Last year, total personal remittances from overseas Filipino workers to the Philippines reached US$ 38.34 billion, representing a 3 % increase from the US$ 37.21 billion recorded in 2023. Cash remittances (sent through banks) totaled US$ 34.49 billion, up 3 % from US$33.49 billion in 2023. These remittances constituted some 8.3 % of GDP and 7.4 % of GNI in 2024. There are unofficial estimates that the total remittances annually can reach $40 billion or more if we include what the returning workers do not channel through banks but actually carry them in actual currencies or goods (pasalubong).
The sources by country of these remittances in 2024 were the United States (40.6%), Singapore (7.2%), Saudi Arabia (6.4 %), Japan (4.9%), United Kingdom (4.7 %), Canada (3.6 %), Qatar (2.8 %) Taiwan (2.7 %), and South Korea (2.5 %). The large amounts coming from the U.S. can be partly explained by the practice of OFWS, especially those from the Middle East, of routing their remittances through US-based correspondent banks. Over the last twenty years, the annual increase of OFW remittances has averaged 3 to 5 % despite global crises. In fact, during the pandemic, when hundreds of thousand of Filipino workers were sent home from the Middle East, the decline in OFW remittances was less than 1 %, demonstrating how resilient this source of GDP growth for the Philippines.
Once again this year 2025, there are threats to OFW remittances as a result of the expected slowdown in the global economy emanating mainly from the anti-trade policies being implemented by the Trump Administration. As mentioned above, the mere slowdown of the global economy in the past hardly affected the flow of OFW remittances to the Philippines. Growth every year averaged at least 3 %, with a high of 6 % during some years. One explanation given for this resilience of this sector is the positive response of the OFWs to the financial difficulties their relatives face during challenging times. The OFWs become more generous and dip into their savings when times get more difficult for their relatives, increasing their remittances.
What about the plan of the Trump Administration to include a remittance tax in the so-called “One Big Beautiful Bill Act (OBBBA)” now pending in the U.S. Congress? What is the current status of this Bill? The House version, which was passed last May 22, 2025 included a 3.5 % excise tax on remittances after December 31, 2025, targeting transfers sent by non-U.S. citizens. Last July 1, 2025, the Senate version reduced the tax to 1%, applying only to cash remittances (not bank/credit/debt transfers). The tax will apply to any sender, including U.S. citizens, but exempts transfers from U.S. bank accounts or debit/credit cards under the Bank Secrecy Act. Remittances from Overseas Filipino Workers would not be exempt. OFWs sending cash, money orders, or cashier’s checks—and not via U.S. bank or debit/credit cards—would incur the 1 % excise tax under the Senate version. If they use U.S.-based bank or card transfers, those would not be taxed.
Whatever version will be finally passed by the U.S. Congress, there is consensus among economists that the negative impact on Philippine GDP will be minimal. To illustrate, a 1% surcharge automatically withheld at the counter would mean that a US$ 500 cash sent would cost an extra US $5. Under the Senate version, remittances of OFWs will be generally exempt because they already use Zelle-to-bank or remittance apps from U.S. accounts. Filipinos are digitally advanced and would be expected to migrate to these channels. Also exempt Fintechs (e.g. Remitly, Wise, etc) would likely highlight their advantages to customers. Surveys by BSP and the PIDS show cost-sensitive OFWs trim transfer fees when all-in fees break 5 %. An extra 1% on cash under the Senate version would push the average US-PH corridor cost from 4.4 % to 5.4 %. Finally, as Secretary of Finance Ralph Rector observed, Filipinos are generally clever enough to avoid taxes by just having recourse to carrying cash with them without being detected. Given all these considerations, the so-called OBBBA will pose no significant threat to OFW remittances this year and in the coming years.
The OFW phenomenon is part and parcel of the long history of the Filipino people as a nation. Here, I will borrow extensively from a Magisterial Lecture given by Dr. Veronica Ramirez, Full Professor of the University of Asia and the Pacific, who is a foremost scholar on this very important topic. She occupied for many years the Professorial and Research Chair on Overseas Filipino Workers that was endowed by the Bank of the Philippine Islands to the UA&P. In a lecture based on both her personal experiences interacting with OFWs all over the world and her scholarly research, she wrote a paper which is to be delivered as a Magisterial Lecture at the UA&P some time in August of 2025. For the benefit of all who are trying to understand the enduring role of the OFWs in Philippine society, I will summarize some of her findings culled from her multidisciplinary research involving history, economics, the arts and politics.
The OFW phenomenon started with the Galleon Trade between the Philippines and Mexico in the 16th Century. In 1790, the Philippines opened its doors to world trade. Filipino men were recruited to work in the galleon ships that travelled to Acapulco, Mexico. Hundreds of islanders from the Philippine Archipelago joined the ships. Similar to what is still happening in both North America and Europe today, the islanders upon reaching the areas of Mexico that were under U.S. jurisdiction, decided to jump ship to migrate to North America. It can be said that these were the first Overseas “Filipinos.”
In the 1900s, when the Philippines was a colony of the United States, farmworkers from the Philippine Archipelago called “sakadas” in the local dialect traveled to Hawaii in order to work in the sugar plantations. There were also the knowledge workers, scholars in different disciplines, who went to the U.S. to study under scholarship programs of the U.S. Government. In fact, as late as the 1960s, I was able to study at Harvard University as a Fullbright scholar. Since Fullbright and other scholars had to find some part-time jobs to make both ends meet, they could also be considered as overseas workers. In the Filipino migration that followed through the centuries, three categories emerged: Permanent migrants, i.e. those immigrants who are legal permanent residents, and naturalized citizens of their host country; Temporary migrants, those documented land-based and sea-based workers and others who stayed under contract, or those with accompanying dependents (these are the ones who are called Overseas Filipino Workers); and the last group are Irregular workers without valid work permits but were recruited by unscrupulous recruitment agencies or who may be overstaying workers or tourists.
If we factor into the total OFW remittances what the returning workers bring with them in actual foreign exchange (and not to mention the goods in kind called the pasalubong), it is estimated that total annual flow is already more than $40 billion, ten percent of GDP. For 2025, I forecast the exchange rate to be at P58 to P59 to a U.S. dollar, given the larger balance of payments deficit that will result from a slow down in exports resulting from the protectionist policies of the Trump Government, especially if the 19 % recently announced is the final tariff. I consider it a benefit to our consumer-oriented economy that the peso will be depreciating from its stronger position at the beginning of the year. It is also unfair that the relatives of the OFWs will be financially prejudiced by a strong peso after all the sufferings abroad of their relatives abroad.
This fool-proof engine of growth that is the OFW remittances has a long history. As Dr. Ramirez will recount in her Magisterial Lecture at UA&P, way back in 1962, the Philippines entered into a bilateral agreement with Nigeria, which started the recruitment of engineers, doctors, and teachers. From 1975 to 1982, some 7,000 teachers left the Philippines to work in Nigeria. In 1968, the U.S. Navy employed more Filipino men in the U.S. military bases in Southeast Asia and the Pacific. They were then offered to live in the U.S. after their tour of duty. In the 1970s, already the Martial Law years under President Ferdinand Marcos Sr., the Middle East became the top destination country for Filipino migrant workers as a result of the oil prices and the increasing demand for infrastructure projects. It was also the beginning of the strong demographic dividend that the Philippines enjoyed as a result of fertility rates as high as 6 children per fertile woman. It was providential that, despite aggressive efforts of the World Bank and the U.S. Agency for International Development (USAID) to introduce population control programs in the Philippines, family planning never became widespread among the Philippine masses for cultural and religious reasons. Unlike most of its Asian neighbors today, the Philippines continues to have a young and growing population which enables it to satisfy both the domestic and foreign demand for Filipino workers. Despite the fertility rate having dropped to below replacement at 1.9 babies per fertile woman, the relatively high fertility rate over the last twenty years has resulted in a young and growing population at least for the next twenty years, a period long enough for the country to catch up with its Southeast Asian peers in per capita income. The median age of the Philippines is still 25 years compared to 30 to 40 years of all of its peers in the ASEAN. Indeed, in two years, the Philippines is expected to finally become an upper-middle income economy.
It was in 1974 after he declared Martial Law in 1972 that President Ferdinand Marcos Sr. launched the overseas employment program dubbed “Development Diplomacy”, an exclusively directed labor export program to the Middle East. At the start, Filipino male workers were employed in construction projects and as labor sub-contractors, mostly in Saudi Arabia. It didn’t take long for women to follow. In the 1980s, thousands of Filipinas left the Philippines as tourists for Italy, Spain and Greece but were really directed to work as household service workers in the Middle East. Thus there was a significant increase in Filipina domestic workers abroad. In the 1990s, there was a marked decline of construction workers in the Middle East. The same decade saw the saw the rise of the so-called Asian Tigers, i.e. Singapore, Taiwan, Hong Kong and South Korea. These economies suffered serious labor shortages and turned to migrant workers from the less developed Southeast countries like the Philippines and Indonesia. The health, sales, manufacturing and other service sectors continued to employ mostly females. In the 1990s, there was more demand for skilled workers such as nurses, health care and IT personnel. Female migration increased as a response to the demand for teachers, nurses, domestic workers and entertainers. From the 1980s through 2024, Japan recruited thousands of entertainers or overseas performing artists who were classified as professionals. By the year 2000, overseas household work remained the number one occupation for Filipino women overseas.
It was in 2004 that the Philippine Government set a deployment target: one million migrant workers every year. This was included in the Medium-Term Philippine Development Plan 2004 to 2010 of the Arroyo Administration. The succeeding Administration of Noynoy Aquino, however, removed the deployment target in its 2010 -2016 Philippine Development Plan and instead committed to create more jobs locally, declaring that “Migration should be a choice rather than a necessity.” In 2006, the Household Service Workers (HSW) Reform Package set the age of employment at 23 years old and the minimum pay at US $400 monthly.
It is worth pointing out, however, that top Filipino professionals as well as business executives have also been “Overseas Filipino Workers.” One of the most outstanding examples is PLDT Chairman Manuel V. Pangilinan who was recently bestowed with the Gintong Alon Leadership Award from the Philippine Association of Hong Kong. The speech he delivered (which was published in the Business World) was entitled “An Ode to the OFW Spirit.” Mr. Pangilinan is the role model of outstanding Filipinos, both knowledge and technical workers, who become OFWs out of pure choice and not necessity. Although they may be a small portion of the OFWs, they prove that Filipinos can hold their own in the global market for top executives, entrepreneurs, scientists and technical workers. Despite the sometimes exaggerated lamentation on the poor quality of Philippine education, we have produced people like Mr. Pangilinan who have headed top positions in multinational enterprises all over the world as well as founded their own businesses. I can cite the examples of dozens of Filipinos during my generation who were promoted to very high managerial positions in such global enterprises as Citibank, Procter & Gamble, S.C. Johnson, Unilever, Coca-Cola, Nestle and many others.
Let me quote some inspiring lines from the address of Mr. Pangilinan: “…the significance of these remittances goes beyond their sheer size. There is no more cost to your country to earn these revenues from you. They are 100 % value added to the economy—like economic cocaine injected into the veins of our nation…As OFWs, we continue to be charged with doing our appointed tasks with quality and excellence—no matter the place or the time. To hold up to the world the Filipino greatness of heart and spirit, of courage and compassion. You are our country’s bright lights of hope—worthy of emulation and valued for your immense performance.” As our economy moves from a low-middle income status to that of a upper-middle income one (possibly in the next two years before the end of the BBM Administration), there will be many more cases of people like Mr. Pangilinan who worked as an “OFW” in Hong Kong for 22 years out of sheer choice and not necessity. This we can attribute, not only to our continuing to produce high-quality professionals like Mr. Pangilinan as well as excellent technical workers, but also to the fact that we are among the very few countries in the Indo-Pacific region that are still blessed with a young and growing population, the demographic dividend that world leaders like Elon Musk highly appreciates. For comments, my email address is Bernardo.villegas@uap.asia
