Bernardo M. Villegas
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Rebalancing Strategy
published: Mar 31, 2017



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OFWs Will Sustain Their Remittances

           There is no need to worry that remittances from Overseas Filipino Workers will suffer significant declines because of the low oil price or the political instability in Saudi Arabia and in the Middle East in general.  Over the last ten years, despite the Great Recession and the precipitous drop in the price of oil in 2007 from $140 to $40 a barrel, there was not a single year that OFW remittances suffered a decline.  In fact, the average growth over the last ten years ranges from 3 to 5%.  Even when total demand for overseas workers in the labor-short countries like Europe, the Middle East or East Asia actually declines, demand for Filipino workers either stays constant or even increases.  Filipinos are always a cut above other migrant workers because of their familiarity with the English language and their soft or social skills.

          I know of a seven-star hotel in Dubai that suffered a large decline in occupancy when the price of oil dropped from $140 to $40 in 2007.   The management of the hotel laid off many of their migrant workers but retained every Filipino they had in their staff.  When I inquired why the Filipinos were treated differently, the reply was that Filipinos save them a lot of money because they are very good in multitasking.  They don’t mind being assigned to different jobs and they actually perform.  An example I usually give is that a Filipina might have been hired as a chambermaid and does a good job cleaning the hotel rooms in the morning.  At night, that same Filipina may be singing in the hotel’s lounge a la Celine Dion.  Or a Filipino carpenter by day may be entertaining diners with the voice of a Josh Groban.

          Another frequent example I give is the preference for Filipino waiters in cities like Barcelona, where some of the best restaurants of the world attract millions of tourists.  Not only are Filipinos preferred as waiters because of the constant smiles on their faces, their ability to interact with people from different cultures, and the ease with which they learn Spanish words related to the restaurant business (tenedor, cucharra, servilleta, paella, brazo de mercedes, etc.).  What some of the restaurant managers emphasized when I asked about this preference for Filipinos is the personal hygiene of Filipinos:  that we take a bath every day.  Without being uncharitable to other cultures, some migrant workers in Europe do not have the habit of showering every day.  They can be hired as construction workers, street sweepers and janitors.  But because of body odor, they would not last long as waiters or for that matter, in any service work that requires close personal contact like caregiving, nursing, or physical therapy.   When European economies suffered from a real estate bubble, many of them had to turn to tourism and other service-oriented industries to keep their economies afloat.  It was not a surprise that their demand for Filipino workers actually increased.

          For the same reason, I am sure that the low price of oil and the political instability in the Middle East will not result in a decline of the demand for Filipino workers in such countries as Saudi Arabia and the Emirates. To make up for the loss of revenues from oil, these countries will accelerate their build up of service-oriented  sectors and will have no other alternative but to hire more Filipino workers.  Anyone who has traveled to Dubai or has spent a few hours in its airport en route to other destinations can attest to the fact, that the duty free shops in Dubai would close down if Filipino workers would decide to return to the Philippines.  In many European countries, the fear of Islamization is provoking a move towards hiring more Filipinos whose Christian culture is highly appreciated especially in service work in the home.  I have actually been told by visitors from some European countries during the height of the Syrian refugee crisis that they expect a greater demand for Filipino workers in the near future.  This will be especially visible in the health sector where Filipino nurses are generally preferred to other nationalities in such English-speaking countries as the UK, Canada and the U.S.

          It is possible, though, that official receipts of remittances monitored by the BSP may suffer a decline because of the decision of international banks to close the accounts of remittance companies from the Philippines.  Unless our Government is able to work out a compromise with these banks by giving a seal of good housekeeping to the legitimate remittance companies that are not involved in money laundering, OFWs may opt to send their remittances again through informal channels.  Total remittances would still increase and thus still contribute to the consumption-led growth of the economy.  What would suffer would be our gross international reserves.  I am not worried, though, that the low price of oil or the political instability in the Middle East will lead to a slowdown of the total remittances from OFWs. I expect at least a 3% increase in OFW remittances in 2016. For comments, my email address is bernardo.villegas@uap.asia.