Eurasia: 500,000 unhappy OFWs critical in 2010 polls

by Lala Rimando,

Posted at Mar 31 2009 03:19 AM | Updated as of Apr 03 2009 10:16 PM

Risk consulting firm Eurasia has a tip to politicians thinking of running for office: Watch the rate of overseas Filipino workers’ (OFW) deployment. OFWs stuck in the country could make or break a candidate’s—including the presidentiables’—chances in 2010, the global firm said.

Robert Herrera-Lim, director in the Asia practice of the New York-based political risk consulting firm, Eurasia Group, told in a recent visit to Manila that recent surveys have not yet accounted for the group of potentially ‘unhappy’ OFWs and their kin ranging from 500,000 to 700,000.

Herrera-Lim said this group could develop into an opposition vote that could make a difference between winning and losing especially for those vying for national positions. In previous elections, the votes of winning senatorial contenders were just about 200,000 to 300,000 more than those who didn’t make it.

Eurasia considers the ‘unhappy OFWs’ in their assessment of where the Philippines is headed. This helps them guide clients—from multinational corporations, financial institutions, governments and non-governmental organizations—make informed business decisions in an emerging economy like the Philippines where understanding the political landscape is critical.

Half a million

While OFW remittances have become critical lifeblood of the Philippine economy—it accounts for over one-tenth of the country’s economic output, boosts the peso, and fuels businesses from cellphones to condominium units—Herrera-Lims said the impact of remittances goes beyond macro-economy.

“I think OFW remittance also has a political effect,” he shared.

Based on his estimates, Herrera-Lim said that there will likely be 500,000 to 700,000 OFWs and their kin who are 'unhappy' because they could not access work opportunities abroad.

He said current 2010 election-related surveys are likely to have not yet captured this block since this unhappy group will likely emerge by the third or fourth quarter this year. "The surveys might shift come fourth quarter," Herrera-Lim estimated.

His estimates took into account the number of OFWs who would like to be rehired by their previous employers, those who have come home or are coming home soon due to job cuts, and those who would like to work overseas for the first time because of lack of opportunities here.


Herrera-Lim shared that Eurasia monitors the pace of OFW deployment instead of waiting for results of the remittance data, which business strategists and analysts typically consider in their future business plans .

The risk consultant said that, after all, the rate of deployment dictates the growth rate of remittances. Increases in the number of workers and professionals leaving for overseas jobs resulted in higher remittance levels after months or even a year.

Herrera-Lim noted that a number of OFWs especially those bound for the Middle East usually have 3 to 6 month-long vacation before they are re-hired for a new contract that would last for years.

He said those who are scheduled to take their vacation in first quarter are likely to want to or need jobs by the third or fourth quarter. By that time, they have used up most of their savings and are ready to be redeployed again.

But as the global economic crisis is not expected to ease by the end of the year, a number of these OFWs would not likely be rehired anytime soon. The Middle East countries' wealth, fueled by oil, have been hit by plunging oil prices, which currently hovers at $40 a barrel, a far cry from record $148 a barrel in July, 2008. The region absorbs more than half of the 8.7 million OFWs deployed abroad.

Add to that group those who lose or about to lose their jobs. Herrera-Lim described those in the Middle East as unlike Filipinos in the US or Europe who would tend to stay put and find alternative work when they lost or about to lose their jobs. Those in the Middle East tend to go home.

"They come home and they will accept menial work to get by. They are not happy," Herrera-Lim said.

He estimated that a good number of those who are not immediately rehired and the returnees are married, then assumed that a percentage have an 18-year old kid who could already vote. He also counted in the OFWs' relatives who have been benefiting from dollar remittances.

"I estimate that the total is at least 500,000," Herrera-Lim said. "That's a lot of unhappy people."

Hard times

The New York-based risk consultant also considered those who would like to seek job opportunities abroad for the first time.

“Deployment is inversely related to the GDP growth of the Philippines. It’s just logical that more people want to go abroad when the local economy is not doing well,” he said.

In the seventies, thousands of Filipinos jumped at the chance to leave for jobs in the Middle East when the Philippines was reeling from increasing foreign debts and a political and economic crises.

And when President Arroyo admitted that the country was facing a fiscal crisis in 2004, the total count of Filipinos leaving for overseas jobs in 2005 reached half a million for the first time in just six months.

These spikes in deployment took place at a time when it was the local economy that was slowing down.

The current US-triggered economic crisis, however, is a global one. "The problem is, we have not seen this kind of coordinated slowdown in the global economy. We haven’t tested yet the absorption rate of the global economy for Filipino labor in this environment," Herrera-Lim said.

This year, Filipinos are expected to take a hit as the local economy screeches to a slower pace of 3 to 4 percent—a far cry from the record high of 7 percent in 2007.

“Before, when our local economy slows down, OFWs leave for Middle East, Japan, the US, and others. But with the global crisis, the question is who will absorb them?” the risk consultant pointed.

“If they cannot leave, they are not happy.”

Opposition vote

Herrera-Lim highlighted the political leanings of OFWs who could not leave due to the dismal overseas job market: “Unhappy people don’t normally vote for the incumbent or will not support the candidate of the incumbent.”

He emphasized, “This will be an opposition vote.”

Currently, potential candidates for president that are assumed to be considering seeking the endorsement of President Arroyo are Vice President Noli de Castro, senators Manuel Villar, Manuel Roxas III, and Francis Escudero.

"They should watch out for this voting block," the Eurasia director said.


At the moment, however, this voting block is still difficult to concretize since recent deployment data from the government have been hazy.

The Philippine Overseas Employment and Administration (POEA) reported that in the first two months of 2009, a total of 283,348 Filipinos left the country for employment abroad —a record 27 percent increase over the same period last year.

Recruitment experts have been contesting the data since the rosy numbers do not match their experience of increasing OFW contracts no longer being renewed. They said OFWs who returned to their work abroad after their Philippine vacation must have bloated the government’s count of ‘rehires’, which refer to those who actually renewed their job contracts and returned to their previous foreign employers.

Even analysts doubt government’s data. Citibank’s recent Asia Pacific study projected a decline in new hires and rehires by anywhere from 37 to 51 percent as the crisis cuts demand for migrant labor.

POEA Administrator Jennifer Manalili herself was also quoted as saying that the contracts processed for rehires declined by to 57,182, a decline of a whopping 43.5 percent in the first two months.

Nonetheless, there is consensus that 2009 remittances--the consequence of OFW deployments now--will likely miss last year's $16.4 billion level.

On Monday, a World Bank economist said the world's fourth biggest remittance receiving country could see money sent home by migrants fall by 4 percent to $15.7 billion.

Citibank's Asia Pacific study was more pessimistic. Its market analysis cited a 30 percent plunge to $11.4 billion.