By Pepper Marcelo

The Philippine Overseas Employment sector is at a crossroads. For decades, the country has relied on remittances to fuel the local economy and its domestic consumption. Now it faces rough sailing as labor demand from overseas slows down as a result of the global financial crisis.

No other country has had as much an over-reliance on remittances as the Philippines. Compared to other top recipient countries such as India, China and Mexico, the high percentage of remittances to the national income, or GDP, is highly disproportionate.

For example, the ratio of remittances (in billions of dollars) to the GDP of India is 27-to-3, China 27.5-to-1, and Mexico 25-to-2.8. The Philippines, on the other hand, is 17-to-13.8.

The country’s economic survival is dependent on sustaining these OFW remittances. With the current global financial crisis effecting migrant workers, however, the OFW sector faces an accelerating number of complex challenges going into the new decade and beyond.

Europe, North America and Asia are in a recession of unknown duration and depth. Job orders from Australia, New Zealand, and Canada, previously considered the best countries for expatriates, have stopped.

Only Middle East countries of Saudi Arabia, UAE, Qatar, and Libya are hiring workers, using government and sovereign funds that sustain much of their current infrastructure projects and OFW manpower demand.

“To them, the Middle East is a difficult place. There’s no freedom there,” says Loreto Soriano, executive director of the Federated Association of Manpower Exporters (FAME). “The point I want to clarify, is that in those first world countries that the Filipino would normally want to go, they are the first to be affected by the crisis. You have to be practical. If you’re looking for a job and want to earn, that’s the place.”

Soriano is an Overseas Contract Worker (OCW) himself, having experienced personal economic benefits (as well as family sacrifice) while stationed in Saudi Arabia in the 80’s. Over the last two decades he has become involved in the migration of workers, and has been advocating the design of OFW components that would be beneficial to OFWs and the nation.

Dutch disease

To him, remittances are causing a “Dutch Disease.” “It is a phenomena in which you are awash with wealth but spend it unwisely.”

The concept is based on the impact of the high remittance growth rate in many sectors of the economy, including appreciating the peso, increasing foreign imports and discouraging domestic production, increasing government debt, encouraging smuggling and allowing for the growth of corruption.

“For example, before, to sustain the wealth of your family, you had a farm, a piggery or small poultry. This is the source of income that provided education to your kids. If you have a daughter in Japan or Saudi earning overseas and sending home money, you don’t need to sustain that farm.”

On a larger scale, “Dutch Disease” is the detrimental outcome of a country’s foreign exchange income without the government’s cost of development and investment.

Erroneous data

The financial sector and government agencies have propagated the falsehood that the last few years’ remittance record increases have been driven by a large increasing group of OFWs working in “recession-proof” occupations.

In fact, professional deployments have declined by 45% from 2005-2007, and less than 5% of all OFWs should be considered working in recession-proof positions, such as healthcare, 70% of whom are employed in Saudi Arabia.

There is a fundamental flaw to the collection and processing of OFW deployment and hiring data. Deployment statistics reflect multiple counting, while job classifications are too few, outmoded, and not sufficiently detailed. Financially, authorities have been aware of OFW statistical inconsistencies and deficiencies for years. Most statistical claims are believed but “upwardly biased.”

Many officials say there is record growth, but it is attributable to change in mode of transfer rather than increased deployments of professionals with increased salaries.

These statistics reflect different channels of delivery – from banking to non-banking, or non-informal channels such as couriers, hand carry and padala transfer methods.

“If there is growth, why can’t poor people feel it? Because it is a jobless growth. From a productive economy, it has changed into a consumptive economy. Because of the inflow of dollars, and industries are dying, there is so much consuming by the families of OFWs. And if there in nothing to buy locally, we import everything we need.”

And contrary to popular belief that OFWS are employed in recession-proof industries and a high percentage of them are professionals, they are not. Though it is stated that 90% of the OFW workforce is composed of professionals, the number is closer to 13%, and that is steadily declining.

The fact is that OFW deployment is dominated by low-skilled workers, encompassing household, service, factory and labor. The deployment of professionals – nurses, doctors, etc. – remains low compared with other skills categories. In the supposedly “recession-proof” healthcare industry, only approximately 3% of nurses were new hires in 2007, down 36% from their peak of 9,000 in 2001.

It is also believed that hundreds of thousands of nurses are deployed each year, when in reality, it is less than 10,000. And that many of them go to the U.S., but actually only 186 went in 2007.

Unemployable graduates

“That kind of dialogue – that tens of thousands of nurses are deployed since 2003 – invited half a million enrollees in nursing for the past six years,” Soriano says. “That’s why you have computer schools like AMA and STI and Mapua Institute of Technology (MIT), companies that are dedicated to IT and engineering, opening nursing courses.”

The Philippines is producing unemployable candidates and qualified graduates for most job orders, yet nationwide specialty “schools” and programs keep proliferating, ignoring the job market reality.

For many years, the Overseas Employment Service Providers (OESP) has voiced their concerns on the incompatibility of college, technical and vocation courses with international standards.

Unfilled job vacancies, approximately 500,000 according to the POEA, were not filled due to the lack of experienced, qualified professionals and skilled workers. There are 389,000 job orders, but only 25% can be filled in the next 6 months.

Increased competition and lack of experienced, qualified applicants will continue to increase and accelerate. There is also a lack of permanent jobs for gainful experience, with manufacturing industries that offer permanent jobs quickly dwindling.

“Can we change that? No, unless there are structural changes.” One of his solutions is that returned and “retired” OFWs should be treated as productive assets and become part of a new economic model that utilizes their experience, knowledge and available investment funds by working under sustainable domestic programs. This includes agriculture and community-based commerce.

Failure to act now, Soriano says, to protect and sustain the OFW economic engine will cause great political and social uncertainty in the country and affect the capacity to be a regional player in the future.

“Our economists and government policy makers should realize this. The effect of their failure to protect the local economy is now affecting the overseas employee.”

By Perla Aragon Choudhury

The money sent home by overseas Filipino sailors rose by $108 million to a new record of $2.501 billion in the first nine months of 2009, an increase of or 4.51 percent from $2.393 billion over the same period in 2008, according to the Trade Union Congress of the Philippines (TUCP).

TUCP secretary general and former Senator Ernesto Herrera said the rise in remittances from sea-based migrant Filipino workers is due to increased enlistment by ship owners in Europe and Asia.

“A growing number of European and Asian shipping firms is disbanding their multinational crews, and replacing them wholesale with all-Filipino personnel that are younger and more able,” says Herrera.

“Foreign employers find Filipino sailors quick learners, and easier to train compared to other nationals. This may be due to their superior instruction here, apart from their ability to understand English,” he adds.

About 229,000 Filipino sailors are on board merchant shipping vessels around the world at any given time, data from the Department of Labor and Employment show.

The Philippine Overseas Employment Administration (POEA) reports that in 2007 – the year for which the most recent data are available – Filipino seafarers were employed by 1,157 registered/accredited manning agencies, up from 869 in 2006.

The Philippines, says POEA, has been the world’s leading supplier of seafarers since 1987, making it the manning capital of the world.

Overseas assignments

Data in 2007 showed that Filipino seamen were scattered aboard vessels bearing various flags of registry: Panama – 51,614; Bahamas – 29,681; Liberia – 21,966; Singapore – 10,308; Marshall Islands – 9, 772; United Kingdom – 8,172 ; Malta – 7,513; Cyprus – 7, 052; the Netherlands – 7,017; and Norway – 6, 975.

By vessel type, here are the 2007 statistics on Filipino seamen: passenger-type – 47, 782; bulk carriers – 42, 356; containers – 31, 983; tankers – 25,011; oil/product tankers – 14, 462;   general cargo ships – 10,754.;  chemical tankers – 7,502 ; tugboats – 6,610;  pure car carriers – 5,742; and gas tankers – 3,471.

By type of work, the 226,900 local seafarers deployed overseas in 2007 were assigned as follows: seamen – 31,818; oilers – 19,491; ordinary semen – 17,355; mess men – 7,810; chief cooks – 7,778; bosuns – 7,737; third engineers – 7,056; third mates – 6,599; and waiters – 6,388.

Global crisis

In late 2008, even as the global financial crisis was wreaking havoc on virtually every major economic sector, the manning industry suffered minimal setback in terms of job losses.

“The bulk of the seafaring industry is not as affected as people might think,” says Miguel Angel Rocha, vice-president for business development of CF Sharp Crew Management, Inc., one of the country’s leading manning companies. His firm is now the major business of CCF Sharp, a port agency business began in the late 1930s by his grandfather and business partner CF Sharp. It is also the first Filipino manning company to be certified as compliant with ISO 9000 Standards.

“The manning industry is a trailing indicator,” Rocha tells Planet Philippines in an interview. “Only after an event will it be affected. Lately, ships had been 15% laid up, or out of service, and by 2009 the figure was 30%. But jobs were not lost because of the `hot’ or `warm’ nature of the industry – a ship always needs engineers and crew to operate, maintain and mobilize it.

“Chinese factories stopped ordering raw materials and so bulk ships were the first to get affected. By November 2008 there was a decrease in daily chartering from $180, 0000 per day to $3,000-5,000 per day in September. After Christmas [of 2008] and New Year [of 2009], there were no more orders and container ships were down. We don’t see a significant loss of jobs but we do see slower growth.”

Prospects

Rocha is optimistically guarded about the prospects in 2010.

“Even if the global economy gets better, it will take a long time before we see a recovery in our industry,” he stresses.

He warns that if the market worsens, jobs will be harder to find.

“Also, seafarers now working might have to work less and stay on vacation longer. There is no growth as ship owners try to maintain their pace of work where they have 15 persons on board for the 10 actually needed.”

But then, Rocha explains, the shipping industry is cyclical. “A new ship means new crew in boom times. Now this is going to change and so they’re laying vessels but not selling them for scrap, and giving the crew  longer shore leave. But then again, things might turn around and it will be boom time again.”

Poaching of officers

Rocha is actually more concerned about the poaching of senior officers, from master officers and chief mates to chief and second engineers, which could have a more dramatic impact on the industry.

The global shortage of officers is oftentimes remedied by a greater-rotation-cum-shorter-vacation solution. The problem is only a recent development, according to Rocha. Officers and ratings used to be available, mostly from the West.

“But as more ships were built in the ‘90s and today, as the economy of the West expands, British, German and Norwegian officers can earn as much or even more on land. They have left and have been replaced by officers from Poland and Ukraine.”

The vacuum could have been filled up by the local manning industry but unfortunately, there are not enough Filipinos with the required skills and training.

Lack of training

“There are 80 to 100 maritime schools offering BS Marine Transportation and BS Marine Engineering courses with a curriculum of three years in the classroom and 12 months on board a ship prior to state board exams, but less than 20 percent of the students get on board,” he laments.

Rocha cites two top maritime schools in the Philippines where slightly under 15% of the most recent graduating class have trained on a ship. Their graduates got certificates of academic equivalency but they are not on board because the majority of ship owners do not make a provision for cadets on board, who would also have to be paid.

“The problem is no one is willing to challenge ship owners,” he continues. “Some 280,000 students graduate each year. That seems a lot of seamen who could get a higher income for their families. But people don’t see the uphill battle in getting the license, and educators prey on seamen. Going abroad is not always pleasant experience and can be very daunting.”

But Rocha notes that there is a bit of positive news on the horizon as ship owners have lately invested in training. For one, the Norwegian Shipowners Association has a program for cadets.

But without support from POEA and the Commission for Higher Education (CHED), Rocha fears that maritime schools might not participate or offer enough slots in the training and development of seafarers.

It remains to be seen if the government and the manning industry could come up with policies and measures to address the problems and challenges. Unless there is a serious effort to meet them head-on, less and less Filipino seafarers may find their way into the open seas.

By Leandro Milan

The country’s education system continues to turn out college graduates whose training and skills are not attuned to the needs of the labor market both at home and abroad. This is the lament of human resources and labor recruitment officials who decry the continuing popularity of glamorous and white-collar courses that produce diplomas but not well-paying jobs.

The criticism had been voiced many times in the past by business leaders and politicians but both government and the private sector have failed to institute meaningful and concrete measures to correct the mismatch between skills and jobs. The issue gains added urgency in view of the government’s inability to provide jobs and its continued dependence on the overseas job market. Problem is Philippine education is not well suited to the requirements of the global economy as well.

“Many overseas employment opportunities abound in sub-specialties of various occupations but the Philippine education system is either ill-equipped and/or unprepared to offer corresponding courses to the demand but rather do a ‘one course fits all’ mentality,” says recruitment consultant Emmanuel Geslani.

This, he says, has led to “a disastrous oversupply of unemployable graduates.”

“In-demand careers like respiratory therapists, cardio technicians, laboratory, ct-scan, are often passed over in favor of more high-profile careers like nurses, says Geslani.

 Serious gap

 Lito B. Soriano, president of LBS-E Recruitment and executive director of the Federated Associations of Manpower Exporters, Inc., observes that there has always been a “serious gap” in the education system that persists in having curriculums that are “unsuitable” in providing their graduates with the possibility of employment.

In a study titled, The OFW Economic Engine, Philippine Reality and Required Reform Arising from the Global Financial Crisis, Soriano noted: “Of the one million college graduates annually, only five to ten percent are employed in jobs consistent to their course, only 30 to 40 percent will find any employment. The vast majority of graduates will remain unemployed.”

He says the country is producing too many nursing and tourism graduates who are unqualified to be hired abroad.

“Over 2,000 nursing schools have an annual total enrollment of over 420,000 students and each year, 100,000 new nurses take the board exams yet only 40 percent are able to make the grade,” Soriano points out.

According to him, there are also few job openings for nurses in the country since local hospitals can only absorb less than 5,000 nurses each year while overseas opportunities are very limited.

“Hospitals abroad have very strict requirements like two to three-year experience in specialty or clinical wards with large hospitals having a two hundred bed-capacity,” he explains.

 Soriano adds that there around 400,000 licensed nurses who are not gainfully employed and there is an estimated 80,000 board-passers joining the ranks each year. Many of them even end up paying for a job in a desperate attempt to obtain the necessary work experience.

POEA data

 Data from the Philippine Overseas Employment Administration (POEA) show only 10,000 nurses are able to work in the Middle East, United States, United Kingdom, Australia and Canada every year.

At the same time, the country generates more than 120,000 hotel and restaurant management (HRM) graduates every year, says Soriano. Most of the HRM graduates also need additional skills training to be able to qualify for employment overseas.

Labor Undersecretary Rosalinda Baldoz confirms that nursing and HRM courses post the biggest number of graduates for the past years. She says many of those who took up HRM and nursing courses want to go abroad but they cannot immediately qualify for employment overseas due to lack of the necessary experience required by foreign employers.

To curb the growing number of unemployed graduates of nursing, HRM and so-called glamour courses, human resources and labor recruitment specialists urge the concerned government agencies to undertake immediate reforms.

Soriano suggests that non-performing and sub-standard nursing schools be required to enforce necessary measures to improve their performance or face suspension.

For his part, Geslani challenges the colleges to evaluate their current course offerings and make them relevant to the needs of the global economy.

“Producing non-employable graduates of courses for which there is no demand could be viewed as unethical and merely a method of generating cash dividends for stockholders or owners,” maintains Gerslani.

The POEA meanwhile should regularly provide the current global job information so Filipino students could be properly guided in choosing marketable careers. Two examples of in-demand jobs in the Middle East are medical technicians and therapists.

Go voc-tech

Geslani and Soriano urge college and high school graduates to go to vocational and technical schools if they want to improve their chances of landing jobs. The government, they say, should provide more vocational and technical training opportunities to the youth.

According to Geslani, strengthening the training programs of Technical Education and Skills Development Authority (Tesda) will give more unemployed Filipinos opportunities for local and overseas jobs.

He and Soriano have been batting for massive training programs for the one million graduates from college and another million from the high school ranks, pointing out that blue-collar jobs are the wave of the future.

Lito Soriano, president of LBS-E Recruitment, said high school graduates should consider taking technical vocational courses at this time if they want lucrative job opportunities.

“The Philippines can take advantage of the pressing need for skilled workers in trillion-dollar projects in the Middle East if many of our high school graduates will shift to schools offering tech-voc subjects like auto servicing, technical drawing/drafting, building wire installation, shielded metal arc welding, machining, pipefitting, metal craft, and carpentry,” Soriano points out.

Demand outstrips supply

He says the country is unable to meet job orders abroad due to the shortage of workers with vocational skills.

“Recruitment companies are already competing with each other for the very few skilled workers for their job orders mainly from the Middle East.”

Most foreign employers, he adds, are looking for highly-qualified construction workers such as welders, flame cutters, pipe fitters, and carpenters due to construction booms in various countries abroad.

“Recruiters are hard pressed to supply qualified skilled manpower for the multi-trillion dollar projects in Saudi Arabia and Qatar whose development plans have not slowed down despite the rock-bottom prices of crude oil,” says Soriano.

In Saudi Arabia alone, there are job orders for housekeeping, gardeners, equipment technicians, water treatment, civil technicians, plumbers, painters and all maintenance positions on top of the 4,000 Filipino health workers needed there.

According to Tesda Director General Secretary Augusto Syjuco, about 22,540 plumbing and 20,687 welding job opportunities are available in countries such as in Saudi Arabia, Iran, Qatar, Russia, Australia and South Korea.

Skilled workers, such as welders and plumbers, receive higher salary overseas.  Syjuco cites a welder who receives as much as $6,000 or P293,070 a month abroad.       

“The growing mismatch of workers’ skills and the need of the industry have resulted in numerous overseas job vacancies unfilled by OFWs,” says Soriano. “It’s a matter of choice for students who might want to start a career abroad.”