eLmEr, NobLe and gReaT

here’s one good article which explains the remittances of filipinos..

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Will remittances fall?

By Cielito Habito

Philippine Daily Inquirer
First Posted 21:05:00 02/22/2009

IF THE PHILIPPINE ECONOMY HAS SO FAR weathered the impact of the global financial crisis better than most of its neighbors, it’s because of one unique element: Massive remittances from millions of overseas Filipino workers (OFWs). The country is now the third largest recipient of remittances in the world, behind India and Mexico. The Bangko Sentral ng Pilipinas reports that overseas Filipinos sent back $16.4 billion of remittances last year, growing 13.7 percent over the 2007 level even with the global economic slowdown. This surprising continued double-digit growth propelled Filipinos’ consumption spending (and some investment spending as well) enough to offset the drop in our export sales and thereby helped keep our economy growing.

Will our luck with remittances hold up through 2009? Is it true that overseas Filipinos’ earnings and remittances are mostly immune from the global slowdown? Or are we simply seeing a time lag in its effect? Will there be an inevitable reversal this year that could put our economy in peril of recession?

Economic impact

Last year’s $16.4 billion in remittances translated to about P800 billion in the pockets of Filipinos. This is 10.7 percent of our total GDP of P7.5 trillion last year. Roughly, this means that remittances funded one out of every 10 pesos spent on the goods and services produced in our economy. Without those remittances fueling Filipinos’ spending, our economy would have shrunk by 6 percent instead of growing 4.5 percent as reported by government statistics.

This is, of course, an oversimplification. Every dollar of remittance actually leads to more than its peso equivalent in additional production, due to the multiplier effect that it generates. The multiplier effect is stronger when the remittance is received by a rural household (more likely the case), which tends to consume more domestically produced goods than an urban household. It is argued that there could also be an offsetting effect, where remittances reduce the recipients’ need to work, thereby dampening overall economic activity. A 2003 IMF paper found that for a sample of 113 countries, remittances affected income growth negatively due to this adverse incentive problem. However, a study by Geoffrey Ducanes and Manolo Abella showed this not to be the case in the Philippines. So, in light of the multiplier effect described above, the implication is that a fall in remittances can have more profound impacts on our economy than the numbers would directly suggest.

Where from?

About one in every four OFWs deployed is a seafarer, while the other three are land-based workers. In terms of money sent home, sea-based OFWs contribute roughly one in every five dollars remitted (18.5 percent). Of the land-based workers deployed in 2007, 60 percent went to the Middle East, 27 percent to other countries in Asia, 5.6 percent to Europe, and 3.4 percent headed for the Americas.

Nearly half (47.6 percent) of last year’s remittances came from the United States, although these include amounts sent through US banks that may have originated elsewhere. OFWs in Europe sent 16 percent of total remittances, while those in the Middle East and Asia sent 15 and 12 percent, respectively.

The US, European, Middle Eastern and the more affluent Asian economies (i.e., Japan, Hong Kong, Singapore and Taiwan) together account for about 90 percent of all remittances. These are already suffering not just slowdowns, but actual recessions (i.e., contraction) that are projected to get even deeper this year, and last for some time to come. If such contractions in host economies are reflected in OFWs’ earnings, then remittances would naturally decline, and we would be in for tough times ahead.

Who from?

But that is the big question: Will these contractions in fact be reflected in OFWs’ earnings? Or are the jobs held by OFWs mostly recession-proof?
The seafarers, who account for a fifth of all remittances, will surely be hit by the significant drop in world trade and tourism, maybe not just yet, but in due time. There is clearly a time lag in feeling this impact fully as ships already at sea can take months to complete their voyages and seamen’s contracts will last till then.

The so-called “recession-proof” jobs refer to those in health care (nurses, caregivers and doctors) and education (teachers). The published data leave much to be desired, but if reported deployments in recent years are any indication, then 15-20 percent of land-based workers would be a liberal estimate for these jobs. The bulk is classified as production workers, professional and technical workers and other service worker jobs not generally considered recession-proof. Domestic helpers and other household workers make up the single largest group (16 percent). Whether or not these jobs are recession-proof is debatable, but there is growing anecdotal evidence that they are not.

The December 2008 data in fact already showed a 5.8-percent decline in overall deployments, and this could very well signal the end of the lag effect. I say we should all pray for the best, but prepare for the worst.

http://business.inquirer.net/money/columns/view/20090222-190403/Will-remittances-fall

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other trivias:

the philippines is the leading exporter of seafarers in the world (that at sometime in the 90’s - dutch, british and japanese agencies inspect maritime schools to comply with international standards.)

the philippines as a major source of health care professionals especially nurses, doctors, therapists, dentist and care givers, competing with india and china. though most employers i’ve heard from my friends say they’d still prefer filipinos.

filipino caregivers are in demand in europe - in fact my aunt, a caregiver in italy for 13 years tells me italians still prefer filipino caregivers than other nationalities. that at one time the word filipina was coined to refer to domestic helpers - that in some countries like egypt, one family is rich if it can afford a filipina domestic helper. Domestic helpers who are graduates of degree courses in the philippines - working as both nanny and teacher to the child under their care. teaching them english and filipino manners. that at one time indonesia imitates the philippines by training and sending its citizens to work abroad as domestic helpers to reduce poverty.

that at one time during the 60’s and 70’s the best doctors in the states were filipinos (these are graduates from the 4 best medical schools in the philippines - UP Manila, UST, FEU and UERMC)..filipino doctors are now next to indians in numbers (25,000 filipinos as against 50,000 indian doctors in the states)..there are 1billion indians as against 90million filipinos.

our engineers and architects are still the most sought after workers in the middle east (competing with engineers from egypt and india).filipinos in multitudes in the 60’s til 80’s flocked to middle east during the oil boom era. that at present, filipinos outnumber indians in Saudi Arabia - the only GCC country where filipinos hold the most number of expats in the kingdom. did you know that the most number of engineers and architects in UAE are filipinos.

that filipino teachers are teaching english in china and in southeast asian countries. special program and math teachers practicing their professions in the united states. that filipino nurses are now in demand as teachers in thailand, indonesia and in the states.

have you ever notice that filipinos are working in most restaurants and hotels in the world..that HRM (Hotel and Restaurant Management) courses including hospitaliy courses such as tourism are booming in the philippines.

and steadily, filipino accountants are now being recognized in the world..i have classmates working in the finance sector as financial analysts in canada and australia, as accountants in the middle east, singapore and UK, as a banker in indonesia, as consultant in the States.

and watch out - as entrepreneurship is being push by the private and public sector in the philippines..remember the Jollibee phenomenon - the Philippines is the ONLY country in the world where mc donalds is not number 1 in the fast food chain sector. soon filipinos would make their mark in the business sector and regain their once status half a century ago as the second biggest economy next to japan in asia.