OFW juggernaut slows down in 2009, govt. promises jobs back home

After a spectacular run of growth, the overseas Filipino workers (OFWs) finally seem to be losing steam as the country's central bank projects a slowing in remittance growth in 2009. Accordingly, the Philippine government is taking measures to stand by those who stood by the country for more than four decades, propping up the economy and the people. Analysts, however, believe that the risks are being overestimated and that the diversified base of OFWs would help them withstand the global economic carnage.

Barely a month after the Bangko Sentral ng Pilipinas (BSP) Governor, Amando Tetangco Jr., forecasted a 6-9% growth in remittances for 2009, a senior bank official predicted a further fall in growth projections for the current year. In the emerging scenario, said Iluminada Sicat, head of the central bank's Department of Economic Statistics, “growth in OFW remittances in 2009 may be slower than the earlier forecast of 6 percent due to contraction in remittances from major countries.” The bank, he added, would cut its remittance growth projection from 6-9% to a lower level.

For Philippines, this will be the first single digit growth since 2005 and almost half the rate witnessed last year. Remittances received in 2008 increased by 13% to $16.9 billion compared to a year ago. A 6% growth in 2009 would mean a remittance flow of around $17.9 billion this year.

The central bank officials fear this slowdown may indicate a trend “going forward”. Interestingly, BSP Deputy Governor, Diwa Guinigundo stated that the central bank had actually anticipated such a slowdown at least three years ago.

A single digit growth, at a time when the world is expecting to see a negative growth, may not be too bad, but accommodating a huge chunk of laid off migrants could be a matter of concern. Also, a significant slowdown in remittances could have a major impact on the balance of payment position and the overall economic growth. The International Monetary Fund (IMF) has already downgraded its projection for the Philippine's economic growth in 2009 to 2.25% from an earlier forecast of 3.5%.

The central bank's projections could be read as 'official concern' about the changed situation. Thousands of OFWs have been facing job losses since late last year in countries such as Taiwan, Hong Kong, Macau, parts of Eastern Europe and the Middle East. The number is expected to rise in future in case of further deepening of the crisis. According to Teresa Soriano, assistant secretary of the Philippine labour department, more than 500,000 of the eight million strong OFW work force are facing risk of losing their jobs in countries hit by the global economic downturn.

Amidst such gloom, the pro-active stance taken by the Philippine government to redress the situation deserves accolades. In a prompt response to an impending crisis, the government resorted to a four-fold increase in its livelihood fund for overseas Filipino workers to PHP 1 billion. As announced by President Gloria Macapagal- Arroyo, the government has already drawn up a 'reciprocity program' or 'payback' package for the laid off OFWs returning home. She also assured that retrenched OFWs could get jobs back home in segments such as call centres, restaurants, bakeshops, among others.

However, scuttling the worst fears and contrary to BSP forecast, J P Morgan analysts predicted a flat growth of OFW remittances.

“We expect remittances to see flat growth in 2009 on the back of the very weak global economic backdrop. Nonetheless, we do not expect remittances to contract due to diversified base of overseas workers that are increasingly employed in service/professional industries,” a recent report by the US investment bank states.