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AEC Skilled-Labor Migration: A Gap between Aspiration and Reality?

August 26, 2015

By Victor Bernard

As ASEAN countries have moved up the technology ladder and the demand for skills has grown, a labor gap has emerged that mirrors the gap between more- and less-developed nations. Higher-income countries such as Thailand, with falling birthrates and greying populations, are suffering from growing labor shortages in sectors such as healthcare and IT, while lower-income countries face burgeoning youth populations and high levels of graduate unemployment. As the inauguration of the ASEAN Economic Community (AEC) approaches, supporters contend that the freer movement of skilled labor will help bridge this development gap, bringing skilled workers to high-income countries, while providing employment and skills development for workers from low-income countries. In practice, however, progress towards freer mobility has been slow and uneven, due to rigid national immigration policies, inequalities in professional education and licensing regimes, public ambivalence toward the AEC, and the vast income gap that many countries fear will contribute to brain drain.

AEC

The AEC should also promote sectoral approaches to develop professional accreditation frameworks such as those undertaken by the ASEAN Constructors Federation and the Asian Welding Federation. Photo/Karl Grobl

In 2007, ASEAN leaders agreed to fast-track the creation of the AEC, setting a goal of December 2015. The AEC is intended to transform the region into a single market and production base by establishing the freer flow of goods, services, investment, capital, and, crucially, skilled labor. The free flow of skilled labor has been a central topic of discussion among member states, and several agreements have already been adopted, including: (1) mutual recognition arrangements (MRAs), which recognize education, experience, licenses, or certifications obtained in other ASEAN countries for engineering, nursing, architecture, surveying, medicine, dentistry, tourism, and accounting; (2) streamlined visa and employment regulations for professionals and skilled laborers engaged in cross-border trade and investment; and (3) enhanced cooperation among ASEAN universities to increase the mobility of students and staff.

But while the ambition to have a freer flow of skilled labor is laudable, current policies, even if fully implemented, will be inadequate to achieve it, and further reforms will be required.

Challenges

Freer movement of people across ASEAN will require policy reforms and harmonized procedures at both the national and regional levels. For example, ASEAN still lacks a uniform visa system for foreign businesses and skilled workers. Work permits and employment visas remain subject to domestic rules and regulations. Some countries, including Thailand and the Philippines, have constitutional and legal restrictions on the employment of foreigners. Some even have sectoral and occupational restrictions, such as ethnic and local language requirements, labor market tests, restricted periods of employment, and the requirement that employers arrange skills-transfer programs to eventually replace foreigners with locals. Given the many prevailing legal constraints, domestic practices of member states may not change in time to accommodate AEC’s ideal of freer movement of skilled labor.

There are also big differences between the ASEAN-wide MRAs and the professional education and licensing regimes of member states. Each professional practice is composed of several stakeholders that share responsibility for various aspects of the recognition process, especially where regulatory decisions are delegated to subnational actors. Even at the national level, several government departments may have a stake in negotiations, including those responsible for education, employment, trade, and international relations. Industrial and professional corporations that often exercise political power within their industries add another layer of vested interests. Before the MRAs can be realized, concrete measures such as detailed, occupation-by-occupation analyses and negotiations, informed by research and statistics, will be required. The AEC should also promote sectoral approaches to develop professional accreditation frameworks such as those undertaken by the ASEAN Constructors Federation and the Asian Welding Federation.

The widespread lack of awareness of the MRAs, and of the AEC itself, is an additional impediment, resulting in weak political and public support to drive the process forward. A 2012 survey of Thai professionals, for instance, found that only 30 percent of engineers and 20 percent of nurses knew about the AEC and understood its implications. To sell the public on the AEC, vigorous efforts should be made, in both receiving and sending countries, to raise public awareness of the benefits of skilled-labor migration.

The Brain Drain Effect

In addition to the myriad policy and procedural obstacles, there is the issue of brain drain. Brain drain is the emigration of highly skilled laborers to a more developed country to find better opportunities, higher salaries, and a better standard of living. Free labor migration can result in competition for skilled human resources that less-developed countries view as unfair, and the fear that brain drain will deplete their already limited stock of highly skilled workers may explain some of the resistance to the AEC-mandated reforms. The Philippines exemplifies this scenario: its bilateral arrangements affecting the migration of healthcare professionals have depleted the number of nurses in its healthcare sector.

But ASEAN economies also stand to gain from this effect. Not all emigration is permanent. There are cases of “reverse brain drain,” where skilled expatriates return to their country of origin, bringing knowledge that can generate investment flows and develop new skills and technology. This has tended to occur in economies like Taiwan, with industries offering benefits on a par with developed countries, or where investment and entrepreneurial opportunities are plentiful, as in China. Therefore, ASEAN should also ensure that mechanisms are in place to support skilled migrants returning to their countries of origin.

ASEAN has established frameworks and incentives for the freer movement of skilled labor, but it would be unrealistic to anticipate the realization of this goal before the AEC is formalized in December 2015. There is a gap between aspiration and reality, as ASEAN, in practice, still lacks uniform and flexible intraregional visa procedures or policies that can bridge the gaps in education and certification standards between member states. Meanwhile, many enterprises and professionals are oblivious to the benefits of more streamlined migration, rendering political will and public support too weak to drive the MRA process forward. As long as these obstacles persist, the full potential of skilled labor to sustain and propel the prosperity of the region will not be realized.

Victor Bernard is a program associate of The Asia Foundation in Thailand. He can be reached at victor.bernard@asiafoundation.org. The views and opinions expressed here are those of the author, not those of The Asia Foundation.

Related locations: Philippines, Thailand
Related programs: Economic Opportunity
Related topics: ASEAN, Labor Migration

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