IT’S a continuing paradox. The steady flow of remittances from millions of overseas Filipino workers (OFWs) has been cited as the main reason the economy is still holding well despite the global financial crisis and a string of disasters. The flows are so unexpectedly sustained that the central bank and global agencies like the World Bank have admitted they underestimated it and are recasting their growth forecasts accordingly.
Ironically, the same sector responsible for the sustained flows is hurting badly these days, as the peso climbs steadily versus the dollar: the more dollars workers send home, the stronger the peso becomes, and the value of what they send becomes perennially short of their families’ usual monthly requirements.
A recruitment consultant on Wednesday offered estimates that each OFW household loses on average a thousand pesos each month from trading the dollars sent back by workers. And, on aggregate, the OFW sector lost P10 billion in the forex trade in the first eight months of the year owing to the rise of the peso.
According to recruitment consultant Emmanuel Geslani, millions of OFWs are complaining to their recruitment agencies that their families have to “tighten their belts” in view of the lower equivalent they get, with dollars now being exchanged at the rate of P46.50 against $1.
Geslani said almost P10 billion to P12 billion were lost by OFW families during the month of January-August remittances.
“A strong peso is hurting OFW families, as it continues to appreciate against the dollar when it hit 46.50 recently from a high of P48.80 last April 2009,” he said.
By way of example, when the OFW’s dollar could be traded at P48.80, the $200 monthly salary of an OFW fetched P9,760; the same family is now receiving P9,300, or P430 less a month.
“The appreciation of the peso against the US dollar during the past year has contributed to the depreciation of the lives of OFW families since they now receive less pesos for the dollars they exchange or receive from their OFW member. Those families receiving $400 each month are losing almost P1,000 on the exchange- rate appreciation,” he said.
According to the Bangko Sentral ng Pilipinas (BSP), remittances from OFWs coursed through banks amounted to $1.4 billion in August 2009, posting a year-on-year expansion of 2.8 percent.
The steady remittance flows in the first eight months summed up to $11.3 billion, representing a year-on-year growth of 3.7 percent. “It means that for the first eight months of this year, more than P12 billion have been lost by our contract workers due to the increase in the value of the peso against the dollar,” Geslani said.
Meanwhile, recruitment agencies are also feeling the pinch in the rise of the peso as they pay most of the placement fees of workers, with the principals observing a no-placement fee agreement with many middle-size and high-end agencies.
These placement fees are receivables on a three-month cycle as the agencies are paid in full only after three months from the deployment of the worker.
“With the strong peso, agencies have to dig deeper into their resources to keep afloat, as deployment is flat with many agencies unable to fill up their job orders due to the dwindling manpower available in the country,” LBS E-Recruitment Solutions Corp. president Lito Soriano said.
He cited an example: If a certain agency has receivables from OFWs amounting to $100,000 or P4.8 million a month, by the time the agency receives the dollars this October, the exchange rate has gone done to P46.50, or a loss of P150,000. This is quite a large sum, probably enough to pay salaries or rentals for operations, he said.
Source: Business Mirror
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