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Wednesday, August 31, 2011

The Saudi OFW Bubble Has Burst

The specter of the OFW remittance bubble bursting seemed unthinkable in a time when the Filipinos, the Aquino government and the presidents before Noynoy pandered to economic serfs and call them as “heroes” because of billions of remittances.

In May 2011, I wrote:

The remittances are a bubble waiting to burst. We need more job-creation opportunities at home. We need to address the root causes that make the Philippines an unattractive investment destination – starting with removal of the restrictive 60/40 constitutional proviso.

Pop Goes the OFW Remittance Bubble

Guess what, KSA OFWs who were on vacation have been advised not to return to their former employers. Gulf News has reported that

Overseas Filipino workers (OFWs) in Saudi Arabia were advised not to return to the Philippines to visit their relatives following reports that many of them were barred from returning to their jobs, a radio report said.

“To those who are planning to take a vacation, I hope they postpone their plans,” Carlos Cao, administrator of the Philippine Overseas Employment Administration told ABS CBN.

“We will get in touch with our counterparts in Saudi Arabia, to clarify reports that some vacationing OFWs were given exit visa without the accompanying re-entry visa,” said Cao.

About 30,000 to 50,000 OFWs were expected to return home in the next five months, records showed.

Earlier, John Leonard Monterona, of the militant Migrante in the Middle East narrated to the Philippine Star, “There were four OFW-engineers who called me in Riyadh. They expressed surprised that their respective exit/re-entry visa had been stamped ‘exit’ only by the Saudi immigration officer at the counter.”

“We reported that matter to Philippine Labour AttachĂ© Albert Valenciano in Riyadh. He was surprised by that move,” Monterona said, adding this could be a sign that skilled Filipino workers and professionals might also lose their jobs because of Saudi Arabia’s labour policy.

What in the world is going on? Here’s what’s going on – while we had our attention focused on Spratlys, Mislang, Mendoza, Porsche, the latest Aquino speech, the oligarchs double digit revenue growth – the Kingdom of Saud has opted to adopt a labor policy similar to the labor policies in the Foreign Investments Negatives List – List A

THE Department of Labor and Employment (Dole) has created Task Force OFW (overseas Filipino workers) to prepare for the displacement of migrant workers amid the looming “Saudization”, or the move of the Kingdom of Saudi Arabia (KSA) to limit the number of overseas workers.

The Saudization or what KSA refers to as “nitaqat” scheme involves categorizing public and private firms into color codes that represent if the company complies with the “Saudization” requirement in hiring its own nationals to at least 10 percent of the total numbers of their workforce.

The government, on cue, downplayed the “Saudization” ban on domestics won’t affect OFW remittances.

BSP assistant governor Almasara Cyd Amador told a news forum hosted by the Philippine Information Agency that they are sticking to their target of a seven percent increase in remittances.

“Seven percent is an attainable, fighting target because there are many factors behind the growth in OFW remittances,” Amador said .

Remittances by Filipinos living and working abroad hit $1.5 billion in February, or a 6.2 percent growth from last year, the BSP said earlier.

Filipino workers in Saudi Arabia accounted for eight to 10 percent of these remittances, Amador said.

Yeah right, there are many factors behind growth – and there are factors behind the – reversal of growth. Not being allowed to work in KSA again is gonna hurt the OFWs.

Read the government’s lips ban on OFW domestics will not affect OFW remittances, – really? Well, obviously Noynoy needs to get the BSP, the DOLE, and the DFA to sit on the same table, speak the same language, and use the same figures because someone will look like a major doofus of dumbass proportions when the OFWs come home to the Philippines – without jobs or business opportunities waiting for them.

The figures differ greatly, with the Department of Labor and Employment saying Saudization will affect 90,000 “low-skilled” workers and the overseas worker advocacy group Migrante-Middle East saying as many as 360,000 could lose their jobs.

An official of the Department of Foreign Affairs, on the other hand, told InterAksyon recently that up to 150,000 mid-level professionals, including engineers and supervisors, stand to lose their jobs because of Saudization.

This is aside from the estimated 20,000 domestic workers who may lose their jobs or no longer be hired because of Saudi Arabia’s refusal to agree to the $400 minimum wage set by the Philippine

Clock is Ticking Noy

What’s Aquino gonna do? Send the KSA returnees to Libya? Yemen? Egypt? The clock is ticking for for OFWs in KSA.

As the Saudi Gazette has pointed out – the Nitaqat (Saudization program is now in full swing – there will be winners and there will be losers. OFWs will not be happy – but unemployed Saudi citizens will be less inclined to boot the Saudi royals as Nitaqat spurs recruitment of Saudi workers

RIYADH: Saudi-owned and multinational companies have stepped up their recruitment of local workers following the announcement of Nitaqat, the Labor Ministry’s newly introduced Saudization program.

Under the program, private firms, based on the percentage of Saudization, are classified into green, yellow and red categories. Companies with high Saudization rates will come under the green category, while those who fail to achieve the required rates or refuse to employ Saudis will be included in the yellow and red categories, respectively.

Khalid Othaim, General Manager of the Dani Food Group, said the group is currently in a process of recruiting more Saudi nationals in different job categories.

“Although our company is in the ‘green category,’ as defined by Labor Ministry’s recent Nitaqat program, we are moving ahead with the recruitment of large number of Saudis to reach at least 50 percent,” he said.

Pinoys get a dose of Pinoy-style labor protectionism

Before MIGRANTE or some other Filipino elected officials come up with another retarded statement about imposing Filipino whims on the Saudi government – now would be a good time to remind Filipinos that the Saudi government is just following a protectionist policy similar to the constitutional and FINL restrictions on limiting the practice of professions to Filipinos only – sure sucks doesn’t it?

The argument for more cost effective and more productive competitive foreign labor is being made to allow the continued deployment of the OFWs. It becomes so hypcritical that what’s good for the Saudis and other developed economies of the world – foreign labor – is not good enough for the Philippine economy. The argument is that we have enough graduates to fill in the vacancies left by existing Filipino professionals. What’s lacking in this proposition is the lack of real-world experience of fresh grads who are plunged into teaching positions does not benefit students at all. And, with the teacher to student ratio rising we can certainly use more science, math, and literature teachers. But no, we want to keep our doors closed pinning our hopes in misguided nationalism.

What to do with the excess manpower?

The KSA returnees not only count blue collar workers – but also count among them a lot of our technical professionals, the sort of people that keep economies going. It will be such a waste to see such talent rendered unproductive. But what really is the alternative? The moment the KSA returnees leave the NAIA, they will face the stark reality of once again being either jobless or underpaid. Perhaps, they will have a brief spending binge – the last hurrah of the Pinoy petrodollar. After the well dries up – what next?

Search for more jobs in overseas economies? Search for jobs anywhere – yup, anywhere but here.. the Philippines. Unless of course you want to put up with the same Pinoy companies, their suck ass managers, the equally inept rank and file – and the pay which is slightly above starvation pay. Gosh – for all the talk of protecting our workers overseas, we can’t even provide a decent working environment to our local workers. Just go to your nearest retail store chain and inquire about the perpetual temporary employees and weep.

Saudi Arabia is but the beginning in the bursting of the mid-east/north africa OFW remittance bubble. Will the government open up the economy to allow foreign investors to own 100% equity and generate jobs locally? Aquino is sending out political signals that he will not endorse opening the economy – or even make a half-assed attempt to do so. For the meantime, expect the local dailies and local media to play up the sob stories of laid off KSA returnees – with Aquino and all his merry men taking turns in having photo ops with the soon-to-be jobless OFWs. That’s all there is to it – a photo op, and nothing more.

Let me spell it to you again gentlemen. We don’t have to send our workers overseas and break their families apart. We don’t need the bantay-salakay POEA or MIGRANTE to “protect” us. Free the market, open up the economy, remove the 60/40 – is the best way to protect our workers and consumers. Allow foreign investors to own up to 100% equity of the businesses they register in the Philippines and generate jobs LOCALLY.

The thing about the Arabian spring is that it can be contagious. When people don’t have jobs while the oligarchy is living it up – callousness and impunity often wind up as the proverbial needles that break the backs of camels. EDSA may very well find itself transported to the deserts of the middle east face to face with the jinns it has been trying to avoid.

About the Author


has written 277 stories on this site.

BongV is the webmaster of Antipinoy.com.

2 Comments on “The Saudi OFW Bubble Has Burst”

  • bokiyo wrote on 12 July, 2011, 3:05

    And… it won’t be long before OTHER countries follow the same suit . . . to reduce foreign workers in lieu of the locals (which should be the case). Singapore is now stepping up the plate to reduce foreign skill dependencies (even though most MNCs still prefer foreigners).
    On another note, “Saudization” is more hell bent on providing job opportunities for their locals, so why Philippines have a less efficient program of the Philippine “Saudization”. Yeah, we know, fingers are pointing to the 60/40 protectionism.


  • Hyden Toro wrote on 12 July, 2011, 13:40

    Saudi Arabia is just doing the right thing. It is employing its own people.. Noynoy Aquino administration has no way to remedy the unemployed OFWs to have jobs…we don’t have industries . We programmed our way to solve unemployment; by sending people to work abroad as OFWs or even Drug Mules…We have to face the realities; that more and more people will be unemployed; and there are no waiting jobs for them in the Philippines…
    World recession is the name; and finding a good job abroad, is the game…like finding a needle in a haystack…


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