Less demand for homes, cars means less remittances in 2009

Published by rudy Date posted on April 6, 2009

FOR fear of losing their jobs abroad, more Filipinos working overseas have cancelled orders here for new homes and cars and will send less money for their amortization, a major trade union group said yesterday.

As a result, remittances from Filipino workers abroad will fall by 5 percent to 10 percent this year, down from a forecast of 10 percent, the Trade Union Congress of the Philippines (TUCP) predicted.

In 2008, remittances from OFWs coursed through banks rose by 13.7 percent to $16.4 billion, from $14.45 billion in 2007, according to the Bangko Sentral ng Pilipinas (BSP).

The World Bank (WB) pegs the 2008 remittances from OFWs at $18 billion, to include some $1.6 billion sent through non-bank channels.

The WB said that foreign workers worldwide would likely send home only $290 billion this year. This is $15 billion short of the $305 billion that they sent home in 2008.

The BSP said remittances from overseas Filipino workers (OFWs) coursed through banks declined by one-tenth of 1 percent to $1.260 billion in January versus $1.264 billion in the same month in 2008, suggesting a possible downtrend in the months ahead.

“Worried about the security of their jobs and income, many overseas Filipino workers have suspended large acquisitions of new homes, cars, even costly home appliances,” said TUCP Secretary-General Ernesto Herrera.

“If you ask property developers and car dealers, they’ve had a significant rise in canceled reservations to purchase new homes and motor vehicles. And many of them were done by OFWs,” said Herrera, former chairman of the Senate committee on labor, employment and human resources development.

“Once an OFW calls off home or a car purchase, this means he or she will no longer be sending home the money for the monthly amortization,” he added.

Herrera said many OFWs do not feel secure enough in their jobs, because people around them in their host countries are being thrown out of work.

A worst-case scenario on the global financial turmoil will see up to 51 million people losing their jobs worldwide this year, according to the International Labor Organization (ILO).

In a best-case scenario, the ILO said up to 30 million people could lose their jobs globally.

Herrera said he found it “incredible” that government reported only a few thousand OFWs displaced since the worsening of global economic conditions in the last quarter of 2008.

“Frankly, we doubt that government has an adequate system in place to accurately monitor the OFW job losses abroad. It cannot even correctly count the job losses here at home,” he said.

He said the government report does not include OFWs who lost their jobs because foreign employers did not renew their contracts.

“Technically, these OFWs were not laid off. But the truth is, they still lost gainful employment. And if not for the lingering crisis, under normal conditions, their job contracts would have been renewed right away,” Herrera said.

He described as “positive” the decision of many OFWs to boost savings and spend less due to the economic turmoil. However, he also said that from a bigger perspective, the cut in spending “is not good, as this could send the local economy into a deeper slump.”

The crisis should compel the Philippines to coalesce with other leading remittance-receiving countries, such as India, Mexico, China and Russia, and push for lower global money transfer charges, Herrera said.

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