But Pinoys may be spared: Oil plunge may result to job cuts in Middle East

CEBU, Philippines - Overseas Filipino Workers in the Middle East are threatened by possible manpower layoffs due to the continuous drop of crude oil prices in the world market.

Economist Bernardo Villegas however, said that should Mideast companies streamline manpower due to the weakening oil prices, Filipinos on the other hand are more like to be retained due to their known edge in talent and efficiency.

"Filipinos are first to be hired, and last to be fired," said Villegas downplaying impressions that if the plunging cost of crude in the market were to continue, Middle East will likely experience an economic crash resulting to job cuts.

"We are the most sought after in the world. There is nothing to worry about," said Villegas.

Earlier, the Bangko Sentral ng Pilipinas announced that the diving prices of oil in the world market are not expected to dampen remittance growth at least in the short term.

However, exporters of goods and services could take a hit as spending power of oil-producing countries weakens.

Fuel prices have fallen by more than half since June last year as global production has surged while demand cools.

Based on the estimates of the Commission of Filipinos Overseas, around 27 percent of 10.489 million overseas Filipinos work and live in the oil-rich Middle East as of December of last year,

The continued slide in oil prices has sparked concerns that remittances, which are equivalent to around 10 percent, of Philippine gross domestic product, will consequently fall, or worse Filipinos will be affected by retrenchments.

BSP’s latest record showed that cash remittances which Filipinos coursed through banks grew 5.7 percent to $21.991 billion as of November last year from $20.796 billion from 2013’s comparable 11 months.

Major sources of cash remittances in the 11 months to November 2014 were the United States, Saudi Arabia, the United Arab Emirates, the United Kingdom, Singapore, Japan, Canada, and Hong Kong.

Money sent home by Filipinos abroad reached $22.968 billion in 2013 -- 7.4 percent more than 2012’s $21.391 billion -- exceeding a five percent growth forecast. The BSP expects inflows to have grown by 5.5 percent in 2014.

Villegas further projected, that the cheap crude prices will stay in the bottom for long.

Among other factors, the part of the reasons of the oil price slump, is the decreasing demand of oil the world market.

In a report, oil demand in Asia and Europe began weakening — particularly due to slowdown in China and Germany.

More broadly, oil demand has been stagnating in lots of places around the world. The United States, once the world's biggest oil consumer, saw big cutbacks in industrial oil use after the recession, while gasoline consumption has flatlined as fuel-efficient cars became more widespread. At the same time, countries like Indonesia and Iran have been cutting back on fuel subsidies.

The combination of weaker demand and rising supply caused oil prices to start dropping from their June peak of $115 per barrel down to around $80 per barrel by mid-November. (FREEMAN)