Vol. XXII, No. 105
Friday, December 19, 2008 | MANILA, PHILIPPINES
The Economy
BY ROXANNE KATE MAGTIBAY, Junior Researcher, and JENY TABIN, Senior Researcher
A DECADE's worth of experience should have prepared the country for the present financial slowdown. The Asian Crisis in 1997 took a significant toll on the employment of overseas workers and exposed the perils of a remittance-driven economy. Though not as highly reliant on international trade relations as other Asian countries in late 1990s, the Philippines trudged on shaky ground due to the growing number of Filipinos seeking jobs abroad.
Their remittances have been the economy's primary lifeline, driving consumption and, ultimately, growth. Yet, after ten years, it is difficult to ignore the déj� vu: with overseas employment held hostage by the global financial crisis, the domestic economy appears to be in for rough sailing ahead.
A lesson from history The belt-tightening of many Asian countries in the late 1990s resulted in a slump in demand for Filipino labor. According to reports from the Department of Labor and Employment (DoLE), at least 2,300 overseas Filipino workers (OFWs) in the Asian region lost their jobs in the first half of 1998 as a result of the financial crisis.
Salary reductions were also reported in some countries such as South Korea; including this country, OFWs were also affected most in Brunei, Malaysia, and Hong Kong.
This illustrates that overseas jobs are not as "recession-proof" as one would like to believe. The current global financial slowdown has already claimed the jobs of workers, both migrants and nationals alike. As economies slip into recession, firms scamper to cut costs, and labor is among the first to get hit. Economic turmoil also heightens the possibility of protectionist stances; rising unemployment may push governments to adopt policies that prioritize their nationals for employment, effectively reducing the demand for migrant workers.
Still, analysts believe that not all OFWs will be hit by the slowdown. Some types of jobs are considered safer than others. Workers in the education and health care sector, for example, are relatively more stable since people avail educational and medical services regardless of economic conditions. On the other hand, professionals and skilled workers such as accountants, construction workers, and engineers appear more vulnerable as firms scale down their operations.
A helping hand In response to the perceived threat, the government extends a helping hand to OFWs and their households that may be affected by the global economic downturn. A reintegration program prepared by the Arroyo administration is founded on livelihood support and re-employment. A sum of P250 million—part of an expatriate livelihood facility under the program—shall be made available to returning migrant workers to aid them start a new business or provide for their family's needs.
In addition, the DoLE and Overseas Workers Welfare Administration (OWWA) shall coordinate with other government agencies and regional offices to track job openings here and abroad; information shall then be provided online to aid Filipinos, whether recently displaced or new migrants, in seeking out employment opportunities around the world.
These programs are quite reminiscent of the government's response in the wake of the Asian financial crisis. Back then, the OWWA initiated a Comprehensive Reintegration Program that comprised two approaches: self-employment, which included loan packages and livelihood seminars; and reemployment, which provided job referrals and retraining. The OWWA followed this effort with a Livelihood Development Program that offered loans as capital for small ventures.
These government projects, however, were far from sufficient. The loans could hardly support a business expected to support a household formerly dependent on an overseas worker. Worse, failed businesses piled up as repayments became more and more difficult.
Since then, OFWs have placed setting up a business at the bottom of their priority list. Consumption has eaten the bulk of remittances, with money from abroad spent on food and education, clothing, housing, and now, even electronic gadgets such as cellphones and digital cameras. Furthermore, the reemployment program for returning workers was basically a referral system that only facilitated the flow of information, as there was little to no assurance that a job vacancy could actually be filled by an applicant. These problems are again expected to afflict the current government's efforts.
A fundamental flaw Indeed, the current plight of Filipino migrant workers reveals a fundamental flaw in the country's plan towards development. While there is no doubt that OFWs play a huge role in propping up the economy, the country's reliance on remittances is also hardly sustainable; with the evident vulnerability of migrant labor, such a strategy holds the country hostage to overseas developments that are beyond the country's control.
Economics and labor experts have not been short of warnings and matching recommendations. University of the Philippines economics professor Ernesto M. Pernia warned that while OFW remittances buoy the economy in hard times, the flight of skilled workers negatively affects the economy. The exodus of health professionals, for instance, has left the country lagging behind its neighbors in terms of health care, regardless of the country's record of training large numbers of medical workers.
All in all, the situation remains visibly the same. OFWs are just as susceptible to the economic slowdown. The good news, perhaps, is that the government, through its contingency programs, has realized the need to encourage OFWs and their households to save and invest. Much still needs to be done to ensure the success of these government-led initiatives, but they are a viable start towards a more long-term strategy towards growth.
The Istitute for Development and Econometric Analysis, Inc. (IDEA) is an economic think-tank based in the University of the Philippines — Diliman. For inquiries on IDEA, please contact Eduard Robleza at edjrobleza@idea.org.ph.
Sources: Kanlungan Center Foundation, Inc. 2000. Fast Facts on Filipino Labor Migration. Quezon City: Kanlungan Center Foundation, Inc. and Evangelische Zentrallstelle FÜr Entwicklungshilfe e. V.
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