If English Is Widely Spoken, Why Isn’t the Philippines Richer? A Handmade Factory and 400 Years of History

Yesterday, I watched a television documentary following factory workers in the Philippines.

It was not a particularly serious documentary. It had the tone of a light entertainment program asking a question like, “Where are Japanese wigs made?”

But although it was called a factory, there was no array of modern machinery. The workers were carefully implanting strands of hair one by one, entirely by hand.

I was impressed by their craftsmanship, but their lives were far from affluent. Their wages were low, and life appeared difficult.

That raised a question in my mind.

Why hasn’t the Philippines become more prosperous?

I often speak with Filipino tutors through online English lessons. Many of them are cheerful and kind, and communicating with them in English is never a problem.

The Philippines has a large young workforce, English is widely spoken, and labor costs are relatively low.

With all those advantages, it would hardly be surprising if foreign companies entered the country one after another and built modern factories.

In fact, electronics manufacturing and IT-related services have developed.

Even so, the country has not built an industrial base strong enough to raise living standards across the population.

Frankly, it remains in the lower tier of Southeast Asia.

Cheap Labor Alone Is Not Enough to Build a Factory

When I looked into the issue, the first problem I encountered was infrastructure.

Electricity is a particular concern.

A modern factory cannot operate unless its machinery can run reliably. If electricity is expensive and the supply is unstable, companies will hesitate to invest.

Roads, ports, and other logistics infrastructure also present challenges.

Low wages mean little if electricity and transportation are expensive.

What matters to a company is not just how much it pays its workers, but the total cost of finishing a product and shipping it.

Building that infrastructure requires political action.

Does Protecting Domestic Interests Make a Country Richer?

The Philippines has powerful business conglomerates and political dynasties.

It is an extremely unequal society, where as little as 2% of the population can be said to control 70% of the wealth.

Competition in sectors such as electricity and telecommunications was restricted for many years. Foreign companies also faced strict limits on entering the market.

Although deregulation has progressed in recent years, barriers to entry and complicated administrative procedures remain.

For the conglomerates, having fewer competitors is convenient.

Without competition, however, prices are less likely to fall and services are less likely to improve.

As a result, electricity remains expensive and unreliable, making it difficult for new factories to enter the country.

What is intended to protect domestic companies ends up obstructing the development of domestic industry.

It is a deeply ironic structure.

And when the most powerful figures in politics and business are closely connected, changing that structure is not easy.

The Most Capable People Leave the Country

The Philippines has another distinctive circumstance.

That is the presence of overseas workers, commonly known as OFWs, or Overseas Filipino Workers.

The ability to speak English gives Filipinos a major advantage when working abroad.

If they cannot earn enough at home, they can work overseas.

Remittances from abroad are, in fact, an important source of income supporting the Philippine economy.

For their families, this is welcome.

For the country as a whole, however, the situation is more complicated.

Educated and capable people leave in search of higher salaries. Domestic companies then find it harder to secure talent.

The money they earn overseas returns to the Philippines, but the technology they develop and the businesses they help create abroad do not necessarily return with it.

Even after the country educates talented people who speak English, foreign companies are the ones that value their abilities most highly.

What 400 Years of Colonial Rule Left Behind

To put it harshly, the country can appear not to be genuinely committed to improving the lives of its people.

It can look like a system designed to allow only a privileged class to prosper.

Why, then, did this political and economic structure emerge?

This is where the history of the Philippines becomes relevant.

The Philippines became a Spanish colony in the late 16th century and came under American rule at the end of the 19th century. It was also occupied by the Japanese military during World War II before gaining independence in 1946.

In total, it spent roughly 380 years under foreign rule.

During that time, land, wealth, and political power became concentrated in the hands of a small number of influential people.

Changing the flag at independence did not transform the country’s power structure overnight.

The elites formed during the colonial era, along with the political dynasties that followed, continued to wield enormous influence.

After independence, the economy opened to some extent, and people of Chinese descent moved into that space.

It is said that among today’s conglomerate-owning elite, about 20% descend from the Spanish ruling class and 80% are of Chinese descent.

Even after the foreign rulers were driven out, the ruling class remained the descendants of foreigners.

It is said that the Malay Filipinos who were there originally have continued to be the ones exploited.

Speaking English Does Not Guarantee Prosperity

When I speak with Filipino English tutors, I am often impressed by how capable they are.

That is precisely why the documentary made me think about the issue again.

The population is young. English is widely spoken. People are willing to work.

Even so, if the political and economic systems do not function well, it is difficult for the country as a whole to become prosperous.

Some problems cannot be solved through individual effort alone.

The irony is that Filipinos’ English ability has proven more powerful as a tool for working abroad than as an engine for developing domestic industry.

The next time I speak with a Filipino tutor in an online English lesson, all of this may cross my mind.

Then again, I pay only a few hundred yen—just a few US dollars—for each lesson.

Here I am, a Japanese customer worrying about the Philippines’ low-wage economy while enjoying its benefits myself.

I am hardly in a position to sound self-righteous.