Patrick C.


11/8/12 PHILCON

The Philippines over the past decades has heavily relied on the remittances of migrant workers, even though it is against the policy statement (Section 2, C ) of RA8042 or the Migrant Workers Act of 1995. It is explicitly stated that: (c) While recognizing the significant contribution of Filipino migrant workers to the national economy through their foreign exchange remittances, the State does not promote overseas employment as a means to sustain economic growth and achieve national development. The existence of the overseas employment program rests solely on the assurance that the dignity and fundamental human rights and freedoms of the Filipino citizens shall not, at any time, be compromised or violated. The State, therefore, shall continuously create local employment opportunities and promote the equitable distribution of wealth and the benefits of development. (Republic of the Philippines, 1995) However, according to the World Bank, as of 2008, the Philippines have received $18.643 billion in remittances. About 1.1 million of those migrant workers are located in Saudi Arabia in which they constitute about $7.9 billion from the total remittances received by the Philippines (COWA, 2011). Until today, Saudi Arabia since the 1970s has been the top destination of Filipino migrant workers such as nurses, domestic helpers to civil engineers.


REMITTANCES OF OFWs by TOP 5 COUNTRIES IN THOUSANDS OF DOLLARS (2005 2010) 2005 All Country SourcesTotal United States Canada Saudi Arabia United Kingdom 10,689,005 6,424,848 117,061 949,372 300,725 2006 12,761,308 2007 14,449,928 2008 16,426,854 2009 17,348,052 2010 18,762,989

6,526,429 590,627 1,117,915 561,670

7,564,887 595,079 1,141,319 684,007

7,825,607 1,308,692 1,389,120 776,354

7,323,661 1,900,963 1,470,571 859,612 773,561

7,862,207 2,022,611 1,544,343 888,959 882,996

Japan 356,659 453,98 401,612 575,181 Source: (Philippine Overseas Employment Administration, 2010)

Meanwhile, inside Saudi Arabia, although it is a very wealthy nation, it has a young population, most of whom are unemployed. This paradox was due to the state being highly reliant on a single resource (oil) and the importation of labor in order to meet the requirements of economic growth that would contribute to further develop the state (Fakeeh, 2009). The government has acknowledged this problem and has developed a policy of “Saudization”. It is aimed to replace expatriate (migrant) workers with local population as a way of resolving the issue of unemployment (Al-Dosary & Rahman, 2005). THE KINGDOM OF SAUDI ARABIA UNEMPLOYMENT RATE (2011) YEAR 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 UNEMPLYMENT RATE 8.1 8.15 8.34 9.66 10.35 11 11.52 12 11 9.8 10.46 2 PERCENT CHANGE 0.62 2.33 15.83 7.14 6.28 4.73 4.17 -8.33 -10.91 6.78

2010 10 Source: (Central Intelligence Agency Editors, 2012)


Saudization Program The program classifies private companies into different categories. They are classified as Excellent or Blue, Green, Yellow and Red. The Ministry of Labor summarizes the program by stating that:

Companies deemed Excellent or Green would be granted the most privileges in visa requests and operations for non-Saudis. Yellow listed companies are given a period of nine months as of June 11 to improve their rate of nationalization before restrictions come into effect, while Red firms are given six months. In the restrictions, Yellow listed companies will find themselves barred from transferring visas of non-Saudi workers to their sponsorship, while Red companies will be barred from new visas, substitute visas and seasonal work visas, and from opening new branches or facilities with the Labor Office. (Saudi Gazaette Editors, 2011) Philippine Response to Saudization The Philippines responded to the policy rather negatively. The Philippine's relation to the Kingdom of Saudi Arabia has been very strong and friendly, since it been its largest supplier of workers and nurses to its country. Essentially, these workers have helped the economy and built the infrastructure of Saudi Arabia which became one of the factors that made it one of the most developed countries in the Middle East. Bad as it may be, the Department of Foreign Affairs (DFA) has no course of action except to respect the policy of the government of Saudi Arabia (Esplanada, 2011). However, the government of the Philippines may address the problems of the OFWs through bilateral talks, if needed. As of today there had been no drastic impact to the flow of Migrant workers to the Middle East. Rather, according to the Overseas Workers Welfare Administration (OWWA), that the effects of Suadization will be gradual. However, within Saudi Arabia, the policy has been met with little success, with only half of all the employment agencies have complied. The Ministry of Labor itself declared it as a failure.


In a way the some OFWs have been spared by the policy and still remain a part of the economy of Saudi Arabia. In addition, the DFA has emphasized that the OFWs still currently working there cannot be fired just because of the policy. If such a scenario were to occur, it could be seen as a breach of contract to the employees, since it will be a manifestation of wrongful termination of employment of the OFW (OFW Guide Editors, 2011). These workers can fight for their employment since they are still protected by their rights as well as their contracts. The only foreseeable threat as stated by the OWWA is that this policy might be copied by other Middle Eastern states themselves, which can cause the unemployment of millions of OFWs and would cost the Philippines billions of dollars.

Future of Saudization Since the policy itself has been a failure many labor and migration experts have called it as a temporary short-term solution to the problem of unemployment in the country. The program falls short on several key areas. First is that it only targets the symptom (unemployment) and not on the real problem (employability). Second, the policy is not tuned into the needs of the private sector and has failed to meet the concerns of employers or employees. Third is that, the policy has failed to respect the varying situations of employers in different sectors of the labor market and should have recognized the need to set industry specific targets for Saudization (Fakeeh, 2009). In summary, the policy is deficient and provides little more than a short term solution. Conclusion For the Philippines, it would seem that the program for Suadization borders on the unfair for the OFWs. It is estimated by the Department of Labor and Employment (DOLE) that around 20,000 50,000 may be affected by it (OFW Guide Editors, 2011). Although the program itself is meeting very little success it would take time for it to be felt by the OFWs, but for now it seems as though only few companies have complied with the provisions of Suadization.


   Al-Dosary, A. S., & Rahman, S. M. (2005). Saudization (Localization) –A Critical Review. Dhahran: Routledge. Central Intelligence Agency Editors. (2012, November 6). The World Factbook: Saudi Arabia. Retrieved November 12, 2012, from Central Intelligence Agency: Esplanada, J. E. (2011, July 29). ‘Saudization’ still on track, says DFA. Retrieved November 12, 2012, from Inquirer: Fakeeh, M. S. (2009). Saudization as a Solution for Unemployment: The Case of Jeddah Western Region. Glasgow: University of Glasgow. OFW Guide Editors. (2011, July 24). OFWs in Saudi Arabia Advised to Report Unfair Terminations. Retrieved November 12, 2012, from OFW Guide: OFW Guide Editors. (2011, July 15). POEA: Saudization Will Be Implemented Gradually, No Impact Yet on OFWs. Retrieved November 12, 2012, from OFW Guide : Philippine Overseas Employment Administration. (2010). Overseas Employment Statistics 2010. Retrieved November 12, 2012, from Philippine Overseas Employment Administration: Saudi Gazaette Editors. (2011). New ‘nationalization’ program announced. Retrieved November 12, 2012, from Saudi Gazaette:

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