TOWARD AN INTEGRATED ASEAN LABOR

MARKET FOR ASEAN ECONOMIC COMMUNITY:

PROSPECTS AND CHALLENGES FOR CLML

COUNTRIES AND THE ROLE OF TAIWAN

NGUYEN HUY HOANG, PHD

INSTITUTE FOR SOUTHEAST ASIAN STUDIES, HANOI, VIETNAM

Paper Presented at the International Conference: Towards an Integrated ASEAN Economic Community... In

Taipei on October 30, 2013

Outlines

Introduction

ASEAN integration and its implication for an integrated ASEAN labour market

Prospects and Challenges for CLMV

Countries

Role of Taiwan, ROC in improving Labour Market for CLMV countries

Conclusion

Introduction

ASEAN building and its realization process in the end of 2015

Completion of AEC is considered an important content to promote building an Integrated ASEAN labour market which is freer, more efficient and more competitive

Economic Interaction (investment, trade, cooperation in education, contracted workers) among countries would enhancing labor market for ASEAN.

Characteristics of ASEAN labor economics

ASEAN Agreements for an integrated ASEAN labour market

AEC and integration of labour market in ASEAN

ASEAN integration and its implication

for an integrated ASEAN labour market

Characteristics of ASEAN labor economics

Previously colonized by Western countries tile securing independence,

Dominantly agricultural economies with extractive industries ,

Population is all multi-ethnic, multilingual, multi-religious and multicultural

ASEAN labour economics begins with the entry of migrant workers,

Ambitious socioeconomic programs after indept. as modernizing economy by emphasizing on manufact’ring and investing in public infrastructure,

Gradual shift from agricultural, extractive to manuf’ring leads to rural urban labor migration, changing wage structure, living conditions and standards.

Regional Trade Agreements (RTA): AFTAs Pave ways for labour market integration in ASEAN.

However, these existing agreements don’t have all provisions to facilitate movement of natural persons

Instead, RTAs tend to replicate two bases found in GATS: (i) favouring highly-skilled and professional workers; and (ii) closely linking investment with specialised skills such investments require.

ASEAN Framework Agreement on Services (AFAS) in 1995 including Mutual Recognition Agreements (MRAs).

ASEAN Agreements for an integrated

ASEAN labour market

Bali Concord II (2003) called for completion of MRAs for qualifications in major professional services by 2008 to facilitate free movement of professionals and skilled labour in ASEAN

An important working program on labour market integration in ASEAN is ASEAN labour ministers Meeting (ALM) with five priorities: (i) employment generation, (ii) labour market monitoring, (iii) labour mobility, (iv) social protection; and (v) tripartite cooperation. Another area added in 2006 ALM work program: OSH

Jan. 13rd, 2007: ASEAN Declaration on the Protection and promotion of the Rights of Migrant Workers signed

GMS labour Migration Program launched in June 2005

In short, several agreements and working programs on labour markets functioning in ASEAN both regionally and sub-regionally bring both opportunities as obstacles, especially for CLMV countries

Some theoretical arguments:

- Labour market interdependence: promoted by absence of trade barriers, factor mobility and trade, investment

- Labour market integration: extent of factor mobility and trade between two or more economies as well as investment flow

- International trade is driven by comparative advantage, which’s determined by relative stock of production factors. Investment promotes technological transfer

AEC and integration of labour market in

ASEAN

Pattern of labor migration within ASEAN

- Countries of origin: Indonesia, Philippines,

Vietnam, Myanmar, Laos and Cambodia,

- Countries of destination: Thailand, Malaysia and Singapore

- Factors of worker migration

+ Push factors: Slow growth, low wages, high unemployment rate (origin countries), better wages (destination), labor export policy, crisis pressure in less-developed countries as CLMV,

+ Pull factors: rapid growth, labor shortage, changing demographics, labor market needs in high income countries.

Table: Intra-ASEAN Labor Migration Data

Intra-ASEAN Share of Intra ASEAN

to Total Migration (%)

Outward

Migration

Inward

Migration

Ratio of

Outbound/

Inbound

Outward

Migration

Inward

Migration

Brunei D. 9,313 120,578 0.08 38.26 81.40

Cambodia 53,722 320,573 0.17 15.33 95.46

Indonesia 1,518,687 158,485 9.58 60.64 39.91

Lao PDR 82,788 10,134 8.17 22.58 53.58

Malaysia 1,195,566 1,882,987 0.63 80.72 79.87

Myanmar* 321,100 814 394.47 62.39 0.83

Philippines 335,407 9,096 36.87 7.84 2.09

Singapore 122,254 1,162,960 0.11 41.13 59.13

Thailand 262,721 448,218 0.59 32.39 38.73

Viet Nam 221,956 21,511 10.32 9.97 31.04

TOTAL 4,123,515 4,135,357 1.00 32.08 59.21

Towards an Integrated ASEAN Labour Market:

- Integration of labour market in ASEAN would be implemented through intra-ASEAN investment and trade. The investment inflows and outflows in ASEAN countries to its members tend to increase in recent years, and it is expected to even more increase after AEC was built in the end of 2015

Table : Top intra-ASEAN source and host countries

Source Country

Amount

(US$ Mil.)

%

Host Country

Amount

(US$ Mil.) %

Brunei 1,152.08 1.05 Brunei 1,651.99 1.51

Cambodia 87.78 0.08 Cambodia 1,640.38 1.50

Indonesia 12,947.25 11.80 Indonesia 24,386.30 22.22

Lao PDR 120.69 0.11 Lao PDR 675.63 0.61

Malaysia 20,024.34 18.25 Malaysia 17,696.89 16.13

Myanmar* 373.06 0.34 Myanmar* 1,536.54 1.40

Philippines 1,810.42 1.65 Philippines 1,605.34 1.46

Singapore 65,965.12 60.12 Singapore 31,834.31 29.02

Thailand 5,705.57 5.20 Thailand 18,929.43 17.25

Viet Nam 1,525,14 1.39 Viet Nam 9,765.62 8.90

Total 109,722.43 100.00 Total 109,722.43 100.00

CLMV countries 2,106.67 1.92 CLMV countries 13,618.17 12.41

- Accomplishment of AC, particular AEC in 2015: critical base for fully integrated ASEAN and ASEAN labour market

- By 2015 and beyond: free movement of goods, investment, and labour forces (skilled labour) in ASEAN

- Despite by 2015, variation in development of ASEAN countries are still large, full implement of cooperation agreements towards AEC implies labour

market in ASEAN countries indirectly integrated through freer movement of goods and investments

Therefore, wages are expected to gradually converge (according to theory of international trade) despite variation of development levels among countries still considerably remain.

Thus, unlikely that ASEAN labour market can become fully integrated as in EU

- as Blueprint of the AEC also indicates a single market and production base achieved in ASEAN with only free flow of skilled labour, not general labour.

• Freer movements can be envisaged at the top end of labour market (professions and those with specific technical skills). This movements are complementary to the freer movement of capital,

• Industrial cooperation is result of various cooperation agreement in AEC, thus how labour market at the top end can be more fully integrated.

At the lower end of labor market: continuingly temporary migration to work in various receiving countries, thus undocumented migration still serious problem for many (more developed) countries in ASEAN need a framework to deal with this.

Issue of labour migration should be closely monitored in order to have a more integrated market for labour in ASEAN

Prospects

Challenges

Prospects and Challenges for CLMV

Labour Markets

Prospects

Skilled labour forces in CLMV countries have a chance to bridge gaps in sophisticated knowledge and skills with their colleagues in ASEAN-6 countries,

Opportunity for enhancing the quality of labour and labour market

Strengthening labour cooperation with dialogue partners and international organisations

Challenges

Increasing competitive pressure for labour market in CLMV

Skilled labour migration and Brain drain in CLMV

Some Social effects

Role of Taiwan in improving labour market for

CLMV countries

FDI from Taiwan, ROC as a process of technological transfer plays an important role in improving skills of labour for CLMV countries.

Trade between Taiwan, ROC and CLMV would promote labour improvement in exporting countries (as CLMV countries)

Education that Taiwan provided to CLMV students would enhancing and building skill and capability for high skill workers in CLMV countries.

Contracted labour working in Taiwan…

Table. Students from ASEAN countries seeking degrees in Taiwan

Countries Academic year Total

04-05 05-06 06-07 07-08

Brunei 4 3 0 1 8

Cambodia 7 29 57 36 129

Indonesia 1391 1394 1555 1658 5998

Laos - - - - -

Malaysia 332 425 671 872 2300

Myanmar - - - - -

Philippines 207 164 197 252 820

Singapore 30 22 45 71 168

Thailand 279 332 379 487 1468

Vietnam 503 671 836 1276 3286

Total 14,177

Conclusion

Labour provisions in RTAs illustrate

• Range of options for access, calibrated to national needs

• Need for close policy coordination and dialogue between migration and trade authorities

• Need to consider how to implement commitments and administrative capacity required

• CLMV countries have opportunities and face challenges for their labour forces,

It may help these countries to find solutions for economic development and labour development for better quality of labour forces for better competing with labour forces inASEAN-6 countries.

Taiwan plays an important role in enhancing and promoting labour market in CLMV countries in the process of building an Integrated ASEAN labor market after realizing ASEAN Economic Community in the end of 2015

Thank you!