Hous­ton, Texas to Manila, PHL

Business Mirror - - OPINION -

THE city of Hous­ton, Texas, is the cap­i­tal of the oil in­dus­try in the United States. Some 5,000 com­pa­nies in­volved in oil ex­plo­ration, de­vel­op­ment, refining and dis­tri­bu­tion have their head­quar­ters in this city.

Over two decades, com­pen­sa­tion to the oil-com­pany ex­ec­u­tives has come from stock op­tions. In 1992 the US Congress passed a law en­cour­ag­ing “per­for­mance-based” pay, and 70 per­cent to 80 per­cent of th­ese ex­ec­u­tives’ in­come de­pends on prof­itable com­pany re­sults and the share price.

Dur­ing the oil boom, Hous­ton was adding 100,000 new jobs per year, driven by the oil in­dus­try. That pace is now at a vir­tual stand­still. Over­all, home build­ing is down, and com­mer­cial and of­fice build­ings are hav­ing prob­lems with oc­cu­pancy rates. Sales of sin­gle fam­ily homes fell 2 per­cent in Jan­uary, and sales of houses priced over $500,000 tum­bled 9 per­cent.

It is not just the ex­ec­u­tives that are feel­ing the pain. Thou­sands of mid­dle­m­an­age­ment jobs have been lost in oil ex­plo­ration and pro­duc­tion, and Uber driv­ers are be­ing stocked with for­mer en­ergy-in­dus­try pro­fes­sion­als try­ing to keep up on their car pay­ments and put food on the ta­ble.

Over the last few months there has been a con­tin­u­ing con­ver­sa­tion about the ef­fect on the jobs of Filipinos work­ing in the Middle East. At this point, the amount of re­mit­tances from over­seas Filipinos is still grow­ing. But, de­spite the Philip­pine govern­ment as­sur­ances that it has ev­ery­thing un­der con­trol, we wanted some in­de­pen­dent con­fir­ma­tion of that, and what we were told is not good.

Sev­eral or­ga­ni­za­tions rep­re­sent­ing the in­ter­ests of over­seas Filipino work­ers have been sound­ing the alarm that work­ers are be­ing fired. Sev­eral news or­ga­ni­za­tions have done their own anec­do­tal sto­ries from re­turn­ing works. We de­cided to ask some­one we know well who is on the ground in a Per­sian Gulf state, which has thou­sands of Filipino work­ers. The story is not good and be­lies the govern­ment re­port.

This gen­tle­man has been in the re­gion for two decades and is a top fi­nance of­fi­cer of a com­pany that man­u­fac­tures con­struc­tion ma­te­ri­als. Our friend tells us that any govern­ment talk about this be­ing a re­sult of a move to em­ploy their own cit­i­zens is false. Lo­cals can­not do the jobs that Filipinos are do­ing. How­ever, his com­pany has laid off 60 per­cent of over­seas work­ers of all na­tion­al­i­ties, from the rank and file to ex­ec­u­tives. There is just no busi­ness to keep the com­pany em­ploy­ing th­ese in­di­vid­u­als.

The con­struc­tion in­dus­try is de­pen­dent on govern­ment in­fra­struc­ture projects, and al­most all but the most vi­tal projects have been can­celed out­right. Th­ese gov­ern­ments do not have the rev­enues as a re­sult of low oil prices to keep their economies grow­ing. Com­pa­nies are plan­ning for this sit­u­a­tion to con­tinue for at least two more years. More lay­offs will hap­pen in the fu­ture, as the next wave of un­em­ploy­ment will come to Filipino em­ploy­ees not work­ing for govern­ment-de­pen­dent com­pa­nies as the lo­cal economies de­cline some more.

The Philip­pine govern­ment has had more than a year to pre­pare for this down­turn, and an­other legacy of the Aquino ad­min­is­tra­tion will be to pass this se­ri­ous prob­lem to its suc­ces­sor.

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