When the Magna Carta of Filipino Seafarers (Republic Act 12021) became law, many in the maritime community hoped it would finally bring stability, fairness, and protection to the country’s thousands of seafarers. It promised better welfare, clearer contracts, and stronger oversight of employment practices.
But as months have passed, seafarers and manning agencies who spoke with SeaEmploy.com say one part of the law is creating unintended consequences: the mandatory 80% allotment rule that channels most of a seafarer’s salary through Philippine banks in local currency.
The rule aims to protect families and formalize money flows, yet it’s raising real-world concerns about loss of financial control, unfavorable exchange rates, and added costs hidden in the system.
What the Law Actually Says
Under Republic Act 12021, every Filipino seafarer must:
- Allot at least 80% of monthly wages to a designated person in the Philippines.
- Remit that allotment through an authorized Philippine bank once a month.
- Have the remittance credited in Philippine pesos, using the bank’s exchange rate on the day of remittance.
This rule appears in Section 38 of the law and the Implementing Rules and Regulations (IRR) released by MARINA and the Department of Migrant Workers (DMW).
The government describes the measure as a welfare safeguard, meant to ensure that seafarers’ families receive steady, documented support. Few dispute that intention. The concerns start when wages meet the bank counter.
Why Seafarers Say It Costs Them Money
Filipino seafarers are usually paid in U.S. dollars, euros, or other foreign currencies. Once those wages hit a Philippine bank, the money is automatically converted to pesos at the bank’s official exchange rate.
That rate, regulated by the Bangko Sentral ng Pilipinas (BSP), is legal and transparent — but it’s often lower than mid-market or informal rates available elsewhere. The result is simple: the allottee receives fewer pesos for every dollar earned.
To put it in perspective:
A seafarer earning $2,000 a month must remit $1,600 (80%). If the official rate is ₱57 to $1, but an informal rate offers ₱59, the family receives ₱3,200 less that month — nearly ₱40,000 a year lost purely to conversion differences.
Crew members interviewed by SeaEmploy.com say these small gaps add up. “It’s legal, but it still hurts,” one able seaman explained. “We follow the rules, but our families end up with less.”
The Official Rationale
Government agencies maintain that the rule protects both seafarers and their dependents.
The DMW and MARINA emphasize that routing wages through authorized banks ensures traceability, prevents disputes over missing allotments, and helps families receive funds on time. It also aligns with anti-money-laundering standards and keeps remittances within formal financial channels — crucial for a country where overseas earnings support millions of households.
Officials also note that this system helps the Philippines maintain accurate remittance data, a major economic indicator used by the BSP and international lenders.
Those points are valid. Yet, from the seafarer’s side, the process feels more like a trade-off between security and personal control.
Concerns from the Ship and the Office
Less Control Over Personal Earnings
Many crew members say they appreciate the intent but question the rigidity of the 80% rule. It leaves little flexibility for personal planning, onboard emergencies, or investment decisions.
Experienced officers who manage their finances globally feel especially limited. One chief engineer told SeaEmploy.com:
“We already follow company policies, training rules, and maritime law. Now even our salary is dictated — it’s like they don’t trust us to handle our own money.”
The Currency-Conversion Problem
The automatic peso conversion remains the sharpest pain point. Because banks apply their official rates at the moment of credit, seafarers can’t time their transfers to take advantage of stronger dollar values.
The IRR explicitly states that “the allotments shall be paid in Philippine currency at the rate of exchange at the time of remittance indicated in the credit advice of the local authorized bank.” That leaves no flexibility to hold funds in foreign currency or choose alternate remittance providers.
Economists and maritime accountants note that the spread between bank rates and open-market rates effectively acts as an invisible fee, reducing the real value of remittances without appearing as a deduction on payslips.
SeaEmploy.com does not recommend using unregulated or illegal “parallel market” channels, but the comparison illustrates why many seafarers feel short-changed under the current system.
Extra Work for Employers and Agencies
Manning agencies and ship operators also feel the pressure. They must coordinate monthly transfers, validate exchange rates, and generate proof of compliance — all at no cost to the seafarer.
For large fleets, the logistics are manageable. For smaller companies, especially those with mixed-nationality crews, the added administration can delay payroll and increase overhead. Some recruiters quietly worry it could make Filipino hires less competitive for certain roles.
Economic and Policy Side-Effects
Beyond individual cases, analysts note that the rule brings clear macro-economic benefits to the state. Routing billions of dollars through domestic banks strengthens the country’s foreign-exchange reserves and banking liquidity.
Critics argue this is less about exploitation and more about economic policy design — an effort to keep foreign currency inflows within formal systems. Still, it means the financial system gains stability and volume, while seafarers shoulder the cost of conversion losses.
The Government’s View
Officials reject suggestions of ulterior motives. They stress that the Magna Carta was drafted after years of consultation with unions and shipping stakeholders, and that its guiding principle remains protection and dignity of work.
They add that ensuring remittances go through banks protects seafarers from fraud and informal lenders, which have caused real losses in the past. For the government, the benefits of traceability, data integrity, and family protection outweigh the inconvenience.
Whether that view satisfies those at sea is another story.
Possible Paths Forward
Greater Rate Transparency
Experts suggest banks could be required to publish daily seafarer-remittance rates, allowing crews and families to verify that the official conversion aligns with posted figures. Transparency could restore trust without breaking the law.
Allow Partial Foreign-Currency Accounts
One compromise would let seafarers retain part of their wages in foreign-currency savings accounts under Philippine banks. This would still keep funds within the system while giving workers flexibility to time conversions.
Review of the 80% Threshold
Labor groups continue to ask why the figure is set at 80%, not a lower or flexible amount. A graduated scale — perhaps linked to family status or position rank — could balance protection and freedom.
What Seafarers Can Do Now
- Keep copies of every bank credit advice and payslip showing conversion rates.
- Check the rate on the remittance date using BSP’s published rates.
- Raise discrepancies through official channels; the Senate has already reminded agencies to apply actual bank rates at the time of remittance.
- Coordinate with unions and associations that monitor implementation of RA 12021 and lobby for amendments.
Knowledge is the best protection until the system evolves.
References
SeaEmploy.com – Maritime Recruitment and STCW News
Republic Act 12021 – Magna Carta of Filipino Seafarers
MARINA Draft Implementing Rules and Regulations, 2024
