The Philippines has decided to cut its interest rates by a quarter percentage point. It was the Philippine central bank’s third cut since December last year.The bank said the move is needed to ensure liquidity and boost market confidence amid the global economic crisis. Unlike its neighbours Japan and Singapore, the Philippines is not expected to fall into economic slump. But it is definitely facing the effects the ongoing crisis, as its exports and imports are shrinking and unemployment rate is rising.
On the streets of Manila
The Philippines has one of the highest unemployment levels in Southeast Asia and about a third of its population is considered poor. In the past, migration has helped the country to solve the unemployment problem to a great extent. In fact, the money migrant workers send back home accounts for nearly 10 percent of the country’s gross domestic product and is a major source of foreign exchange for the economy.
But the ongoing global economic slowdown is now threatening the jobs of thousands of Filipinos working overseas, says Max Estayo, a journalist from Manila.
“We are actually projecting a slower growth this year compared to the previous years, primarily because of the low remittances that come from countries which are hard hit such as the US and Europe.”
More than a tenth of the country’s population work overseas, mainly as health workers, financial and IT professionals and domestic helpers.
Since last October, more than 5000 overseas Filipino workers have lost jobs abroad and have come home. And the numbers are expected to rise further.
Local job cuts
Within the country too, the unemployment rate is rising. More than 40,000 workers have been laid off in the recent months, as many multinational companies and export-oriented businesses have closed down.
“Late last year we saw layoffs in companies such as Texas instruments and earlier this year the Intel shut down its plant where hundreds of people directly lost jobs," says Elaine Ruzul Ramos from Manila Standard Today.
Lifting the ban
The Philippine government doesn’t allow the deployment of its workers to countries such as Iraq, Lebanon or Nigeria because of security risks. But amid the ongoing crisis, the government is reviewing lifting the ban.
“Interestingly the government is considering lifting the ban because there are many job opportunities in Iraq, especially in reconstruction work. The fact that it is reviewing its policy indicates how things are becoming difficult,” says Elaine Ruzul Ramos.
The Arroyo government plans to spend nearly 330 billion peso or over 5 billion Euros, particularly in infrastructure and social projects this year.
The move, many say, is needed to boost the growth and generate jobs. But it also comes as the country faces elections next year and President Gloria Arroyo continues to suffer from bad approval ratings in public surveys.