369.47 158,145,116.80 93,981,309.00 98,649,038.00 Other Income 37,509,602.33 55,707,307.72 76,725,038.80 30,024,252.00 271,174,013.00 TOTAL P741,113,751.63 P702,657,948.25 P718,452,509.63 P451,018,072.00 P394,030,299.00 OWWA succeeded in increasing the frequency of collection from one time payment per employer to per contract contribution. However, this was not implemented in Hongkong due to the militant protest of OFW organizations, which was led by UNIFIL and Migrante International. It also made an attempt last year (2000) to annualize the collection but that scheme was blocked by the OFW protests worldwide. OWWA has a total asset of around of Php 2B. Medicare coverage is annual, thereby; failure to pay for the remaining term of his contract also means forfeiture of benefits. This fund, after six years of operation, has accumulated more than Php2billion in assets. Membership to the Pag-ibig Fund is voluntary and its overseas collection started way back during the Aquino administration. Meanwhile, the SSS, following the good collection performance of OWWA, Medicare and Pag-ibig is strengthening its on site collections. The bad news is that payment to the above Funds can only be sustained while the OFWs has a contract. However, the nature of their contractual employment implies that soon enough all their contributions will be futile and therefore, they cannot expect any future benefit. Private profiteers are feasting the multi-billion dollar industry of labor export. Their means of ensuring higher profits is to further exploit the OFWs. The government and many politicians and bureaucrats are also engaged in this business. There is a regulation that private recruiters can charge a maximum of P5, 000.00 as processing fee and a placement fee not beyond 1-month salary of the deployed worker. However, private recruitment agencies violate this regulation as a rule rather than in exemption. Illegal activities 7

are committed by licensed agencies by way of exacting exorbitant recruitment and incidental fees. Aside from the processing and placement fees, deployment process allows the recruitment agencies to charge for medical examination, Pre-departure Orientation Seminar (PDOS), trade and skills certificate (which may include all sorts of training fees). Table 5 shows that an OFW needs a minimum of P30, 000. 00 to cover deployment costs paid to a recruiter, assuming that monthly salary is at a minimum of US$ 200. TABLE 5. Recruitment Agencies' Fees Trade / Skill Test Php 300 Certificate Processing Fee Php 5,000+ Placement Fee 1 month salary + PDOS Php 100+ Medical Examination Php 2,600 to Php 5,000 However, several examples indicate that the amount is way beyond thirty thousand pesos. Aside from payments before departure, another scheme is through salary deduction. The Philippine government is aware of this practice, which is usual in Hongkong, Singapore and Taiwan. The amount involved can go as high as P150, 000.00 wherein, a worker will need a year of overseas work to pay. Many times, workers need to endure the abuses of their employer because on top of their loan from the recruiter they still have to pay their debts back home. Placement agencies usually charge exorbitant amount for trade test, medical examination, PDOS and others. At this point, the aspiring OFW is normally tied to paying any amount just to be in the waiting list for deployment. Many recruiters are also agents of insurance companies, into courier services, even facilitates remittances to families, and sale of various products. Aside from the local recruitment, workers still has to deal with the counterpart recruitment agencies in the host country, which usually charge them for additional costs. A worse scenario of recruitment is in Taiwan, which is supposedly directly managed by the Philippine government through the MECO. An OFW is exploited by both the local and counterpart recruitment agency. Salary deduction is the prevailing practice where an OFW suffers for as long as one and a half year paying an equivalent amount that is as high as P200, 000.00. Corruption in the Labor Export Industry MECO is a quasi-government institution and basically a government recruitment office. The undetermined amounts collected for processing do not formally enter the national receipts of the Philippine government. It goes to the Office of the President as a donation. Therefore, assignment to MECO is strictly of patronage politics. This Office was known as Pangasinan country at the time of former President Ramos because it was headed and manned by people from that home province of the President. Then, under deposed President Estrada, it was Guia 8

Gomez, one of his wives, who lorded over the Taiwan operation. Allegedly, Mike Arroyo, the First Gentleman, is currently running this very lucrative recruitment business. Many politicians and bureaucrats are as well into the business of labor export. They of course take campaign funds from recruitment agencies but they themselves are directly involved in many ways. Who can refuse a business that is almost risk-free, require least capital and effort but only enough influence to get job orders from foreign employers and facilitate collusion with government officials? The list of these officials includes; Presidential Families, Senators, Congressmen, Labor Officials, Foreign Affairs Officials and Ambassadors. Recently, Mike Defensor, a former cabinet official and close ally of Arroyo allegedly interceded for the Sentosa recruitment agency in the POEA which was apparently involved in illegal recruitment. In addition, in 2004, the OWWA and Philippine Health Insurance Corporation (Medicare) funds were claimed to have been used for the political campaign of President Arroyo. This was one of the cases of corruption contained in the impeachment of GMA. Other cases involved failed government-led fund raising projects from OFWs themselves. A case in point was the CGMA (Classroom Galing sa Manggagawa Abroad) program which was obtained voluntarily from OFWs to establish education facilities abroad, The fund did not produce the said facilities and the millions of pesos raised could not be accounted to date. Conclusion: Exploitation and countless corruption issues by state officials in the embassies, labor offices and other government offices including private sector profiteers have been raised by migrants who have labored under extreme conditions. Many of them now begin to understand the root causes of the bankrupt policy of labor export. Now, despite having been called heroes, our Filipino migrant workers have learned how to collectively defend and fight for their rights and welfare. 9