Labor export worsens social inequality

Apparently, the OFW phenomenon, even as it has delivered some $13 billion in remittances last year and uplifted the lives of millions of Filipinos, has aggravated social inequality. For one thing, millions more who lacked the education or the training that qualified them for overseas jobs were left behind. For another, instead of leveling regional poverty levels, labor exportation worsened it, a recent academic study reveals.

Manila and five other regions that account for most of the labor exports already have the country’s lowest poverty levels. These areas also showed significant drops in poverty levels between 2000 and 2003, according to a paper by University of Santo Tomas professor Alvin Ang and reported by Agence France Presse. On the other hand, poverty levels increased to between 34 percent to 49 percent in those regions where labor export is not a principal preoccupation, the study said, citing government data.

Ang’s paper said the results support the hypothesis "that those who are migrating and working abroad are not poor." It is precisely the poorer regions who do not participate in the exportation of labor because their workers do not have the proper skills as well as the resources to move overseas. Since most of the migrating workers "are from relatively affluent regions, they may be worsening inequality among regions," Ang concluded.

The deterioration in the quality of public education works against the poor being able to take advantage of opportunities offered by the overseas market for labor. The initial demand was for lower-skilled service workers in the 80s, including domestics. Demand however, shifted in favor of highly-skilled Filipino professionals and technical workers, with the information technology revolution and the graying population of much of the developed world.

Worsening social economic inequality is also a serious concern in the United States. Ben Bernanke, chairman of the US Federal Reserve, notes that over the past three decades, income gains in the US seem to have been unequally distributed. Recent analysis, Dr. Bernanke observes, suggest particularly large gains at the top of the income distribution. Also noteworthy has been the jump in the share of profits in gross domestic product since the 1980s. Critics have lamented the loss of equality in economic opportunity.

But, what is meant in practice, by equality of economic opportunity?

In a recent speech, Dr. Bernanke laid our three principles: "That economic opportunity should be as widely distributed and as equal as possible; that economic outcomes need not be equal but should be linked to the contributions each person makes to the economy; and that people should receive some insurance against the most adverse economic outcomes, especially those arising from events largely outside the person’s control."

In the case of the US, Dr. Bernanke observed that "although average economic well-being has increased considerably over time, the degree of inequality in economic outcomes has increased as well." In simple terms, the problem has manifested itself in lack of universal access to adequate housing, education, and health care.

Why is it important to deal with this problem of growing inequality? For one thing, rising social inequality reduces harmony in society that manifests in rising criminality among others. Rising inequality causes declining equality of opportunity, creating a negative cycle of hopelessness. This is why it also makes losing a job costlier, more objectionable and so more resisted for the middle class and the middle aged.

There is a heated debate on the reasons for this growing disparity among American social classes. There is this growing grassroots feeling that globalization is to blame. This gives rise to protectionism in both the United States and other developed economies as well as in the developing world.

It also makes necessary economic restructuring difficult to undertake on both the macro and micro levels. Note what is happening in France and Germany as their governments struggle to correct structural problems in their labor markets. Note too the problems of the American Big Three car companies.

But many economists, including Dr. Bernanke dispute the view that globalization’s primarily to blame. The Federal Reserve Board Chairman is of the view that "the influence of globalization on inequality has been moderate and almost surely less important than the effects of a skills-biased technological change."

In the view of Dr. Bernanke, what we see today as rising inequality is mostly caused by skill-biased technical change; "winner-take-all" markets for the most talented; and also, globalization. The problem has to be addressed in its totality. It seems to me that the common thread in the Philippine and US situations is the matter of education. We are simply not educating our people well enough to help them break out of poverty and meet the higher demands for skills in the world economy today.

What are we to do?

In that same speech before the Greater Omaha Chamber of Commerce, Dr. Bernanke suggests the policy implications. "The challenge for policy is not to eliminate inequality per se but rather to spread economic opportunity as widely as possible. Policies that focus on education, job training, and skills and that facilitate job search and job mobility seem to me to be a promising means for moving toward that goal. By increasing opportunity and capability, we help individuals and families while strengthening the nation’s economy as well."

I guess that means, even with our stopgap but major thrust for labor exportation, we can maximize its contribution to the economy and society by equalizing the chance for our citizens to take advantage of the opportunities it offers. If government just sits back and do little but count the number of OFWs deployed and the money they remit back, inequality in society will only be worsened. Token programs like Tesda, unless done on a more widespread and systematic basis in all regions, don’t count for much.

The will

This one’s from Marilyn Mana-ay Robles.

Last night, my wife and I were sitting in the living room and I said to her," I never want to live in a vegetative state, dependent on some machine and fluids from a bottle. If that ever happens, just pull the plug".

She got up and unplugged the TV and threw out my beer.

She’s such a bitch . . .

Boo Chanco ‘s e-mail address is [email protected]