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AseanAffairs Magazine May - June 2011




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 The creation of a larger pool of skilled labor as the Asean Economic Community envisions, is likely to have a major regional impact.

Datuk Aishah Ahmad President Malaysian Automotive Association H.E. Imee R. Marcos Governor Province of IIocos Norte, Philippines Mr. Kee Beom Kim Employment Specialist with the Decent Work Technical Support Team for East and South-East Asia and the Pacific of the International Labour Office (ILO)
Datuk Aishah Ahmad is currently Chairman of Automotive Federation Malaysia (AFM) and President of Asean Automotive Association (AAF). Imee R. Marcos was one of the first female graduates from Princeton University, and earned honors in law. She is also a theater, TV and film producer, responsible for Filipino film classics winning Cannes Special Jury Prizes and organized a three million strong village youth group-the Kabataang Barangay Kee Beom Kim is employment specialist with the Decent Work Technical Support Team for East and Southeast Asia and the Pacific of the International Labour Office (ILO), Bangkok, Thailand. Before joining the ILO in 2002, he was an Analyst at the Korea Development Bank. He has published a number of publications and papers on labour market and employment issues.

The protocols of the Asean Economic Community (AEC) call for greater movement of professionals and skilled labor personnel between the 10 Asean member states. This freer exchange of labor would essentially create a much larger pool or labor market for Asean companies from which to draw. The hope is that this would facilitate trade and investment between the member states.

Currently, Malaysia, Philippines, Indonesia, Singapore and Thailand, report that they need skilled labor to expand their growing industrial and technical base.

It is important to note that the movement of unskilled labor is not called for in the AEC. The movement of relatively low-wage labor from the CLMV (Cambodia, Laos, Malaysia, Vietnam) countries into Thailand, and from Indonesia and the Philippines into Singapore, Malaysia and Brunei has provided opportunities for several million workers. At the same time, these movements have raised challenges as receiving countries such as Thailand and Malaysia, have had to deal with a high proportion of undocumented workers from neighboring states.

Datuk Aishah Ahmad (Malaysia), Governor Imee Marcos (Philippines) and Kim Kee Beom (International Labor Office, Indonesia) address labor issues that may evolve after the AEC comes into effect in 2015.


Q: How will labor mobility work in practice: wage scale imbalance, workers’ rights, and unionization?

 Ahmad: Labor competency and strength differs by countries in Asean.

It will be a win-win situation with industries probably reviewing its current base based on the labor strength that match their operational requirement.

The receiving country will get the manpower it needs; the migrant country will receive financial remittances. Countries with low per capita incomes will generally see a greater out flux of its general workers.

One concern, however, is whether countries would be “discouraged” to train and educate their workforce if cheap labor is easily available across the region.

Marcos: Migration is not a win-win situation. The Philippines is number four following China and Mexico in world migration and remittance and it does not enjoy economic stability. As a stop gap measure, the Philippines enjoy 7 to 9 billion in remittances but you cannot call migration a legitimate economic policy. Labor mobility inside Asean is stop-gap measure but never a permanent solution to pressing economic problems.

Beom: Labor mobility can lead to a more efficient matching of resources, which in turn can enhance the productive capacity of Asean economies to generate higher levels of growth, more decent work opportunities and improve living standards, there are significant potential benefits that can arise from labor mobility for all Asean Member Counties. This does not however mean that all Asean countries will automatically be better off. For example, the presence of foreign workers in some receiving countries could lead to locals being out-competed, if those foreign workers are more productive. For sending countries, the emigration of skilled workers to other countries can lead to “brain drain,” with potential deterioration in that country’s growth potential. While a win-win situation is certainly possible, it depends to a large extent on the policies in place to maximize the development gains from labor mobility while ensuring policies and systems exist to support those that may be harmed by labor mobility.

Q: Japanese SMEs are eyeing moves to Thailand but they expect they will need 700,000 skilled laborers and if Thailand can’t supply that, the Japanese will look elsewhere in Asean. Will the AEC raise the level of competition between Asean countries?

     Ahmad: Thailand had an unemployment rate of 1.20 percent in 2010.

Other Asean countries like Laos, Cambodia, Myanmar, Philippines or Indonesia may be able to provide the numbers, but other considerations such as availability of infrastructure, facilities, educated workforce, management capabilities or government restrictions may be deterrents in certain countries.

Marcos: Looking at the bright side of AEC, it would at the onset create a competition between Asian countries to provide cutting edge service and a multi-skilled labor force. In the long run, AEC can create an opportunity for developing specialized labor skills that would provide equal opportunities to all Asian countries, since industries require varying skills. Competition is never a bad thing until countries start to put the price down to the detriment of both the product and the labor sector. BPO is the best example. It started in India and Philippines. Currently, Philippines is number one but unless it can sustain continuity in raising its standards of training labor for quality performance it will lose out. Surprisingly, North Korea’s experience with back-office outsourcing with a cheaper cost for digital industries created a leverage which resulted with a lot of the clients coming back because production was cheap. At the end of the day, it is not merely the price of labor that will be affected but also of the quality of work and the product. On the question of quality, competition will compel countries to train at a higher level and in the end it will not be simply a price war; it would not be the issue of the cheapest but also of quality of products and services. Competition is not only having the cheapest price but also as to who can provide the best service..

Beom: Foreign investors, whether Japanese SMEs or otherwise, take a number of considerations into account in making decisions to locate in a particular country. The quality of the workforce is certainly an important consideration and thus it is critical that countries make investments in improving the quality of their workforce, including through strengthened education, training and lifelong learning policies. Such a strategy will work best if it is part of a broad set of policies aimed at providing a conducive environment for the growth of sustainable enterprises, including economic and political stability, the rule of law, including respect for workers’ rights, and infrastructure quality among other elements.........................

(L-R) Mr. S. Roy, Founder & Chairman of AseanAffairs, Mr. V. Raman Narayanan, Regional Head, Asean Affairs, AirAsia Berhad, Malaysia, H.E. Imee R. Marcos, Governor, Province of IIocos Norte, Philippines, Mr. John Pang, Chief Executive Officer, CIMB Asean Research Institute, Dato’ Mohamed Iqbal Rawther, Vice President, ASEAN Business Forum / Chairman, Malaysian Institute of Management


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