OFWs in Europe brace for cost-of-living squeeze

Tougher times are looming for Filipinos in Europe as the Middle East war drives up the cost of living for them as well as for their families back home, raising concerns over the sustainability of remittance flows in the months ahead, according to a Madrid-based consultancy firm.

“The European Filipino diaspora and the effects of the Iran War have forced overseas Filipino workers (OFWs) to contend with the challenges of both residing abroad while maintaining and sustaining their family ties back in their homeland,” Conectando Filipinas said in a statement over the weekend.

According to the firm, OFWs are facing rising living costs in Spain, the UK, France, and Germany.

Citing estimates from a French-based online rental platform, it said that a one-bedroom apartment costs between €900 and €1,200 a month.

“Food expenses, aside from dining, are spiraling because of the high cost of fuel (and its impact on)  product and packaging, manufacturing, and logistics,” it said.

“These rising costs directly affect OFWs’ ability to manage their finances and sustain remittances to their families,” it added.

Philippine inflation accelerated to 4.1% in March from 2.4% in February and 1.8% a year earlier, breaching the Bangko Sentral ng Pilipinas (BSP) 2-4% target band.

“These combined pressures abroad and at home are reshaping how OFWs manage their financial obligations,” the firm said.

“The decline in the quality of life among OFW families in the Philippines underscores the importance of maintaining a strong and constructive link between the European Filipino diaspora and their communities back home,” it added.

It said that Filipinos in Europe are expected to increase, especially in Portugal and Spain, which could grow remittances from the two countries.

“However, the war could also bring about job losses and delayed or reduced salaries, leading to a downturn in remittance volumes,” it said.

Conectando Filipinas estimates that an OFW typically sending home €300  could end up sending only €150 due to the impact of the Middle East conflict, “reflecting a survivalist scenario where high local inflation in Europe forces a significant cut in transfers.”

Alternatively, monthly remittances could actually increase to €500 if OFWs practice the kind of “altruism” observed in migrant workers. Under such a scenario, migrant workers prioritize family welfare  during periods of economic stress.

“Over the longer term, the escalating conflict is expected to pose broader risks to financial systems and remittance channels,” the firm said.

“The escalating Mid-East conflict will impair the flow of funds from Europe to the developing economies of Asia. Money transfers face security risks and financial services disruption,” it added, noting that this could delay the critical help for OFW families.

If the war is prolonged, the firm expects it to affect employers’ sources of income, with these pressures passed on to workers through decreased incomes, forced relocations, and strained employer-OFW relationships.

The BSP reported that cash remittances coursed through banks rose 2.6% to $2.79 billion in February.

Source: Business World

PH incomes can match Europe level – in 2050

The catch is that it won’t be happening anytime soon.

England-based research and advisory company Oxford Economics said in a report released on Wednesday night that it expects Manila residents’ incomes to approach the European level by 2050, as it highlighted the rapid ascent of Asian cities within global value chains and the “closing” gaps in living standards between emerging and developed economies.

Oxford Economics associate director Liam Sides and senior economist Christopher Reynolds said Manila is projected to add more than a million jobs in business services from 2025 to 2050.

In cities like the Philippine capital, they said such roles have expanded far beyond call-center work to include higher-skilled positions in IT, software development, data analytics, and other technical fields, offering both better pay and career growth.

High-value services

Sides and Reynolds said three other Asian cities — Delhi and Mumbai in India and Shenzhen, China — are expected to see similar gains, reflecting a broader shift in the region toward high-value service employment.

While job growth in business services has also been strong across the Middle East, the two analysts said it was Asian markets “that have dominated growth in business services since 2010 — and they will continue to do so.”

“Indeed, cities across Asia are becoming both significantly more populous and wealthier. In terms of the overall increase in high-income households between 2025 and 2050, Asian cities take eight of the top 10 spots globally,” they added.

Wide gap

Latest figures from the Philippine Statistics Authority show that the average annual income of families in Manila reached P482,490 in 2023, well above the national average of P353,230.

The income increase in Manila marked a 16.7-percent rise from 2021, the last year the triennial household survey was conducted. That slightly outpaced the 15-percent growth recorded nationwide.

Meanwhile, families in the wider National Capital Region earned an average of P513,520 in 2023, nearly 23-percent higher than in 2021.

The European Commission’s Eurostat policy department puts the average income of its residents at €37,860 a year (equivalent to P2.6 million at the current exchange rate).

Laggard

Among the nine major Asian cities analyzed in the report, Manila will be the slowest to catch up.

Estimates from Oxford Economics showed that Manila’s projected income growth would make it “increasingly comparable,” but not fully on par with European averages, over the next 25 years.

On the other hand, Shanghai, Beijing, Bengaluru, Hyderabad, Shenzhen, Jakarta and Mumbai are all expected to surpass average European city living standards, while Ho Chi Minh City could reach parity.

In India, Hyderabad and Bengaluru are expected to surpass the European average for personal incomes before the end of the next decade, with Mumbai following before the end of 2050. 

Jakarta is projected to follow a similar trajectory, supported by Indonesia’s abundant natural resources and its relatively young, highly skilled workforce.

“Overall, these shifts represent a dramatic reversal, with people in China, India, and Indonesia returning to more similar levels of income relative to Europe, as they had before the Industrial Revolution,” Sides and Reynolds said.

“Convergence in global living standards is not inevitable,” they added.

Source: Business World

Philippines officially exits from EU ‘high risk’ money laundering list

The Bangko Sentral ng Pilipinas (BSP) on Tuesday vowed to continue efforts to combat financial crimes, after the Philippines officially exited the European Union’s (EU) list of countries that are at “high-risk” for money laundering.

“The BSP remains firmly committed to driving financial sector reforms, strengthening anti-money laundering/countering terrorism and proliferation financing (AML/CTPF) supervision, and building a resilient, inclusive financial system that supports economic growth and global confidence,” BSP Governor Eli M. Remolona, Jr. said in a statement.

Mr. Remolona, who also chairs the Anti-Money Laundering Council (AMLC), said they are working on identifying areas where the Philippines can further uphold its commitment to combat financial crimes and maintain global standards.

On June 10, the European Commission approved a regulation that removed the Philippines and seven other countries from its list of “third countries” that were flagged as facing a “high risk” of money laundering and terrorism financing. This regulation took effect on Aug. 5.

The European Commission had welcomed the progress made by the Philippines, Barbados, Gibraltar, Jamaica, Panama, Senegal, Uganda and the United Arab Emirates in strengthening the effectiveness of their AML/CFT (countering the financing of terrorism) regimes.

“Based on the available information, the commission concludes that Barbados, Gibraltar, Jamaica, Panama, the Philippines, Senegal, Uganda and the United Arab Emirates no longer have strategic deficiencies in their AML/CFT regimes,” it said.

In February, the Financial Action Task Force (FATF) removed the Philippines from its list of jurisdictions under increased monitoring for dirty money risks, after a successful on-site visit and completion of the recommended action plan.

The Philippines was also removed from the United Kingdom’s list of high-risk third countries last March.

The country was on the FATF’s “gray list” for over three years or since June 2021. This had resulted in the Philippines’ inclusion in the EU’s list of high-risk jurisdictions and the UK’s advisory list, which meant being subjected to stricter customer due diligence measures by member states for business relationships or transactions, the Anti-Money Laundering Council has said.

The BSP said the Philippines’ exit from the FATF as well as the UK and EU watchlists “signals growing international confidence in the Philippines’ AML/CTPF regime.”

“This development is expected to generate benefits, including lower remittance fees and improved relationship of Philippine banks with foreign counterparts, which drives business activities,” it added.

Analysts said the BSP’s commitment to anti-money laundering reforms is “highly significant.”

“It signals to global investors, banks, and regulators that the country is serious about maintaining the integrity of its financial system,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said. “This enhances investor confidence, reduces transaction costs, and improves access to global financial markets.”

Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc., said the BSP’s move shows “sustained vigilance and proactive governance in financial regulation.”

“To maintain global AML/CTPF standards and avoid future listings, the BSP can enhance its risk-based supervision, particularly over high-risk sectors like casino junkets and designated nonfinancial businesses,” Mr. Asuncion said.

“Strengthening digital surveillance tools, improving inter-agency coordination with the AMLC and law enforcement, and regularly updating regulatory frameworks in line with evolving FATF standards will be key to sustaining momentum and ensuring long-term compliance,” he added.

The AMLC earlier said it is pushing amendments to the Anti-Money Laundering Act as part of efforts to ensure the Philippines will remain off the FATF’s gray list.

Source: Business World