Mideast guide to impact of crisis on OFWs

PASIG CITY. Philippines — As the plane nosed down to its landing in Dubai, economist Josef Yap sensed a portent of things to come for Filipino workers in the Middle East and the labor export industry. “These are the scenes of the Asian financial crisis of 1997," Yap recalled saying to himself and to three other Southeast Asian economists during that visit in the financial capital of the United Arab Emirates. He said his colleagues agreed especially after seeing and walking inside high-end shopping malls and knowing the price tags of a day’s stay in Dubai’s luxury hotels. Yap, president of the Philippine Institute for Development Studies (PIDS), said in a forum on Asian labor migration by the Scalabrini Migration Center early this year he wondered how cash-strapped Westerners can afford staying in these places during these trying times. Those sights of the region’s economic progress can lead to an economic crisis that is “waiting to happen" in the Gulf region, Yap added during the forum on labor migration statistics. An International Labor Organization estimate supports Yap’s view. According to its 2009 Global Employment Trends Report, the ILO estimates the Middle East’s gross domestic product growth rate will go down to 5.1 percent this year from an estimated six percent GDP growth last year. The report also estimates the Middle East, composed of 16 countries, posted the second highest unemployment rate among the world’s regions with 9.4 percent last year. Yap opines that not even the region’s petro-dollars can avert a looming economic crisis in the Middle East, especially with world oil prices reversing its last year’s upward jolt. In a statement last February, the International Monetary Fund said the Gulf Cooperation Council nations and oil exporting countries in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region will post growth at 3.6 percent this year, down from 5.6 percent in the previous year. “For the oil exporters, the decline in oil prices and Organization of Petroleum Exporting Countries (OPEC) production cuts are projected to reduce oil export receipts by almost 50 percent in 2009. This implies a loss of government revenue to the tune of US$300 billion compared to 2008," the statement quoted director Masood Ahmed as saying. MENAP oil-exporters include Algeria, Bahrain, Iran, Iraq, Kuwait, Libya, Oman, Qatar, Saudi Arabia, Sudan, United Arab Emirates, and Yemen. These numbers spell bad news to an estimated two million Filipinos working in the Middle East and their families relying on their monthly cash remittance. Holdup Recent data, however, from the Bangko Sentral ng Pilipinas, the Philippines’s central bank, gives a pound of hope that the Middle East countries are still holding up against the weight of a global financial collapse that forced advanced economies to declare recession in their respective economies. Cumulative remittance last year from OFWs in 16 Middle East countries posted a 15.2-percent growth to US$2.5 billion, or $3.3-billion higher than the previous year’s remittance of $14.4 million. Land-based Filipino workers there sent $2.4 billion from January to December, according to the BSP data, while sea-based workers sent home nearly $20 million in the same period last year. Remittances from the UAE, specifically, also posted a double-digit growth rate to $621 million or $91-million more than what was recorded Filipinos sent back to the Philippines in 2007. Only Qatar and Kuwait posted declines in remittances –Kuwait-based workers sent home 25-percent less to $125 million while Qatar-based workers sent 7.5-percent less than the $133 million in 2007. Government estimates there are 139,803 Filipino workers in Kuwait while 195,558 are in Qatar. Remittance rates posted declines in six of 11 months last year, the biggest recorded in April (-23 percent) when world oil prices spiked nearly $100 a barrel. Dubai crude, for one, hit $95.08 in April 2, 2008 (see http://www.petron.com/pops/pricewatch.asp?cat=Crude&yir=2008) The second-lowest month-on-month drop was recorded in October at nearly 18 percent, when world oil prices began tapering down up to $56.42. Notably, the February 2009 cumulative year-on-year remittance level of 2.5 percent was the lowest in six years since 2003. The second-lowest was in February 2004, when the level was at 5.6 percent. This means that while remittances from an estimated eight million Filipinos in 190 countries was bigger at $2.6 billion in February this year, it was just an inch above the $2.2 billion posted in the same month last year. Of the eight countries that the BSP cited in its statement as major sources of remittances for the first two months of the year, two are in the Middle East: Saudi Arabia and the UAE. Last year, full-year remittances from Saudi Arabia posted a growth rate of 21.5 percent to nearly $1.4 billion, the largest among the 16 countries. BSP Governor Amando M. Tetangco, Jr. was quoted in the statement as saying remittances “have been holding up as deployment of overseas Filipino workers has risen during the first two months of the year while the increase in the number of reported layoffs has slowed down." Mixed up Some industry players offer mixed views on the impact of an impending slowdown in Middle East economies to overseas Filipino workers (OFWs) in the region. The Philippine Overseas Employment Administration (POEA) reported that some 1,376,823 land- and sea-based overseas workers were deployed in 2008, but no figures per region of destination are available. Last year, however, the country deployed lesser numbers of new-hire overseas workers to the Middle East with 203,572 (lower by 4.9 percent to the 214,360 deployed new hires in 2006), according to POEA data. On a per-country basis, comparing 2006 and 2007 figures of deployed new hires, deployment grew in Middle East destination countries such as Saudi Arabia (by 6,892 new hires), the United Arab Emirates (5,395 new hires), and Qatar (1,742 new hires). Meanwhile, new-hire deployment dropped in Kuwait by 12,192 workers. Still, recruiters look at the Middle East labor market as rosy for Filipino workers. Health workers remain needed in Saudi Arabia, said president Victor Fernandez of the Philippine Association of Service Exporters Inc. (Pasei), even as he thinks construction projects in the Middle East “may be delayed". “The supply of construction workers to the Middle East can be a problem during these times," Fernandez said during the same forum where Yap spoke. For his part, former overseas worker Loreto Soriano, president of LBS e-Recruitment Solutions, still believed in the market potentials of the Middle East. The region “needed thousands of construction workers," says Soriano, citing data from the Federated Association of Manpower Exporters where he is president. Soriano points out there is a need for increased deployment of workers in Libya “due to its growing economy," again based on his group’s data. But while most of the 5,036 displaced overseas Filipino workers (as of January) come mostly from Taiwan’s electronics sector, 298 OFWs from the UAE got displaced. As of January 28 also, the departure of some 85 UAE-bound workers who are scheduled to begin their work in the country’s services and electronics sectors “has been put on hold," POEA’s running data on the global economic crisis show. Taiwan and the UAE are the top two sources of displaced OFWs in recent months, based on government data. The ILO projects that if the unemployment rates in the developed economies and in the European Union rise because of the global crisis, the Middle East’s unemployment rate may reach 11 percent —affecting eight million workers (including foreigners). - OFW Journalism Consortium