Stratfor: RP stable despite remittances slump

ABS-CBN News

Posted at Feb 23 2009 10:34 AM | Updated as of Feb 24 2009 09:50 PM

The global economic crisis, particularly the drop in remittances from migrant workers, will do little to change the country's social conditions, according to a report from intelligence-gathering service Stratfor.

Stratfor said the Philippines, among many others, is "already in such dire straits that ramifications of the global recession will do little to change social conditions or national behavior."

Rather than causing a significant impact on the country's political system and national behavior, Stratfor said the main problem likely to be caused by the decline in remittances is reduced income. According to Stratfor, remittances from overseas Filipino workers (OFWs) amount to 12.5 percent of the country's gross domestic product.

"Filipinos who return jobless could contribute to an increase in organized crime, but the primary concern of the Philippines in terms of declining remittances is simply the loss of cash," Stratfor said.

Aside from the Philippines, other countries placed under the same category include Bangladesh, Nigeria, Morocco, Tajikistan, Kyrgyzstan, and Kazakhstan.

On the other hand, Stratfor said some nations which are at risk of suffering social and political instability include Egypt, Turkey, Armenia, Georgia, the Baltics, Ukraine, Romania, Moldova, Albania, Kosovo, Bosnia, Herzegovina, Serbia, Mexico, Central America, Haiti, Colombia, Ecuador, Bolivia, Paraguay, Peru, Sri Lanka, Afghanistan, and Pakistan.

Jobs retained

Stratfor said OFWs are more likely to retain their jobs in the United States and the United Kingdom as compared to their fellow emigrants in the Middle East, owing largely to the country's deliberate effort to export labor through the Philippine Overseas Employment Administration.

The think tank also cited efforts of the Bangko Sentral ng Pilipinas (BSP) for facilitating transfers from agencies other than banks that can handle remittances such as telecommunication firms which provide wireless transfers.

"For instance, Filipino women often work as nurses in Japan, where the aging population has created a demand for health care that will last for some time. The Philippines also exemplifies some of the reasons remittance flows have grown in previous years," Stratfor said.

Bleak future for OFWs

The International Labor Organization (ILO) has earlier reported that temporary or undocumented OFWs would bear the brunt of the global economic crisis, as they would be in the weakest bargaining positions to retain jobs.

In a study, ILO said unemployment in Asia is seen to increase by 7.2 million between 2008 and 2009 to a rate of 5.1 percent, with vulnerable employment rising by 21 million. In the worst case scenario, the number of unemployed in the region could surge by 23 million to a rate of 5.9 percent.

At present, ILO said the country has some 5.1 million Filipinos working on temporary contracts abroad, with 2.18 million or 43 percent based in the Gulf States.

With migrant workers' jobs at risk, so are remitances, which are seen to drop by 2 to 3 percent in Austria in the next five months.

According to Ursula Schaefer-Preuss, Vice President for Knowledge Management and Sustainable Development of the Asian Development Bank, said growth of OFW remittances is expected to decline to as low as 6 percent to 9 percent in 2009, compared to 10 to 14 percent last year.

The BSP has reported $16.4 billion in remittances for 2008, up 13.7 percent from the previous year even with the global economic downturn. With a report from Karen Flores, abs-cbnNEWS.com