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Rashesh Shrestha is an economist at the Association of Southeast Asian and East Asian Nations Institute for Economic Research.
Just before the COVID-19 hit, the Japanese government was reforming its labor migration system, which is often criticized for being too restrictive.
In the process, he had signed agreements in 2019 and early 2020 with 12 Asian countries of origin of migrants, including six members of the Association of Southeast Asian Nations, a region with which Japan maintains close trade and investment links. But the new system has yet to take full effect as migration rates have plummeted due to border closures and reduced economic activity. Slow vaccination rates in labor-supplying countries, the emergence of new variants and unclear strategies for reopening borders could lead to a new year with low levels of labor mobility. artwork.
Even before the pandemic, as goods, services, capital and even technology moved smoothly across East Asia, labor mobility was relatively restricted. In particular, skilled and unskilled workers, a misnomer given their economic contribution, faced enormous obstacles.
Current policy largely reflects the attitude of host countries: they see the economic value of the migrant worker in filling labor shortages but want to avoid the political and social consequences of large-scale immigration. This has resulted in policies that restrict the economic freedom of migrant workers, for example the ability to change employers. While politically timely, this is not the best strategy for maximizing the economic contributions of migrants. In addition, this is one of the reasons why migrant workers have been particularly affected by the pandemic.
The pandemic offers an opportunity for the region’s labor-receiving countries – Japan, Malaysia, South Korea, Singapore and Thailand – to liberalize their foreign worker policies to support their recovery and future growth. After all, a restrictive immigration policy will be unsustainable. And with aging populations, the labor shortage will only get worse.
Particularly in the service sector, where tasks are non-routine and rely on interpersonal interactions, human work will continue to be more profitable and reliable than any technology. Such labor-intensive economic activities will require a steady supply of workers, although other sectors benefit from automation. But these labor-receiving countries will not always benefit from a large pool of potential migrants willing to meet their labor needs.
Today, many aspirants in developing countries are attracted by the prospect of a higher standard of living in developed countries and are willing to migrate for jobs rejected by locals. According to a recent report by the Asian Development Bank Institute, the OECD and the International Labor Organization, migration from Vietnam to Japan increased from 11,000 in 2010 to 123,000 in 2018, becoming the most important country of origin of Japan. Migration from Cambodia and Indonesia, although relatively small, increased by 400% during this period, and migration from the Philippines doubled.
However, this trend may not continue for very long. More attractive opportunities may emerge elsewhere as more countries become richer and have disposable income to spend on labor-intensive services. In addition, the countries of origin are growing rapidly themselves, creating better prospects at home for potential migrants. Vietnam, for example, is one of the fastest growing economies in the world. In the medium term, the pool of Vietnamese willing to pay the high cost of migration to Japan can be expected to decline.
Additionally, given the dynamics of the migration process, the unprecedented disruption of labor movements could decrease the rate of post-COVID migration. One of the reasons that migration is sustained over time is that existing migrants attract new migrants. This is because having a large community in one location reduces some associated costs, such as collecting information and finding employment opportunities. Sociologists call this the social network effect.
As many migrants lost their jobs and returned to their countries of origin due to the pandemic, the size of migrant communities declined, and with it, the attractiveness of the place for new migrants. Thus, reforms of recruitment policies to minimize the costs borne by migrants would be necessary to achieve the desired levels of migration after the pandemic.
Greater labor mobility resulting from these reforms will also help further deepen the economic integration of East Asia, creating more growth opportunities for all countries in the region. Not only do migrants send remittances to their families back home, many also return with a better knowledge and appreciation of the culture and society of the host countries. It is therefore an additional means of promoting goodwill between the people of the regions of origin and of the host.
For example, Japan has created a positive image in ASEAN through its strong economic presence, and it can build on this image by implementing a well-managed migration system. Research has shown that such cultural familiarity can translate into increased trade and investment between countries.
The pandemic has forced labor-receiving countries like Japan to pay attention to the plight of its migrants and relax some of the restrictions. This provides useful lessons for better governance of labor migration. Host countries should increase social protections for migrants and extend their economic rights. They should also make the flexibility introduced during the pandemic permanent.
In addition, they should improve the opinion of their citizens by highlighting the positive contributions of migrant workers. At the regional level, a concerted effort to improve labor mobility provisions in trade and investment agreements would be a step in the right direction.
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