Overseas Workers' Uncertain Future

Against all the odds and after years of being identified as the region's basket case, the Philippines is one of two countries escape negative growth from the global financial crisis in 2009.

In the Philippines' case, much of its positive growth is built on the shoulders of its overseas workers, particularly those in the Middle East – at a time when the Middle East itself faces a cumulative 5.1 percent fall in gross domestic product, according to the International Labor Organization's 2009 Global Employment Trends Report, which estimates that the region's gross domestic product growth will fall to 5.1 percent year-on-year from estimated 2008 growth of 6 percent.

The Philippines' human exports are expected to moderate but not stop despite the fact that the 16 countries of the Middle East posted the second highest unemployment rate among the world's regions at 9.4 percent last year. Joseph Yap, president of the Philippine Institute for Development Studies (PIDS), said in a forum on Asian labor migration that not even the region's petrodollars can avert a looming economic crisis in the Middle East, especially with world oil prices reversing its last year's upward jolt.

In a statement last February, the International Monetary Fund said the Gulf Cooperation Council nations and oil exporting countries in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region would post growth at 3.6 percent this year, down from 5.6 percent in the previous year.

“For the oil exporters, the decline in oil prices and Organization of Petroleum Exporting Countries (OPEC) production cuts are projected to reduce oil export receipts by almost 50 percent in 2009. This implies a loss of government revenue to the tune of US$300 billion compared to 2008,” the statement quoted director Masood Ahmed as saying.

MENAP oil-exporters include Algeria, Bahrain, Iran, Iraq, Kuwait, Libya, Oman, Qatar, Saudi Arabia, Sudan, United Arab Emirates, and Yemen.

These numbers should spell bad news to the families of an estimated 2 million Filipinos working in the Middle East and their families who rely on their monthly cash remittances. Recent data from the Bangko Sentral ng Pilipinas, the Philippines's central bank, gives hope, however that the Middle East countries are still holding up against the weight of a global financial collapse that forced advanced economies to declare recession in their respective economies.

Cumulative remittances last year from overseas foreign workers in the 16 countries posted 15.2 percent growth to US$2.5 billion. Land-based Filipino workers there sent $2.4 billion from January to December, according to the BSP data. Remittances from the UAE, specifically, also posted double-digit growth to $621 million or $91-million more than what was recorded in 2007.

Only Qatar and Kuwait posted declines – Kuwait-based workers sent home 25-percent less to $125 million while Qatar-based workers sent 7.5-percent less than the $133 million in 2007. The government estimates there are 139,803 Filipino workers in Kuwait while 195,558 are in Qatar.

Remittance rates posted declines in six of 11 months last year, the biggest recorded in April (-23 percent) when world oil prices spiked nearly $100 a barrel. Dubai crude, for one, hit $95.08 in April 2, 2008 (see: Forex Rate and Dubai Crude Monitor) The second-lowest month-on-month drop was recorded in October at nearly 18 percent, when world oil prices began tapering down up to $56.42.

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Notably, the February 2009 cumulative year-on-year remittance level of 2.5 percent was the lowest in six years since 2003. The second-lowest was in February 2004, when the level was at 5.6 percent.

This means that while remittances from an estimated eight million Filipinos in 190 countries were bigger at $2.6 billion in February this year, they were just slightly above the $2.2 billion posted in the same month last year.

Of the eight countries the central bank cited in its statement as major sources of remittances for the first two months of the year, two are in the Middle East: Saudi Arabia and the UAE.

Last year, full-year remittances from Saudi Arabia posted growth of 21.5 percent to nearly $1.4 billion, the largest among the 16 countries. Central bank governor Amando M. Tetangco, Jr. was quoted as saying remittances “have been holding up as deployment of overseas Filipino workers has risen during the first two months of the year while the increase in the number of reported layoffs has slowed down.”

Some industry analysts offer mixed views on the impact of an impending slowdown in Middle East economies to overseas Filipino workers in the region.

The Philippine Overseas Employment Administration (POEA) reported that some 1,376,823 land- and sea-based overseas workers were deployed in 2008, but no figures per region of destination are available. Last year, however, the country deployed fewer new-hire overseas workers to the Middle East with 203,572 (lower by 4.9 percent to the 214,360 deployed new hires in 2006), according to POEA data.

On a per-country basis, comparing 2006 and 2007 figures of deployed new hires, deployment grew in Middle East destination countries such as Saudi Arabia (by 6,892 new hires), the United Arab Emirates (5,395 new hires), and Qatar (1,742 new hires). Meanwhile, new-hire deployment dropped in Kuwait by 12,192 workers.

Still, recruiters look at the Middle East labor market as rosy for Filipino workers. Health workers remain needed in Saudi Arabia, said President Victor Fernandez of the Philippine Association of Service Exporters Inc. (PASEI), even as he thinks construction projects in the Middle East may be delayed.

“The supply of construction workers to the Middle East can be a problem during these times,” Fernandez said during the same forum where Yap spoke. For his part, former overseas worker Loreto Soriano, president of LBS e-Recruitment Solutions, still believes in the market potential of the Middle East. The region “needed thousands of construction workers,” says Soriano, citing data from the Federated Association of Manpower Exporters where he is president.

Soriano points out there is a need for increased deployment of workers in Libya “due to its growing economy,” again based on his group's data.

But while most of the 5,036 displaced overseas Filipino workers (as of January) come from Taiwan's electronics sector, only 298 Filipinos from the UAE got displaced. As of January 28 also, the departure of some 85 UAE-bound workers who are scheduled to begin their work in the country's services and electronics sectors “has been put on hold,” POEA's running data on the global economic crisis show.

Taiwan and the UAE are the top two sources of displaced OFWs in recent months, based on government data.

The ILO projects that if the unemployment rates in the developed economies and in the European Union rise because of the global crisis, the Middle East's unemployment rate may reach 11 percent —affecting eight million workers (including foreigners).

Jeremiah M. Opiniano and Isagani De La Paz write for the OFW Journalism Consortium, www.ofwjournalism.net