Home for the holidays

Oh, there’s no place like home for the holidays

‘Cause no matter how far away you roam

When you pine for the sunshine of a friendly gaze

For the holidays, you can’t beat home, sweet home

This fifties Christmas song describes the longing that runs deep in every Filipino working, studying or simply based abroad. This has become more pronounced in the last three decades, when overseas Filipino workers (OFWs) timed their annual vacation to join loved ones and friends in the happiest season of all. The pandemic has made it all the more special as separated family members desire to be with their loved ones and see how each one is getting through this challenge. While this is what we want to happen, the pandemic has made it difficult to fully enjoy what the season offers.

The excitement that Christmas brings pushes consumption highest every last quarter of the year. With more purchasing power due to bonuses and 13th month pay, more remittances sent home by those who cannot be home and cash brought home by returning workers have pushed economic activities to the brim. This is not the case this year. In fact, this will be the first contraction in the fourth quarter that we will record in decades. While the contraction is expected to be lower than the second and third quarters, it is not necessarily going to be slower. The storms in the last week of October and November have caused considerable damage to agriculture and infrastructure, creating a huge void in economic activities in many regions in the country. We estimate that our fourth quarter contraction will be close to double digits.  Because of that the full year contraction will also be around -10 percent.

Our OFWs have served as our main offense and defense amid global and domestic economic crises in the past. Their remittances sent home have created various opportunities within the country and abroad and have helped improve economic activity beyond the capital. In a way, they are instrumental in spreading urbanization in many regional centers and even provincial capital. Remittances roughly represent about 10 percent of our GDP and are multiplied in consumption creating demand for education, housing and consumer goods. These have recently been muted by the pandemic. Overall consumption has been contracting due to a combination of the lockdowns, weak confidence and lost of jobs. This will remain to be the story for this fourth quarter albeit a bit slower than previous quarters. Even if the remittances have been observed to be increasing in the last few months, it is likely attributable to people sending more money due to the appreciating peso, OFWs delaying remittances due to lockdowns and OFWs returning for good and sending their international savings. This will remain to be the source of the flow in the coming months.

It should be noted, however, that the number of OFWs that have been sent home by the pandemic has already breached 300,000. There are probably more who are still waiting to be repatriated in different places, unable to adapt to job opportunities abroad or are simply sent back home by employers who no longer are able to operate their business profitably. The job losses are particularly high in industries related to travel and tourism and to a certain extent, retail trade. Manufacturing, while experiencing some recovery, are still hampered by global value chain connections since many countries are experiencing waves of the pandemic in different timings. These mean that OFWs remaining abroad will continue to be at risk in the coming year. Meanwhile, official data of the Philippine Overseas Employment Administration (POEA) says that as of October, the total number of OFWs deployed roughly totaled 700,000—a 60 percent drop from the same period last year. This is the lowest deployment since 1996. If we are to account for those who were repatriated, we can assume a net deployment of about 350,000. Even with the opening up of health worker deployment, that will still be not enough to cover the sectors that have limited worker demand. Hence, many of the workers who are home for the holidays may be here for extended ones.

The challenge is our own internal labor market is also facing downsizing. The latest round of the Labor Force Survey showed that overall labor force shrunk by 6 percent compared to a year ago as many industries continue to be downsizing. This will most likely continue in 2021 as firms and businesses, especially the small and non-digital, decide to fully implement full-scale operational adjustments that could lead to redundancies. It is therefore imperative for the government, firms and workers to work together in preparing the work force for retraining and reskilling, insurance, entrepreneurship support that can address confidence issues both of business and consumers. While we want people to be home for the holidays, we want that to be temporary—whether here or abroad—we all need to go back confidently into the economy so that we can continue to be looking forward to going home and not staying at home for long periods of time.

The Ateneo Center for Economic Research and Development wishes everyone a safe and blessed Christmas and hopeful for our economic engines to confidently move faster in 2021.

Home Opinion Home for the holidays

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