Financial Considerations for becoming an OFW

ABS-CBN News Channel (ANC) with guest Susan Ople (President of Blas F. Ople Policy Center and Training Institute) produced this video On the Money: True Cost of Being an OFW to give an understanding of the cost for a Filipino going abroad.  According to Ople, the cause of Filipinos leaving for another country is not poverty but a salary differential.  Applying for a job overseas is a transaction between you and your employer not a favor given by a recruiter.   There is a great deal of fraud by fake agencies and recruiters so it is extremely important to do your research via the internet and asking referrals before paying any money to a “recruiter.”   Not infrequently, OFWs are victims of contract substitution:  meaning that as soon as the OFW arrives in their destination country, the nature of the contracted job and agreed upon salary change.  When this happens the OFW can report the situation to the Philippine Embassy and Philippine Labor.  However there are times when the Philippines government is unable to impose its law on the host country of the OFW. 

 

For those thinking of applying as an OFW, make sure you know:

• the specific nature of the job you are contracting
• how much the salary is
• the conversion rate of your salary into Filipino currency
• when your salary will be paid
• the cost of living (housing, transportation and food costs)
• the distance of travel to your job
• the exact nature of any benefits that are promised 

Here is a summary of the costs* incurred by an OFW:

• Placement fee (Should not exceed 1 month salary as approved by the POEA)
• Mandatory contributions to PAG-IBIG and PhilHealth which are set by law like (P1200 for 2014 and P2400 for next year 2015)
• Cost of Pre-departure Orientation Seminar: P100
• Passport fee: P950
• 2 Years Overseas Workers Welfare Administration (OWWA) membership US$25 (P1100)

*There are countries with hidden costs like Taiwan (requiring a broker’s fee between P60,000-P100,000)

You will be required to present a receipt for all of these expenses to the PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA) before leaving the Philippines. 

And there are additional expenses: 

• National Bureau of Investigation (NBI) clearance
• Medical clearance
• Airfare
• Accommodation fees from agency while in Manila
• Travel costs to Manila before the international flight

**Domestic workers are exempted from placement fees.  However, there are many schemes created to extract money from domestic workers, like salary deduction so one must be very careful

Once you leave the Philippines you are on your own, so before leaving the Philippines:

1.  Make sure you have at least 3 copies of all your documents.  Keep one copy for yourself in case something will happen with others when you present them to authorities or your boss.
2.  Know the name of the Philippine ambassador, the address of the embassy, hotlines, emails, and websites for those who can help you if you are in need.
3.  Make a strategic plan with your family including your children and set clear goals:

• Know why you want to work overseas and communicate it clearly to your children.
• Clarify expectations and needs with your family and agree upon them together. 

4.  Develop a financial management plan

• Discuss the time table: how long you plan to stay
• Discuss savings and investments plans
• Discuss limits on purchases with your new income that will be much more than you are accustomed to making while in the Philippines
• Discuss how much to spend for priorities and needs.
• Discuss limits on what will be given or lent to friends who come asking for help once you are earning at a much higher rate
• MAKE A WRITTEN BUDGET

***Susan Ople recommends that you do NOT send all of your excess income to your family to protect yourself from severe disappointment when they do not follow through on your agreements

Choosing to work abroad is one of the biggest decisions you will make in your life and it should be made with as much accurate information as possible.  Many Filipinos put all of their hearts into an OFW job only to see their dreams come crashing down into reality because they have not carefully researched and weighed all of the factors that will affect them and their families.