Economic downturn weighs on Filipino migrant labourers

Published by rudy Date posted on March 26, 2009

MANILA (Reuters) – Like millions of Filipinos, Alma Ang left her homeland to work abroad for a salary far higher than she could have ever earned at home.

Now, as the global financial crisis bites, Filipino migrant workers face the prospect of losing their jobs abroad and returning home unemployed and often in debt.

In the case of Ang, after paying a recruitment agency 120,000 pesos (about $2,500) for a job at an electronics factory in Taiwan, she was retrenched within a year and is back in the Philippines without any work at all.

“I wanted to earn more money so I could build a house for my family, but that did not happen,” said Ang, 31, who gave up her job as a quality control officer at a garment factory near Manila for a job in Taiwan that paid four times her salary.

As the global economic crisis deepens, countries such as the Philippines, which are heavily reliant on remittances sent home by migrant workers, face the prospect that workers may return en masse after losing jobs in recession-hit economies abroad.

Migrante International, an NGO that assists Filipino migrant workers around the world, predicts that 100,000 workers may lose their jobs this year.

“We have yet to feel the full effects of the global economic crisis,” Gary Martinez, head of Migrante International, told Reuters. “The situation will certainly worsen in the coming months”.

A mass influx of returned, unemployed workers could weigh on the Philippines which has one of the highest unemployment rates in Southeast Asia and one of the highest poverty rates, with one-third of the population living below the poverty line.

Mass unemployment and social problems that often accompany large-scale joblessness could also take a toll on what is expected to be a tight presidential election next year to replace President Gloria Macapagal Arroyo.


Working abroad has become a way of life in the Philippines. Millions leave every year to work overseas, mostly as domestic helpers, seafarers or caregivers, to support families back home.

Last year, 1.4 million Filipinos moved abroad for work, a daily deployment of close to 4,000 people. Due to high unemployment at home, the Philippine government has long championed the exodus of workers abroad, despite widespread disquiet of a drain of talent.

Arroyo calls these migrant workers “modern day heroes” because the money they send home has kept the Philippine economy afloat even in times of economic uncertainty.

But as the global economy faces its biggest downturn in decades with a slump in shipping and recessions in many of the countries that employ Filipino migrant workers, the Philippines may find itself particularly exposed.

Around 10 percent of the country’s estimated 90 million population live abroad. Last year, they sent home a record $16.4 billion in remittances, a major pillar of the domestic economy.

Economists expect the inflow of remittances to contract by as much as 6 percent this year due to the global slowdown.

“There is declining demand for labour and that is going to reduce demand for migrant workers,” said Steven Kapsos, an economist at the International Labour Organisation (ILO).

“I don’t think that that is a permanent phenomenon … but it is difficult to look beyond this crisis,” he added.

Cash sent home by Filipino migrants, the vast majority of whom live in the United States, is one of the Philippines’ top sources of foreign exchange and a pillar of consumer spending in the domestic economy.

A drop in remittances is expected to squeeze the Philippine economy as migrants’ families tighten their belts, squeezing GDP, along with falling exports.


Returning migrant workers face a bleak future at home with the Philippine economy struggling to provide enough jobs.

The unemployment rate climbed to 7.7 percent in January after some 40,000 workers were laid off in the past few months. The country’s jobless population is now almost 3 million and over 1 million people enter the labour force every year.

Poverty is also a concern. More than 30 percent of the Philippine population live below a government-defined poverty line of $3 a day per family of five, and the number will likely worsen as more Filipinos are added to the list of unemployed.

“The poverty rate has gone up while the economy was growing … so with GDP growth slowing down to probably 2 or 3 percent this year, you can expect that poverty rate is going to increase further,” said Ernesto Pernia, an economics professor at the University of the Philippines.

“I would think the poverty rate would go up to something like 35 percent or 36 percent.”

The government has formulated a 330 billion pesos ($6.9 billion) stimulus plan, to create almost one million jobs, including some 100,000 “green-collar jobs”.

About 250 million pesos will go to a support fund for retrenched overseas workers, while the government will also impart skills training for in-demand jobs in other parts of the world. Critics, however, say it is not yet clear how the government will fund the stimulus plan.

In the meantime, Filipino workers in places such as Hong Kong and Singapore worry about keeping their relatively high paying jobs. A maid can earn $500 a month, compared to just $120 at home, with most of the money sent home to provide for families.

“Many of us here are feeling nervous because there’s been a lot of jobs terminated because of the crisis,” said Janette Pilotin, a 35-year-old Filipina maid in Hong Kong who uses her income to put her two children through school.

“If I lose my job, I cannot afford to come back home,” she said.

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