By Alastair McIndoe

'CONGRATULATIONS on making the leap,' Dr Carl Balita tells his class of 21 former overseas Filipino workers now learning to start small businesses.

All of them were laid off from electronics factories in Taiwan last month, the first casualties in this country's army of migrant workers of the global economic meltdown. They have decided to return home to the Philippines, taking their chances starting small businesses with government assistance rather than trying to find jobs overseas again in these bleak times.

'They should have stayed home in the first place,' said Dr Balita, who runs a microfinance training company in Manila.

'For the placement fee of around 120,000 pesos (S$3,800) paid to recruitment agencies for a job abroad, they could have started a small restaurant or a little Internet cafe'

The first wave of layoffs among overseas Filipino workers caused by the global economic crisis is still just an ominous ripple. The retrenched workers, thought to number several thousand, are mainly from the manufacturing and construction sectors.

Remittances were still robust last November, up 10.5 per cent at US$1.3 billion (S$1.9 billion) compared with November 2007, according to the central bank's latest data on the inflows of migrant money. In the first 11 months of last year, a record 1.2 million Filipinos were deployed overseas, either on new or renewed contracts.

It was only last month that the retrenchments became noticeable. And as the global recession deepens, fears are intensifying among international labour groups that the fallout for migrant workers from developing economies like the Philippines, one of the world's biggest labour-exporting countries, will be severe.

The Philippine government is preparing for the worst. It has readied livelihood programmes - Dr Balita runs one of them - for laid-off overseas workers. The lifeline package includes a small amount of start-up financing and access to special loans from state banks: up to 50,000 pesos for uncollateralised loans.

'By the looks of it, job losses will be increasing,' said Ms Teresita Manzala, deputy administrator of the labour department's National Reintegration Centre for Overseas Filipino Workers. 'We received the first distress signals in October and then only in Taiwan. Now we're seeing losses in Australia, Macau, the United Arab Emirates and the Czech Republic.'

This is not unfamiliar territory for the Philippine authorities. Three years ago, several thousand workers were repatriated from war-torn Lebanon.

'We have a lot of experience running programmes for displaced workers, but this is not business as usual; we have to be flexible with the regulations and cut red tape,' said Ms Manzala, referring to the financial assistance packages.

At a reintegration centre in Manila's old Spanish walled city, seven Filipinos, all but one of them women, laid off last month from a plant in the Czech Republic, were signing on for the livelihood programme when The Straits Times visited last Friday. 'We got a plane ticket and no compensation,' complained one member of the group.

Just over 600 retrenched overseas workers have visited this centre since the first layoffs; 242 applied for the training. Data is still being collected from regional offices to get a broader picture of the likely demand for the programme.

Going by Mr Balita's class, many returned home mired in debt. Fees charged by recruitment agencies are way beyond the means of many job seekers. Families and relatives invariably chip in, but there is a well-beaten path to loan agencies.

Ms Brenda Pila, 22, borrowed 70,000 pesos to get a job in a semiconductor factory in Kaohsiung, Taiwan. She earned NT$17,000 (S$756) a month, double her salary as an office worker in Manila. Like numerous Filipinos in unskilled jobs abroad, she has a college degree.

She started work last August, elated to be able to support her family. Four months later, she was laid off. Along with many other export-dependent Taiwanese businesses, her firm saw orders plunging.

'I was so angry about the wasted effort,' said Ms Pila. Worry clouded her face as she talked about the loan: 'I can barely pay the interest, let alone the principal.' With the government grant, she plans to start a small meat-processing business from her kitchen, turning meat into sausages to sell.

Half of the 28 courses for returning overseas workers run by the Technology Resource Centre, a government agency, are to do with food, seen as one of the safer business bets here. Mobile phone repair businesses are popular on the non-food side.

It is still a gamble: 70 per cent of enterprises started by former overseas workers fold because of poor planning and inadequate training, according to one estimate. Even so, the moderating inflation rate is good news for small business start-ups, especially in the food sector. And the broad economy, at least for now, is not in the eye of the global financial storm, thanks to the local banking system which is largely unburdened by toxic debt.

'I'm excited about trying a small business; it's something I never even thought of before until I lost my job in Taiwan,' said 27-year-old accountancy graduate Ryan. He plans to open an Internet cafe in his neighbourhood, starting with a few second-hand computers.

This article was first published in The Straits Times on January 21, 2009.