MAKING MOBILITY WORK
Barriers and inefficiencies in the migrant labour system are preventing Asean from reaping all the benefits of economic integration.
Contrary to the global trend, the movement of people across national borders within Southeast Asia has been increasing significantly over the past two decades. The continuing vitality of intra-regional migration is fuelled by rapid economic development, demographic diversity and the mismatch in supply and demand of domestic labour.
However, most countries in the Association of Southeast Asian Nations (Asean) still have inappropriate and restrictive migrant policies with ineffective institutions to manage migration. Barriers and weaknesses in the system are causing Asean to miss out on the opportunity to accelerate the realisation of true economic integration, where both skilled and low-skilled workers can move freely across borders.
“Income disparity is an important driver of the migration flow in Asean. There are huge economic gaps in the region where the wealthiest country is 25 times richer than its poorest,” said Philip O’Keefe, practice manager for social protection and labour at the World Bank.
According to United Nations data, the share of intra-regional migration in Asean between 1995 and 2015 increased significantly to almost 10% while the rest of the world is experienced a negative trend. In South Asia, intraregional migration decreased 25% over the same period, followed by Sub-Saharan Africa (13%), Europe and Central Asia (9%).
Demographic differences, which have caused a mismatch of supply and demand in the labour market, are key contributing factors encouraging people to seek employment in different parts of the region, said Mr O’Keefe.
“Population ageing is another key factor,” added Thai Labour Minister Pol Gen Adul Sangsingkeo. “While labour shortages have already emerged in many ageing countries, some countries are still struggling to produce adequate employment with a large pool of young workers.”
The mobility of the workforce is bringing benefits to the citizens of both receiving and sending countries, he said, as it helps bring back capital, knowledge and skills when migrants return home. Thailand, for example, has become the regional migration hub where migrant workers are a key to economic growth.
Thailand, Malaysia and Singapore receive 96% of all intra-regional migration. Among the three, Thailand receives 55%, followed by Malaysia at 22% and Singapore at 19%.
Sending countries such as Myanmar, Indonesia, Malaysia, Laos and Cambodia have made huge economic gains from remittances from their workers abroad, helping to improve the quality of life of their families. In Singapore, for instance, the average wage is at least five times that of any other Asean country, while Cambodian migrants can earn three times more in Thailand than they can at home.
Remittances sent to Asean countries from their nationals working all over the world totalled US$62 billion in 2015, according to the International Labour Organization (ILO). Remittances account to 10% of gross domestic product (GDP) in the Philippines, 7% in Vietnam, 5% in Myanmar, and 3% in Cambodia.
“Labour migration helps address labour market shortages in the receiving countries, which consequently boosts production and stimulates the country’s competitiveness,” Pol Gen Adul added.
BARRIERS AND LIMITATIONS
Despite the huge economic upside from migration, there are still many barriers that prevent workers from taking full advantage of the opportunities from mobility, according to Mauro Testaverde, an economist in the Social Protection and Jobs unit at the World Bank. Consequently, the region misses out on opportunities to realise all the economic and social gains of regional integration.
The main barriers are the high cost of international migration, overly restrictive migrant rules, rigid domestic employment policies and the lack of access to protections for migrant workers.
The costs of recruitment in terms of money and time are significant for workers, he said. ILO data shows that recruitment costs of migrants from Myanmar to Thailand could be as high as a quarter of their yearly income. When the time spent is factored in, the overall migration cost is increased by about 40%.
Dr Testaverde said Asean has mutual recognition arrangements (MRAs) that facilitate mobility in theory. However, their application is limited, so the region can do more to lower barriers to mobility and improve workers’ welfare.
“MRAs cover only a limited number of high-skilled occupations which represent only 5% of Asean employment. It does not cover the majority of Asean migrants that are mainly low-skilled and often undocumented,” he said.
Chen Namchaisiri, chairman of the Federation of Thai Industries (FTI), said that despite its great need for migrant workers, Thailand’s current procedures for registration and documentation remain inefficient and onerous.
“Many industry sectors in Thailand are in desperate need of migrant workers,” he said. “The government should extend them convenience with higher efficiency in the system so [migrants] can come in easily. Otherwise, these workers will be working under uncertain conditions which will not contribute to positive development.”
For instance, he said, policymakers should consider streamlining the steps for qualification and documentation of foreign workers for businesses.
Negative public attitudes t oward migrant workers also need to change, said Mr Chen.
“The government should help promote the notion that migrant workers are here to help the development of our country and the private sector benefits hugely from them,” he said. “The right mindset toward legal migrant workers should be instilled among authorities and the public.”
Dr Testaverde agreed that providing and disseminating data about the positive impact of migrant workers on the economy could help alleviate negative perceptions among the public.
Vivathana Thanghong, deputy permanent secretary with the Labour Ministry, said restrictive and perhaps rigid labour market rules in some countries mainly reflect national security concerns.
“Many countries in Asean provide proper welfare to their citizens but extending those benefits to migrants is seen as a burden,” he said.
“The significant differences in Asean demographic profiles could be another potential cause of restrictive labour laws compared to the more liberal migration policies, such as in Europe where the demographics are broadly similar,” Mr O’Keefe added.
IMPROVING EFFICIENCY
Experts agree that a more efficient migration system is needed in order to bring about the greatest gains from labour migration. This requires collaboration between member countries and all other stakeholders.
Dr Testaverde suggested that the region could gain greater benefits from economic integration if trade liberalisation were accompanied by measures to reduce mobility costs and improve workers’ welfare.
Different countries in Asean have different priorities. In general, destination countries such as Thailand, Malaysia and Singapore should work toward migration systems that are responsive to their economic needs and consistent with domestic policies. Sending countries should work to balance protections and welfare for migrant workers, experts suggested.
“[The region needs to strike] the right balance between providing protection for workers in the receiving countries while allowing a freer flow of labour through an efficient system,” said Mr O’Keefe. “Rigidity and regulatory barriers will not stop people from moving, but will result in people moving informally in an unregulated manner and the situation becomes unfavourable for both the workers and receiving countries.”
By removing the remaining barriers to integration and employment, Asean countries will be able to enjoy significant boosts to GDP, exports and total employment.
Studies have shown that immigration has a positive impact on the economy and directly increases a country’s GDP. In Malaysia, for instance, a simulation found that a 10% net increase in low-skilled immigrant workers increases real GDP by 1.1%. In Thailand, a recent analysis found that without migrants in the labour force, GDP would fall by 0.75%, according to the World Bank.
While technology and digitisation are one possible solution for streamlining migration documentation, each country needs an overall immigration policy framework with objectives that are in line with its development plan.
“Electronic identification could help facilitate some processes but the country’s legal system should also take advantage of technology by making the most use of these tools to ease and accelerate the process,” Mr Chen said.
Mr Vivathana said Thailand was planning to use technology to streamline documentation and employment contracts. “In one or two years, we may have all [migrants’] documents stored and processed through an electronic system,” he said.
Rigidity and regulatory barriers will not stop people from moving, but will result in people moving informally in an unregulated manner and the situation becomes unfavourable for both the workers and receiving countries” PHILIP O’KEEFE World Bank