Summary
This policy brief reviews the level of labour market integration in ASEAN and
assesses labour market reforms being undertaken as part of the establishment of the
ASEAN Economic Community (AEC). Key findings:
Labour migration is already a reality in ASEAN with millions working in other
member states both legally and under irregular conditions.
The ambition of the AEC is that it will “transform ASEAN into a region with free
movement of goods, services, investment, skilled labour, and freer flow of capital.”
In the area of labour mobility ASEAN is falling short of its stated goals calling into
question whether there will be effective free movement of high-skilled labour by
the end of 2015.
Mutual Recognition Agreements (MRAs) are intended to facilitate the movement
of professionals by ensuring their qualifications are acknowledged in other ASEAN
members. But only a few sectors are currently covered and MRAs do little to
overcome other barriers like nationality requirements.
By restricting liberalization on labour mobility to skilled professionals, the region is
also missing out on the benefits that a well-managed co-operative scheme
covering all labour, including lower-skilled workers, could bring.
In addition to further labour market liberalization, greater co-operation is also
needed to protect migrants’ rights and improve the portability of social security
schemes.
1. Labour migration in ASEAN today
Each year thousands of migrants move between ASEAN member countries in search
of work. There are a reported six million ASEAN citizens currently residing in other
ASEAN member states though this is probably a large underestimate (figure 1).
ASEAN members can be broadly divided into net sending and net receiving countries
for labour: Cambodia, Lao Democratic People’s Republic, Myanmar, Indonesia, Viet
Nam and the Philippines are net senders; Singapore, Thailand, Malaysia and Brunei
Darussalam are net receivers (Capannelli, 2013). The majority of migrants are
low-skilled, and many are irregular. 1
Large income disparities among
geographically-close ASEAN members; differential rates of population growth and
aging; and the absence of regional redistributive mechanisms create large labour
deficits and surpluses (Chia, 2013). These are a powerful spur to migration with
labour flowing mainly from the poorer countries to the richer.
2. Managing Labour Migration in ASEAN
ASEAN members are pursuing economic integration across numerous fronts. The
expected benefits of integration include: an enlarged market with economies of scale
and scope; enhanced resource allocation with free movement of factors of production;
and improved resource pools of capital and labour; and enhanced competition which
spurs efficiency and innovation (ADB, 2013). Indeed, labour migration, when
well-managed, can bring substantial benefits to: (i) migrants themselves in terms of
higher wages and opportunities to acquire skills and experience; (ii) host economies
by addressing labour shortages and boosting growth; and (iii) sending countries
through financial remittances and knowledge transfers (Anukoonwataka and Heal,
2014). For host societies, greater openness to migrants also needs to be weighed
against public concerns over social cohesion. There is little evidence, however, that
migrants generally depress wages for native workers as is often feared (Gaston and
Nelson, 2002; Okkerse, 2008).
However, mobility of labour currently lags behind integration in other areas. In trade
and investment, growth in regional production networks has been facilitated by
improved customs procedures, standards harmonization and logistics. Similarly,
investment liberalization, facilitation and stronger protection have boosted FDI. With
regards to the movement of persons less has been achieved, with the exception of the
easing of requirements for short-term travel between members.
In ASEAN members, as in most other countries, migration policy is primarily handled
at the national level, with few constraints imposed by international agreements.
National governments decide on key elements of labour market openness including:
visa policies; eligibility to work in certain sectors; and necessary qualifications and
requirements. As well as pre-migration processes such as screening visa applications,
post-migration policies are important, for instance on the protection of labour rights for
foreign workers. Systems for dealing with migrant workers who overstay their
permitted time and for managing irregular migrants are elements of an overall policy
framework.
Policies vary widely between countries making generalization difficult. Migration
policies in individual ASEAN countries have so far mainly been reactive and have not
actively guided or planned migration flows (IOM, 2008). Most ASEAN countries offer
little in the way of access to jobs for low-skilled labour migrants, while several
countries compete openly for highly skilled migrants. The large numbers of irregular
migrants are evidence that there are too few legal channels for migration to meet
regional demand. Treatment of irregular migrants is often unsatisfactory and they are
often vulnerable to abuse (IOM, 2008).
While national policies remain paramount, ASEAN members are already co-operating
in a number of areas, and a number of ASEAN agreements also have a bearing on
migration policy. For instance, the ASEAN agreement on the Movement of Natural
Persons (MNP) was signed in 2012 (overtaking commitments made under the ASEAN
Framework Agreement on Services - AFAS). The commitments of members in this
area, however, do not go far beyond those very limited pledges already consented to
through the WTO; the MNP Agreement only deals with the temporary movement of
persons pursuant to mode 4 of the AFAS. Indeed, the MNP Agreement is specifically
limited to business visitors, contractual service suppliers, and intra-company
transferees and is focused on facilitating for ASEAN companies to send their
personnel (professionals and executives) temporarily to other countries to provide
services. Likewise, the MNP Agreement does not allow for permanent entry by such
persons, nor does it allow for movement of all persons (e.g., unskilled labor) even on
a temporary basis.
Another area of co-operation has been migrants’ rights. Following the 1999 Bangkok
Declaration on Irregular Migration, members strengthened commitments to migrants’
rights in the Declaration on the Protection and Promotion of the Rights of Migrant
Workers agreed in 2007. In this declaration ASEAN member states commit to protect
migrant workers’ human rights and to promote decent, humane, productive, dignified
and remunerative employment for migrant workers. However, enforcement
mechanisms are absent and irregular migrants, who are often the most vulnerable to
exploitation, are not covered. The declaration also led to the establishment of the
ASEAN Forum on Migrant Labor in 2008 which provides an ongoing forum for
governments and civil society
Some of the most substantive co-operation on labour market access among ASEAN
members is not through ASEAN but in bilateral labour agreements (BLAs) and MOUs.
Thailand, for example, has signed MoUs with Cambodia, Lao PDR and Myanmar in
order to regulate the entry of labor migrants and to cope with irregular migration. The
Philippines, normally a labour exporting country, also has MOUs governing the arrival
or workers from Indonesia and Lao PDR. These bilateral agreements can provide
valuable learning and provide a basis for great multilateral co-operation within ASEAN.
Non-binding forms of co-operation, notably through Regional Consultative Processes,
can also facilitate the sharing of information and best practice in migration
management. The Colombo Process brings together several ASEAN members with
South Asian countries such as India, Pakistan and Sri Lanka for dialogue on the
management of overseas employment and contractual labour.
3. Towards Skilled Labour Mobility under the ASEAN Economic Community
The formal establishment of the ASEAN Economic Community (AEC) at the end of
2015 will ceremonially mark a milestone in the process of economic integration in
Southeast Asia. The ambition of the AEC is that it will “transform ASEAN into a region
with free movement of goods, services, investment, skilled labour, and freer flow of
capital.” The ASEAN Economic Community Blueprint, launched in 2008 outlines the
vision for the AEC and the steps towards its realization (ASEAN 2008).
2 ASEAN is committed to the achievement of “Free Flow of Skilled Labour” under Pillar A (“Single
Market and Production Base”). Despite the ambition, actions required to be
undertaken of member states in pursuit of this are relatively limited when compared to
the extensive actions and commitments given in relation, for example, to trade in
goods and services, or trade facilitation.
Progress to date in relation to the major commitments has been made but many areas
require further attention:
Facilitating Visas and Employment passes – Access to working visas is one of the
most fundamental issues in relation to labour market opening. ASEAN is committed to
facilitating the issuance of visas and employment passes for professionals. However,
this commitment only applies to persons ‘engaged in cross-border trade and
investment related activities’. This very limited scope falls far short of free flow of
skilled professionals. Other remaining barriers include high case fees and
cumbersome and lengthy application processes. Additionally, requirements for work
visas vary greatly across ASEAN countries and many restrictions remain that
effectively limit the ability of non-nationals to gain access to employment in many
sectors. For instance, in Cambodia, Thailand, Myanmar and the People’s Democratic
Republic of Laos employers hiring foreigners have to guarantee that knowledge is
transferred to locals and the foreign employee