Brain drain saps the Philippine
economy By David L Llorito
MANILA - Philippine Airlines (PAL) vice
president Captain John Andrews complains that the
national carrier's business prospects have never
been so up in the air. Despite the airline's
raising salaries by some 40% and padding fringe
benefits, its best pilots keep jumping ship for
better-paid jobs at foreign carriers.
Between 2003 and 2005, PAL lost more than
80 pilots, or 20% of the airline's total number.
Airlines in Hong Kong, South Korea, the Middle
East and even Sri Lanka have all poached their
highest-flying pilots - particularly ones trained
on wide-body aircraft such as the Boeing 747 and
the Airbus A340. At least 15 more pilots have
departed PAL so far this year, most lured by the
prospect of receiving salaries two to three times
the amount PAL offers.
That's taking a
heavy toll on the airline's viability, Andrews
contends. "We can't expand [the airline's]
capacity because of
the
uncertainty on the availability of pilots," said
Andrews, himself a former pilot who is currently
on standby to fly again if more pilots leave.
"Nobody knows how many pilots are going to stay
with us or leave."
Struggling to keep its
planes aloft, PAL has raised its pilots' mandatory
retirement age from 60 to 65 years - but that has
had a minimal effect on retaining staff. The
company has since asked the Philippine Overseas
Employment Administration (POEA), the country's
labor-export program, to impose a moratorium on
deploying Filipino pilots abroad.
But
there are more human-resource storm clouds on
PAL's horizon: all global pilots will be required
by 2008 to pass an English-proficiency
examination, which will make English-speaking
Filipino pilots even more attractive to global
airlines.
"The financial incentive for
them to leave is just too tempting," said Andrews.
"[The government] says: 'Why just don't you train
more pilots?' But why should we train more pilots
only to [have them] be pirated by foreign
airlines?"
The brain-drained
economy The woes of the Philippine aviation
industry are just one example of a spreading
phenomenon that is fast undermining the Philippine
economy. Low-skilled workers have long left the
Philippines for higher-earning jobs abroad. But an
expanding diaspora of the Philippines' best and
brightest professionals is hitting the country's
overall competitiveness and threatens to
jeopardize the viability of entire sectors of the
local economy. And indications are that what's
locally referred to as "the brain-drain situation"
is set to get worse before it gets better.
POEA statistics indicate that over the
past eight years, the number of Filipino workers
who have left the country in pursuit of more
gainful employment abroad has averaged 880,000 a
year, with destinations spanning the globe from
the Americas to the Middle East, Europe and other
Asian countries. There are now more than 8 million
overseas Filipino workers (OFWs) worldwide,
representing 10% of the total Philippine
population or nearly 23% of the country's labor
force, according to the POEA.
"Globalization has opened a lot of
opportunities for Filipino professionals," said
Lalaine Benitez-Chua, a Filipino expatriate based
in Dubai who runs her own publishing firm. "I
would think that the diaspora of Filipino
professionals is mainly related to the performance
of the Philippine economy - as well as the general
feeling of hopelessness the country is plagued
with."
Over the past decade, two major
diaspora trends have emerged. First is the rising
proportion of professionals, skilled technicians
and high-end service workers who are leaving the
country for higher-paying jobs abroad. In 1992,
this category of workers accounted for about 60%
of all newly hired OFWs; by 2005 that percentage
had shot up to 70%.
The second statistical
trend is the so-called "feminization" of new OFWs,
rising from 50% to 70% over the same 13-year
period. The rising proportion of female OFWs began
as early as 1993, but the trend accelerated in
1998 with the onset of the Asian financial crisis,
which hit the Philippines' economy hard. But even
though the Philippines has since recovered from
that economic downturn, the exodus of Filipino
workers, especially women, has continued apace.
"If you go to any country in the Middle
East, the first things that you see at their
airports are stores or boutiques manned by
Filipinas as cashiers," said Rosalinda Baldoz, a
POEA administrator. "They have Filipinas in their
hospitals, their homes, and offices. The domestic
helpers, entertainers and caretakers of the
elderly and incapacitated are mostly Filipinas."
Aging populations in rich countries such
as Japan, Spain, the United Kingdom, and the rest
of Western Europe, she said, has contributed
significantly to the so-called "feminization" of
the Filipino diaspora. "Nurses and caregivers -
professions traditionally dominated by females in
[the] Philippines - are in demand. It's really the
[global] health-care sector that's bringing this
about."
Globalization has definitely had
its upside in the Philippines. Historically the
Filipino diaspora has sent home huge economic
benefits to the Philippine economy through hefty
foreign-currency remittances. OFW dollar
remittances have recently averaged about US$7
billion per year, and peaked at more than $10.7
billion in 2005. Foreign remittances currently
account for about 13% of the Philippines' total
gross domestic product (GDP).
This March,
the monthly remittance figure was more than $1
billion, a 19% jump from the previous month's
figure. The Bangko Sentral ng Pilipinas (BSP), the
Philippine central bank, attributed the jump in
remittances to the growing deployment of
better-paid skilled workers, specifically
engineers, nurses, and medical workers.
While growing remittances help to spark
local consumption, government policymakers are
starting to ask hard questions about the long-term
economic impact of its current success as a labor
exporter. The specter of a growing "brain drain"
is stoking new fears that the Philippines might be
losing more skilled workers than it can afford in
critical sectors of the economy, including health,
aviation, mining, shipping, and port operations.
Doctors-cum-nurses Nowhere is
this emerging problem more pressing than in the
medical sector. Dr Jaime Galvez-Tan, professor of
the University of the Philippines' College of
Medicine and a former secretary of the
government's Department of Health (DOH), says the
Philippines is currently the world's leading
exporter of nurses. About 164,000 nurses, or 85%
of the country's trained total, are working
outside the Philippines. Out of this number, about
100,000 have left the Philippines in the past 10
years.
Most have been lured by the higher
pay. Nurses in both private and publicly owned
Philippine hospitals are paid between P3,000 and
P6,000 ($58-$115) per month, said Leonor Rosero,
chairperson of the Professional Regulatory
Commission (PRC). In such countries as Japan, the
United States and the United Kingdom, they could
earn as much as $5,000 a month, Galvaz-Tan
estimates. Rising global demand has subsequently
raised enrollment in most national nursing
schools.
At the same time, there is a
growing dearth of specialized nurses in local
hospitals, especially those that have expertise in
the operation room and the delivery and pediatric
wards. But what really alarms health policymakers
is the new trend of doctors becoming nurses - the
so-called "nursing medics" phenomenon - so they
can more easily leave the country to work abroad.
The huge time and expense required to train new
doctors is making replacement at local hospitals
difficult.
"PRC data [show] that about
4,000 doctors-turned-nurses have already left the
country," said Dr Kenneth Ronquillo, head of the
DOH's health and human resources development
division. About 4,000 more doctors are currently
studying nursing, most likely in preparation for
jobs abroad, he said. "Should they pass the board
examination for nurses, they are likely to leave
the country as well."
The higher wages
that nurses earn abroad have greatly diminished
domestic interest in studying medicine with the
aim of becoming a full-fledged doctor. Since 2000,
Galvez-Tan notes that enrollment in medical
schools has declined by an alarming average of
almost 6% a year through 2005. Those declining
figures have driven at least three
Philippines-based medical schools out of business,
while the number of applicants for medical
residency positions, required to become a medical
specialist, has declined by an average of 10% per
year over the same period.
From 1994 until
2000, official statistics show that those who took
the National Medical Admission Test (NMAT) to
become doctors numbered between 5,000 and 6,000
per year. Since 2001, however, the number of NMAT
applicants has been declining by an average of 13%
a year, hitting a low of 2,900 test takers in
2005.
Dr Jose Sabili, president of the
Philippine Medical Association, attributes the
trend to the "low return on investment" in the
Philippine medical sector. He notes that while
medical students pay tuition of about P100,000 per
semester for an eight-semester degree, their
starting salaries at private and public hospitals
on average start at P17,000 to P21,000 per month -
less than a tenth of what they could earn abroad,
he notes.
There is little doubt that those
hard financial realities are adversely affecting
the quality of Philippine medical services.
Galvez-Tan says that about 200 hospitals have
recently closed down across the country because of
a lack of doctors and nurses. Another 800
hospitals are considered "partially closed",
meaning that at least one of their wards has been
shuttered because of the lack of qualified health
personnel. "The proportion of Filipinos dying
without [proper] medical attention has reverted to
its 1975 levels," he said, also noting that
government health programs, including immunization
drives, have also suffered.
Unmanned
infrastructure Even crucial economic
infrastructure is being affected, though some
employers are trying to fight back. National ports
operators are another victim of the growing
diaspora, where rising demand for skilled
handling-equipment operators in the Middle East is
luring Philippine workers from local shipyards.
Last year, 50 skilled port handling-equipment
operators from the Philippines-based International
Container Terminal Services Inc (ICTSI) suddenly
left for Dubai, lured by the higher salaries
offered by the Dubai Ports World, a United Arab
Emirates state-owned firm.
The mass
resignation of some of ICTSI's best workers nearly
crippled the company's Manila-based operations. In
response, ICTSI has since instituted a
productivity-based incentives system to raise
their workers' pay and ideally improve
productivity. Arnold Rivas, ICTSI's human-resource
manager, says an operator now earns a base pay of
$250 a month, but also has the potential to earn a
number of performance-based bonuses. The company
has also showered workers and their families with
perks, including free dental, medical and
hospitalization insurance.
"Last year, we
lost 50 of our best workers; this year, not a
single staff [member] has resigned," said Rivas.
He contended that even if more of his workers
left, the company's operations would not suffer
since most of the firm's staff, including office
workers, are multi-skilled. Notably, the company
has also started training female crane operators
for the first time.
While more training
and financial incentives might help Philippine
port operators, and possibly to a lesser degree
the aviation industry, addressing the growing
exodus of medical and other skilled professionals
will be much more difficult, labor analysts say.
The Philippine Congress is now considering
legislating a "national health service law" that
would require medical and nursing graduates from
state colleges and universities to serve the
country for at least a year or two before they
would be allowed to leave the country for overseas
work.
POEA officials, however, are wary of
introducing new measures that restrict the right
to travel, fearing that strict rules would only
encourage people to leave the country through
illegal means. Even the PRC's Rosero is skeptical,
stressing that coercing nurses and doctors through
legal restrictions will only accentuate the
problem. Rosero fears that without a significant
rise in the local pay scale, homebound nurses
might opt for better-paying jobs at call centers
and medical transcription companies, which on
average offer P18,000 a month, or three times what
they can currently earn as nurses at local
hospitals.
Given the government's
perennial fiscal problems, raising doctors' and
nurses' pay is obviously easier said than done. In
the past 10 years, the DOH's budget as a
percentage of the total national budget has
decreased from about 2.53% in 1998 to just over 1%
last year. Health expenditures have perennially
lost out to debt service payments and national
defense on the government's priority list, and
this has prevented the DOH from raising doctors'
salaries.
Meanwhile, global demand for
English-speaking, skilled Philippine labor
continues to grow. Rosero says that Australia is
considering proposals to source more Filipino
nurses and accountants. Canberra has already
opened its doors to 20,000 Filipino technical
workers.
More Filipino geologists,
metallurgical engineers, and mining engineers now
work in mines and laboratories abroad than
domestically. The government has recently opened
the door for more foreign investment in mining in
hopes of creating more jobs. But once the new
mines start operations, mining companies may soon
discover that there are few skilled engineers to
hire.
David Llorito is a
researcher at the BusinessMirror, a Manila-based
daily newspaper. He has more than a decade of
experience in socioeconomic research, policy
analysis, and business-economy journalism in the
Philippines.
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