OFWs and ‘Uncomfortably Strong’ Peso
Inquirer Feedback, 05/29/07
THIS is a reaction to Mr. Neri’s irritating remarks from your column, part of which reads: “When asked about the families of overseas Filipino workers, who are likewise adversely affected by the peso’s strengthening, Neri said: ‘Well, they are not being taxed anyway, so that’s their consolation.’
“‘Also, OFW remittances are getting higher anyway,’ Neri said. ‘Remittances are increasing because there’s an upgrade on the quality of jobs.’”
First thing, Mr. Neri should not “brag” about OFWs not being taxed; lest he forget, remittances from the OFWs keep the country’s head above high waters. Second thing, indeed remittances from OFWs are increasing simply because more and more Filipinos leave the country to work abroad.
Mr. Neri’s statement on increased dollar remittances due to upgrades in the quality of jobs is inaccurate. It’s just a matter of ratio and proportion; the more Filipinos leave the country to go work abroad, the more the influx of dollar remittances to the country.
Now why do people leave the country, everyday, to work abroad? Because they don’t see a good future for their family if they just stick around and wait for the Philippine government to give them the opportunity to have one. It’s sad, but it’s the truth!
Indeed OFWs are adversely affected by the strengthening peso because prices are not going down accordingly, which virtually makes the nature of the strengthening peso superficial. With the current exchange rate, OFWs practically lost about 10 percent of their income compared to fourth quarter of 2001 rates, and approximately 20 percent from September 2004 rates.
– Jeoffrey Bautista, Al-Khobar, Saudi Arabia (via e-mail)
I actually consulted a couple of relatives working in the banking/finance sector about this ‘dilemma’. Both of them say that the higher inflow of remittances along with the weakening of the US dollar itself are the major factors behind the strengthening of the peso. Ergo, the government can’t really take any kudos for the now almost P45=$1 exchange rate.
While I am suffering over this – since I’m effectively earning less with prices apparently not going anywhere down – I try to simply look at it this way: Sometimes you’re up; sometimes you’re down. When the peso plummeted to P56=$1, OFWs and exporters rejoiced while importers sunk deeper into debt. Now, it’s the importers turn to rejoice, while we learn to tighten our belts. In other words, weather-weather lang ‘yan.
In any case, my uncle says his bank’s year-long forecast is for the peso to stabilize at P47 =$1 by the end of the year. I’m good with that.