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Kuwait stands to lose millions yearly as row with Philippines worsens

Kuwaiti families began recruiting household help from abroad following an oil boom in the Gulf in the 1970s.

Currently, around 262,000 Filipinos work in Kuwait, with nearly 60% of them being domestic workers, according to the Philippines’ foreign ministry.

Today, they account for well over a fifth of the country’s small population of 4.2 million.

Even as that figure continues to grow, proper handling of these helpers’ rights has been lagging, as evidenced by the turmoil surrounding the row between Kuwait and the Philippines over the gulf country’s troubles in that sector.

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Manila exported its unemployment problems.

In 2017, overseas Filipino workers remitted up to $33bn (close to 10% of GDP) back home.

One of the three major goals of the country’s foreign policy is the protection of the welfare of Filipino migrant workers, which have been an indispensable source of capital to that nation’s economy.

The Philippines has exported labor for decades to fuel its economy.

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Tip of the ice-berg

The policy is proving increasingly unsustainable, since it exposes countless Filipinos to difficult and highly dangerous working conditions abroad, while the demand for labor is rising in the Philippines, along with the standards of living.

Diplomatic tensions between Kuwait and the Philippines spiked in February when the body of a murdered Filipina domestic worker, Joanna Demafelis, was discovered in a freezer in Kuwait.

In 2016 and 2017, as many as 185 Filipinos working in Kuwait died, some under suspicious circumstances, according to published media.

In the aftermath of several outrages over alleged mistreatment and murder of Filipino household help in Kuwait, the Philippines government scrambled to act to reassure the Filipino authorities and public opinion.

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Amid the escalating diplomatic tensions with Kuwait, the Philippines’ President Rodrigo Duterte has called on all Filipino workers in the Gulf country to return home.

His self-described “Solomonic” announcement, which shocked many at home and abroad, came shortly after Kuwait recently expelled the Philippine Ambassador Renato Villa and recalled its envoy to Manila over accusations the Filipino embassy engaged in a “rescue stunt” of its workers in Kuwait.

Kuwait immediately detained several non-diplomatic staff from the Philippine embassy, while issuing arrest warrants for three Filipino diplomats.

After decades of cordial relations, the two nations have moved dangerously close to severing their diplomatic ties and the fate of more than 260,000 Filipinos residing in Kuwait is now hanging in the balance.

The ongoing diplomatic crisis, however, is only the tip of the iceberg.

On Sunday, Duterte told reporters in Singapore his ban on sending Filipino workers to Kuwait is here to stay.

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“Modern heroes”

But as the Philippine economy enters a “golden age” of growth, there are hopes that many Filipinos can return home.

In fact, amid a massive $180 bn infrastructure build-up, the Philippines is, for the first time in recent history, running short on construction workers.

Several stipulations requested this year by Manila are already incorporated into Kuwait’s 2015 Domestic Labor Law but were never fully implemented.

The legislature prohibits passport seizure and gives workers’ rights to a weekly day off, annual paid leave and overtime pay, among others.

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What does Kuwait stand to lose?

Up until now, there wasn’t a remittance tax in Kuwait, but a bill to impose this tax on expatriates has been approved.

The Parliamentary Financial and Economic Affairs Committee of Kuwait is currently discussing the bill and it will surely be put into practice, according to Times of Oman.

If the bill comes to pass by the general assembly, Kuwait will be the first GCC country to impose this tax.

The country previously had a lot to gain from Filipino expatriates.

According to reports, remittance outflow from the Gulf country was at $15bn in 2016, 3% of which was from Filipino workers.

The tax is supposed to impose 1% on under $300 monetary exports and rises to 5% on remittances over $1,650.

Kuwait could’ve potentially received $22.5 million/year in taxes from Filipino workers in the country.

But with the current ordeal and problems facing the two countries, this might be an appalling loss for both.