Philippines Peso Gaining as Overseas Workers Top Mexicans: Jobs
Raffy Vital Gimeno started sending part of his pay to his family in the Philippines after getting a job in Qatar in 2008. Now his wife and sister are also working in the Middle East state and they’re all remitting money home.
“Working here has allowed me to become more financially stable,” said Gimeno, 27, who wires about 25,000 pesos ($610) a month to his retired father in Manila, almost three times the minimum wage in the capital. “Opportunities here are everywhere.”
Government projects in the Middle East, spurred by the Arab Spring and the global financial crisis, are drawing Filipino engineers, nannies and office workers. The rise may propel the Southeast Asian nation ahead of Mexico this year to become the world’s No. 3 in remittances, behind India and China. The funds account for about 10 percent of the Philippine economy.
“Consumption has been driven by remittances for years and with investment picking up, the Philippines is set to become one of Asia’s gems,” said Santitarn Sathirathai, a Singapore-based economist at Credit Suisse Group AG. “Philippine assets will remain attractive, with a strong upside to the currency. Within Southeast Asia, the peso would be our top pick.”
Funds sent home from Filipinos working overseas will rise 5.5 percent to $24.3 billion in 2012, while Mexico’s receipts will drop 0.3 percent to $23.5 billion, the World Bank’s Migration and Remittances Unit forecast in a Nov. 20 report. The rising inflows prompted the Philippine central bank to cut rates to damp gains in the peso, the second-best performer against the U.S. dollar among Asia’s 11 most-traded currencies this year.
The number of Filipinos who left to work abroad climbed 15 percent in 2011 to almost 1.7 million, according to the Philippine Overseas Employment Administration. Saudi Arabia, the United Arab Emirates and Qatar accounted for about 40 percent of the total.
Persian Gulf states were at the forefront in the Middle East in implementing “greater government spending in light of the Arab Spring and the global crisis,” Hans Leo Cacdac, head of the POEA, said in an interview in Manila. “They opened up basic services programs, built new infrastructure, hospitals, housing units,” to try to calm public dissatisfaction and boost the economy.
Those programs created new opportunities in the traditional job market for Philippine migrant workers, such as in construction, tourism and services, Cacdac said.
While Asian migrant workers are benefiting from increased spending in the Middle East and Asia, those from Latin America and the Caribbean are feeling the effects of the global economic slowdown and cutbacks in the U.S., their main destination. Growth in remittances to countries in South and East Asia will outpace the rate to Latin America and the Caribbean in 2012 and 2013, the World Bank report said.
For many Filipinos, such as Riza Lapatha in Manila, remittances mean education for their children.
“If my husband wasn’t working overseas, we wouldn’t have enough to send our kids to school,” said Lapatha, 42, who has two children in college, one in high school and a 4-year-old. She and the children live with her mother-in-law while her husband, Rex, works as a mechanic at an aviation company in Abu Dhabi. He earns twice what he could in the Philippines.
Still, while overseas jobs may offer higher pay, the reality for many is a cycle of debt and harsh living conditions, according to a report led by Professor Sevil Sonmez at the University of North Carolina at Greensboro.
The 2011 report in the Health and Human Rights journal cited cases of construction workers suffering heatstroke during 12-hour shifts, in temperatures reaching 131 degrees Fahrenheit (55 Celsius), and female domestic staff working 100 hours a week with no rest days.
The influx of overseas earnings has helped advance the Philippine peso by about 7 percent this year, touching a four- year high last month. The central bank in October cut its benchmark interest rate for a fourth time this year, to a record-low 3.5 percent. All economists surveyed by Bloomberg News predict the central bank will hold that rate at its meeting today.
Deputy Governor Diwa Guinigundo said the reduction will help address the capital inflows. Bangko Sentral ng Pilipinas in July lowered the rates for its so-called special deposit accounts and banned foreign funds from investing in them to help curb the influx of money.
Rising remittances aren't the only boost to the Philippines’ $225 billion economy. The country’s young workforce is attracting companies from Japan, China and South Korea looking for cheaper, skilled workers. The nation of 7,107 islands lured $6 billion last year in pledged foreign investment, according to the government.
The Southeast Asian nation is forecast to be among the 10 fastest-growing economies in 2013 and 2014, according to a Bloomberg survey of economists.
That’s boosting demand for Ayala Land Inc. (ALI) homes and Ford Motor Co. (F) cars. Growth accelerated to 7.1 percent last quarter, the fastest pace since 2010 and the most in Asia after China. The nation’s benchmark stock exchange index has risen more than 33 percent this year, touching a record this week.
Still, with a workforce forecast to expand more than 30 percent this decade, many Filipinos will continue to have to find options abroad. The nation’s labor force will increase by almost 18 million, to 75 million, in the years to 2020, Bank of America Corp. projected in April.
“The thing with the Philippines is that it has a big working-age population and there are not enough jobs,” said Gareth Leather, a London-based economist at Capital Economics Ltd. “Whether the government will be able to provide these jobs in the foreseeable future is quite doubtful. You need many years of 7-plus percent growth to be able to do that.”
John Randy Franco, 29, has been working as a cook for four years in a Lebanese restaurant in Jeddah, Saudi Arabia, where almost all the 50 or so employees are migrants. Two-thirds are from his home country.
“It feels just like you’re in the Philippines,” he said in a phone interview. He took the job because his previous position in the fast-food restaurant Tokyo Tokyo in Manila didn’t pay him enough to build a home for his wife and two sons. “Now we’re building it,” said Franco, who sends 12,000 pesos a month home out of a salary equivalent to 20,000 pesos.
Philippine remittances rose 5.9 percent in September to a record $1.84 billion, according to the central bank. In contrast, funds to Mexico declined for a fourth straight month in October. More than 95 percent of Mexico’s sent-home wages come from the U.S. historically, according to the Washington-based Inter- American Development Bank.
Other Asian nations are also benefiting from jobs in the Middle East. Remittances to India will probably rise 11 percent to $69.8 billion in 2012, according to the World Bank report. Money sent home to Sri Lanka is estimated to grow 22 percent this year, while funds to Pakistan may gain 14 percent.
In the Philippines, four decades of sending what the government called “modern heroes” to work overseas means more than 9.4 million Filipinos, or about 10 percent of the population, now reside abroad. Gimeno has an uncle working in San Diego and another in Tokyo, both of whom have brought over their families.
“It was difficult to decide to leave because I felt like I was doing OK in the Philippines,” said Gimeno, who now works as a corporate communications officer in Commercial Bank of Qatar QSC. “But what convinced me really to work in Qatar is that they tripled my salary, plus there’s no tax.”
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