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NEWS UPDATES Asean Affairs              30  July 2011

Saudi hiring poses problems to Philippine labor market

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Saudi Arabia’s shift to hiring more Filipinos could worsen unemployment in the Philippines, posing a challenge to the ability of Manila’s business process outsourcing industry to absorb returning overseas Filipino workers.

Benjamin Diokno, former budget secretary during the Estrada administration, said the impact of Saudization is “definitely negative,” though the intensity remains uncertain.

According to Diokno, Saudization has two effects: first, some jobs will not be renewed; and second, Saudi Arabia will stop the flow of new workers from the Philippines.

“It will affect both the unskilled and skilled workers. It will definitely worsen the unemployment situation in the country, since there will be an increase in workers returning from abroad,” said

Diokno, who is also an economics professor at the University of the Philippines.

Data from the National Statistics Office showed that 22.1 percent of the 2 million OFWs for the period April to September last year were working in Saudi Arabia.

But Socioeconomic Planning Secretary Cayetano Paderanga said the possible number of OFWs who would be affected by Saudization is “not significant” compared with the annual increment to the labor force.

At end-April, the country’s labor force stood at 39.7 million.

“Even then, the government is trying to make room for all of these workers coming in. We haven’t been that successful in the past, [but] we will try to become successful now,” Paderanga said.

While admitting that Saudization could have an impact on remittances and unemployment, Paderanga said it does not show a “very significant impact.”

“The trend really is that remittances [are] still increasing but not increasing as fast as [they] used to be. But [an]other thing is that BPO is increasing faster. So, there’s a shift on how we are earning the current inflow that we have,” he said.

“Remittances have been a very strong support to the economy. We hope it would stay there. But the program of the Aquino administration is to grow several directions, especially directions that are internally sustainable,” Paderanga, who is also director general of the National Economic and Development Authority, said.

Data from the National Statistical Coordination Board showed that OFWs contributed 13.9 percent, 17.6 percent, and 17.1 percent to the economy at current prices in 2008, 2009 and 2010, respectively.

“Over time we hope remittances will continue to be there but it will become less important in a sense that we have other sources that are coming in,” Paderanga said.

Besides the BPO sector, the government is banking on tourism and agribusiness to create more jobs.


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