The Philippine economy has long relied on migrant workers’ remittances. This was evident during the pandemic where the funds they sent to their families buoyed millions who lost their jobs and incomes. In 2020, remittances reached $29.903 billion (₱1.49 trillion)—bigger than other sources of external funding such as direct foreign investments, tourism and call center revenues. From 2000, remittances have comprised around 10% of the Philippines’ gross domestic product.

Filipino migrants’ remittances slowed only by 0.8% during the height of the pandemic in 2020. This was despite the fact that 600,000 migrant workers lost their jobs and millions more were temporarily unemployed due to restrictions. Many migrants further tightened their belts to continue sending money to the Philippines. There were reports that US-based migrants sent even their state financial aid. In 2021, overall remittances bounced back to ₱34 billion.

Cuts on remittances

On top of all their other sacrifices, Filipino migrants are subjected to more hardships by high remittance costs or cuts by banks and institutions through which they send their money. American banks, which process up to 40% of Filipino remittances, squeeze the most profits.

According to reports from the Asian Development Bank last February, money transfer companies charge an average of 8.8% or $17.6 (₱915.20 base on the exchange rate of $1=₱52) for every $200 (₱10,400) sent by migrant Filipinos. This was higher than the international average of 6.4% and 5.9% in the Asia and Pacific regions. Filipino migrants send an average of $300-$500 every month, which is around half of their wages.

Meanwhile, banks charge up to 10% or more for their financial services (both in physical banking and mobile banking.) In addition, these arbitrarily impose “hidden charges,” including a foreign exchange rate charge which is based on market speculation.

Majority of global remittances (70%) are made in a cash-to-cash basis where money is deposited abroad and is received as local money in the country. The number of migrants using “mobile money” through telecom services like GCash is lowest due to limited infrastructure and know-how. This is despite the fact that mobile money charges are lowest per transaction.

Banks and institutions rake in at least $2.56 billion (₱135.2 billion) during the height of the pandemic in 2020. This is higher than the ₱100 billion aid that the Duterte regime rolled out that year.

Profiting from remittances

Among the companies which profit from migrant workers’ remittances are US companies Western Union and MoneyGram. In the Philippines, most remittances flow through Lucio Tan’s Philippine National Bank and the Sy family’s Banco de Oro.

In 2017, the Duterte regime cashed in on the remittance business when it established the Overseas Filipino Bank (OFBank) through Executive Order 44. Migrante International called it a “bankpira” (a play on the words bank and vampire) as it will “suck out” their remittances. Aside from transmitting funds, the bank offers payment services for the Social Service System, OWWA, Philhealth, Pag-ibig and others for a fee per transaction.

In addition, migrants object to the OFBank as this will only strengthen the labor export policy of Filipino workers. This will not address the issue of forced migration. “Its main objective is to make the system of extracting profits from the Filipino migrants’ hard-earned wages easier and more thorough,” they said.