OFW DOLLAR WINDFALL INFLICTS 'DUTCH DISEASE' ON RP ECONOMY
MANILA, MARCH 15, 2010 (STAR) Awash with dollars from $18 billion in overseas Filipino workers’ (OFW) remittances a year, the Philippine economy is now afflicted with the Dutch Disease, a malady that sees the decline of local industries, fuels an overvalued peso, makes exports costly and imports cheap and results in jobless growth.
The warning was issued by Lito B. Soriano, chairman of the LBS Recruitment Solutions and leader of an organization of agencies deploying OFWs across the globe, during a forum on the strong peso and what must be done on peso-dollar rate controversy.
Ironically for the OFWs who are the ones sending the dollar windfall to their families each month, they and their families are the first victims of the economic malady that was first experienced by the Netherlands.
The bloated dollar supply, not earned with private and government investments, tends to lure decision makers to squander public funds and go into foreign borrowing sprees, confident the country has enough reserves to pay for the foreign loans.
Soriano said that one of the most obvious symptoms of the Dutch Disease is the continued strengthening of the local currency (peso) even when the economy is barely growing.
“When an OFW sends $1,000 to his family today, the peso equivalent is only P45,000 at P45 to the dollar exchange rate or P5,000 less than what they got when the dollar was worth P50 in 1997,” he said. The rule of thumb is, an OFW does not get a raise while on contract for two to three years.
The strong peso fueled by OFW money further punishes both the local industries selling to the domestic market and abroad because their costs are much higher than those from countries not suffering from the “Dutch Disease”, the OFW turned recruiter said.
The decimation of both the domestic industries and export industries has depleted the manpower pool for highly skilled and professional workers that are in the high-end of the deployment industry, he noted.
The OFW deployment industry has suffered with shallow pool of highly trained people and resulted in fewer takers and the increasing deployment of factory workers, maids and entertainers.
Of the 7.8 million workers sent to different parts of the world from the year 2001 to 2008, average yearly deployment was 893,475 people, but close to half of them (47 percent) are rehired land-based workers plus 24 percent returning seafarers. Newly hired averaged only 29 percent or less than a third.
Taking the year 2007 as an example, Soriano, using POEA figures, revealed that of first-time OFWs, 121,715 were factory workers, 107,135 were classified as service workers mostly domestics while only 43,225 were professional and technical workers. Another 20,000 were sent out as sales workers and clerks.
“In 2007, 74 percent of deployed workers were domestics, service and factory workers,” he pointed out. Of all the deployed, only 14 percent were new hires.
Among nurses, only an average of 10,000 get nursing jobs abroad each year, a far cry from the alleged tens of thousands some public officials claim. Most nurses end up without jobs here.
The most alarming trend is the increasing rate of female workers getting jobs overseas. In the past seven years, 64 percent were female against 36 male and most of them were sent as domestic helpers, entertainers and factory hands. – Philexport News and Features
Chief News Editor: Sol Jose Vanzi
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