Asean Economic Community fails to bridge skills gap
While the newly enacted regional trade pact acknowledges the need for skilled labor mobility, only seven service professions have been approved for cross-border employment
Almost three million Southeast Asian professionals are working in Europe, North America and Oceania at a time when their home region is bidding to bridge skills gaps by facilitating greater labor mobility within its borders through the newly enacted Association of Southeast Asian Nations Economic Community (AEC).
The region’s skills divide is stark. Singapore (13) is the only Southeast Asian country ranked in the top 20 in the World Economic Forum’s 2016 Human Capital Report for the quality of its workforce; Myanmar is rated 109th of 130 countries assessed, Laos 106th and Cambodia 100th. Malaysia (42), Thailand (48) and the Philippines (49) fall somewhere in the middle.
In Singapore, 55% of workers are rated as ‘highly skilled’, while only 10% in Vietnam and 4.9% in Cambodia make that grade. Thailand, Singapore and Brunei have labor shortages due to aging populations, while manpower is expanding in Indonesia, the Philippines, Laos and Cambodia.
About 22% of Indonesians are under-employed, and one-third of those are in the 15-24 years-old graduate age bracket.
Impressive gains have been made in education and training, but it will be at least a generation before developing nations like Myanmar and Laos will have a skills base capable of efficiently absorbing technology transfers and moving up the value scale.
Labor migration, much of it illegal and transitory, has played a critical role since the 1980s in developing low-cost manufacturing in countries like Thailand, Malaysia and Indonesia, keeping fishing boats at sea, tapping palm oil and building much of its infrastructure.
As of 2015, 9.9 million Southeast Asians were working abroad, including 6.9 million in their own region, according to Asia Development Bank (ADB) statistics.
The remittances they send home fill foreign exchange coffers in the Philippines and Myanmar, but the migrants bring few skills with them and take few back.
The International Labor Organization and ADB have calculated that 179 million regional workers, or one in every three, are trapped in vulnerable jobs and 92 million earn too little to escape poverty.
Yet efforts to expand the migration of skilled workers, which would provide an important spearhead for integrating markets under the AEC, have attracted less enthusiastic support.
While Asean has acknowledged that it needs a free movement of labor to distribute manpower to sectors where it is most needed, only seven service professions – accounting, architecture, dentistry, engineering, medicine, nursing and tourism – have been approved for cross-border employment.
Participation in the AEC is non-binding on signatories and contingent upon bilateral mutual recognition arrangements. The scheme is unlikely to be expanded while source markets try to hang onto the skills that they most need for their own development: for instance, only five countries have established rules and procedures for the registration of architects.
There is also considerable evidence of brain waste in the program, with skilled migrants working as taxi drivers or cleaners because the host country does not recognize their credentials.
The targeted industries employ about 15 million people in the region, or just 5% of total manpower. So far 310,582,000 people have taken advantage of the scheme, of whom 83% are involved in one sector: tourism.
Engineers, the workers most in demand, have comprised only 3% of the region’s migrants, with medical at 2% and accounting a mere 1%.
Yet demand for highly-skilled workers within Southeast Asia is projected to grow by 41%, or 14 million workers, between 2010 and 2025.
Professionals with the right credentials are migrating, but not within Asean. In 2010-2011, the most recent period for which data was released, there were 2.8 million people from Southeast Asia with tertiary qualifications working in Organization of Economic Community (OECD) countries, up from 1.7 million a decade earlier.
This does not include tens of thousands of other labor migrants who work in non-OECD countries like India, China and the Gulf region. There were 1.8 million Filipinos working on temporary contracts in 190 countries in 2014; that number has since risen.
Malaysia, Thailand and the Philippines have launched initiatives to lure back this straying pool of talent and channel it into economic development, but the prospects aren’t good.
Surveys suggest that while many do want to return, they can’t yet find the same level of opportunity at home. The AEC may have lots to offer an ambitious professional, but it seems wanderlust will always win when it brings higher wages, superior technologies and more appealing working conditions.