It is time for each country in Asean to set up a labour market information system to help manage the challenges posed by increasing worker mobility and to resolve labour shortages in various countries and industries, say experts.
Imbalances between the number of available workers and jobs are a problem across Asia Pacific. With economic growth in Asia threatened because of slowdowns elsewhere in the world, there will be an impact on the quantity and quality of jobs available, the International Labour Organisation (ILO) warned recently.
In Southeast Asia, labour migration and wages remain highly contentious issues. Singapore since the late 1970s has been one of the major recipients of foreign workers, despite attempts to limit foreign labour numbers at one-third of its total workforce.
One way to reduce dependence on foreign workers is to increase the productivity of resident labour. However, the more affluent a country becomes, the more choosy its citizens become about jobs. Foreign workers often are recruited to do jobs local people shun.
In 2010, the resident labour force in Singapore stood at 2.047 million out of a total workforce of 3.135 million, according to the Ministry of Manpower.
In Indonesia, the government has had to respond to worker protests by announcing a plan to lift the minimum wage to 2 million rupiah (6,380 baht) a month nationwide next year. In Jakarta, the wage will rise by 44% to 2.2 million rupiah (7,030 baht) on Jan 1.
Indonesia’s minimum wage is now among the highest in the world relative to average salaries at 65%, according to the OECD.
Thailand, meanwhile, is going ahead with a long-planned (and promised in the 2011 election) increase in the minimum wage to 300 baht a day nationwide starting from Jan 1. That’s a big shift from the past when wages depended on the cost of living in different provinces.
Although Thai workers will enjoy higher incomes, they may see fewer jobs available, as businesses that feel they cannot bear increasing costs could close or move elsewhere.
The challenges facing Southeast Asia go beyond wages but also include labour shortages, availability of decent work, and illegal migrant workers, says Nilim Baruah, senior regional migration specialist with the Regional Office for Asia and the Pacific of the International Labor Organization. This is why a labour market information system is so important, he says.
Demographic evolution, labour shortages and economic disparities remain the main causes driving workers from less-developed countries to seek better opportunities in more developed ones. Thus, the problem will not be solved easily.
He cited World Bank estimates that 14 million migrants from Asean are working across the globe, accounting for around 13% of global labour migration. Almost 6 million of these are working within Asean countries. Three countries — Thailand, Malaysia and Singapore — host 90% of all intra-Asean migrants. Other significant destinations are South Korea, Taiwan, Hong Kong and the Middle East.
The Philippines, Indonesia, Cambodia, Laos, Myanmar and Vietnam are the major countries of origin. Workers from Cambodia, Laos, Myanmar and Vietnam primarily migrate for work in Thailand and Malaysia, while workers from Indonesia and the Philippines mostly move to Singapore, Malaysia and Brunei. This flow is estimated to have generated US$39.5 billion in remittances.
As of Sept 30, 2012, Thailand had an officially estimated 1.162 million migrant workers, of whom 989,431 were legally registered, according to the Department of Employment. The unofficial number is believed to be much higher.
Among unskilled workers, around 300,000 from Cambodia and 200,000 from Laos make up the largest groups, according to Dr Yongyuth Chalamwong, research director for labour development with the Thailand Development Research Institute (TDRI). However, workers from Myanmar are by far the largest group, numbering roughly 1.3 million, both legal and illegal.
Dr Yongyuth estimates that Asean as a whole has around 6 million migrant workers, of whom 5.5 million are unskilled and semi-skilled. Malaysia alone employs nearly 3 million workers from Indonesia and up to 300,000 from Myanmar. Most of them are recruited legally. Brunei hosts 40,000 to 50,000 Indonesian workers and Singapore 20,000 to 30,000. Filipino workers elsewhere in Asean total around 4,000 to 5,000.
Indonesia, the Philippines, Cambodia, Laos and Vietnam are net labour exporting countries. The net recipient countries are Thailand, Singapore and Malaysia.
He said that integration under the Asean Economic Community (AEC) would lead to even more labour mobility, as new investments and investment relocations among Asean countries would draw workers as well.
Mr Baruah said there was already a large wage differential between Thailand and its neighbours that fuels labour migration. A survey of monthly wages as of September in countries tracked by the Philippines Department of Labour and Employment showed an average of only US$17 a month in Myanmar and $61 in Cambodia, against $214 to $290 in Bangkok.
ILO data, meanwhile, show unemployment rates in most Asian countries are still below 5% with no sign of change in 2013.
“Migration still exists both legally and illegally. In order to make it right, we should have the mechanism to put this problem in order. The labour market information system is required and it has proved successful in other countries such as in Europe,” said Mr Baruah.
He cited the United Kingdom and Spain for systems that identify labour supply and job demand and attempt to match them, based on indicators that identify labour shortages.
The system is affordable and worth investing in as it makes it much easier for a country to manage the flow of both skilled and unskilled workers.
“It’s urgent to have a better labour market information system. Asean countries can open up occupations that need more workers for foreigners with less fear that they will replace nationals,” said Mr Baruah.
Along with a labour market information system, Asean countries should facilitate migration by simplifying their cumbersome immigration processes. If labour migration is managed well, it will be beneficial for the people who move in, as they can find better jobs.
For countries that supply the labour, ease of movement is good in terms of remittances. And for the recipient countries, it will be good for competitiveness.
“After governments reduce irregular flows and increase legal flows, they should set quotas or ceilings as the way to protect their nationals,” said Mr Baruah.
Dr Yongyuth said the wage hike in Thailand would draw more migrant workers. That could create a loophole for companies that want to reduce their wage burden by hiring foreign workers instead of nationals.
Thailand has already signed memoranda of understanding with Myanmar, Laos and Cambodia to import labourers legally.
The Thai government requires all alien workers now in Thailand to prove their nationality by Dec 14 in order to prevent an influx of illegal foreign workers who want to benefit from higher wages starting in January.
Despite the concern about a rise in migrant workers, the labour shortage in the industrial sector may ease as there will be more workers in the market. In addition, labour-intensive industries in the near future are likely to move to lower-wage countries, Dr Yongyuth forecast.
Mr Baruah said many jobs in Thailand had to be filled by migrants, including in construction, manufacturing, agriculture, fishing and seafood processing and domestic work. The wage hike is unlikely to lead to an increase in unemployment. There will, however, be an impact on production costs.
On the positive side, Thailand is among the most income-unequal countries in Asia, where minimum wages have not kept pace with inflation over the last 10 years. The wage hike to some extent will correct this, he said. Upward wage trends in line with productivity, and a fair distribution of revenue, are vital to achieving a more peaceful and just society.
It can also be argued that the wage hike will increase aggregate demand. Increased wages in the medium and long term can also reduce the over-dependence in some sectors of the economy on low-wage migrant labour as nationals become attracted by increased wages.
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Writer: Nalin Viboonchart