Overseas Filipinos In Countries Under Recession Cut Expenses, But Maintain Level of Remittances To Cope Up With Global Economic Crisis

AHN Staff

Manila, Philippines (AHN) - Although Filipinos overseas - both contract workers and permanent migrants - comprise 10 percent of the total Philippine population of 80 million, they are not concentrated in a few countries, but spread in almost 170 nations.

The bulk, though are in countries ironically suffering from recession such as the United States, United Kingdom, Canada and Japan. Since Filipino plantation workers started to work in Hawaii as pineapple farm workers a century ago, the migration of Filipinos continued over the years. However, until the mid 1970s, the U.S., because of its special relationship with the Philippines, continued to be the most popular destination of migrating Filipinos.

By the 1970s, Filipino nurses started to discover Britain as a work destination. When oil prices jumped during this decade, Middle Eastern nations used their petrodollars to build their economy and hired Filipino construction workers. By the 1980s other countries became popular destinations for Filipino migrant workers, including Japan for entertainers, Hong Kong for domestic helpers and New Zealand for IT professionals.

Collectively, the 8 million plus Filipinos overseas remit money to their families back home equivalent to 10 percent of the Philippines' gross national product. Since the bulk of Filipinos are in countries with recession or were severely affected by the global economic crisis, AHN asked Filipinos overseas how they are coping up with the tight conditions in their second countries and its effect on their remittances.

Michael Duque, a nurse in Britain and president of the Philippine Nurses Association in U.K., pointed out Overseas Filipino Workers in England generally have secure employment because they are in the health care sector. Although the sector also has budget cuts, jobs for nurses are still there.

Because of the effect of recession on the British currency, the pound, which has weakened, Duque and about 200,000 OFWs in Britain who are mostly nurses, have to send a slightly larger amount of pounds to maintain the peso equivalent monthly needed for his family's budget in the Philippines. Britain officially entered into a recession in late January after it registered two consecutive quarters of negative economic growth rates for the third and fourth quarters of 2008.

"I had to cut my unnecessary spending and increase my extra work load to compensate for the lower pesos-sterling pounds exchange rate," Duque said.

Information technology worker Josel Hizon, who works at the Georgia State University, said Filipinos who lost their jobs in the U.S. were laid off not because they were overseas contract workers, but because their offices have gone bankrupt or are downsizing. They are now part of the 3.6 million U.S. residents who lost their jobs the past year as joblessness rate in the United States hit 7.6 percent in January.

While Hizon still got a merit increase this year, she is not optimistic more would be forthcoming until the U.S. recovers from the recession. In the meantime, Hizon has to cope up with a decline in the value of her house, low interest rate on her savings because of several cuts in benchmark interest rates made by the Federal Reserve the past few months, higher prices of basic goods and a decline in the value of her 409k account.

Among the measures that Hizon has done to adjust to the harder times are to avoid going to the mall, use coupons to get discounts for her groceries and toiletries and to stay away from major purchases for home furnishing. She also plans to rent out some spare rooms in her house to earn extra. But like many Filipinos overseas, sharing in the family expenses is one of the reasons she migrated to the U.S., hence her remittance and occasional money gifts stay at their present level.

Like Hizon, Hazel Bautista, an employee of a biotech firm in California, has cut down on shopping, eating out and other leisure activities. She still regularly sends boxes of American goodies back home, but has cut it down from five times a year to only twice.

New Zealand suffered three straight quarters of negative growth rates in 2008, at 0.3 percent for Q1, 0.2 percent in Q2 and 0.4 percent in Q3. Fortunately, the country started to recover in the 4th quarter with a 1 percent GDP growth rate. Since a large number of the 20,000 Filipinos are contract workers like Rene Molina, they have fixed salary rates that protected them from pay cuts.

Molina, who teaches communication at the Waikatu University in Palmerston, said he has always been a thrifty person, but has to make further cuts in his spending to send money for his wife and three children's monthly expenses in the Philippines. Aside from him and his family in Quezon City having to adjust to the lower exchange rate, Molina is saving up so his family could join him this year in New Zealand.

The difficulty in finding better paying jobs in the Philippine has led a lot of Filipinos to acquire permanent residency or even citizenship in their second countries. Molina and Bautista no longer plan to return home, except for vacations. Duque is open to returning home if there is a good-paying job, while Hizon has plans come back, but only after she has retired. Hizon reasoned out, a retiree with a retirement fund in U.S. dollars would have an easier life in the Philippines because of the lower cost of living in Manila.

Gino Noche, a school employee in Hong Kong, scrapped plans of coming back to Manila to study because of the unfavorable currency conversion. His pay had literally become frozen since the 1999 Asian crisis despite the tiny pay increments he gets which are eaten up by inflation.

Like other single Filipino professionals in the Crown Colony, Noche cuts on weekend nights out, rents movies instead of watching it in a regular cinema and reduced shopping for luxury items.

The responses of these five Filipinos could be considered typical of Philippine residents working or living in foreign lands. Raised up in a country where life was hard, they could easily tighten their belts not just because the economic atmosphere is not favorable in their second home, but more importantly because their economic links with their mother land has not been severed.

By trying their best to maintain their level of remittance or even sending a bigger amount to make up for the weaker currency of the Philippine pesos and euro, pound and dollar, OFW remittance in 2009 is still expected to grow to $17.3 billion. But because of the effect of the slowdown in many western countries which will also affect some overseas Filipino workers, the Bangko Sentral ng Pilipinas forecasts OFW remittance growth to slow down to six from nine percent this year from the $16.3 billion sent in 2008.

JP Morgan, however, projects a zero growth rate. In its latest report, the U.S. investment bank said despite the global economic crisis, OFW remittances will not contract since 65 percent of Filipinos deployed the past decade - like Molina, Hizon, Bautista, Noche and Duque - are employed in the service and professional industries which are less economically sensitive and more resilient to the global slow down.

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