Update on Effects of Oil Price Decrease on the Employment of OFWs
Department of Labor and Employment
14 March 2016
(Following the instruction of Labor and Employment Secretary Rosalinda Dimapilis-Baldoz to all Philippine Overseas Labor Offices to provide weekly updates on the effects of the oil price decline on OFWs, the Labor Communications Office, in cooperation with the International Labor Affairs Bureau, is providing below a summary of the POLO reports for the week.)
The report of DOLE Undersecretary Ciriaco A. Lagunzad III and OWWA Director Albert Q. Valenciano on their special mission to the KSA from 7-11 March 2016 contains the following:
(1) On the Saudi Binladen Group (SBG)
• There were about 400 OFWs in the SBG’s Qadisiyah Work Camp, 100 of whom were met by the mission and who said some of the SBG OFWs at the camp worked with its Architectural and Building Construction Division or ABCD), while the others are workers employed by SBG’s other sub-contractors, like Empower and CPC.
• The ABCD workers disclosed that they used to number 600 in their project located near the city’s Exit 12, but the number has gone down to 20; their co-workers were transferred to the company’s worksite in Jeddah.
• The workers of sub-contractor Empower said that SBG mobilized an additional 1,000 workers, more or less, for the on-going construction of a high-rise building inside the King Abdullah Financial District. On the other hand, CPC workers said the company acquired 12 new buses for their project in al Kharj City located south of Riyadh. The workers complained about lack of food; working without break time; delay of 3-4 months in the payment of their salaries and food allowance; non-renewal of iqama; no medical card that would entitle them to health care/medical attention; and lack of effort on the part of management to communicate truthfully, which heightened their anxiety.
• A worker of ABCD observed that the company has not replenished its materials supply inventories (cement, cable and tie wire) since December 2011.
• In another meeting with OFWs at the SBG’s Hamdaniah Work Camp in Jeddah, the mission found that close to 500 OFWs, also employed at SBG’s ABCD, live at the camp. Most of them have stopped work and want to return to the Philippines primarily because of delayed payment of salaries of 4-5 months. Ten of them were transferred to sub-contractors but have not been issued iqama by the sub-contractor.
• Mr. Nehad Ismail, director of HR for International Operations, promised the mission that the company will facilitate the issuance of exit visas for 40 workers who are working with its sub-contractors.
(2) On Saudi Oger Ltd.
• There are 7,580 OFWs in the company as of March 6, 2016, out of whom 800 are classified as management level employees.
• The management informed the mission that Saudi Oger, with 38,000 workers, is not involved in new mega projects, but in medium-sized projects in the next 2-3 years, as well as in maintenance contracts, such as with King Abdullah University of Science and Technology (KAUST) with which it has a 20-year contract and where it employs 1,000 OFWs. It has also maintenance services contracts for royal palaces all over Saudi Arabia that will continue for an additional five years.
• Saudi Oger will downsize in summer and reduce the number of its sub-contractors, but operations will stabilize after this period. The transition will lead to manpower reduction, especially in construction, in the next 1-2 years, although it added that Filipino workers will be the least affected. As to the number of OFWs, management did not give a definite answer, except to say that it will be less than 1,000 workers. The company has assigned to its contractors 431 OFWs.
• It outlined the company’s plan to pay the salaries of Filipino workers—delayed since November 2015—as follows: (a) before the end of March 2016, payment of November 2015 salaries; (b) by April 2016, payment of December 2015 to January 2016 salaries; (c) May 2016-payment of February and March 2016 salaries; and (d) by June 2016, payment of salaries will be current. In the meantime, affected workers can request for financial support for their daily needs. The company has no-work-no-pay policy, but those who stay and are willing to work, but are prevented to do so, would be paid.
• Management assured the mission that Saudi Oger will pay for all the penalties for 3,180 un-renewed iqama and resolve this problem by April 2016. It also assured the mission that 224 exiting workers will receive their salaries and benefits and committed to pay their end-of-service benefits by April 2016.
(3) On MMG
• There are still about 300 OFWs of MMG working on a sub-contract with ARAMCO on an arrangement that will make it possible to pay the workers directly without passing through MMG.
• Philippine Ambassador to Saudi Arabia Ezzedin Tago informed the mission that the MMG problem is almost over, given the intervention of the King to waive payment of penalties (which the MMG will be charged) for purposes of exit issuance and to repatriate the workers. Ambassador Tago said documentation has been completed and the Saudi Labor Office is working with the Jawasat (Immigration Department) for the workers’ exit visas.
• Officials of the Ministry of Labor in the eastern Province—led by its director general, Mr. Omar Al Omer Al Saleh who, together with Mohammad al Musa, Mohammad al Atrash and Abdulrahman al Sayaz, had met with the mission—suggested the plan for the MMG workers, that is, to pay 20 percent of the workers’ claims before they leave and pay the remaining 80 percent through the Philippine Embassy under a special power of attorney.
• The final exit visas of 152 OFWs are now being processed by the Jawasat (Immigration Department). This leaves about 260 more workers who had wished to be repatriated. On average, each worker will receive SR 2,000 as advance payment for end-of-service benefit.
• The mission met with some of these workers in the MMG camp in Jubail and they requested to read the document they are supposed to sign containing the computation of their claims. They also inquired about the special power of attorney which the Philippine Embassy in Riyadh is facilitating in favor of the persons who will receive their back wages and benefits. They also inquired about possible financial support that the government can extend their families.
• The mission allayed their fear that MMG will make them sign another final settlement document or waiver before they leave Saudi Arabia, saying this is not true because the agreement or compromise with the MMG has been ordered by King Salman himself for implementation by the Ministry of Labor.
• In a meeting with Mr. Essa al Hanwah, assistant HR director of MMG, he confirmed to the mission that 18 Filipino workers have been repatriated, including 11 workers with medical problems. He assured us that the workers are provided food and daily necessities until they are able to leave Saudi Arabia for the Philippines.
(4) On Meeting with OFW Council of Leaders
• The OFW Council of Leaders of Jeddah informed the mission of the KSA government’s moves on account of the oil price decline, some of which are as follows: (a) 66 percent reduction in oil price subsidy resulting to an appreciable increase in pump prices; (b) possible imposition of value added tax on goods and services; and (3) use of foreign exchange reserves to reduce budgetary deficit.
• The Council expressed hope the problems in SBG, Saudi Oger, and MMG will be resolved soon. The leaders inquired whether the government can provide some form of financial relief to the affected workers’ families and to the workers themselves who are dire straits. They also proposed ways to improve the implementation of PDOS by including moral values reorientation in the PDOS modules; conduct the PDOS in the provinces; and to include family members in the orientation. They also wondered whether it would be feasible to allot US$5.00 out of the $25.00 OWWA contribution to set up a legal assistance fund to take care of non-criminal cases. The mission briefed the Council and all the OFWs it met in the camps about the DOLE’s Assist WELL Program and advised them to put in writing their proposals to the government.
In Dubai and Northern Emirates, the POLO reported job orders this week reached 201 for the hospitality sector; 606 for construction/manufacturing; 213 for health and wellness; 186 for retail/merchandising; and 60 for cleaners and security guards.
The POLO in Bahrain reported no termination this week; but reported a decrease in job orders from 41 last week to 40 this week; a decrease in employment contracts processed, from 189 last week to 113 this week; and an increase in the number of OECs issued, from 287 last week to 364 this week.
From Doha, in Qatar, the POLO reported there was no retrenchment or termination of workers this week, but POLO has unofficial reports of another round of termination by Hamad Medical Corportaion involving administrative and support staff. POLO is to ascertain if reports are true and find out how many OFWs might be involved.
The POLO in Oman reported a normal week for OFWs: no retrenchment/termination of OFWs, although there was of other nationalities; an increase in the number of job orders processed, from 110 last week to 227 this week; an increase in employment contracts processed, from 172 last week to 277 this week; and an increase in OECs issued, from 104 last week to 269 this week. A scheduled meeting between PE-Oman, PE-Qatar, and PE-UAE at the Burai-Al Ain border to conduct ocular inspection for the updating of contingency plans in connection with the Saudi-Iran conflict, was cancelled due to bad weather.
While the Macau economy is not affected by the slump in oil prices and OFWs are not affected, its revenues from gaming—on which it depends much, including on tourism, textile, and garments—have been declining since 2014. The POLO report this week indicates Macau has not renewed work quotas of non-resident workers occupying managerial positions because of low tourism revenues and the completion of new tourism properties. POLO processed 33 individual contracts in the first two weeks of March, compared to 36 contracts in January and 35 contracts in February. There is no reported termination; OFWs’ employment situation remains stable.
From Taiwan, the Office of the Labor Representative in Taipei reported that it verified 186 job orders for the week, an increase of 22 percent over last week’s, but the number of manpower in the job orders was only 429, lower than the 487 manpower in job orders processed last week. This, as preparations are underway for the hiring in Manila at the end of this month by Powertech Technology Inc. (PTI), a world-leading provider of IC back-end services, of 78 OFWs to work as factory workers in its plant in Hsin-chu, Taiwan through the Special Hiring Program for Taiwan/International Direct E-recruitment System (SHPT/I-DES). Three of Powertech’s HR executives will conduct a screening/interview of 320 applicants at the Occupational Safety and Health Center in Quezon City.
In Brunei, the POLO reported that job orders verified decreased from 48 in the last week of February to 24 in the first week, and then to 29 in the second week, of March. The manpower complement for the job orders in the first week of March was 226, and for the second week, 36. Individual contracts verified in the first week of March reached 45, increasing to 70 in the second week. Likewise, OECs issued increased, from 240 in the last week of February, then to 261 in the first week of March, and to 416 in the second week.
The Minister of Energy reported at the 12th session of the Legislative Council on the need of Brunei Shell Petroleum (BSP) to rightsize its labor force—by 15 percent of its 655 foreign labor quota. Already, BSP has terminated 75 foreign workers. POLO has written the Ministry of Energy how many of the 655 workers are OFWs, and if any OFW is part of the 75 terminated workers. There is no reply yet.
In Malaysia, the DFA, in a letter to Sec. Rosalinda Dimapilis-Baldoz relayed the information that a survey by the Financial Times, the FT Confidential Research, shows that Malaysian workers are most adversely affected by the economic slowdown in Southeast Asia and have the most difficulty securing employment.
The POLO in Australia (which has jurisdiction over New Zealand) reported no termination this week; six job orders involving 28 OFWs this week compared to only two job orders involving only two OFWs last week; four contracts processed compared to nine last week; and 14 OECs this week as against 24 OECs issued last week.
Despite falling oil prices, NZ government awarded 15 new oil and gas exploration permits, involving US$110 million in committed spending for further work investments of US$1 billion. Christchurch Rebuild continues. The recent amendments to the immigration law allowing workers in the Canterbury region to transfer to another employer as long as it is the same occupation without the need for visa variation are helping foreign workers, including Filipinos, to get new jobs after retrenchment or contract termination.
From Korea, the POLO reported that the administrative manager of Sungchang Heavy Industries Co. Ltd. visited the POLO this week to validate the receipt by three (3) Filipino engineers of their salary for the month, the end of service benefit, and their application for pension benefit. The engineers said they have no further claims on the company. As earlier reported, the contracts of the three OFW engineers were pre-terminated, while the contracts of two others were not renewed due to the completion of its Suncor Energy project. The administrative manager manifested Sungchang will again engage the services of the five OFW engineers, hopefully, by next year. The three engineers will leave Korea on 18 March. Only one Filipino planning/design personnel is left with the company.
EUROPE AND THE AMERICAS
The POLO in Toronto reported no termination; processed a job order for 12 skilled pork production technicians. Reduction in employment opportunities was basically on account of the changes in federal policies that were implemented starting 20 June 2014 (Overhaul of the Temporary Foreign Worker Program) when the four-year duration of stay took effect in April 2015 and on 30 November 2014 (Reforms on Live-In Caregiver Program.
As of reporting period, the POLO in Milan, Italy said the oil price decline has no impact; but there was a decrease in the number of OECs issued, from 236 in February to 210 in the two weeks of March on the account of the strict implementation of the “lavoro subordinato”, or work permit-holders only.
From Rome, the POLO reported no impact on employment of either land-based or sea-based OFWs; a drop in the number of individual contracts verified due implementation of MC No. 13 Series 2015 on the issuance of OECs for re-hires, change of employer/jobsite, and irregular workers bound for Italy; and a drop in number of OECs issued due to full implementation of the BM Online System.
In Washington, the POLO said oil price drop has no significant effect on OFWs’ employment in the US and in the Caribbean; reported three (3) job orders processed this week compared to nil last week; employment contracts reached 34 this week, compared to 22 last week.
The next update will be Monday, 21 March 2016. For questions, please contact the Labor Communications Office at 527-3446.