OFW remittances remain unaffected by slump in oil prices

MANILA, Philippines - Despite slower growth last year, remittances from overseas Filipinos have so far not been affected by the slump in oil prices, the chief economist of the Department of Finance said.

“So far, the steep drop in crude petroleum prices has not affected Middle East remittances,” Finance Undersecretary Gil Beltran said in an economic bulletin dated Jan. 19.

According to central bank data quoted by Beltran, remittances grew 3.63 percent to $22.83 billion from January to November last year. The growth was slower than the revised 2015 goal of four percent.

Broken down, money from the Middle East-- the second major source of remittances-- expanded by a faster 9.6 percent to $5.243 billion during the same period.

Global oil prices have continued their decline into 2016, plunging to new lows not seen in more than 13 years and hitting company profit margins.

This, in turn, has caused anxiety that jobs in the oil sector may be slashed, including those held by the more than two million Filipinos, according to Department of Foreign Affairs figures.

“The DOLE (Department of Labor and Employment should be ready with viable options in case the economic crunch starts to bite,” Beltran said.

Aside from this, he said it would also be advantageous for the government to diversify the profession and destination of overseas Filipino workers (OFWs).

As for the type of jobs, Beltran said most OFWs are employed as skilled workers, particularly in the healthcare, management and education sectors, which are “socially necessary.”

“While OFWs are in professions that are socially necessary..., and are therefore less prone to job turnovers, reduced concentration could minimize risks from socio-political upheavals and economic instability,” he pointed out.

Meanwhile, OFWs have started to become “more dispersed” in terms of destinations.

Without citing data, Beltran said the share of smaller countries in attracting OFWs have been growing faster than the traditional ones, suggesting more diversification.

“The country should continue exploiting non-traditional markets for deploying OFWs to reduce risks,” he said.

Remittances traditionally account for a tenth of the country’s gross domestic product, benefitting OFW families by boosting their consumption and investment capacities.