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October 2013, Volume 20, Number 4

Southeast Asia: ASEAN 2015

ASEAN. The ASEAN Economic Community (AEC) plans steps toward full economic integration among its 10-member countries with 600 million residents and 285 million workers in 2015, including free mobility of professionals and highly skilled workers.

Some researchers recommend that ASEAN member states create a Labor Market Information System so that workers in poorer countries can fill jobs in richer countries. Michele Bruni reports that over 90 percent of 15-44 year old workers in Singapore have a secondary or tertiary education, compared with less than half in Cambodia, Laos and Vietnam, and urged creation of an Employment Migration Fund to channel monies from ASEAN migrant-receiving countries to migrant-sending countries in order to defray some of the cost of educating migrants to receiving-country standards.

Singapore is the major ASEAN destination for skilled migrants from other ASEAN countries, mostly from Malaysia and the Philippines. ASEAN member states have pledged to expedite the issuance of visas, develop Mutual Recognition Agreements to speed the recognition of credentials earned outside the country of employment, harmonize training and qualification requirements, and increase the mobility of students and faculty between member states. Yue (2011, 206) reported that the timeline for completing MRAs for IT, heath care, and tourism-related service was 2008 and the harmonization of skill requirements in these "priority integration services" was to be completed by 2009.

Requiring ASEAN member states to create one-stop agencies to issue visas, establish MRAs, and harmonize qualifications is not enough to ensure more intra-ASEAN labor mobility, since labor market tests, quotas, and restricting some jobs to nationals can limit migrant access to jobs. In some cases, governments allow private licensing associations to evaluate credentials earned outside the country and determine if foreigners should receive accounting, engineering or nursing licenses.

The GATS does not require member countries to recognize the credentials of individuals earned outside the country. The major requirement of GATS Article VII is that, if two or more WTO member countries negotiate recognition-of-credentials agreements among themselves, they must give other WTO members an opportunity to join the agreement or negotiate a similar agreement.

It is hard to establish and implement MRAs for three reasons. First, countries vary significantly in education and testing requirements to earn professional recognition, and professional associations are often reluctant to change standards to accommodate individuals trained elsewhere or to admit foreign-trained individuals who could be competitors. Second, particular professions are licensed in some countries but not others. If a person migrates to a country that licenses a profession, it can be hard to obtain a license if she does not have a license from the country of origin. Third, some countries require persons filling some jobs, from teachers to lawyers, to be citizens.

ASEAN had seven MRAs as of 2011. The engineering MRA was signed December 9, 2005, nursing was signed December 8, 2006, architects and surveyors was signed November 19, 2007, and doctors, dentists, and accountants was signed February 26, 2009. Some countries require foreigners seeking local licenses to demonstrate proficiency in the local language.

Most migrant-sending countries have policies to protect their citizens going abroad temporarily to work in Middle Eastern oil exporters. Arnold and Shah (1984) described special ministries or offices established to handle the recruitment and deployment of migrant workers, standard contracts and regulations of recruiters to protect workers, and two types of policies that have since been abandoned, restrictions on the exit of some types of skilled workers to prevent skill shortages at home and requirements to remit a certain share of wages earned abroad. For example, Korea required migrant workers to remit 80 percent of their earnings, the Philippines 70 percent for professionals and Bangladesh, 25 percent.

Burma. Clashes in early June 2013 that left several Burmese migrants near Kuala Lumpur dead prompted the Burmese government to temporarily stop the deployment of Burmese migrant workers to Malaysia and to help Burmese in Malaysia to return if desired. There are an estimated 350,000 to 500,000 Burmese in Malaysia, including a large number of Muslim Rohingya who fled religious persecution in Burma.

Reports in summer 2013 noted that 300 Burmese a day were applying for work permits at the Malaysian consulate in Yangon. Burmese workers are also trying to get jobs in Thailand, where the minimum wage is 300 baht ($10) a day. Many Thai employers pay Burmese migrants less, often 250 baht a day.

Cambodia. Some of the small farmers displaced by newly developed sugar plantations have become migrants in Cambodia, a country with a per capita income of less than $1,000. In order to create plantations to grow sugar cane, large firms enlist the government to create the large acreages needed to produce cane efficiently. There are few land records, since the Khmer Rouge in power between 1975 and 1979 destroyed most records, and Cambodians returned to previously populated areas after land mines were cleared.

Cambodian law gives ownership to farmers after they farm unoccupied land for five years. Some of the sugar plantations that are exporting sugar duty free to Europe, where prices are above world levels, are on land that sugar growers say was unoccupied while displaced farmers say it was actively farmed.

Indonesia. The number of Indonesians going abroad to work is falling, reflecting economic growth in Indonesia and policy changes that bar the legal deployment of especially Indonesian women to some countries. The Indonesian government in August 2013 banned some Indonesian and UAE recruiters from recruiting domestic workers because they promised the Indonesian women work in the UAE but sent them on to other countries, which can be considered trafficking.

Indonesia stopped sending domestic workers to Saudi Arabia in 2011 after the Saudi government, without informing the Indonesian government, beheaded a domestic worker who confessed to killing her employer. As a result, some domestic workers bound for Saudi Arabia were sent there via the UAE.

President Susilo Bambang Yudhoyono (SBY) addressed the second meeting of the Congress of Indonesian Diaspora in August 2013; the first was held in 2012 in Los Angeles. The government says that it has identified half of the estimated 20 million Indonesians and their children abroad, including two million who are domestic workers.

Indonesia elects a new president in 2014, and a leading candidate to succeed SBY is Joko Widodo, the governor of 10-million resident Jakarta. Jokowi, as he is known, is famous for walking the streets and talking to people and for directing city government that has little corruption.

Malaysia. The number of foreign workers with permits has been falling, from two million in 2007 to 1.9 million in 2009 to 1.6 million in 2011. The steepest drop was in services, where work permits were down 35 percent, followed by domestic workers and construction, each down 25 percent.

Of the 1.3 million foreigners who registered in 2011, 500,000 completed the process and received work permits while 330,000 were deported. A three-month crackdown that began September 1, 2013 targeted foreigners who registered but did not complete the process. Malaysia's Immigration Department announced that it planned to arrest 400,000 illegal foreigners and 1,000 of their employers during the crackdown known as Ops 6P Bersepadu that was expected to last through Fall 2013. Some of those arrested had paid brokers $1,000 to $2,000 and were cheated when the brokers did not obtain work permits as promised.

The 6P program to "whiten" or legalize migrant workers began in October 2011 and referred to six processes to legalize migrant workers.

After registering in 2011, many employers told their workers not to complete the process after registering to avoid the monthly levy that must be paid for each foreign worker. In 2011, over 35 percent of migrant workers with permits were in manufacturing, 30 percent were in agriculture and 15 percent were in construction. Half of migrant workers with permits were from Indonesia, 16 percent were from Nepal, almost 10 percent were from Myanmar, and seven percent were from Bangladesh.

Malaysian employers in summer 2013 complained that the government was slowing their requests for foreign workers by requiring them to advertise jobs for two months with JobsMalaysia before the Labor Department would certify their need for foreign workers. Employers want the government to declare that some sectors have industry-wide labor shortages, and to end the requirement that employers in labor-short sectors post job vacancies under the job clearing system.

Foreigners are 16 percent of Malaysia's 29 million residents and perhaps 20 percent of the 14 million strong labor force. The Home Ministry in October 2013 announced plans to issue up to 2.5 million secure I-cards to foreigners legally in the country.

Philippines. In May 2013, the Philippine Coast Guard killed a Taiwanese fisherman, prompting Taiwan to stop new admissions of Filipino migrant workers. In August 2013, the Philippine government apologized, which allowed labor migration to resume.

The government sets a minimum wage of $400 a month for domestic workers employed abroad and checks their contracts before departure to ensure that they promise at least $400 a month. However, upon arrival in Gulf countries, many Filipinos are asked to sign another contract that cuts their wages in half, since $200 is the typical monthly wage for domestic helpers in Gulf countries.

Remittances from the 10 percent of Filipinos abroad are equivalent to 10 percent of GDP.

The Philippines, once dubbed the "sick man of Asia," is growing economically. However, unlike the other Asian Tiger economies that moved workers from agriculture to manufacturing, many of those leaving Filipino agriculture are finding jobs in services. With the working age population growing by 1.5 million a year and real wages stagnant, the Philippines needs to create more jobs.

In 2010, a third of Filipinos were employed in agriculture, 15 percent in industry (manufacturing and construction), and 52 percent in services. Productivity is highest in industry, and a common complaint is that the Philippines has experienced jobless growth, meaning that overall economic growth has not been accompanied by more jobs in industry.

Singapore. Singapore is a small and open economy where 1.3 million foreign workers fill jobs primarily at the top and the bottom of the job ladder. At the top, foreign professionals are expected to boost Singapore's innovation rate and spur economic growth, and at the bottom migrants are expected to help firms remain competitive by lowering costs.

Total employment in Singapore doubled between 1992 and 2008 from 1.5 million to three million, and the number of foreign workers almost tripled, from less than 400,000 to almost 1.1 million.

Singapore manages high- and low-skilled workers differently. Professionals earning at least US$2,500 a month and with a credential (usually a college degree) receive Employment Passes, including an EP-1 for those earning more than $7,000 a month, EP-2 for those earning $3,500 to $7,000 a month, and EP-3 for those earning $2,500 to $3,500 a month.

S-Passes are available to technicians who earn at least S$1,800 a month and satisfy education and job-in-Singapore requirements. Firms may have up to 25 percent S-Pass holders in their workforces.

Low-skilled workers who earn less than S$1,800 receive Work-Passes to hold down the cost of non-tradable goods such as construction and services, with a lower levy charged if the foreigner is skilled, defined as having an NTC-3 practical trade certificate or more. The number of low-skilled workers who can be employed by any firm is regulated by a levy and quota system to prevent adverse effects on local workers.

There may be too many low-skilled foreign workers. Studies suggest that the capital-labor ratio in Singapore manufacturing has been falling, and productivity is low in construction and services. Economists say that many firms substitute low-wage migrant workers for capital.

Some local residents complain that high-skilled immigrants are raising housing prices and increasing competition to get into universities and find jobs upon graduation. PM Lee Hsien Loong on National Day August 17, 2013 said: "The foreign worker issue is complex. Government cannot meet all the demands, and there's no perfect solution, but we'll definitely help small and medium-sized enterprises find a way to make it. We need to control foreign workers, otherwise it will lead to serious consequences."

The Wall Street Journal on August 31, 2013 reported on the November 2012 strike by Chinese bus drivers employed by SMRT, the state-owned transport firm that serves a quarter of Singapore's bus riders. This was Singapore's first strike since 1986.

Singapore allows strikes only after a secret-ballot vote among workers yields a majority vote in favor of striking; foreign workers who have fixed-term contracts cannot become full union members. Strikes can be considered unlawful if they "inflict hardship on the community," and workers performing "essential services" must give 14 days notice before going on strike.

SMRT had about 2,000 bus drivers at the end of 2012, including 1,000 foreigners, half Malaysian and half Chinese. Chinese drivers reported paying a total of 25,000 yuan ($4,100) in recruitment costs for two-year contracts for jobs that offered $S2,000 ($1,560) a month in Singapore, including overtime pay. In fact, the Chinese workers received a base pay of S$1,000, compared to S$1,200 for the Singaporean and Malaysian drivers who were considered permanent employees.

Four strike leaders were arrested and deported, along with 31 other drivers who went on strike, but SMRT raised the based pay of Chinese bus drivers from S$1,000 to S$1,100 a month and improved conditions in the dormitories where they live. The National Transport Workers' Union is encouraging migrant bus drivers to become associate members of the union.

Thailand. The Thai government manages labor migration from neighboring countries by periodically allowing employers to register the foreign workers they employ, paying about a month's wages in exchange for two-year renewable work permits (most employers pay registration fees and deduct them from worker wages). However, after four years of legal work in Thailand, workers are to return to their countries of origin for at least three years before returning to Thailand.

In September 2013, the Thai government announced that Burmese migrants would have to return to Burma for only one month before they can return to Thailand. In summer 2013, there were an estimated 1.7 million Burmese workers in Thailand with Burmese passports, but only 750,000 had Thai work permits in their passports.

The Ministry of Labor in August 2013 announced that migrant workers employed in fisheries must have ILO-approved contracts signed by their employers that list wages, benefits, and any worker share of fish sales. The goal is to reduce charges that workers employed on Thai fishing boats are trafficked.

The ILO released a report in September 2013 based on interviews with 600 migrants employed on Thai fishing boats that found 10 percent reporting they were severely beaten on board vessels and a quarter saying they were on call over 16 hours a day. Over half of the workers interviewed earned less than $160 a month. Working conditions were worst on boats that stayed away from port for weeks or months, delivering their catch to mother ships that provide supplies and take away the catch. Very few workers had written contracts laying out pay, work hours, and deductions.

Thailand is the world's third leading fish exporter by value, after China and Norway; Thai fishery exports were worth $7 billion in 2012. The ILO urged buyers of Thai fish and seafood to pressure suppliers to improve wages and working conditions.

Thailand produces a third of the world's natural rubber. Sharply falling rubber prices in summer 2013 prompted southern Thai farmers to block roads, provoking a confrontation with the government, which is buying rice at above world-market prices to help rice farmers.

Vietnam. Vietnam sent 80,000 workers abroad in 2012, and 47,000 in the first eight months of 2013.

The Ministry of Labor, War Invalids and Social Affairs estimated that 500,000 Vietnamese nationals were working in more than 40 countries in 2013. The Ministry of Foreign Affairs' Consular Department said that it tries to protect Vietnamese abroad but, because many Vietnamese workers leave the employer for whom they are authorized to work, or do not depart when their work permits end, many do not want to have contact with the Vietnamese consulate.

Vietnam is considering a law that would crack down on illegal recruiters who allegedly send many workers abroad with promises that are not fulfilled.

Bruni, Michele. 2013. Labor market and demographic scenarios for ASEAN countries (2010-35) Education, skill development, manpower needs, migration flows and economic growth. DEMB WP 6. January. Arnold, Fred and Nasra Shah. 1984. Asian Labor Migration to the Middle East. International Migration Review. Vol 18. No 2. Pp 294-318 ILO. 2013. Employment practices and working conditions in Thailand?s fishing sector. Athukorala, P. and E.S. Devadason. 2012. The impact of foreign labor on host country wages: the experience of a Southern host, Malaysia. World Development. Vol 40. No. 8. August. Pp1497-1510.