Scared for their jobs, OFWs cut remittances, spending

Fear of losing their jobs has forced a growing number of migrant Filipino workers to save more, and lessen their home-bound remittances, the Trade Union Congress of the Philippines (TUCP) said. The TUCP now expects remittances from overseas Filipino workers (OFWs) to fall by 5 percent to 10 percent this year, down from a prior forecast of 10 percent growth.

Many OFWs have suspended buying new homes, cars, even costly home appliances. Property developers and car dealers have had a significant rise in canceled reservations to purchase new homes and motor vehicles, and many of them were done by OFWs.

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.

Many OFWs do not feel secure enough in their jobs, because people around them in their host countries are being thrown out of work. On account of the global financial turmoil and economic meltdown, the Geneva-based International Labor Organization (ILO) expects up to 51 million people to lose their jobs around the world this year, in a worst-case scenario. In a best-case scenario, the ILO said up to 30 million people could lose their jobs globally.

It is somewhat incredible that the government reported only a few thousand OFWs displaced since the worsening of global economic conditions in the last quarter of 2008. Frankly, I 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.

The government report does not include OFWs who lost their jobs because their 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.

The decision of many OFWs to boost savings and spend less due to the economic turmoil could be seen in a positive light. However, 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. OFWs and their families here could save up to $1.1-billion (P52.8-billion) annually if current money transfer fees that average 13.5 percent per transaction are cut in half.

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), for its part, pegged the 2008 remittances from OFWs at $18 billion, to include some $1.6 billion sent through non-bank channels. The WB also said that all foreign workers around the world 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 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, after a sustained climb over an extended period.

Keeping an eye on US job losses

Philippine labor groups are watching closely the job losses being reported in the United States, as any marked slowdown in the number of Americans being laid off could signal the beginning of the end of the global economic downturn.

They are monitoring the number of Americans being thrown out of work every month. Once the job losses there have eased, this could be a positive signal for us here.

While the Americans are losing their jobs, or fear losing their jobs, they won’t be consuming much. So our top exports, mainly electronics, auto parts and garments, are still declining. This is why many of our exporters, led by electronics firms, continue to lay off workers. For now, there are no signs yet of a nearing recovery. The widespread job destruction continues in America, which has the largest consumer-driven economy, and is also the Philippines’ single biggest export market.

On Friday, the US Department of Labor reported that 663,000 Americans lost their jobs in March, raising the US unemployment rate to 8.5 percent, the highest in 25 years. Many economists expect the US unemployment rate to soar to double-digit levels in the months ahead, so the worst may not be over yet.

According to National Statistics Office (NSO) figures, the Philippines directly exported to the US a total of $8.2-billion worth of merchandise in 2008. This accounted for 17 percent of all Philippine exports last year, amounting to $49 billion.

But we actually export a lot of goods to Japan, China and other countries that are then made part of products, such as electronics, that eventually get exported to the US. Because of this, we reckon that the US alone effectively consumes about 40 percent of all Philippine exports. Just in the last four months, we lost some $4.707-billion (P226 billion at $1:P48) worth of exports compared to a year ago.

Philippine exports fell by 14.9 percent in October to $3.967 billion from $4.659 billion a year ago; by 11.9 percent in November to $3.494 billion from $3.964 billion; by 40.4 percent in December to $2.672 billion from $4.481 billion; and by 41 percent in January to $2.494 billion from $4.230 billion.

Do not expect any real recovery here as long as exports continue to drop due to rising unemployment in the US and around the world. The March job losses brought to 5.1 million the net total number of Americans laid off since the start of the US recession in December 2007. More than half or 2.65 million of them lost their jobs in the last four months alone.

A total of 681,000 Americans with non-farm jobs were laid off in December; 655,000 in January; and 651,000 in February.  –Ernesto F. Herrera, Manila Times

ernestboyherrera@yahoo.com