Economists say crisis slows remittance growth

MANILA, Philippines – A slow growth in remittance flows and export of Filipino workers overseas are expected to occur as the United States economy remains wanting in signs of a recovery on lackluster jobs data.

Economists and data from government agencies reveal that the global economic crisis continues to slow down the growth levels of the deployment of overseas Filipino workers (OFWs) and their billion-dollar remittances —both being the country’s major trump cards of economic resiliency.

While money sent by overseas Filipinos last year was higher year-on-year by 5.6% to US$17.348 billion than 2008 levels, economists told the OFW Journalism Consortium there was a decline in growth.

Economist Geoffrey Ducanes of the University of the Philippines cited data from the Bangko Sentral ng Pilipinas.

“The [BSP’s] figures showed a substantial decline in remittances’ growth in 2008 versus 2009, compared to the previous years when remittances were growing by double digits,” Ducanes told the OFW Journalism Consortium.

He used the 2003 to 2008 data from the BSP that showed average annual growth of remittances at 16.7 percent.

Year-on-year cumulative monthly figures on remittances since January 2009 saw growth rates in less than 9%—the lowest being 0.1% in January 2009 and the highest being 8.5% last January.

For his part, economist Alvin Ang of the University of Santo Tomas referred to the results of the 2009 Survey on Overseas Filipinos (SOF) by the National Statistics Office (NSO), which annually surveys the number of OFWs and their remittances from April to September.

The NSO said in statement last June that total remittances last year from Filipinos overseas declined by P3.423 billion to P138.481 billion, compared to the P141.904 received in 2008.

The global crisis definitely saw the flow of remittances in 2009 decline, Ang told the OFW Journalism Consortium.

“Despite data capture improvements, and increases in remittance amounts in absolute numbers, there is a slowdown of remittance” growth given the single-digit growth levels year-on-year of remittances, he added.

Ducanes noted that data from both BSP and NSO’s SOF showed that the crisis “not exactly (reduced) remittances but rather (reduced their) growth.”

Ang explained that the BSP data records all types of remittance transactions (including those from immigrants and permanent residents), and the level of flows “has been increasing steadily” since BSP data also includes large one-time transfers of OFWs returning to the Philippines.

NSO’s SOF simply reported how much was sent by those who are still employed abroad, Ang added.

He also disagrees with BSP that it is skilled workers who are driving remittance growth levels.

“It is still domestic workers in a large part.”

Ang projects a 4-to-6 percent annual growth in remittances by year’s end.

Crisis

Ducanes said that the impact of the crisis on migration and remittances “was not severe enough to actually reduce deployment and remittances, but rather its impact was to slow down remittances and deployment growth”.

A check with data from the Philippine Overseas Employment Administration (POEA) confirmed Ducanes’s observation.

The 2007 growth levels of total deployment of land- and sea-based OFWs reached 1.42%, skyrocketing to 12.7% in 2008. In 2009, given the expected surge of seeking more jobs abroad in a crisis situation, deployment was still up and the growth rate was at 15.1% (though the growth rate is just 0.4% higher than 2008 growth levels).

The World Bank, in its own forecasts of labor migration outflows, noticed that labor deployment “actually accelerated during the crisis… (reflecting) that the top OFW destinations were not as affected as the rest of the world”.

But the acceleration of deployment to major destination countries actually slowed down as well. For example, the number of OFWs to the Kingdom Saudi Arabia grew by 5.6% in 2009 (lower than the 15.7% growth rate in 2008.

Another major destination country, the United Arab Emirates (the country where Dubai was feared to have a debt crisis, until neighboring emirate Abu Dhabi bailed Dubai out), saw the 2009 growth rate of deployment reach 1.6% which is lower than the 2008 growth rate of 60.6%.

Hong Kong’s OFW deployment growth rates also declined to 27.8% in 2009 from 32.4% in 2008 as Ducanes noticed that the share of Filipino domestic workers in Hong Kong “has been shrinking” in recent years.

A slowdown of OFW deployment also happened with Qatar: 5.9% in 2009 versus 49.9% in 2008.

Surprisingly, Singapore’s OFW deployment grew by 30.6% in 2009 which saw the destination country recover from a minus-15.9% deployment growth rate in 2008.

Ang said that the impact of the crisis “is not balanced” throughout the different employment sectors, even if the government recorded some 12,117 OFWs were displaced and sent home due to job cuts in host countries (notably Taiwan and the UAE).

Citing government data, the World Bank said that male production and construction workers and new hires were the most affected by the crisis; in contrast, female service workers, seafarers and re-hired OFWs (both male and female) either proved they were resilient during the crisis, or they even benefitted from the crisis.

For example, the exponential rise in the deployment of seafarers in 2009 (to 330,424, for a growth rate of 26.3% revealed that demand for these OFWs “expanded sharply despite a sharp contraction in the (global) shipping industry,” the World Bank said.

As for OFWs who remained abroad whether with or without a job in crisis-hit 2009, Ang thinks that “it is natural that the remittance sent is somehow softened”.

True enough, the 2009 SOF results showed total and average remittances of the three big remittance-sending occupational groups, including laborers and unskilled workers, declined in 2009.  –Jeremaiah M. Opiniano, OFW Journalism Consortium