Global Economic Crisis and Southeast Asian Labor Migrants

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By Junko Kobayashi – Labor migrants across the world, including Southeast Asians, are severely affected by the current global economic crisis. The demand for exports and investments declined and unemployment rates have soared since the crisis began in late 2008. As a direct result, governments have pushed for the protection of their own citizens by laying off migrant workers. The most vulnerable workers have been women and youth, and those in trade-related industries such as electronics, automobile and textile manufacturing.

Southeast Asia consists of mutually dependent migrant labor host and sending countries. Host countries rely on migrant labor for economic growth and for filling labor shortages. Sending countries rely on remittances as a valuable source of foreign exchange that fuels domestic consumption. Those countries, including the Philippines, Indonesia and Vietnam, are drawn to work in the more prosperous countries in the region such as Singapore, Thailand and Malaysia. East Asia and the Gulf States also attract numerous Southeast Asian labor migrants. Thailand is the largest destination country for workers from neighboring Cambodia, Laos and Burma/Myanmar.

Destination countries of Southeast Asia have been adversely affected by the economic downturn because they are deeply integrated with the global economy. Each of these countries has dealt with the serious rise in unemployment by targeting migrant workers.

• The Malaysian government, which hosts the largest  number of migrants in the  region, responded to the crisis by terminating work of migrants first, freezing the issuance of work permits, doubling taxes on employment of foreigners, and fast-tracking the deportation of undocumented migrants. It announced plans to reduce the number of migrant workers by about 10 percent to 1.8 million workers by the end of 2010. Thousands of Indonesians in its manufacturing sector have already been laid off.

• The Singaporean government, with the greatest number of migrants in proportion to its population, has advised companies to lay-off foreigners first in case of unavoidable retrenchment. The Ministry of Manpower has been tasked to ensure the settlement of disputes between migrant workers and employers.

• The Thai government has announced that no new work permits will be issued and that about 500,000 permits will not be renewed for 2010. It has also threatened to deport undocumented migrant workers.

The Philippines is the world’s third largest labor exporter after China and India, with an astounding 10 percent of its 90 million population working abroad. Labor export has been the key governmental strategy to deal with serious domestic unemployment issues since the 1970s. Migrante International, an alliance of migrant organizations based in the Philippines, predicts that 100,000 Filipino migrant workers may lose their jobs this year.

Remittances flowing into the region are no longer growing robustly. In the Philippines, its central bank (Bangko Sentral) predicts that remittances, which constitute a significant portion of the country’s GDP, will contract as much as 6 percent this year. Prior to the economic crisis, remittances in the country had been growing annually on average at 16 percent over the last six years. Because of its over-dependence on labor migration, the Philippines has certainly felt the impacts of the global economic crisis.

Statistics about lay-offs and remittances, however, do not cover the full extent of the problem. Migrants who have managed to keep their jobs have been subject to pay cuts and delays, other forms of exploitation such as lack of provision of healthcare, discrimination and stigmatization, and sometimes even violence. Unsafe and undocumented migration and human trafficking are expected to rise. Moreover, bilateral relationships between host and sending countries may be strained.

The Philippine government has been actively assisting its migrant workers who have been affected by the current economic crisis. The Philippine Overseas Employment Administration (POEA) is aggressively marketing Filipino labor and providing guidance on employment and legal issues. The Department of Labor has set aside 250 million pesos (about 5 million US dollars) to provide livelihood support for the displaced workers. The Philippines has consistently championed the rights and economic contributions of migrant workers, and initiated the formulation of the ASEAN Declaration on the Promotion and Protection of the Rights of Migrant Workers. Such efforts for protecting its vulnerable citizens are commendable but the government can do more by creating jobs at home that can sustain its own workforce.

Even if the displaced migrant workers are temporarily aided by governments or are able to resume work, the influx of returning migrants and disruption in the flow of remittances may increase economic, social and political instability throughout Asia, with long-term consequences.

Junko Kobayashi is a Research Associate with the Stimson Center’s Regional Voices: Transnational Challenges project.


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