AEC Blueprint 2025 Analysis: Paper 6 | Liberalisation in the Movement of Skilled Labour and Business Visitors

by Dr. Bambang Irawan | Originally published on 11 August 2016.


Summary

The AEC 2025 Blueprint does little to expand on the objectives set forth in the AEC 2015 Blueprint in regards to the movement of skilled labor. Crucial skill gaps around ASEAN which threaten to derail the AEC ambition need to be met with proactive action; action which is lacking significantly in ASEAN’s current ambitions for skilled labor.

Foreword

The AEC Blueprint Analysis series is a publication which seeks to provide insight into the ASEAN Economic Community Blueprint (AEC) 2025. The publication will seek to do so by adopting a holistic approach in its analysis; creating context by examining past achievements, defining present challenges, and discussing future plans. The series will pay special attention to strategic measures outlined within the AEC’s new blueprint, providing insights with regards to the viability of regional economic integration under the AEC.

 

A. Past Plans

What were the targets in the AEC 2015 Blueprint?
Another characteristic of ASEAN’s single market and production base is the free flow of skilled labor within ASEAN. ASEAN has taken a two pronged approach to open the door towards the movement of skilled labor:

  1. Allow managed mobility or facilitated entry for the movement of natural persons engaged in trade in goods, services, and investments, according to the prevailing regulations of the receiving country;
  2. To facilitate the free flow of services (by 2015) by harmonisation and standardization

1. AEC Blueprint 2015

What were the targets in the AEC 2015 Blueprint?
Mutual Recognition Arrangements (MRAs) for major professional services, including PIS services sectors by 2008, MRAs constitute the following objectives:

  • Form the main policy tool for skilled labor mobility in ASEAN
  • Do not override local labor policy
  • Provide a local license for regulated professions

Facilitate issuance of visas and employment passes for ASEAN professionals and skilled labor who are engaged in cross-border trade and investment related activities.

Enhance cooperation amongst ASEAN University Network (AUN) members in terms of mobility.

Develop core competencies of skills and qualifications for job skills required in:

  • 12 Priority services sectors by 2009
  • All other identified services sectors by 2015

2. ASEAN Agreement on The Movement of Natural persons (MNP)

Signed in 2012, the MNP Agreement hopes to capitalise on MRAs by providing a legal framework to facilitate the temporary cross-border moment of people engaged in the trade of goods, services, and investment.

The MNP Agreement details streamlined procedures for the migration of business visitors, intra-corporate transferees, and contractual service suppliers.

3. ASEAN Qualifications Reference Framework (AQRF)

Finalised in 2014, the AQRF unifies education frameworks across ASEAN member states to enable the mobility of students and professionals in the region.

Although not a legal framework, the AQRF is designed to develop transparency amongst national qualifications in education, facilitating easier access to schools, colleges, and universities; ultimately, the AQRF is aimed at helping workers practice their professions across ASEAN.

 

B. Past Achievements

What has been achieved?

1. Unskilled labour

Screen Shot 2018-02-06 at 5.16.08 PM

As illustrated by Figures #1 and #2, the intra-ASEAN flow of labor is largely focused on several main corridors with concentrated destinations in Thailand, Singapore, and Malaysia.

The top corridor flowing from Myanmar to Thailand currently represents 28.8% of all intra-ASEAN movement.

More than 87% of intra-ASEAN migrants are unskilled workers.

 

2. Skilled labour

The eight completed MRAs cover 1.5% of the total ASEAN labor force (ADB-ILO, 2014)

MRA Implementation Progress: The MRAs can be broken into four main groups with different implementation processes:

  1. Architectural and Engineering Services
    The two service lines have MRAs which establish an ASEAN level council which has the power to declare vetted professionals as ASEAN chartered professionals; ASEAN charted professionals have their qualifications recognised by member states. As the most straightforward of the ASEAN MRAs, this group has seen the most success in implementing their MRAs. (Fukunaga, 2016)
  2. Medical, Dental, and Nursing Services
    MRAs relating to these service lines do not establish an ASEAN level council but rather leave the qualification of foreign professionals to national legislation. Instead, these MRAs act as touchstones for qualification equivalents. Implementation is therefore harder to measure, and is liable to domestic policy shifts. (ERIA, 2012)
  3. Accounting and Surveying Services
    Largely frameworks rather than actual agreed upon MRAs, these still need to go through a thorough vetting process and agreed upon by all member states before being actionable.
  4. Tourism Services
    The first MRA to deal with an unregulated profession, this MRA focuses on competency standards rather than a certified qualification. As such, this MRA is largely open to the interpretation of host countries and instead acts as a best practice guideline.

 

C. Present Challenges

What are the current issues?
ASEAN’s focus on ensuring the freedom of mobility of service professionals does not address the majority of actual labor movement in the region, as highlighted by the large proportion of unskilled migrant workers and the low coverage of MRAs.

Labor mobility is still highly limited in comparison to other regional unions such as the European Union and the Australia/New Zealand Closer Economic Relation Agreement. While these latter unions allow for the general movement of people, ASEAN member states are still constrained by immigration regulations, which act as further barriers even where MRAs have been implemented.

With national legislation taking precedence over MRAs, the possibility of policy progress backsliding has not been addressed.

 

D. Future Plans

What new measures are included in the AEC 2025 Blueprint?
Whilst the ASEAN 2025 Blueprint does not contain any explicit shifts in focus or policy, the deepening and expanding of existing MRAs, the MNP Agreement, and reduction of documentation may help to address existing shortfalls.

 

E. AEC 2025 Blueprint Analysis

What do the measures entail?

Screen Shot 2018-02-06 at 5.20.00 PM

Screen Shot 2018-02-06 at 5.20.08 PM

 

F. Conclusion

What does the AEC 2025 Blueprint mean in terms of the movement of skilled labor?

The AEC 2025 Blueprint does little to expand on the objectives of the AEC 2015 Blueprint in regards to the movement of skilled labor. Issues such as the movement of unskilled labor, the limited scope of MRAs, and immigration policy barriers are sensitive issues that have not been addressed.

ASEAN needs to address a crucial skills gap which may derail the AEC ambition. It is projected that there is a undersupply of 9 million skilled and 13 million semi-skilled workers by 2030 in Indonesia and Myanmar alone (World Bank). Recent research suggests that, based on current trends, more than half of all high-skill employment in Cambodia, Indonesia, Laos, the Philippines, Thailand, and Vietnam could be filled by workers with insufficient qualifications by 2025 (McKinsey).


References
ADB, ILO,. (2014). Managing integration for better jobs and shared prosperity. Thailand: ADB.
Retrieved from http://www.adb.org/sites/default/files/publication/42818/asean-community-2015-managing-integration.pdf
McKinsey Global Institute’s reports: on Indonesia, The archipelago economy: Unleashing Indonesia’s potential, September 2012; and Myanmar, Myanmar’s moment: Unique opportunities, major challenges, June 2013.
The ASEAN Secretariat (2015), ASEAN 2025: Forging Ahead Together. ERIA,. (2012). Mid-Term Review of the Implementation of AEC Blueprint.
Fukunaga, Y. (2016). Assessing the Progress of ASEAN MRAs on Professional Services. ERIA’S AEC Scorecard Phase IV Project.
United Nations (2016). United Nations Population Division | Department of Economic and Social Affairs. [online] Available at:
http:/www.un.org/en/development/desa/population/migration/data/estimates2/estimates15.shtml.
The ASEAN Secretariat (2008). ASEAN Economic Blueprint.
The ASEAN Secretariat (2015). ASEAN Intergration Report 2015.
The ASEAN Secretariat & UNCTAD. (2015). ASEAN Investment Report 2015 Infrastructure Investment and Connectivity.
The ASEAN Secretariat (2015). A Blueprint for Growth ASEAN Economic Community 2015: Progress and Key Achievements.


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