Cheap oil, trade deal to cut OFWs’ mobility
Reduce the number of permits, procedures, taxes, and fees for both manpower agencies and the prospective OFWs as the competition from upcoming labor exporting economies will become more intense.
independent, market- oriented think tank in Jakarta, is conducting a comparative study on labor migration by the Philippines and Indonesia, with the explicit goal of learning from the Philippine experience, especially in labor protection during and after deployment.
Based on latest available data from the World Bank, of the top 10 destinations for OFWs in 2013, four are in the Middle East, five in the Trans Pacific Partnership ( TPP) bloc, and Italy. (See Table 2)
The current low oil prices and approval of the TPP Agreement will have initial and short-term negative impact on the deployment of OFWs for two reasons.
One, Saudi Arabia and other Middle East economies will demand less foreign workers because of their shrinking revenues from oil exports. And two, the Philippines will temporarily lose out to Vietnam and Malaysia in some services and labor mobility as they are TPP members and hence, will benefit from lower tariff and non-tariff barriers (NTBs) by the big TPP economies like the US, Canada, Japan and Australia.
There are several policy implications and reform measures for the Philippines.
One, reduce the number of permits, procedures, taxes, and fees for both manpower agencies and the prospective OFWs as the competition from upcoming labor exporting economies will become more intense. In this aspect, the Philippines should follow the lead of Vietnam, Indonesia, Pakistan, Bangladesh, Nigeria, and Egypt.
The Philippine Overseas Employment Administration (POEA) can shorten the process for private manpower agencies which have good track records over the past 10 years or more.
Currently, the procedures and permits required of new recruitment agencies and those that are 10+ or 20+ years old are the same.
Two, the Philippines should pursue its application for TPP membership. Thailand and Indonesia are almost sure to apply for membership in the next round of membership expansion, they will reap the benefits of bigger market access, both goods and services, to the richer member-economies of TPP.
Three, reduce the business bureaucracies, taxes and fees in the Philippines so that more businesses, local and foreign, will come and stay here. Then more and new local higher-paying jobs will be created, and this will help absorb the workers and professionals from the Middle East who are sent home due to cheap oil.