The looming OFW challenge

“Remittance flows from abroad are literally a major economic lifeline,” assert professors Alvin Ang and Jeremaiah Opiniano in a recent policy brief from the Ateneo Center for Economic Research and Development. Disrupt this lifeline, and we’re bound to have a major problem — and analysts have already warned of the danger to this lifeline that had been building up even before the COVID-19 pandemic struck.

“This lifeline… backstop(s) whatever public funds the Philippine government is now unloading to meet urgent survival and social protection needs of Filipinos,” the authors point out.

The imminent drop in this vitally important inflow is but one of several factors that will shrink the country’s resource picture this year, just when it has had to expend extraordinarily large sums to deal with the crisis.

There are at least two reasons why the current threat to our remittance inflows could mean both wider and deeper pain to the economy, compared to past crises that affected overseas Filipino workers (OFWs).

“During the 2008-09 global financial crisis, the presence of OFWs in many parts of the world spread the risk of slow levels of total remittance inflows to the Philippines,” the authors recalled.

Now, however, the pandemic affects literally the entire planet, thereby affecting all our migrant workers wherever they may be. According to the 2018 National Migration Survey, more than one in every 10 Filipino families (12 percent) include an OFW member. The direct hit on family incomes here at home would thus be widespread.

The other important difference is that the world price of crude oil, the lifeblood of Middle Eastern economies hosting a major chunk of our migrant workers, is now less than half of what it was in 2009. Oil prices were at $50-60 per barrel then, but the $20-30 we’re seeing now and expected to persist for some time puts into serious question hundreds of thousands of Filipino jobs in the oil-dependent economies of the Middle East.

Thus, even the post-COVID-19 scenario does not promise to alleviate the blow to OFW jobs that has already pushed thousands of them to come home. Professors Ang and Opiniano estimate 300,000 to 400,000 OFWs to be laid off or suffer pay cuts, leading to a drop of $3-6 billion in remittances this year, down from last year’s record of over $30 billion.

Last year, even before COVID-19 broke out, 121 countries hosting OFWs already saw remittances drop, by a total of $1.36 billion. Looking ahead, tens of thousands of OFWs are likely to return home, just when domestic unemployment is soaring as a result of the standstill in much of the economy due to the enhanced community quarantine. More than 20,000 are already recorded to have returned since the pandemic began.

What needs to be done now, and into the medium term? Our embassies and consulates in OFW host countries must negotiate with their host governments on including foreign workers in their social protection programs. At the same time, dialogues could be initiated with the International Labour Organization and International Organization for Migration on how best to assist distressed migrant workers affected by the pandemic.

The authors note the crucial importance of having our foreign missions anticipate, monitor, and report the threats to Filipino jobs overseas. Initial estimates released by the Department of Labor and Employment put the number of displaced OFWs at 90,000; the months ahead promise to see far more. Effective planning for the repatriated workers hinges on having a good idea of the magnitude of the looming problem.

With the jobs situation here at home already tightened by the pandemic’s impacts on the economy, a logical recourse would be to help returning OFWs turn to entrepreneurship. But for this to work, government must address the many hurdles facing our micro and small enterprises, particularly access to financing, and excessive rules, regulations, and requirements that make starting and running a small business a big pain.

Now is the time to make our returning OFWs feel like the modern-day heroes we like to call them — not pariahs shunned by their own townmates, as they sadly seem to have lately become.

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