The impact of economic integration on labor migration in Asean (Business Mirror (Philippines))

The Association of Southeast Asian Nations (Asean) has embarked on a deeper regional economic integration through the Asean Economic Community (AEC), which aims to launch a free flow of goods and services and the free movement of skilled professionals and capital throughout the region by the end of this year. The AEC is typically defined as (a) a single market and production base, (b) a highly competitive economic region, (c) a region of equitable economic development, and (d) a region fully integrated into the global economy (from the AEC Blueprint 2008).

Even before this process of regional integration, a development divide and a variety of geographical, cultural and historical factors have already pushed labor migration across member countries in Asean. While the region itself has been on fast growth in the last several years, income per-capita range is still relatively wide among the member economies. In 2012 Singapore had a gross domestic product per capita of $54,578.2 as against Myanmar’s $814. Poverty rates remain high even in the original member-countries like the Philippines and Indonesia.

Three countries-Cambodia, Indonesia and Lao PDR-still have poverty rates over 40 percent. Destitution has been one of the major impetus for the migration of unskilled workers in the region. Intra-Asean migration rates have been on the rise in recent years. Currently, the share of intra-Asean migration to total migration to the entire world is 32.39 percent (outward) and 38.73 percent (inward), respectively.

Malaysia’s outward migration to Asean destinations, mostly to Singapore, is at 80.72 percent while Myanmar’s 62.39 percent is mostly to Thailand, and Indonesia’s 60.64 percent is mostly to Malaysia. With deepening regional integration, we should expect increased labor mobility and migration.

Migrant workers from Asean have increased to an estimated 14 million in 2014, equivalent to around 6 percent of the global total. These migrant workers sent almost $50 billion in remittances for the whole region, around 10 percent of the total worldwide. Malaysia, Thailand, Brunei Darussalam and Singapore are the major host countries; the Philippines, Indonesia and CLMV (Cambodia, Laos, Myanmar and Vietnam) are the sending countries.

This is clearly seen in the net migration rates of the Asean members where Singapore’s rate was high at 30.87 percent from 2005 to 2010. The Philippines, Vietnam and Indonesia receive large amounts of remittances from their workers abroad. Labor flows in the region is further described mostly as a relatively low-wage and unskilled work force for domestic services, construction, agriculture, fishing and forestry.

The current Asean migration counts a large portion coming from illegal recruitment facilitated through informal networks and brokers. The legal movements occur through bilateral agreements between sending and host countries, or are made through officially registered private agencies in the sending country with partner firms in the receiving country. Researchers from the Scalabrini Migration Center have identified three migration sub-systems in the region-the Greater Mekong Sub-region, Brunei-Indonesia-Malaysia-Philippines-East Asia Growth Area and Maritime Southeast Asia.

Until recently, there seems to be no empirical estimates on the migration that will be facilitated by the process toward the AEC. However, given the trend toward liberalization of both goods and services, there will be an increase in total migration of skilled workers mainly through services liberalization, i.e., Asean Framework Agreement on Services, where Mode 4 specifies the movement of natural persons in the whole of Asean, with Singapore, Malaysia and Thailand as primary destinations. However, it is taking some time for the Mutual Recognition Arrangements for eight professions to be fully implemented. There will also be a faster increase in the total migration of unskilled workers in Asean in the short and medium run (in the three Asean migration subsystems) because of the following reasons:

With improvements in connectivity, access to labor market information is increased and transport costs are reduced;

Increased incomes in sending countries due to trade liberalization complemented by remittances from already existing networks (of relatives and friends) reduce migration costs;

Increasing wage differentials in receiving countries will continue to be an important pull factor despite similar increasing wages in the sending countries; workers in the losing sectors will be pushed to migrate; Travel facilitation due to no-visa requirements via tourism liberalization;

However, specific country migration effects (either on skilled or unskilled) may depend on a variety of factors like the level and state of education of the labor force, structure of the economy (formal and informal sectors), and the number of winning and losing sectors due to liberalization.

In conclusion, with heightened economic integration in Asean, labor migration will also increase, both skilled and unskilled. But what the member countries must manage well is the influx of irregular workers into their territories. Maybe it is high time to implement an Asean Framework Instrument on the Protection and Promotion of Migrant Workers’ Rights.