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Shortchanging in Filipino seafarer’s remittances

Shortchanging in Filipino seafarer’s remittances
ATTY. DENNIS GORECHO | January 12,2021 -

Filipino seafarers are being shortchanged in the conversion of their dollar remittances to pesos which a blogger described as a “thievery” in the maritime industry.

It is a known practice of some unscrupulous manning agents to shave off at least one or two pesos from the foreign exchange rate, misleadingly calling the cut as “service charges.”

The Philippines is considered as one of the major supplier of maritime labor globally as it is estimated that there is one Filipino seafarer for every four to five crew members on board a vessel at any time.

The sea-based sector’s remittance comprises at least 22 percent of the total dollar remittances of Overseas Filipino Workers (OFWs).

Unlike land-based OFWs, the POEA Standard Employment Contract (SEC) mandates that the Filipino seafarer is required to make an allotment which shall be at least eighty percent (80%) of the seafarer’s monthly basic salary, payable once a month to his designated allottee in the Philippines.

The estimated 519,031 deployed Filipino seafarers in 2019 per POEA data remitted $6.539 billion or around P326.95 billion.

Lawyer Peter Payoyo pointed out in an article the practices of some manning agencies of pinching valuable pesos from seafarers’ monthly remittances.

Payoyo cited the survey made by Philippine Seafarers Assistance Program (PSAP) which revealed that manning agencies have been using a variety of odd techniques to make a quick buck from the remittances flow: “delayed forward of allotment”, using a “house rate” for the currency exchange, “allotment slip available upon request”, “allotment slip mailed to seaman onboard”, or “allotment after all deductions made”, which are often not explained to the seafarer or the family.

He stressed these practices are clearly contrary to the letter and spirit of the POEA contract which says that facilitation by the manning agency of allotments shall be “at no expense to the seafarer”, and that “allotments shall be paid to the designated allottee in Philippine currency at the rate of exchange indicated in the credit advice of the local authorized Philippine Bank”.

The 2019 Seafarers Happiness Index survey report released by the Mission to Seafarers (MTS) noted that seafarers repeatedly lamented that their wages seemed to be falling in real terms due to several factors.

Seafarers cited the dubious fees charged by some manning agents as well as the confusing exchange rates, which impacts the money they are able to provide to their families.

Blogger Fred Uno of pointed out in an article that it is not uncommon for unscrupulous manning agents to get to keep part of the remittances when converting the money to pesos by using an exchange rate that is usually one or two pesos lower than the official rate of the Bangko Sentral ng Pilipinas (BSP).

Such tampering with the dollar-to-peso rate, he added, results to the shortchanging of Filipino seafarers since their families receive less than they should in allotments.

Uno cited as an example an officer with a basic monthly salary of $2,000 will remit to his allottee’s account 80 percent of the amount or $1,600.

The allotment in pesos should be PHP76,800 based on the current rate more or less of P48 to the dollar (the BSP’s reference rate on 11 January 2021 is PHP48.0790 for every dollar).

If the manning agency knocks off PHP2.00 from the conversion rate, the allotment would amount to only PHP73,600, or a difference of PHP3,200.

Under a 10 month contract, his family would have been deprived of PHP32,000 or $666. One peso may not seem much but the total amount forfeited by seafarers’ families as a result of the forex manipulation could be mind-boggling.

As the monthly remittances are not paid directly to the allottees but to the dollar account of the crewing company, Uno stressed that the company has the freedom to use any rate as the foreign exchange conversion in contravention of the POEA rules.

Uno described said practice as “a form of thievery that has gone on for decades.”

He stressed that “it’s all a reflection of a damaged culture — a skewed mindset which considers it all right to cheat seafarers on their remittances because they earn in dollars.”

Payoyo stressed that the government can force manning agencies to be fully transparent in the facilitation of allotments, as the POEA standard contract requires.

He also suggested that foreign employers and principals remit seafarers’ wages directly to individual family bank accounts in the Philippines, rather than through the bank accounts of manning agencies.