Will the ASEAN Economic Community mean free movement of labour?

Author: Johanna Johnson | Date: 09 Dec 2015

Asian businesses can benefit from new trade agreements but the shift will be small at first, says Johanna Johnson of Taylor Vinters

A new economic community is being formed in 2016 to represent 625 million people and become the world’s seventh largest economy.
 
It will be formed of the 10 Association of South East Asian Nations (ASEAN) member states: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.
 
A core tenet of the ASEAN Economic Community (AEC) is to be a free flow of skilled labour. But what does this really mean, and what impact will the AEC have on workforces in Asia?
 
The natural parallel is perhaps the most prominent economic community of all, the European Union (EU). Visions of workers freely moving between member states, reduced border control and increased access to state social security benefits spring to mind. In reality, however, there is a gulf of difference between the EU’s free movement of people and the AEC’s free flow of skilled workers.
 
In the EU a citizen can freely move, reside and seek employment in any member state, regardless of skill level, but the AEC has a far more limited approach. It is only making concessions to eight professions at this point in time: engineering, nursing, architecture, medicine, dentistry, tourism, surveying and accounting. This is less than 1.5 per cent of the ASEAN labour force.
 
There are, however, further limitations on the free movement of that small slice of skilled workers. There are minimum years of experience requirements, labour market tests, pre-employment requirements such as health clearances and numerous other domestic immigration and professional boxes to tick.
 
For organisations that employ people in those eight professions, consideration should now be given to the new, wider talent pool that the AEC is establishing. Organisations can make use of the increased mobility of professionals keen to seize new opportunities.
 
However, it is estimated that around 87 per cent of current intra-ASEAN migrants are low-skilled workers who do not fall into this category. Singapore has a large number of low-skilled workers from the region to build its offices and condos, look after its residents’ households and keep its streets clean. Such workers are, however, strictly controlled on a national level, and without doubt, the AEC will have a hard time persuading increasingly nationalistic ASEAN member states to cede regulation of such workers to the AEC.
 
This should come as no surprise. The ASEAN member states are far more disparate in terms of development and wealth than the founding member states of the EU. It is no wonder that ASEAN members tread cautiously when approaching issues of immigration. A ‘brain drain’ of highly educated workers to richer countries, small, wealthy nations being overrun by poor migrants, and the destabilisation of fledgling industries are very real fears for ASEAN members.
 
When compared to the EU, the ASEAN Secretariat (which will be the central authority for the AEC) appears seriously underfunded and understaffed: last year, its total budget was US$17 million whereas the EU’s administrative budget is in the billions; the ASEAN Secretariat has around 300 staff while the EU has more than 20,000.
 
The list of reasons why the AEC is unlikely to move quickly, if at all, to further facilitate the movement of all workers – not just skilled workers –is a long one. However, while it is important to see the barriers for what they are, the focus should be on the opportunities the AEC will now provide.
 
It will, hopefully, provide a strong platform for the future movement of workers, and the management and protection of migrants. There is an opportunity now for the member states to recognise the worth of local labour and skill sets, and to address the issue of unemployment of educated youth.
 
In time, perhaps the AEC will follow the lead of the EU and abolish discrimination on the grounds of nationality between workers of member states in their employment, remuneration and other conditions of work and employment.
 
For now, however, there is a wider talent pool to consider, and increased mobility for certain professionals. In the wider scheme of things, these are small developments in enabling free movement of workers. But things change quickly in Asia, and the advent of the AEC will almost certainly benefit, rather than hinder, further change.
 
Johanna Johnson is a senior employment lawyer with Taylor Vinters, based in Singapore and focused on the APAC region.