OFWs: No remittances for a month? What happens next

Manila: Imagine this — all overseas Filipino workers (OFWs) suddenly decide to stop sending money home for an entire month.

No cash flowing in.

No financial lifeline for millions.

Sounds extreme? Maybe.

But with pro-Duterte groups and some OFWs pushing the idea of a "zero remittance" it raises a thought-provoking question: What if it actually happened?

OFWs and overseas Filipinos in general, estimated at about 10 million expatriates out of a national population of 110 million (PSA, 2020), are not a monolith.

Some dismiss the movement as grandstanding, while others see it as a statement of "sacrifice".

If an OFW's remittance freeze leaves dependents without basic necessities, could it be considered neglect? That’s a gray area no one would want to test.

Still, let’s dive into the economic what-ifs. Here’s what could unfold:

Millions of Filipino families rely on remittances. Without that steady flow of cash, many would struggle to pay for food, education, healthcare, and utilities. The country’s poverty rate, already a concern, could spike dramatically.

Studies show that remittances aren’t just extra cash — they’re a major economic pillar. Cutting off $3.11 billion in a month (or nearly $38 billion a year) would have serious knock-on effects.

A 2022 study led by Kaye Louise Garcia found a strong correlation between remittances and poverty reduction. Using the "Gini" coefficient and Gross Regional Domestic Product (GRDP), researchers concluded that overseas labor migration significantly improves living standards.

The more families have access to remittances, the better their chances of escaping poverty.

Filipino culture is deeply family-oriented. A critical point: prolonged withholding of remittances could have unintended legal consequences.

This isn’t just emotional — it could also have legal consequences. Under Philippine law, child abandonment is a crime.

The Philippine Revised Penal Code (Articles 276 and 277) penalises child abandonment, which could, in theory, apply if an OFW’s dependents are left without support for an extended period.

A 2009 study by Vina Braganza revealed that remittance-receiving households tend to work fewer hours than those without external financial support.

Remittances provide a "comfort zone", or safety net that allows some Filipinos to opt out of the workforce or take on fewer work hours.

If remittances suddenly stopped, more people might be forced to re-enter the job market. But would they find jobs?

Given the country’s already tight labour market and limited manufacturing sector, the answer isn’t promising.

Money plays a crucial role in family dynamics. A sudden financial drought could spark disputes over household budgets, lead to postponed schooling or celebrations (like graduations, travel or weddings), and strain relationships.

In Filipino households, money is often a delicate topic, and cutting off remittances would only intensify tensions.

Remittances accounted for 8.3 per cent of the Philippines’ GDP in 2024, with total personal remittances reaching a record-breaking $38.34 billion.

If remittances stopped for a month, GDP could shrink by an estimated 0.7 per cent. That’s a huge dent in economic activity.

More than just personal finances, remittances bolster the country’s foreign exchange reserves (aka gross international reserves, GIR), currently one highest in the world.

A sudden drop could weaken the peso, fuel inflation, and create instability in financial markets. This means rising prices for goods and services —something nobody wants.

With the upcoming May 12 elections, some candidates are capitalising on divisive issues, including the detention of former President Rodrigo Duterte by the International Criminal Court (ICC).

Pro-Duterte groups see zero remittance as a show of strength. Some even suggest breaking him out of The Hague.

But in reality, the biggest losers in a zero-remittance scenario would be Filipino families — not politicians.

While remittances provide economic relief, they also highlight a deeper issue: the Philippines’ dependence on its overseas workers.

This reliance exposes the country to external risks — such as global economic downturns or policy changes in host nations.

Additionally, the continuous migration of skilled professionals leads to a “brain drain,” weakening critical sectors like healthcare, education and manufacturing.

And let’s not forget — remittances primarily fund consumption, not long-term investments in local industries.

Some economists argue that remittances don’t do enough to reduce poverty in the long run. Instead, they fuel consumer spending while failing to create sustainable industries.

The same issue plagues the booming business process outsourcing (BPO) sector — which pulled in $38 billion in 2024, as per the IT and Business Process Association of the Philippines (IBPAP).

OFWs and BPOs are often hailed as the country’s economic cushions.

Meanwhile, the manufacturing sector remains weak: there's a severe lack of investment, high electricity costs, regulatory red tape, and over-centralism in Manila (with its infamous traffic).

Without strong local industries, the country’s economic growth will continue to hinge on dollars sent from abroad.

The Philippines’ reliance on OFW remittances is both a blessing and a curse. While these funds uplift millions of families, they also mask deeper economic vulnerabilities.

A prolonged remittance freeze would expose these cracks in painful ways— plunging families into hardship, rattling the economy, and highlighting the urgent need for domestic job creation.

For now, the “zero remittance” campaign is more political theatre than an actual economic experiment.

But it does raise an important conversation: Shouldn’t the Philippines be building an economy that thrives without having to send its best and brightest abroad?

The best outcome from the May 12 mid-term polls would be one that would take the country closer to where it ought to be in the community of nations.