The Hindu Business Line : Economic migration in Asia

While many observers continue to think of cross-border labour migration in terms of the movement of labour from the South to the North, in Asia most of the recent labour movement has been within the continent. This has implications for policies designed to increase the beneficial effects of labour migration. In this edition of Macroscan, C. P. Chandrasekhar and Jayati Ghosh consider the recent pattern of economic migration within Asia.

MIGRATION is as old as human history, and economic migration — in search of better livelihood or simply material survival — is probably the oldest form of migration. This chapter is concerned with one subset of such migration — the temporary movement of people for work, as a form of trade in services.

It could have been expected that the period of globalisation would have ushered in much more significant movements of labour than ever before. Yet it is a peculiar feature of the recent period of world history, that even as the cross-border movement of goods, services and capital has become much more widespread, larger in volume and more unregulated, the cross-border movement of people is more restricted than ever before, and economic migration is sought to be strictly controlled.

On the move

Nevertheless, migration continues, and migration for work has become especially significant in Asia, where it is leading to enormous changes in economies and societies across the region. Asia has become one of the most significant and "globalised" regions in the world not only in terms of the cross-border movement of capital and goods, but also in terms of the movement of people. The greater trade and investment integration of the various economies in the Asian region is now well-known and has been the subject of much discussion already. But there is far less recognition of the increase in, and significant economic role played by, the movement of labour across countries within Asia.

In fact, intra-Asian migration is now the dominant form of cross-border labour movement in the region, and it is important not only in terms of sheer numbers, but also because of its effects upon economies through remittance flows, and societies. It has resulted because of the marked intra-regional differences in per capita income and economic structure, uneven size and geographical spread of population. Asian migration is not a new phenomenon historically, but in the last two decades, there have been changes in its extent and form: thus, more women have moved than ever before.

Shorter tenures

Obviously, short-term economic migration is a multidimensional phenomenon, which can have many positive effects because it expands the opportunities for productive work and leads to a wider perspective on many social issues, among migrants and among the population of host countries. But it also has negative aspects, dominantly in the nature of work and work conditions and possibilities for abuse of migrant workers by employers and others. In general it should be noted that such migration currently plays an important role in many developing countries, not only through the direct income and other effects on sending households, but also for both home and host economies.

Short-term economic migration has a complex and multi-layered relationship with human development: while conditions of human development in the home country determine both the need for and the nature of economic migration, the process itself generates many and often differing socio-economic effects upon the home country and the host country.

Positives, negatives

Clearly, migration can have many positive consequences, such as direct benefits to the unemployed and underemployed persons who get access to sources of livelihood and increased incomes; wider opportunities and increased exposure for migrants; and improved access to technology and skill development.

In addition to these direct effects upon migrants, migration also confers benefits upon the sending country, in balance of payments terms through the effects of inward remittances and in general through the use of such remittances to finance small businesses and other investment. The diversification of sources of foreign exchange incomes leads to a reduction in the vulnerability of economies.

In several Asian countries, migrants' incomes have been found to act as buffers in times of sudden shock or calamity and consumption stabilisers over economic cycles. The role played by migration in enhancing the employment opportunities for women should not be underestimated. In addition, there are positive political, social and cultural effects of the intermingling brought about by migration.

There are, of course, some negative aspects as well. Clearly, not all sections of populations have equal access to migration, and therefore this could, depending upon the pattern, reinforce existing inequalities since the access of different groups differs. There are issues relating to the terms and conditions of migrants' work, and possible exploitation of relatively powerless migrants, which are considered in more detail below.

There may be problems arising from the dispersion and displacement of families, as well as resettlement problems of returning workers and their reintegration with local society and their families. Migration for work in what are relatively low-end economic activities is particularly susceptible to such problems.

Pattern change

Asia contains a vibrant and changing mix of countries of destination, countries that send and receive workers, and countries of origin. Of course migration within and from the region as a whole is not new — the 19th century was marked by great waves of migration of indentured labour especially from South Asia and parts of China to the West, while the current population mix of large parts of Southeast Asia is the result of at least a century of migration patterns, largely from within Asia.

However, recent migration has been rather different in terms of its nature and its duration. The movement of more educated and skilled professional workers has been dominantly to developed countries, either to the US, or western Europe or even to Australia and New Zealand. By contrast, the movement of unskilled or relatively less skilled workers has displayed a much more diverse pattern, with a large and growing extent of intra-Asian region migration.

This reflects the basic features of economic migration patterns from and within Asia: that they are structural and demand-driven, rather than determined by the supply conditions of labour.

While almost all the countries of developing Asia have some amount of labour surplus and therefore are in a position to export workers, the ability of these countries to send workers elsewhere has depended essentially upon the willingness of other countries to receive them. This, in turn, has dictated the pattern, whereby the richer countries which are preferred destinations have increasingly chosen to accept only those workers who fill existing gaps in their own labour markets or add to the pool of highly educated workforce in general.

Table 1 describes the current migration status of Asian countries. It should be noted that at one level all of these countries send labour (of the highly skilled professional variety) to developed countries. But these are often relatively few in number, although they have been growing in significance in recent years. The table refers largely to the much larger flows of less skilled workers who constitute the bulk of the economic migrant population. It also does not include the cross-border shifts of neighbouring populations as part of seasonal movements, which are an old feature of Asian economies.

Much of the migration within the Asian region has been relatively short-term and focused on filling particular labour shortages. This is a feature of much recent economic migration — that it has necessarily been short term in nature. The economic advantages of such short-term migration for the sending country are significant. Short-term migrants are far more likely to send regular remittances back home, and when they return, they typically bring with them not only their accumulated savings but also additional skills and work experience which can be usefully deployed in the country of origin.

By contrast, long-term migrants, especially those professional workers who migrate to developed countries, are far less likely to send money home, and even when they do, it is typically in the form of far more expensive and debt-creating capital flows such as non-resident financial investment, which in turn involve some sort of current outflows for the economy in the form of interest payment or profit remittances. These long-term migrants are also usually associated with a net brain drain and the loss of resources that the home countries have expended on their education and skill formation.

Therefore, the recent moves in the international economy towards greater emphasis on short-term migration may have positive effects on the sending countries. It also increases the relevance of GATS Mode 4, which focuses largely on the procedures and constraints facing short-term movement of economic migrants.

Remittance inflows

Invisibles incomes have grown in significance in the balance of payments of many Asian countries, as short-term migration of less skilled workers has been associated with higher levels of remittance inflows. As Chart 1 indicates, remittance inflows have grown explosively in India and the Philippines in the 1990s, and have increased at a respectable rate in several other countries.

What is especially worth noting is that remittance incomes have been relatively stable, and certainly independent of domestic business cycles, which has imparted some stability to the recipient economies. This is especially true of countries with a large proportion of female migrants, such as the Philippines, since women workers tend to be concentrated in service sector activities, such as domestic work and care-giving, which are relatively independent of the business cycle even in host economies. Of course there are other economic benefits from migration for the sending countries, but the positive impact upon the balance of payments must count as one of the more significant macroeconomic benefits.

Indeed, in countries such as India (and also the Philippines) remittance inflows have amounted to more than all form of capital inflow over the 1990s.

Senders and receivers

Cross-border migration in Asia is highly gendered, with women migrants largely found in the service sector. The major recipient countries in the Asian region are of course the oil-exporting countries of West Asia and the Persian Gulf. The bulk of the foreign workforce in these countries is deployed in relatively unskilled and semi-skilled occupations such as in construction and other services, but there are also a fair number of professional workers, especially in engineering, accountancy and health sectors.

Japan is another important recipient country, which has had very regulated inflows of migrant labour for several decades. Singapore's economic development strategy has been based on the use of migrant labour (largely less skilled) through a system of quotas and levies. Recently, South Korea also emerged as a destination in the region, since the rapid economic growth within the country had led to labour shortages, especially in less skilled activities and low-paid services.

The period of economic boom in Malaysia and Thailand from the early 1980s to the mid-1990s led to labour shortages in these countries, which then opened up to in-migration from neighbouring countries. Migrant workers were used in agriculture, in construction and in the service sectors. However, the unauthorised influx of irregular migrant workers from the poorer neighbouring countries of Indonesia and the Philippines (for Malaysia) and Myanmar and Vietnam (for Thailand) has been viewed as a major problem, especially after the Asian financial crisis of 1997-98. Regular migration, on the other hand, is being encouraged. Asean is working specifically for a common market with free movement of people. Thailand, the Philippines, Singapore and Malaysia have removed visa requirements for Vietnam, for example. There has been much work on recognition of qualifications, and so on — indeed, the Asean experience in this regard may provide an example for the future of wider multilateral negotiations.

Among the countries of origin, the Philippines sends the largest number of workers abroad, workers of varying skill levels, and to more destinations the world over. Filipino skills and professions are spread around the world but certain skills cluster in specific countries of destination. For example, domestic helpers tend to be concentrated in Hong Kong and Saudi Arabia; Filipino entertainers in Japan and other Southeast Asian countries; IT professionals and nurses in the US and the UK.

Other countries in the Southeast Asian region have been long-standing countries of origin, such as Vietnam and Cambodia. But it is only recently that governments in these countries have attempted either to regulate or to promote the export of labour as an economic strategy. Meanwhile, in South Asia, certain countries such as Nepal and Bangladesh have also been labour exporters for many decades, and remain very much in that mould. Both of these countries, whose balance of payments and domestic macro-economic processes are driven by the combination of aid-dependence and the standard features of a remittance economy, provide experiences that suggest that the export of labour is not sufficient to ensure better growth or human development conditions in the country of origin.

India's recent experience with labour migration and remittance incomes provides both a more complex picture and a fascinating scenario of relatively rapid change. As Chart 1 indicated, labour remittances into India have grown very rapidly in the recent past, and the nature of the labour export has also undergone significant changes. To some extent these are mirrored in the Philippines, and some other more dynamic Asian countries of origin.

Recent trends

The very recent period has seen an increase in relatively more skilled temporary migration from Asia to other parts of the world, especially North America, Europe and Australasia. There have also been increases in outsourcing of a range of activities (broadly classified under Business Process Outsourcing and IT-enabled services) which have implied much greater expansion of services trade without necessarily involving the movement of people.

Both of these processes — those involving migration and those involving the cross-border exchange of services — have increased protectionist pressures in the developed world, with attendant implications for the sustainability of these tendencies. This makes the GATS agreement especially significant, although thus far it has had a very limited role in reducing protectionism by developed countries in these areas.

The dominantly labour surplus economies of Asia tend to have an abundance of less skilled workers, but patterns of education vary substantially across the region, and where there is a sufficiently large pool of educated workers, there are also similar migration trajectories. One example is that of India, migrants from which country can be classified into unskilled, semi-skilled and knowledge-based professional workers. General social and cultural conditions often play a definitive role even in "economic" migration: social exclusion and lack of empowerment of particular groups can lead to pressures or incentives for the movement of labour.

For women migrants, the nature of movement and the nature of the work in the destination country can often reflect the extent of patriarchy or gender discrimination in the home country; conversely, more equality at home in terms of access to education and opportunities can help in making women migrants get better benefits. However, the very process of migration itself can generate positive pressures for change: for example, the fact that Sri Lankan women dominantly go to work in the Arab or Gulf countries as maids may reflect patterns of poverty and social situation at home; however, the income and experience gained from such activities may enable them to change these very patterns on their return and contribute to a wider empowerment of other women in their area as well.

All this makes it particularly strange that there are hardly any regional policies that have evolved to make intra-Asian migration more beneficial for host and home countries. Migrant labour protection is poor in most host countries, while many sending countries do not make systematic efforts to direct both remittances and the skills of returning migrants into channels that would benefit the development of the country. Clearly, there is a lot of scope for more proactive national and regional policies in this matter.