The Earn, Learn, Return Model: A New Framework for Managing the Movement of Workers in the APEC Region to Address Business Needs EXECUTIVE SUMMARY Skills shortages and mismatches remain an acute concern for businesses and governments in the APEC region alike, and are steadily growing worse. In 2013, around 50 percent of surveyed employers in APEC economies struggled to fill jobs with suitably qualified candidates placing the APEC region far above the global average of 35 percent. 1 Another survey found that the vast majority of employers in the region support increased talent mobility as a solution to these challenges. These shortages partly reflect longer-term demographic changes, like low birth rates and an aging population, but are also the result of mismatching labor supply and demand. With so many career choices, millennials and the technologically savvy rarely want the challenging jobs required by many sectors. Businesses struggle to fill roles with qualified candidates, as education systems fail to adapt to the current labor market and young jobseekers seek out opportunities elsewhere including overseas. Demand for more workers at all skills levels continues to grow, creating critical skill shortages in some sectors. Meanwhile, existing labor migration management frameworks encourage migrant workers to use unauthorized migration channels or lapse into irregular status, causing additional social problems. Historically, economies grew in large part by opening channels for permanent settlement, as exemplified by the United States during the 20 th century. However, there is a shift away from this permanent settlement model as governments attempt to minimize the economic, cultural, social and security impacts of permanently absorbing newcomers. This paper describes a new and practical set of ideas intended to offer a solution that is sensitive to the economic, cultural, social and security concerns of many APEC economies within an increasingly globalized world. The APEC Business Advisory Council (ABAC) hopes to work with APEC to develop an improved framework that can efficiently manage labor flows in the region. This improved framework is patterned after successes of the global shipping industry, which has one of the world s most sophisticated systems to manage the international movement of seafarer. The framework is critical to enable policymakers to manage worsening skills shortages, and tackle some of the inefficiencies and corrupt practices underpinning this challenge. It 1 Manpower, 2013 Talent Shortage Survey: Research Results, Milwaukee: Manpower Group. 2013 Available at http://www.manpowergroup.us/campaigns/talent-shortage-2013/ 1
would encourage coordination between businesses, workers, and government regulatory agencies to establish a more effective and responsive labor mobility system. It would encourage workers to return home regularly, with portable benefits, thus reducing the permanent loss of human capital in source economies. The framework would also provide safer working conditions for workers, with on-the-job training and better skills development. This brief outlines the APEC Business Advisory Council s Earn, Learn and Return model a more efficient, systematic, and transparent framework for the management of the movement of workers centered around four key elements: 1. A sector-based regulatory structure built around a new category called an APEC Worker. APEC members could identify or create the ideal multilateral or regional organization that would provide the governance structure for each sector. For example, the International Maritime Organization governs the shipping industry s workforce. 2. An APEC-wide regulatory convergence of training, assessment and certification of skills and qualifications for each position in each sector. 3. An APEC-wide transparent, regulated and standard process for the recruitment, job placement, and deployment of workers. The work contracts are circular in structure allowing the worker to return home regularly, ideally every year. There are agreements on work conditions and benefits guided by the market in the destination economy. Employers, not workers, pay placement fees, and recruitment agencies are effectively regulated. The APEC Worker would have a Travel Card which serves as a regionally recognized identification document certifying a worker s occupation in a given sector. 4. A next generation of APEC-wide services catering exclusively for the needs of an APEC Worker including among others, insurance, social security, banking services, (discounted) airfares, and free or discounted communications. This Earn, Learn and Return model framework builds on the successes and best practices from the shipping industry, as well as some agriculture and manufacturing industries worldwide. It provides a long-term, regional, and sector-based approach to managing the movement of workers and workforce development that contributes to achieving one of the key goals shared by governments and businesses in the APEC region today: The attainment of sustained and inclusive economic growth fundamentally supported by workers with the skills and qualifications demanded and recognized by the labor market. 2
I. Introduction Skills shortages and mismatches in the APEC region remain acute and are projected to worsen as economies recover from the global financial crisis of 2008. This trend is exacerbated by demographic changes like low birth rates and aging populations that threaten to shrink the economies of numerous APEC economies. The growth of knowledge-based industries, such as high-tech manufacturing and financial and business services, has altered the aspirations of the young (especially in developed economies) and exacerbated shortages of workers across many sectors. With so many career choices, millennials and the technologically savvy rarely want the challenging jobs required by many sectors. Some economies with young populations of jobseekers lack the educational systems capable of delivering the skills required by the labor market. Many also see their workers permanently emigrate, causing a brain drain especially of the most talented, many of whom have little or no intention or incentive to return home. At the same time globalization has only increased businesses demand for more workers at all skills levels, raising skill shortages to critical levels in some sectors. Attracting and retaining human capital remains a top concern among APEC businesses. A 2012 study found that an overwhelming majority (82 percent) of business executives in the region believed talent mobility would have a positive, very positive or extremely positive impact. 2 More recently, Manpower Group s annual Talent Shortage Survey found that in 11 APEC economies, one in two surveyed businesses struggled to fill jobs in 2013. As Figure 1 below shows, this proportion is much higher than the global average of 35 percent. 2 University of Southern California Marshall School of Business, Trade in Services in the APEC Region: Challenges and Opportunities for Improvement, Report. September 2012. Available at http://www.chamber.org.hk/en/doc/usc_marshall_abac_2012_report_final.pdf 3
Figure 1: Proportion of Businesses Reported Having Difficulty in Filling Jobs, 2013 Source: Manpower, 2013 Talent Shortage Survey: Research Results, Milwaukee: Manpower Group. 2013 Available at http://www.manpowergroup.us/campaigns/talent-shortage-2013/ Even more importantly, the survey reveals talent shortages are a growing issue in three of the largest Asian economies China, Japan and Singapore where the proportion of employers reporting skills gaps increased from 2012 by 12, 4 and 10 percentage points respectively. Eighty-five percent of Japanese employers experienced difficulties filling jobs in 2013, the highest level recorded in the survey s eight-year history. Reported shortages are also at a six-year high in Canada, having risen 9 percentage points yearover-year. 3 3 Manpower, 2013 Talent Shortage Survey: Research Results, Milwaukee: Manpower Group. 2013 Available at http://www.manpowergroup.us/campaigns/talent-shortage-2013/ 4
Four Drivers of the Skills Gap Broader demographic changes like low birth rates and an aging population aside, there are many complex reasons for this widening skills gap in the APEC region. First, economies struggle to build adequate human capital in the areas that are most relevant to economic development. Educational workforce development programs often lack linkages to real-world labor market needs, and remain inaccessible to those who might benefit most from them. Second, most education and training qualifications are not portable or transferable. Workers crossing borders are often unable to put their skills to productive use because their qualifications, experience, and knowledge are not readily recognized in the destination economy s labor market. The resulting waste of human capital represents a loss to employers, host communities, and workers themselves. Barriers to transferring skills and experience are a major impediment, particularly in regulated occupations where applying for the right to practice can be an extremely time-consuming and difficult process for foreign nationals. Third, effectively deploying workers across borders through regulated channels remains difficult despite the introduction of stricter rules designed to deter rising unauthorized migration. Although many workers move to and within the region through regular channels, a significant number do not or later lapse into irregular status. Many workers leave home with huge debts incurred from paying exorbitant fees to recruitment agents. Workers often overstay their visas when there is no opportunity to renew their contracts, as they are reluctant to return home and then pay these fees all over again. Unauthorized migration and the lack of social protections for unauthorized workers lead to major social problems, making labor mobility a sensitive issue for both sending and receiving economies. It also highlights the need to design a new labor mobility framework. Lastly, countries have historically relied on permanent migration to grow their economies. For many, however, this model needs revision, as governments aim to minimize the economic, cultural, social, and security impacts of permanently incorporating newcomers. III. The Earn, Learn, Return Model: A New Framework for Managing the Movement of Workers This paper describes a new and practical set of ideas to manage regional labor mobility effectively and address existing skills gaps in a way that is sensitive to the economic, cultural, social, and security concerns of many APEC economies. To address these skills shortages and mismatches, the APEC Business Advisory Council (ABAC) seeks to work with APEC leaders, in particular through the Human Resources Development Working Group, to develop an improved framework to manage the movement of workers efficiently around the region. 5
This new framework would eliminate current inefficiencies and corrupt practices that underscore the social problems faced by migrant workers, and source and destination economies alike. In the long term, solving these social issues will require improvements in education systems including better-targeted vocational training, higher levels of participation by women, and changes in retirement practices. Nevertheless, without a new framework, APEC economies ability to manage the worsening skills shortages will be severely hampered. Improving the management of worker mobility would facilitate the development goals of source economies and efficiency goals of destination economies. These reforms would address the permanent loss of human capital in source economies, and the social costs brought about by long separation of families. In destination economies, a new framework would streamline labor flows with a coordinated approach involving businesses, workers and government regulatory agencies alike that allows businesses to employ and retain indemand workers. Workers in turn could work in secure and safe conditions, learn while on the job, and regularly return home with fully portable benefits. The Earn, Learn and Return model would be a more efficient, systematic, and transparent framework for the management of the movement of workers. It builds on four key elements taken from the successes of the global shipping industry, which has one of the world s most sophisticated systems to manage international labor mobility. 1) A sector-based regulatory governance structure built around a new category called the APEC Worker The APEC Worker arrangements would have a governance structure arranged by sector and tailored to each sector s specific needs. For example, ABAC envisions one APEC Worker framework for healthcare workers and another framework for engineers. APEC economies could establish a new entity, or identify an existing regional or global organization, to create and develop the international regulatory structures needed for an efficient circular flow of workers. For example, the International Maritime Organization (IMO) governs the shipping sector through agreements with IMO member states on the standards for seafarers. This innovative set-up makes it easier for immigration regimes to identify and approve seafarers visa applications. Like the IMO, the governing body would audit APEC members government agencies on their compliance with established rules and standards, who would then audit local employment agencies and training and educational institutions. 2) An APEC-wide regulatory convergence on education and training, assessment and certification of skills and qualifications for each position in each sector ABAC also envisions that the same governing body would harmonize standards for education and training, assessment, and certification, and would ensure compliance of APEC members. The APEC wide harmonized standards would lower the costs for education, training, and examinations of workers. Harmonized training would also allow for skills upgrading while workers are abroad. 6
3) An APEC-wide regulatory convergence on a transparent and regulated process for the recruitment, job placement, and deployment of workers The model envisions the convergence of transparent regulations for recruitment, deployment and job placement processes particularly on work conditions and benefits thus giving workers an educated choice on whether or not to accept a position. A key feature of the framework is the circular nature of work contracts, with the worker returning home regularly ideally every year to maintain close ties to home. The framework also envisions that placement fees are paid by employers, not workers. Contracts are renewable to prevent overstaying. A worldwide review of mobility systems by the U.S.-based Migration Policy Institute found that inflexible work arrangements, such as nonrenewable visas, visas tied to particular employers, and no flexibility to switch to other admissions categories, encourage workers to overstay their visas and lapse into irregular status. 4 The APEC Worker Travel Card would be issued to every worker and would serve as a seal of good employmentconduct. Sharing similar features with the Seaman s Book, bearers of the Worker Card would be grouped based on specific skills, occupations, and professions. This feature would make visa processing simpler and more efficient. 4) A next-generation framework of new services for the APEC Worker, covering insurance, social security, bank accounts, (discounted) airfares, and free or discounted communications There is an opportunity for APEC economies to develop a fresh, viable, and sustainable new category of services that transcend national regimes to meet APEC Workers needs. These services would include insurance coverage across APEC, a new social security regime where payments are made to an APEC-created agency and are fully portable between APEC economies, specially created banking services, (discounted) airfares, and free or discounted communications. Start Small and Build by Sector Far from suggesting a blanket, cross-sectoral approach to worker mobility, ABAC recognizes that the model works best if adapted to meet specific industry needs. Box 1 below shows, for instance, how the shipping industry has developed a world-class system for managing the movement of seafarers. 4 Kathleen Newland, Dovelyn Rannveig Agunias, and Aaron Terrazas, Learning by Doing: Experiences of Circular Migration, Insight. Migration Policy Institute: Washington, 2008. Available at http://www.migrationpolicy.org/research/learning-doing-experiences-circular-migration 7
Box 1: The Shipping Model Seafarers within the shipping industry are some of the most governed workers in the world today. The international seafaring labor force falls under the jurisdiction of the UN International Maritime Organization (IMO), which provides its global governance framework, and the International UN Labor Organization (ILO), which oversees seafarers rights and benefits. The IMO imposes global safety, environmental, and other minimum standards in mandatory training and certification. As a result, certificates are mutually recognized, and a seafarer can work on any ship regardless of flag state. Maritime colleges and training centers also need to be IMO audited and accredited. The ILO imposes recruitment and job placement regulations, and minimum work conditions and benefits. Contracts are short and circular in structure, with a maximum of 10 months of work and a two-month paid vacation. Seafarers have visas but there are very few reported instances of crew jumping ship and becoming undocumented. Employers pay for all costs of placement and deployment, and provide global insurance and tax-free pay. There is even a special discounted airfare for seafarers, at 30 percent of the regular fare. These circular labor flows enable seafarers to pursue diverse career paths while maintaining close ties with home. They can become part of the global talent pool, using their expertise and knowledge to perform services needed by the industry at home and abroad. IV. Conclusion: Bridging the Gap between Vision and Implementation For ABAC, the promise of the Earn, Learn, Return model is straightforward: a steady supply of needed workers in destination economies, safer and legal movement of workers who earn and learn, and inflows of remittances to source economies that can then benefit from their workers skills when they return home. This model does not just benefit APEC economies: studies show that (contrary to popular conceptions) many workers hope to return home, either on a temporary or a permanent basis. 8
ABAC looks forward to working with HRDWG to identify the next steps for implementing this proposed model, and building up the future prosperity of the region, sector by sector. There are several key issues that could form the basis for future discussion. These include: Should the framework cover both skilled and unskilled workers? This proposed framework presupposes that with the sector-by-sector training and certification framework in place, no worker will be considered unskilled. What is the optimum duration for each repeat contract? The experience of the shipping industry shows one-year contracts help workers maintain close ties with home; thus the framework envisions workers returning home yearly. What practical steps would be needed to create APEC-wide governing bodies to harmonize sector-based standards for recruitment, job placement, education, training, assessment, and certification and, even more importantly, ensure the compliance of member economies? What practical arrangements would be needed to create a sector-based APEC Worker Card? 9