Houston, Texas to Manila, PHL
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.