61
Socio-economic influence
overseas Filipino workers in the Federal States of Micronesia
南太平洋海域調査研究報告
No.53（of201３年２月）
OCCASIONAL PAPERS No.53（February 2013）

Socio-economic influence of overseas Filipino workers
in the Federal States of Micronesia
NISHIMURA Satoru
Faculty of Law, Economics, and Humanities, Kagoshima University
Abstract
The economy of the Philippines heavily depends on overseas workers. The major
destinations and dominance of simple labor has not changed in the last 30 years.
However, the destinations have been more diversified. And the professional jobs
are more dominant in some countries. The paper discusses a case by illustrating
the situation in the Federal States of Micronesia. The economy of this country iscalled MIRAB, which means the economy depending on migration, remittance andbureaucracy. The paper shows that the result of this economy has not brought aroundthe development of the private sector but, rather, frustration. The paper concludes
that the increasing number of Filipino workers will heighten the stressful nature of
the society.
Keywords: FSM, Philippines, overseas workers

Introduction
Globalization of goods, capital and labor is taking place among developing countries
as well as among advanced countries. This paper focuses the growing presence of
the Philippines in the Federal States of Micronesia (FSM). It shows the trend withstatistical data of the government, and it also tries to figure out the socio-economic
influence of this relatively new phenomena.
Growing presence of the Philippines in the FSM economy
Overseas workers as a national policy
The Philippine government has been promoting the increase of overseas workers
as a policy in order to get more foreign currency since 1982 when it launched thePhilippine Overseas Employment Authority (POEA). POEA is aimed to protect thehuman rights of the Filipino overseas workers as well as accelerate the numbers ofthe workers abroad. According to the government statistics, the number of Filipino
overseas workers in 2008 was 8, 19 million, which was nearly 10 % of the total
population. The POEA statistics in 2010 shows the characteristics of the Filipino
overseas workers. The main destinations are Saudi Arabia, UAE, Hong Kong andQatar. The popular kinds of jobs are different between men and women. While maids,caretakers and cleaners are dominant for women, cleaners and construction workers
are leading for men. This trend of main destinations and popular kinds of jobs has notbasically changed since the 1980’s up to now. However, there are also several new62
NISHIMURA Satoru

phenomena taking place. Firstly, the destinations are becoming more diversified toall over the world, such as Oceania and Africa. Secondly, some of the destinations aredeveloping countries where the average wage level is as low as the Philippines. The
paper discusses the case of FSM as this new trend of overseas Filipino workers. It
tries to analyze the impact of it on the FSM as well as on the Philippines.
Overseas workers and trade of the Philippines in FSM
According to POEA, the number of Pilipino workers has increased recently since2006 to 2010 (Fig. 1). The same trend can be read off from the FSM government
data (Fig 2). It shows the total estimated number of Filipino workers, which are nontourists visitors to the FSM. Filipinos are the second largest number of workers toAmericans. Table 1 shows the kind of jobs of the 135 Pilipino workers based on POEAstatistics. It is noteworthy that there are no maids and cleaners which are morecommon in other countries. On the other hand there are many professional workers
such as foremen in construction sites (6), technicians (4), and accountants (4).
Imports from the Philippines to the FSM are also increasing. Figure 3 shows thegrowth rate of imports from the main countries between 2000 and 2006. It showsthat imports from the USA, Japan and Guam stayed at almost the same level, butthat from the Philippines is growing rapidly, as well as Singapore. More detailed
statistical analysis is necessary in order to understand this trade structure, but theauthor found that the importance of products in the FSM markets were of great
importance by simple field research. Table 2 shows the origin of the 89 items soldin a FSM supermarket. It indicates that the USA (45) and Japan (11) were more
dominant, but the Philippines (7) was ranked close to them. One of the accountants ofthe supermarket was a Filipino. We can infer that the increasing number of Filipino
workers will promote the importion of Filipino products.
700600500
40030020010002006

200720082009

Source: POFAFig. 1 Philipino overseas workers in FSM.

2010

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Socio-economic influence of overseas Filipino workers in the Federal States of Micronesia

5000
USA
4000
3000
Philippines
2000
Paciﬁc Islands
1000

Japan
Austraralia

0

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Source: FSM Goverment
Fig. 2. Non-tourists visitors to FSM.
Table 1 Philipino overseas workers in FSM by skills.
skill
Production and related workers transport
equipment operations and laborers
Carpenters, joiners and parquetry workers
Bricklayers, stonemasons and tile setters
Supervisor production and general foremen
OthersProfessional technical and related workersEngineers civil
Accountants
Architects and town planners
Pharmacists
OthersClerical and related workers
Maschine operators automatic/ electronic data
Clerks stock
OthersSales workers
Managers (whole sale and retail trade)
Supervisors sales
Salesmen technical and service advisors
Administrative and managerial workers
Manager general
Service workers
Cooks and related workers
Total
Source: POEA

number
99
20
14
560
19

7

523
135

442
2
722
322
1
232006

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NISHIMURA Satoru

1000
Singapore

800
600
Japan
400

Philippines

200

USA

0Guam
2000

2001

2002

2003

2004

2005

2006

Source: FSM Goverment
Fig. 3 Growth rate of export to FSM by main countries (year 2000 = 100).
Table 2 O rigin of items sold in a supermarket (weno city, Chuuk state, FSM, 2011
August 3).
items (89)rank canned foods

59 rankseasonings

items(89)9 ranksweats

21

rank

total

89

1USA

39

1Japan

41

China

61

USA

45

2

Australia

62

Philippines

22

USA

42

Japan

113

Philippines

43

USA

23

Japan

33

Philippines

73

Japan

44

China

14

Taiwan

23

China

75

Thailand

25Canada

25

Australia

66Korea

16

Indonesia

26Taiwan

36Taiwan

17Philippines

17Canada

26Poland18

Hong Kong

17Indonesia

26Malaysia

17Thailand

210Korea

110Hong Kong

110Poland

110Malaysia

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Socio-economic influence of overseas Filipino workers in the Federal States of Micronesia

FSM economy: MIRAB economy and stress of men
FSM consists of four states, or Yap, Chuuk, Pohnpei, and Kosrae. The population isaround 110 thousand. It used to be a UN Trust Territory and it became independentin 1979. It has a strong relationship with the USA through the Compact of Free
Association. While it allows the USA free access to its territory, it is receiving a hugeamount of the compact ground. The present compact grant is scheduled to continue
to 2023. Figure 4 shows that 43% of the government revenue depended on compact
grant in 2006. This bloated public sector is contributing a lot to infrastructure,education, community development in the islands and so on. However, the provisionof basic education does not necessarily lead to the development of the public sector. It
has just enlarged the inefficient public sector. Figure 4 illustrates the unemploymentrate and percentage of labor force in subsistence economy in 1994 and 2000. The
unemployment rate has increased from 16.3% to 22% , and the subsistence economy
has augmented from 22.6% to 28.4% . It can be said that more than 50% percent of
the working population were not employed in 2000, which means the country is goingback to the non-market economy from the viewpoints of its labor market.
This crooked economic system is sometimes called the MIRAB economy. It meansthat the economy heavily depends on Migrants’ Remittance and Aids from the USAand other countries, and consequently the public sector or Bureaucracy is extremelyenlarged while the private sector stays undeveloped. Regarding the MIRAB economy,
there are both positive and negative views among researchers. Brazys (2010) insiststhat influx of the compact grant increased the relative price in FSM and it entails thepotential of export competitiveness. He resembles the situation as‘Dutch disease,’
which was brought around by export of newly discovered oil in the country in the1980’s. Holland had a difficult time to export its industrial products because of its own
strong currency caused by oil money. Cassels (2006) claims that the rapid growthof foreign currencies led to the import of processed food, and eventually the local

Others8%

Tax21%

Other grants
16%

Fishing access fee
10%Compact grants
45%

Fig. 4 Composition of revenue (2006). Source: FSM government.

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Table 3 Unemployment rate and subsistence economy ratein FSM (1994 and 2000) (% ).
19942000

Unemployment rate

16.3

22.0

Percent of labor force in　 subsistence

22.3

28.4

Source: FSM government

diet was changed to unhealthy market food, which was one of the reasons for theincreasing number of people with obesity and other adult diseases. On the other hand,Ware (2005) maintains that the freer access to the US labor market contributed a
lot to lessen the dispute over the land and thus minimized the social tension. Naylor(2002) sees the role of imported processed food. He appreciates its role as a buffer tothe vulnerable eco-system based on the mangrove forests. The view of Cook (1998)
contrasts to that of Brazys. He claimed that there was no statistical evidence that thepublic sector had crowded out the private sector. He inferred that the reasons for theundeveloped public sector should be explored in other contexts.
Influence of growing Filipino presence on the FSM socio-economy
If the whole structure of the present situation continues, a more negative scenario
will be put into place. The decline of the MIRAB economy caused by the compact
grant cut will force to scale down the bloated bureaucracy. The people in the FSM
will have a more difficult time to find jobs in the public sector. Moreover, the influxof Filipino workers will reduce the chances of the local people to the job market inprivate sector. Especially, males in the FSM will have more frustration mixed with thetraditional female dominant family structure. Figure 5 illustrates the unemployment
rate of men and female in 1994 and 2000. While the rate of men increased rapidly from
10.7% to 20.7% , that of women slightly dropped from 26.9% to 23.6% . It is likely thatthe spread of public education has contributed a lot to lessen the gap between males
and females in job hunting. However, it also means that the stress of men has been
amplified. The stress has led to a different kind of social problem of men, such as highsuicide rate (Hazel 1991), violence and crimes (Oneisom 1991a), mental disease (Hezeland Lightfoot 2005) and abuse of illegal drugs such as marijuana (Oneisom 1991b).
When we conducted research on a small island in Chuuk, we observed a lot ofsocial problems to prove the negative scenario. Many houses and public buildings
were broken partially or totally. Some houses were covered with graffiti painted withspray cans. Figures 6 and 7 show how much the islanders are frustrated. The ice cube
plant was built by JICA (Japan International Cooperation) planning to provide ice forthe fishermen who carry the fish to sell by boat in the market. We are not sure forthe reason, but for some reason the building was targeted by the frustrated islanders.
The walls were broken and the inside was painted with graffiti with a spray can. Itis safe to say that some islanders are stressed and small or big social problems easily
lead to violence. We have also observed that some young men who smoke marijuana
in the middle of the day. We felt like we were in a global city full of crime. Essentially,

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Socio-economic influence of overseas Filipino workers in the Federal States of Micronesia

MaleFemale

26.9
23.8
20.7

10.7

2000

1994
Source: FSM Goverment

Fig. 5 Unemployment of male and female (1994, 2000).

Fig. 6 A broken JICA ice plant.

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NISHIMURA Satoru

Fig. 7 A broken JICA ice plant (inside the plant).

it is a small pacific island with only a few hundred people.
If the FSM is not capable of increasing the number of overseas workers or thepeople are not willing to work abroad, it needs to launch a kind of inward economy
strengthening policies which accompanies the tighter migrant regulation. It is easy tosay but difficult to carry out.
Acknowledgement
I would like to express my deep gratitude to the people in Chuuk state who aretruly supportive to our field research. I would also thank Research Center for thePacific Islands, Kagoshima University which has funded my research and provided
me the basic information and viewpoints. Without the help of them, it would be moredifficult to carry out this study.
References
BRAZYS S. (2010) Dutch Disease in the Western Pacific: an overview of the FSM
economy under the Amended Compact of Free Association, PACIFICECONOMIC BULLETIN, Vol. 25, No. 3, pp. 24-39.
CASSELS S. (2006) Overweight in the Pacific: links between foreign dependence, global
food trade, and obesity in the Federated States of Micronesia, GLOBALIZATION
AND HEALTH, 2:10.
COOK P. and KIRKPATRICK C. (1998) Labor market adjustment in small open economies:
The case of Micronesia, WORLD DEVELOPMENT, vol. 26, no, 5, pp. 845-855.

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Socio-economic influence of overseas Filipino workers in the Federal States of Micronesia

HEZEL F. X. S.J. (1991) What Can We Do to Prevent Suicide? Micronesian Counselor.
HEZEL F. X. S.J. and LIGHTFOOT C. (2005) The Myths of Economic Development in the
FSM, Micronesian Counselor.
ONEISOM I. I. (1991a) Chuuk’s Violence: Then and Now, Micronesian Counselor.
ONEISOM I. I. (1991b) Marijuana in Chuuk Micronesian Counselor.
NAYLOR R. L., BONINE K.M., EWEL K.C. and WAGUK E. (2002) Migration, markets, andmangrove resource use on Kosrae, Federated States of Micronesia, AMBIO, vol.
31. no. 4, pp. 340-350.
WARE H. (2005) Demography, migration and conflict in the Pacific, JOURNAL OF
PEACE RESEARCH, vol. 42, no. 4, pp. 435-454.
Statistics
2005 FSM Statistical Yearbook, FSM National Government.
Household Income and Expenditure Survey Analysis Report FSM 2005, FSM.
International Trade Publication FSM 2004, FSM National Government.
Web pages
CIA (USA) http://www.doi.gov/oia/Islandpages/fsmpage.htm
Division of Statistics, FSM http://www.spc.int/prism/country/fm/stats/POEA (2010) Overseas Employment Statistics 2010 http://www.poea.gov.ph/stats/2010_Stats.pdf