MANILA, Philippines – The head of the country’s biggest labor group is projecting a reduction of as much as 10 percent this year in the remittances of overseas Filipino workers (OFWs) amid fears of more retrenchments due to the global economic and financial turmoil.
Former senator Ernesto Herrera, the secretary general of the country’s biggest labor group Trade Union Congress of the Philippines (TUCP), explained many OFWs are worried about the security of their jobs as a result of the crisis.
For this reason, Herrera said the OFWs have decided to boost savings and spend less by suspending large acquisitions, for instance, of new homes, cars and even costly home appliances.
The decision, he acknowledged, could appear to be a positive development but warned that, from a bigger perspective, the cut in spending could send the Philippine economy into a deeper slump.
With OFWs spending less, the OFW remittances from abroad could fail by five to as much as 10 percent in 2009, the TUCP head said.
In 2008, the more than eight million OFWs sent home a total of $16.4 billion, which landed the Philippines in fourth place among the world’s top recipients of remittances, according to the World Bank (WB).
The WB reported the top three are India, $45 billion; China, $34 billion; and Mexico, 26 billion. At the fifth spot, it added, was Poland, $11 billion, followed by Nigeria, $10 billion; Egypt, $9.5 billion; Romania, $9 billion; Bangladesh, $9 billion; and Pakistan, $7 billion.
Despite the global crisis, the WB projected that instead of going home, these workers are more likely to reduce the amount of money they remit to their families back home, which appears to support Herrera’s claim in the case of the OFWs.
At the same time, Herrera said he found it incredible that the government reported only a few thousand OFWs displaced since the worsening global economic crunch started 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,” Herrera said. “It cannot even correctly count the job losses in the domestic scene.”
The Department of Labor and Employment earlier claimed that over 6,000 OFWs lost their jobs since October 2008 but that many of them managed to find work elsewhere in the world.
However, Herrera argued the government claims do not include the OFWs who lost their jobs because their foreign employers did not renew their contracts.
As such, Herrera said that technically, these OFWs were not laid off. But he stressed that if not for the lingering crisis and under normal conditions, the job contracts of these OFWs would have been renewed.
Herrera also said the crisis should compel the government to make arrangements with other leading remittance-receiving countries, such as India, Mexico and China, and push for lower global money transfer charges.
He estimated the OFWs and their families could save up to $1.1 billion annually if such fees that average 13.5 percent per transaction are cut in half.
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