50,000 OFWs may lose jobs due to US-led financial crisis: DOLE

by ISAGANI DE CASTRO, JR., abs-cbnNEWS.com/Newsbreak | 10/09/2008 5:40 PM

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Up to 50,000 overseas Filipino workers (OFWs) could be affected by the US-led global financial crisis, according to an assessment by the labor department.

Labor Secretary Marianito Roque said the Department of Labor and Employment's (DOLE) "worst-case scenario" is that up to 50,000 workers could lose their jobs in the US and other countries affected by the US-led financial meltdown.

"Worst-case scenario ng Department of Labor, aabot hanggang 50,000 OFWs ang maaaring maapektuhan ng krisis pinansyal sa Amerika at iba pang panig ng mundo," he said.

Roque said the Department of Foreign Affairs (DFA) and other government agencies will soon be drafting a contingency plan for OFWs who may be affected by the crisis. He said the government already has a livelihood program for displaced OFWs.

"Mag-uusap na kami ng DFA at iba pang ahensya ng gubyerno para balangkasin ang contingency plan," he said.

On Tuesday, President Arroyo ordered the DFA and the DOLE to draw up a "contingency plan" for overseas Filipinos who may be affected by the financial crisis.

"I direct our economic team to work hard on all fronts to manage inflationary pressures and provide a safety net to those hit hardest by these global developments. I also direct them to draw up a contingency plan to cushion the impact of a possible economic recession of the developed economies on the ordinary people of the Philippines. Possible, but you hope it will not happen, but it’s important to have a contingency plan. And I direct the Department of Foreign Affairs, the Department of Labor and the Commission on Filipinos Overseas to draw up a similar plan for overseas Filipinos," she said.

Focus on local economy: analyst

Meanwhile, a labor economist is calling on the Arroyo government to think and go local as the Philippine economy slows down and takes a hit from the US-led crisis.

Among the policies that can soften the impact of an economic slowdown are: a campaign to buy Philippine-made products; minimize smuggling; expand small enterprises; extend public funding for the agrarian reform program; and, increase infrastructure spending, especially in rural areas.

In an interview with abs-cbnNEWS.com/Newsbreak, Prof. Rene Ofreneo of the UP School of Labor and Industrial Relations (SOLAIR) warned of loss of local jobs as American consumers cut back on their spending.

Albay Gov. Joey Salceda, an Arroyo economic adviser, has said that around 250,000 jobs could be lost due to the US-led financial crisis.

Ofreneo said it’s not only the export-oriented electronics industry that will suffer from loss of jobs but also the young Business Process Outsourcing (BPO) industry, around one-third of which services American financial companies.

“Some of these BPOs have frozen new hiring,” he said, citing information from the BPO sector.

American electronics companies that operate in export processing zones, such as Intel Philippines, will also be affected by the crisis, he said.

Ofreneo said it’s not only electronics exports that will be affected but also agriculture exports to the US. This is based on the assumption that the US will also be buying less Philippine agricultural products such as bananas and coconuts.

Although economic officials have said that the Philippines will not be severely affected by the US-led financial crisis, Ofreneo said that the Arroyo government “must assume the worst.”

Worst-case scenario

Ofreneo criticized the Arroyo government for its “business as usual” response to the crisis.

“There’s no game plan to protect the economy,” he said.

One possible impact is that overseas Filipinos, especially contract workers, could be retrenched as US companies cut back on their expenditures. Other countries similarly affected by the crisis may opt to reduce the jobs available to migrant laborers.

“The Philippines is vulnerable to the present crisis because of its overseas workers,” he said.

There are around eight million Filipinos overseas or nearly one-tenth of the Philippine population.

He said previous crises were concentrated in a few areas, such as the war in Iraq, which affected Filipinos in the Middle East.

But Ofreneo said the US-led financial crisis could affect more overseas Filipino laborers since its impact is global rather than regional.

BPOs, call centers, and ODA

Labor Secretary Roque said a more worrisome concern of the Philippines is if there is a policy shift in the US against outsourcing of jobs.

"Ang lalong pinangna-ngambahan ng gubyerno, ay ang epekto nito sa bansa lalo na sa sektor ng call centers," Roque said.

He said outsourcing of jobs to countries such as the Philippines has become a controversial topic due to the need to create more jobs in the American economy.

Roque said there were around 200,000 employed in call centers and other business process outsourcing (BPO) outfits nationwide and 50,000 new jobs are being added yearly to the BPO sector.

Ofreneo said Democratic presidential candidate Barack Obama has adopted a “more protectionist” policy than the Bush administration.

Americans may also be more willing to do dirty, difficult and dangerous jobs that Filipinos in the US are already doing, ofreneo said.

He said an Obama presidency will likely be more “inward looking” than the current administration. Obama has called for a review of the North American Free Trade Area (NAFTA) among the US, Canada, and Mexico.

The US government and other donor countries may also choose to reduce its Official Development Assistance (ODA) in response to the crisis, Ofreneo said. This may affect ODA-funded projects in the Philippines.

Ofreneo said the negative impact on employment is likely to be reflected in the official labor force survey early 2009.

He said the government’s job creation targets of one million a year until 2010 will no longer be met as a result of the US-led financial crisis.

Go local strategies

After assuming the worst impact, Ofreneo suggested that the Arroyo government adopt “bold measures” that will strengthen the local economy. Among his suggestions are:

Buy Philippine-made products
Strengthen the campaign against dumping and smuggling, including second-hand cars
Expand small enterprises
Increase government spending on infrastructure development, especially farm-to-market roads
Increase tariffs on agricultural imports that compete with local produce
Strengthen links between local agriculture and industry
Extend funding for the Comprehensive Agrarian Reform Program (CARP), a bill that is still pending in Congress

“We have to go back to our internal economy. We should not rely so much on the external,” he said.

Stronger domestic demand will a boon to domestic producers, assuming they are protected from smuggled goods, Ofreneo said. -- with a report from HENRY OMAGA DIAZ, ABS-CBN News

as of 10/10/2008 12:53 PM