TOWARD AN INTEGRATED ASEAN LABOR MARKET FOR ASEAN ECONOMIC COMMUNITY: PROSPECTS AND CHALLENGES FOR CLML COUNTRIES AND THE ROLE OF TAIWAN

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1 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

2 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

3 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.

4 ASEAN integration and its implication for an integrated ASEAN labour market Characteristics of ASEAN labor economics ASEAN Agreements for an integrated ASEAN labour market AEC and integration of labour market in ASEAN

5 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, multireligious 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.

6 ASEAN Agreements for an integrated ASEAN labour market 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).

7 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

8 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 subregionally bring both opportunities as obstacles, especially for CLMV countries

9 AEC and integration of labour market in ASEAN 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

10 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.

11 Table: Intra-ASEAN Labor Migration Data Intra-ASEAN Outward Migration Inward Migration Ratio of Outbound/ Inbound Share of Intra ASEAN to Total Migration (%) Outward Migration Inward Migration Brunei D. 9, , Cambodia 53, , Indonesia 1,518, , Lao PDR 82,788 10, Malaysia 1,195,566 1,882, Myanmar* 321, Philippines 335,407 9, Singapore 122,254 1,162, Thailand 262, , Viet Nam 221,956 21, TOTAL 4,123,515 4,135,

12 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

13 Table : Top intra-asean source and host countries Source Country Amount (US$ Mil.) % Host Country Amount (US$ Mil.) % Brunei 1, Brunei 1, Cambodia Cambodia 1, Indonesia 12, Indonesia 24, Lao PDR Lao PDR Malaysia 20, Malaysia 17, Myanmar* Myanmar* 1, Philippines 1, Philippines 1, Singapore 65, Singapore 31, Thailand 5, Thailand 18, Viet Nam 1,525, Viet Nam 9, Total 109, Total 109,

14 - 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

15 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

16 - 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.

17 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

18 Prospects and Challenges for CLMV Prospects Labour Markets Challenges

19 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

20 Challenges Increasing competitive pressure for labour market in CLMV Skilled labour migration and Brain drain in CLMV Some Social effects

21 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

22 Table. Students from ASEAN countries seeking degrees in Taiwan Countries Academic year Total Brunei Cambodia Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Vietnam Total 14,177

23 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,

24 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

25 Thank you!