After 10 years of negotiation, the Association of Southeast Asian Nations’ much-anticipated Asean Economic Community (AEC) comes into effect at the end of this year. There is much to be lauded in the agreement, particularly its focus on opening sectors to competition and breaking down trade barriers. The benefits of implementation could lift aggregate output by 7 percent by 2025 and generate around 14 million new jobs.
But these benefits are unlikely to accrue in full if agreements on labor mobility for skilled workers are not implemented. Current restrictions on the free movement of workers not only run contrary to one of the central tenets of the AEC, they also make it difficult for the region to achieve its goal of increased economic integration.
Recent studies have concluded that rather than protect countries from brain drain, the current policy setup is encouraging Asean’s best workers to leave the region entirely.
Over 80 percent of all migrants from Thailand and the Philippines find work outside of Asean. The figures are not much better for Vietnam and Indonesia. The consequence is severe shortages of skilled labor in many Asean countries. Current trends indicate that by 2025 more than half of all high-skill employment in Cambodia, Indonesia, Lao People’s Democratic Republic, Philippines, Thailand and Vietnam could be filled by workers with insufficient qualifications.
For decades, the vast majority of labor migration among Asean countries—over 85 percent by some estimates—has taken the form of unskilled workers from poor countries moving to richer ones. As part of the commitment to the AEC, Asean countries have decided to promote labor mobility for skilled workers such as those in professions like accounting, architecture, engineering, surveying, medicine, nursing, dentistry and tourism.
There has been some progress. Between 2005 and 2012, Asean countries signed mutual recognition arrangements (MRAs) in six sectors (engineering, nursing, architecture, medicine, dentistry and tourism), as well as framework arrangements on MRAs in surveying and accounting to help facilitate cross-border labor mobility.
But a decade after these were first proposed, implementation is still slow—and in some cases nonexistent. This is due largely to the disconnect between regional commitments to labor mobility and existing national legislation and regulations that discourage cross-border movement by professionals.
The portability of qualifications is one of the biggest impediments. Professionals across Southeast Asia wishing to migrate typically find their skills and education underutilized.
Onerous licensure processes, requirements to repeat education, and uncertainty about rules for both employers and employees are just some of the barriers. While there are differences in education and training systems among Asean countries, these obstacles can be overcome by harmonizing, standardizing and implementing compensatory measures to guarantee quality.
Another impediment to implementing the MRAs arises from the divergent interests of countries, sectors and professional groups. Less developed countries have differing interests from wealthier ones regarding skills development and the role of migrant labor more broadly; while sector and professional groups have diverging views about opening labor markets.
Despite the need for skilled labor across the region, it is easy to understand why implementation of skilled labor arrangements is slow. While Asean is meant to encourage regional integration, the reality is that its countries operate in a global marketplace and there is strong competition for investment. Interest groups also hold back implementation in some sectors.
But fears of increasing the flow of skilled workers are greatly overblown. Asean is notable among regional trading blocs for the variety of ways in which domestic constituencies can be satisfied by instruments, including numerical caps on foreign workers in certain sectors. Compare this to the European Union, which has—with few exceptions—completely free movement of labor among its member countries. Even relatively modest regional agreements, such as the North American Free Trade Agreement, allow workers in 63 occupations to move between Canada, Mexico and the United States.
The tourism sector—a bright spot for Asean—can show the way forward. The MRA for tourism professionals has streamlined the hiring process for workers from across the region and eliminated the need for a case-by-case assessment of qualifications. This is helping tourism workers upgrade skills and is giving companies greater flexibility to move their best workers in response to market conditions. Similar efforts have been made for engineers and architects.
But much more effort is needed. Medical professionals continue to face high barriers to movement, even in the face of severe skills shortages for doctors and nurses.
Leaders across Asean are aware of these issues. This week’s high-level forum on skills mobility in Bali will help provide a roadmap for implementing existing and future agreements. The will is there; the time to act is now.
Bambang Susantono is Asian Development Bank’s vice president for Knowledge Management and Sustainable Development.