We Hope Our Community Will Carry on Our Christmas Remittance Tradition, If Possible

When you look at the top four countries that receive remittances (money sent home by their citizens working abroad in a foreign country or by expats to their ancestral home) – India, Mexico, China, Philippines – we see a pattern of countries with historically massive migration. All these countries have histories of diaspora, their people are found in many parts of the globe and have settled and built communities in their adopted homelands.

Migration in these foreign communities has always been initiated by opportunities for work and income.  And therefore, it’s no coincidence that all four of these countries have a huge presence in the U.S. (communities built over generations) and have the highest rates of immigration into the U.S. until today.

There aren’t a lot of studies done that explore the reasons why migrants send remittances back to their home or ancestral country.

Interestingly, as the international communities are currently watching the 2002 World Cup held in Qatar, it is in Qatar where one study was done exploring this concept of migrants’ motivation behind remittances. India (the number one country in receiving remittances) has a large presence of foreign workers in Qatar.

Researchers have concluded two major motives driving remittances among these workers: 1) altruism, and 2) self-interest. As migrants’ income increased, in both study groups (one mostly driven by altruism and the other mostly driven by self-interest) remittances also increased. But in time, it was the self-interest group that continued to send remittances while the altruism-driven group’s remittances declined. Workers in the self-interest group were identified as those with loan obligations such as a property or house back in India.

Worker in this study were all married males, received only secondary education (no college level), and had working contracts for only a few years.

Hawaii sakadas and remittances
We can look to our own Filipino community in Hawaii, the very first wave of migrants (sakadas, 1906-1946) who worked in the sugar plantations. There are similarities in that sakadas were contract workers (for three years), saw their time in Hawaii as temporary, and therefore sent their money earned back to the Philippines to either help their families (altruism) or to buy land or property (self-interest) or both.

The difference from the workers in the study above is that sakadas were mostly all single males. Since such a study wasn’t done on sakadas, we can only speculate that both altruism and self-interest were motivating factors for sending remittances (of course this term wasn’t used then). Furthermore, it’s inconclusive which of the two had a stronger influence.

Today’s remittances practices
It is in this tradition that Hawaii Filipinos first started to send Christmas remittances back to relatives in the Philippines. Through generations and multiple flows of Filipino immigration to Hawaii until today, Filipinos have been sending remittances back to relatives in our ancestral country.

Those who are more recent immigrants and have strong ties with immediate family – parents, spouse, children — send remittances much more frequently.  Some within this group plan (or entertain the idea) to return or retire in the Philippines.

Those who are second-third generation Filipinos with less family ties (relatives) there, and have their primary family members in Hawaii, tend to send remittances less frequently. Some within this group no longer carry on this tradition after their parents pass on, while others – at least during the holiday season – perpetuate this tradition in memory of their deceased parents.

Inflation potential impact on remittances
With the current high cost of basic goods and services hitting record-high prices, some Filipinos say they will cut back on the amount of money they would normally send for Christmas. Others simply cannot afford to do it this year. This is the likely the trend for Hawaii Filipinos where many are stretched thin financially in a state that is among the top in the nation with the highest cost of living but falls in the bottom half of states in wages and salary.

Hawaii ranks number 37 out of 50 states for salaries according to ZipRecruiter. As of Nov 22, this year, the average annual salary in Hawaii is $52,126, that works out to be approximately $25.06 an hour.

While this year’s Christmas remittance could experience a dip in Hawaii, Philippine economists are projecting that the global recession will not have a severe impact in the year’s total remittance, and in the end most likely will settle at a 4% growth or about $33 billion.

Their estimates are based on the quarterly reports (up to September) this year that show remittances are on track to slightly improve from last year – with the last quarter that will include Christmas remittances to surge by nearly $10 billion.

OFWs, the real force behind the country’s enormous remittances
How is this possible in a global inflation? Besides the approximate 10 million Filipinos living outside of the Philippines (expats, immigrants, citizens of other countries) that send remittances, the Philippines has a massive OFW workforce that is responsible for the vast majority of the country’s total remittances.

It’s argued that the Philippines largest export is its people. From Filipino physicians to professionals of all types, to Filipino electricians and skilled workers of all types, to their countries unskilled labor like maids – many of them are contracted to work outside of the Philippines in the U.S., Europe, Asia and Middle East. The OFW work culture is so prominent in the Philippines that the government has grown to be dependent on OFW remittances that accounts for about 9% of the national GDP.

If OFWs are employed abroad, it’s most likely they are sending the same amount of money because their number one priority is to feed their families and take care of the bills back home. They have fixed costs, obligations to pay for. This, perhaps, is why even in an inflationary year that’s off the charts, the country’s remittance is still robust, and potentially will outperform the previous year’s total.

The first week of December typically begins the Christmas remittance season. If possible, we encourage our community to share our Christmas gift-giving with our family and friends in the Philippines.