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New Report Probes Efforts to Protect Migrant Workers 
Press Release
Wednesday, September 19, 2007

New Report Probes Efforts to Protect Migrant Workers 

WASHINGTON — The home countries of international labor migrants can play a major role in protecting temporary workers, says a new report from the Migration Policy Institute. Protecting Overseas Workers: Lessons and Cautions from the Philippines details how a welfare fund financed by migrants has placed a safety net under overseas workers from the Philippines, home to the largest organized labor-export program in the world.

As temporary worker programs and the treatment of migrant workers gain increased international attention, both the accomplishments and the limitations of the Philippines’ experience offer guidance for policymakers in other countries seeking to expand temporary migration programs.

The report, by Dovelyn Agunias of MPI and Neil Ruiz of the Brookings Institution, evaluates the management of the world’s largest worker welfare fund, the Philippines’ Overseas Workers Welfare Administration. As of December 2006, nearly a quarter of the Philippines’ labor force — almost 9 percent of the population — lived in more than 190 countries. Remittances sent from Filipino migrants in 2006 reached US$12.8 billion and are projected to approach the US$15 billion mark in 2007. 

OWWA, a quasi-governmental organization funded by $25 membership fees from workers or, more rarely, their employers, is designed to protect and provide services for migrant workers. As of May 2007, OWWA had over 1 million members, representing 28 percent of the estimated 3.8 million Filipinos who worked abroad legally on temporary contracts.

The “backbone” of the services that OWWA provides, according to the current administrator, is repatriation in case of maltreatment, illness, or war; repatriation includes returning to the Philippines the bodies of workers who die while abroad. OWWA repatriated 10,834 Filipinos in 2006, most of them escaping the crisis in Lebanon. Other core services include the provision of health and life insurance and legal assistance for work-related disputes. Secondary services include scholarships and training, as well as loans for migrants and their families — although the loans have been plagued by low repayment rates.

The authors find that OWWA has struggled to balance financial stability for the fund with the provision of core services for its members. The fund grew nearly fourfold in 11 years, from 2.2 billion pesos (US$44 million) in 1995 to 8.6 billion pesos (US$172 million) in 2005, with 2006 assets of more than twice the annual budget of the Department of Labor and Employment, its parent agency. In the last five years, OWWA’s income averaged 1.9 billion pesos (US$38 million) a year. 

Despite these increases, only 3 percent of OWWA’s fund balance was spent on services in 2005, the last year for which audited financials are available. Fund administrators note that amassing large savings will enable OWWA to support itself on the interest payments from its investments while maintaining the 10 billion peso (US$200 million) balance needed for a mass repatriation from the Middle East in a worst-case scenario.

Of the money spent from 2002 to 2006 —  an average of 865 million pesos (US$17 million) a year —  more than half (55 percent) was used for operations. Approximately 600,000 members, or 62 percent of all members, received various kinds of assistance or services through operation centers in 2006. Due in part to the international nature of OWWA’s operations, salaries and personnel benefits accounted for 40 percent of the total annual budget. 

The authors note that the need for transparency and accountability, particularly in funding decisions, becomes even more critical when questions of mismanagement arise. For example, from 1999 to 2005, the Philippine Commission on Audit’s reports found millions of pesos in unrecoverable or “doubtful” accounts, including a 479 million peso (US$9.6 million) investment in a housing project that defaulted, making recovery of the funds “uncertain.”

To strengthen accountability, the authors recommend increasing the number of migrant representatives appointed to the OWWA board, holding periodic consultation of migrant workers on pressing needs, and establishing a system for evaluating program performance.

Finally, the authors highlight the successes OWWA has achieved through partnerships with other organizations and the need for destination countries to establish complementary protection mechanisms for migrant workers.

MPI Associate Policy Analyst Dovelyn Rannveig Agunias noted, “OWWA has shown that welfare funds can raise the revenue needed to meet the inherently expensive needs of workers overseas and provide critical on-site emergency services. With effective oversight, it has the potential to promote entrepreneurship of returning migrants.” She continued, “OWWA needs to overcome some management and transparency challenges, as is perhaps to be expected of an organization serving almost 4 million people in over 190 countries.”

The authors find that OWWA’s operations are instructive for other developing countries working to establish worker protection and assistance programs. The number of temporary migrants in East and West Asia, including the Middle East, has grown by 2.5 percent a year since 1985; in countries that belong to the Organization for Economic Cooperation and Development by 9 percent since 1997; and in the United States an average of 10.4 percent a year from 1997 to 2004.

“As temporary migration around the world continues to increase, governments from Mexico to India need models of what has and has not worked in structuring programs to protect workers abroad,” said Neil Ruiz, a research fellow at Brookings. “At the same time, it is equally critical for destination countries to establish legal norms that protect migrant workers and help build capacity for welfare funds and countries of origin.”

The report is available online.