Migrant workers demonstrate in Indramayu, West Java, on Dec. 19. (Antara Photo/Dedhez Anggara)

Easing Restrictions on Labor Migration Offers Opportunity for Asean: World Bank


OCTOBER 11, 2017

Jakarta. Reducing restrictions on labor migration offers an opportunity for Southeast Asian countries to improve their economies by providing better employment alternatives to workers, according to a new report by the World Bank published on Monday (09/10).

The 10 member countries of the Association of Southeast Asian Nations (Asean) envision the region as a single market with a free movement of goods, services and investment, yet migration procedures across the bloc remain restrictive.

The World Bank report, titled "Migrating to Opportunity," identifies a widespread perception that a migrant influx would have negative impacts on receiving countries. So, countries in the region impose costly and lengthy recruitment processes, restrictive quotas on the number of foreign workers allowed and rigid employment policies.

However, the study rebuked that notion, showing that reducing barriers for high-skilled workers would increase worker welfare by 14 percent compared to no reduction at all. Migrant workers would enjoy higher wages in destination countries, while staying workers would see higher demand for their skills that in turn boost their wages.

Workers welfare would be 29 percent higher if countries lowered barriers for all migrant workers compared to lowering barriers for only skilled workers.

Migrant labor's impact on low skilled local workers is also minimal, the report said, and could be mitigated by relaxing regulations to allow local workers to easily switch jobs, firms or geographic locations.

"With the right policy choices, sending countries can reap the economic benefits of out-migration while protecting their citizens who choose to migrate for work," Sudhir Shetty, World Bank chief economist for East Asia and Pacific region, said in a statement.

"In receiving countries, foreign workers can fill labor shortages and promote sustained economic growth, if migration policies are aligned with their economic needs."

The World Bank report cited a 2015 study by Ximena Del Carpio that showed an additional 10 immigrants to a given state in Malaysia opened up an additional five jobs for Malaysians who relocate to that state.

Labor mobility promises a better livelihood for people from lower-income countries within Asean.

Malaysia, Singapore and Thailand were the region's largest migration hubs with 6.5 million migrants — or about 96 percent of the total number of migrant workers in the region — between 1995 to 2015. On the other hand, the Philippines, Indonesia and Vietnam have become so-called "sending" countries.

Indonesia's Case

To enhance worker mobility, Indonesia, as one of the leading sending countries, should work to improve coordination among agencies responsible for managing labor migration and to streamline exit procedures for migrants to encourage documented migration.

Outmigration can be costly. Mauro Testaverde, the lead author of the report and World Bank economist for the social protection and jobs global practice, said workers face higher mobility costs than the annual average wage.

"Improvements in the migration process can ease these costs on prospective migrants, and help countries respond better to their labor market needs," Testaverde said.

According to data from Indonesia's Agency for the Placement and Protection of Indonesian Migrant Workers (BNP2TKI), 148,285 Indonesian workers have been deployed to more than 25 countries as of the end of August, 5.31 percent lower compared to the same period a year earlier on the back of new infrastructure projects in the country that have absorbed workers.