Catalog

Asia's labor migration dynamics

The dynamics of Asia's international labor migration has been shaped by various factors, grouped for our purposes under the rubrics of global demographic changes, disparities in incomes and wages, structural changes in labor-receiving countries, globalization and regional integration, and changes in immigration policies. Divergences in demography and regional economic opportunities have played the most important roles, which are discussed first.

Global demographic changes

The highly divergent rates of population growth between developing and industrial countries have been a key driver of labor migration from the former to the latter. The demographic transition in high-income countries starting in the 1960s has led to declining labor force growth rates there since the 1980s (Figure 2.3.3). In some countries like Japan, the labor force has already begun to shrink in recent years. In contrast, developing Asia as a whole is still at a stage of rapid population and labor force growth. Over the period 1995–2005, the labor force in developing Asia grew at an annual rate of 1.6%. In some labor-sending countries like Bangladesh, Cambodia, Pakistan, Philippines, and Viet Nam, the labor force growth rate exceeded 2% a year in the last decade (Figure 2.3.4). Millions of young people enter the job market each year in these countries, but many do not get absorbed. Some of the new entrants are either unemployed, or underemployed with extremely low pay (Felipe and Hasan 2006, and the chapter in Part 2, Young Asians: A squandered talent). The combination of "push factors" (absence of opportunity at home) and "pull factors" (presence of demand in other countries) makes migration an attractive alternative for many.

Changes in the population's age composition are also important in determining labor migration trends. Aging populations in the industrial world have created a huge demand for health-care workers, who are in extremely short supply in their domestic economies. Many nurses, physicians, and other health workers from developing Asia now move to industrial countries to fill health sector jobs. Between 1992 and 2006, the annual deployment of migrant nursing professionals from the Philippines rose from 5,747 to 13,525.

Demographic factors also play a role in determining intraregional labor migration in Asia. Asian countries are quite diversified in terms of population dynamics. The NIEs, PRC, and Thailand have experienced a remarkable decline in fertility from the 1960s to the 1990s. With the exception of Singapore, which has been populated by immigrants, population and labor force growth rates in these countries are less than 1% a year. However, in Cambodia, Lao People's Democratic Republic (Lao PDR), Philippines, and most South and Central Asian countries, the demographic transition came much later. These countries (and subregions) are expected to achieve rapid population and labor force growth rates in the next 20–30 years. The slow expansion of population and labor force in the NIEs, Kazakhstan, and Thailand, coupled with their relatively high income levels and rapid economic growth, make them important regional poles for labor migration.

Disparities in incomes and wages

Income differences are a key determinant of international labor migration. Despite its impressive economic growth and a narrowing of its income gap with industrial countries in recent years, developing Asia as a whole is still far behind rich countries in terms of per capita income. In 2006, the per capita GDP of developing Asia was only 18.1% of the Organisation for Economic Co-operation and Development average in purchasing power parity terms and 6% in market exchange rate terms. Moreover, there have been significant cross-country variations in Asia's growth performance. The convergence over the past decades of developing Asia's per capita GDP with those of the high-income economies has largely been a result of the rapid growth of large countries such as the PRC and India. Meanwhile, some regional economies have suffered from prolonged slow growth. Their income gaps with fastgrowing neighbors have generally grown rather than shrunk. As shown in Figure 2.3.5, even the per capita incomes of middle-income laborreceiving countries like Malaysia and Thailand could be 10 times those of neighboring low-income labor-sending countries. The persistently large income gap between most developing Asian economies and high-income countries, as well as rising intraregional income disparities, provide a powerful economic underpinning for expanding Asian migration flows.

Given the large income disparity between labor-sending and laborreceiving countries, and their demographic differences, the wage gains of migrant workers are usually substantial. Filipino nurses, for instance, earn $3,000–4,000 a month in the US, compared with $75–200 a month in the Philippines (IHPDS 2005). World Bank (2006) finds that migration increases the income of Tajikistan migrants 10 times compared to what they used to earn in their home country. Depending on their occupations, the average monthly income of Vietnamese migrant workers ranges from $150–200 in Malaysia, $300–1,000 in the NIEs and $1,250–2,500 in the US and UK, while the average monthly wage of a worker in Viet Nam is $55 in 2004 (Dang 2007). Despite being partly offset by migration costs, these significant wage gaps provide a strong incentive for Asian workers to migrate to reap higher lifetime earnings.

Structural changes in labor-receiving countries

Three main structural changes in labor-receiving countries—in the realms of services, female employment, and low-status jobs—have provided fresh impetus to the expansion of international labor migration. First, the past 20–30 years have witnessed the increasing significance of services activities in industrial countries. As income and living standards rise, the consumer demand for services, such as domestic and restaurant help and discretionary health services, has grown rapidly in these countries. They have to rely on immigrants to meet the growing services demand, because of slow indigenous labor force growth and the nontradable nature of these services. Also in services, fast-evolving technological changes have induced the rise of knowledge- and skillsbased productive services industries (such as financial and ICT services), leading to a worldwide scramble for skills and larger flows of skilled and professional workers (see the chapter Asia's skills crisis).

Second, partly as a response to the labor shortage, female labor force participation rates have risen in most industrial countries over the past three decades (Figure 2.3.6). Greater employment among women has raised the demand for domestic services. In some economies like Hong Kong, China; Korea; and Singapore, authorities even have policies to encourage hiring of foreign domestic helpers to relieve local women with higher levels of education of their domestic chores.

Finally, native workers become increasingly reluctant to work in jobs that have low status in their society, reflecting economic development and the increase in the education attainment of nationals. This has led to significant labor market segmentation in labor-receiving countries, in which migrants are employed in tasks, on the lower rungs of the employment ladder, that are shunned by local workers (Piore 1979, Massey et al. 1993). In Asia, the bulk of the low-skilled migrant labor correspond to this category, filling jobs that offer low status, low income, and little security.

Malaysia and Thailand are most evident examples of such labor market segmentation. More than a million unskilled workers from neighboring poor countries are concentrated in a narrow range of lowstatus jobs in each country (Figure 2.3.7). In turn, substantial numbers of Malaysian and Thai migrants work in the higher-income Asian economies of Japan; Korea; Singapore; and Taipei,China. Even in times of high unemployment and economic downturn, locals are reluctant to enter the sectors that are typically for migrants, such that demand for migrant workers is rigid even during those periods.¹

Globalization and regional integration

Globalization and regional integration are important forces shaping international migration flows. Economic globalization has been associated with decreases in transportation, communications, and other transaction costs, which have been driven by rapid technological progress as well as efforts toward building regional infrastructure to widen and integrate markets. The costs of moving people have also fallen. Better communication, information dissemination through mass media, and the availability of faster and cheaper transport links have made migration that much easier. In Asia, increasing regional integration of trade and investment has especially boosted intraregional movement of skilled labor, as regional production networks of multinational corporations pave the way for intracorporate transfers of managers and professionals among varying locations.

But globalization can also dampen international labor migration. Research on migration during the early period of globalization suggests that capital movement substituted for migration and served to narrow factor price differentials (Williamson 1998). This effect can also be observed in Asia. The relocation of manufacturing production from regional high- and middle-income economies (Japan, Malaysia, the NIEs) to some low-cost countries (particularly the PRC) has lowered demand for manufacturing workers in labor-receiving countries, and reduced emigration pressures by creating jobs and raising incomes in laborsending countries.

Similarly in the services sector, advanced telecommunications facilities and the development of the Internet enable companies to outsource a range of labor-intensive services jobs (broadly classified under ICT services and business process outsourcing) to developing countries, implying much greater expansion of services trade without involving the physical movement of people. This negative effect of services outsourcing on skilled migration is particularly evident in India, where the booming outsourcing industry has slowed the emigration of ICT workers and even triggered return migration from the US and other rich countries (Khadria 2004).

Changes in immigration policies

Certain changes in international migration policies have helped expand Asia's migration flows. For example, selectivity, favoring skilled workers, has played a pivotal role in the increase in inflows of skilled immigrants to rich countries. During the 1990s, in view of intensified labor and skills shortages, most industrial countries in North America and Europe adopted more liberalized immigration policies toward skilled workers. In the US, the annual number of visas issued for highly skilled professionals (H-1B visas) increased from 110,200 in 1992 to 355,600 in 2000. Some European countries have also enacted legislation to secure inflows of skilled workers, such as the 2000 "Green Card" initiative for information technology specialists in Germany and the 2002 Highly Skilled Migrant Programme in the United Kingdom. Asia is an important beneficiary of the relaxation of skilled labor migration restrictions in industrial countries. In 2005, Asia accounted for around 70% of all the new H-1B workers to the US, with India, PRC, and Philippines ranking as first, second, and fourth primary sources, respectively (USCIS 2006).

In Asia, robust economic growth in the late 1980s and early 1990s tightened the supply of labor, leading some countries to open their doors to migrant workers. The Singapore Government, for example, has long recognized the importance of foreign workers in sustaining economic growth and views its migration policy as a key element of the national development strategy. Since the late 1980s, it has devised an innovative immigration policy, using a combination of the price mechanism and employment quotas, to regulate inflows of workers in line with domestic labor market conditions. Taipei,China officially adopted a labor migration policy intended to bring in additional workers for major construction projects in 1989, with the Employment Services Act of 1992 the major legal basis for the entry of such workers. In recent years, the authorities there have emphasized foreign workers as a means of promoting targeted industries and upgrading economic infrastructure, going beyond the initial objective of using these workers to alleviate temporary labor shortages (Athukorala 2006).

Some Asian economies do not have explicit policies to encourage the entry of foreign workers, but resort to irregular migrant workers drawn from tourists, students, refugees, trainees, etc. to meet their labor demand. Governments may turn a blind eye to these practices for a time, especially in economic boom times (Wickramasekera 2002). For example, although Thailand has never allowed unskilled foreign workers to be employed in the country, its policy toward irregular migration has been tolerant. The Government has introduced several amnesty programs to allow illegal migrants from Cambodia, Lao PDR, and Myanmar to work in specified jobs that local workers do not want to perform. Japan and Korea are also examples of countries that have highly restrictive labor migration policies but that permit some back-door entry through trainee programs.