[SCMP Column] Costs of Migrantion

May 21, 2016

Is Hong Kong about to face a major home helper crisis? If Indonesia’s President Joko Widodo is true to his word, it seems we will – as early as next year.

President Widodo – Jokowi for short – insists that the country will stop allowing home helpers to work in the Middle East starting from June, and in economies like Hong Kong and Singapore by 2017. But, justified as he is to be outraged at the frequent appalling abuse of home helpers around the region, is he not creating more problems for himself and his economy than he is solving?

It is surely important to remember that the millions of (mainly) young girls that travel overseas, far from their homes and cultures, into work environments that resemble Victorian semi-slavery, are not travelling for the sake of their health. They are fleeing joblessness and poverty in an economy that has consistently failed to provide jobs or income security to large parts of its population. To his credit, Jokowi has over the past year brought unemployment in Indonesia down from 6.2% in 2015 to 5.5% in the past quarter, but unemployment remains extremely high in many of the rural areas from which migrant workers so frequently come.

To clamp down on labour migration when there are no well paid jobs available at home is surely counterproductive. It is condemning families in the country’s poorer regions to grinding poverty and reliance on the state and welfare, when they have shown themselves willing and able to solve their economic problems for themselves. Surely that spirit of enterprise should be encouraged and rewarded, not condemned and constrained. It is also worth recalling the recent work of economist Branko Milanovic that demonstrates that labour migration, by reducing difficulties in matching labour demand and supply is among the most potent means of reducing inequality between rich and poor economies worldwide.

Beyond the questionable value of forcing families to stay home without work, Jokowi would also be forgoing potentially massive and valuable foreign exchange remittances, and the potential for workers to return home with skills that would never otherwise have been obtained. The IMF estimates that Indonesia received remittances of just under $10 billion in 2014 from its overseas workers (estimated at between 4m and 6m) – valuable to the economy by any measure. The potential to nurture these inward foreign exchange flows is perhaps best illustrated by the Philippines, where an estimated 10.4m overseas workers remitted $28.5bn last year – amounting to almost 10% of GDP.

Jokowi is wrong to talk about halting outward labour migration, but he is right to be outraged at the current plight of so many overseas workers, and would do us all a favour by demanding changes in how these migrant flows are managed. The dreadful case last year of Erwiana Sulistyaningsih, whose torturing Hong Kong boss was imprisoned for six years, was symptomatic of widespread abuse, and a powerful reminder of the work that needs to be done to improve the way overseas worker flows are managed to fill unmet and indispensable local employment gaps. Jokowi is right to demand that these abuses are curbed.

A first step would be to oversee much more consistently the thousands of agencies that manage the movement of workers from their homes into jobs overseas. Making their operations transparent, making visa issuance more simple, and demanding that fees are paid by employers rather than the workers should be an urgent priority.

In APEC, we have begun to discuss the creation of an “international worker card” that would not only facilitate the movement of such workers to and from their overseas jobs, but would also embody standardized access to health insurance and maintenance of retirement benefits. Jokowi would serve us well by lending Indonesia’s support to this initiative. So would our own Hong Kong Government.

APEC is giving this issue priority not just because of difficulties being expressed by Indonesia and its outspoken President. Worldwide, the International Labour Organisation estimates there are 150 million such international workers currently working outside their home countries, with perhaps 30 million of these in the Asia Pacific. Improving the way in which we manage the movement of such a large number of workers clearly makes sense, both for the economies like Indonesia and the Philippines that provide such workers, and for those like Hong Kong, Singapore, Japan, Korea, the US and Australia that benefit from their arrival to meet chronic and increasingly severe labour shortages.

APEC is also paying careful attention to associated challenges, and two in particular stand out: improvements in managing remittances, and regionwide recognition of skills and qualifications. As the World Bank’s recently released “Migration and Remittances” report makes clear, severe problems exist in efficiently remitting overseas workers’ earnings, so that they can be put to optimal use back in their home economies. A worker remitting $200 on average pays charges amounting to an exorbitant 7.4% - about $15. And that is even if he or she is able to remit: the recent regulatory squeeze on banks has made them increasingly reluctant to handle worker remittances. New “know your customer” regulations have prompted many to stop dealing with overseas workers, since their remittances can so easily be muddled with criminal money laundering.

Work is also beginning in APEC on a “qualifications framework” that would allow (for example) a nurse trained in a college in the Philippines to have her qualifications recognized in Japan or Korea. In this politically thorny area, blighted with local protectionism, the first areas to be tackled are likely to be “allied health” professions, and qualifications for workers in the tourism sector.

So we can thank Jokowi for paying such energetic attention to the need to manage international worker flows more fairly and efficiently, but we have to pray he can do so without creating a crisis for us all. I can hardly imagine how Hong Kong would function without the 300,000 army of home helpers that allow us all to concentrate on the high value adding – and high salary paying – work that makes Hong Kong the affluent hub it is today.
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