In 15 months, the Asean Economic Community (AEC) comes into effect, heralding a new era in which the flow of goods, services, capital and labour will be freed up across the region.
One aspect of this liberalisation is what it will mean for job opportunities across Asean’s 10 member countries.
Will an engineering graduate from Malaysia be able to apply for a job in Indonesia? Can a Filipino nurse get to work in a Thai hospital?
Under ideal conditions, the answer is a resounding yes. But there are several reasons why the answer is no and will remain so in the next few years.
Essentially, the AEC will affect employment in two ways – structural change in domestic economies as a result of greater trade integration; and from freer flow of skilled labour.
In terms of structural change, there could be some occupations that are likely to grow as the Asean integration process matures. Indeed, this kind of structural change, and changing employment dynamics, has occurred in the past.
Take the fact that during the last two decades, Asean has seen a decline in agriculture employment, which has mainly been compensated for by gains in the services sector.
Currently, while agriculture accounts for 40 per cent of total employment in the region, industry accounts for 19 per cent and services, 41 per cent.
But the regional generalisation masks cross-country variation.
Country-wise, even today, agriculture remains the largest employer for Cambodia, Laos, Myanmar, Thailand and Vietnam. Then again, though, services sector employment plays an important role in Singapore, Brunei, Malaysia, the Philippines and Indonesia.
Interestingly, a study of six Asean countries from both these groupings – Cambodia, Indonesia, Laos, the Philippines, Thailand and Vietnam – by the International Labour Organisation and the Asian Development Bank mentions that with the AEC in place, by 2025, the six countries would gain jobs in agriculture, trade and transport, and construction. For these economies, job losses would occur in food processing, private services and mining industries.
The impact on the labour market could also be felt in a shift in occupations that would be in demand. The largest absolute demand is likely to come for low- and medium-skilled jobs, though high-skilled jobs will be wanted, too. Low and medium-skilled jobs include wood treaters, craftsmen and machine operators, locomotive drivers, hotel and restaurant managers, waiters and bartenders, and repairmen.
But it is in the area of high-skilled workers that the groundwork for greater mobility is being laid.
Asean member states have agreed on a framework for mutual recognition agreements for seven professions – engineering, architecture, nursing, accountancy, surveying services, medical and dental professions. These agreements allow each member country to recognise education and experience, licences and certificates granted in another country.
But in practice, only the skills of architects and engineers who are registered with the professional regulatory body both in their home countries and at the regional level receive cross-border recognition, and thereafter domestic rules and regulations governing these professions prevail, preventing free movement.
For example, in Malaysia, foreign engineers have to be licensed by its Board of Engineers for specific projects and must be sponsored by the Malaysian company carrying out the project. The Malaysian company must further demonstrate to the Board that it is not able to find a domestic engineer for the job.
Lastly, foreign engineers in Malaysia must be registered engineers in their home country, have a minimum of 10 years’ experience and have a physical presence in Malaysia of at least 180 days in a calendar year.
Similar restrictions prevent architects taking up full-time work in another Asean country. Most countries still impose restrictions on residency or nationality in their licensing requirements.
Foreign architects are often allowed to work on a project-based basis and, in most of the cases, employers have to submit proof that an equivalent national professional is not available. Such protectionism is not expected to go away anytime soon.
In nursing, again there is limited cross-border movement due to domestic regulations. For example, for a Filipino nurse to practise in Thailand, the candidate must pass the national licensure exam – in the Thai language.
As for the surveying profession, the mutual recognition agreement provides only broad aims and objectives for further bilateral and multilateral negotiations among Asean member states. So the advent of AEC by December 31, 2015, is not going to change anything for the Asean labour market immediately.
With maturity of economic integration over time, the region might see structural changes and, with that, changes in employment scenarios.
But those changes will take time, and the policymakers do have enough transition time to address looming issues in the domestic economies.
For example, while AEC may result in higher welfare for workers, better wages and more employment opportunities, the benefits are expected to be distributed unevenly among countries, sectors and gender.
To address this, coordinated and coherent policies will be needed at both regional and national levels to ensure inclusive and fair outcomes.
Policymakers should also continue with efforts to ensure quality education and training in their economies, as Asean strives to remain competitive and to develop itself as a regional production base in future.
The mutual recognition agreements cannot be a stepping stone towards greater mobility unless they address the domestic rules and regulations of individual Asean economies.
The writer is a fellow and lead researcher (economic affairs) at the Asean Studies Centre, Institute of Southeast Asian Studies.
Source: The Straits Times