According to an often-cited study by the International Labor Organization and the Asian Development Bank, the formation of the ASEAN Economic Community (AEC) could generate up to 14 million jobs across Southeast Asia. In an ideal scenario, the free flow of skilled labor – along with goods, services, and capital – will fuel robust regional GDP growth, which came in at 4.5% in 2015.

In reality, freedom of movement for skilled labor across ASEAN remains a distant dream.

Mutual recognition agreements (MRAs) have been established for eight professions – accountants, engineers, nursing, architects, surveyors, doctors, dentists, and tourism professionals. But work permits are still necessary before commencing employment, on top of having to pass local professional examinations.

“You have an ageing population in Singapore and Thailand, but you have youthful ones in the Philippines, Indonesia, and Vietnam. You need to take advantage of these demographic changes [in ASEAN] to get an optimum distribution of labor”

Underlying all this is political pressure to protect citizens on their home turf, which begs the following questions: Is ASEAN integrated enough in harmonizing labor policies? Is there enough political will to make freedom of movement easier?

“The political will is there, but politicians have to take care of domestic politics, so that becomes the focus,” muses Veerinderjeet Singh, Executive Chairman of business consultancy AxcelAsia. “Attention on the region becomes number two, or three or way down the list.”

“There is no doubt that ASEAN leaders are politically in tune with the reality, but when it comes to implementation they are looking for guidance,” he adds. “This is where the private sector and NGOs have a role to push things forward and policies along. I don’t think you can sit there and wait for the politicians to start the process.”

Domestic vs. Regional vs. Global

Singh made those remarks at the recent discussion panel for Singapore-based station Channel NewsAsia’s Perspectives program, Upskilling ASEAN for Growth.

Picking up on that sentiment, Stephen Groff, Vice President of operations at the Asian Development Bank, highlighted the economic and demographic diversity that fuels fears of more attractive cities taking all the best talent, thus creating entrenched inequality.

“You have an ageing population in Singapore and Thailand, but you have youthful ones in the Philippines, Indonesia, and Vietnam,” Groff says. “You need to take advantage of these demographic changes [in ASEAN] to get an optimum distribution of labor.”

“Yes, it’s important to not lose your best talents to countries outside of ASEAN,” he says. “But it’s also important that you distribute that demographic shift better [across ASEAN] in order to realize its benefits.”

“Mobility across the region is a good thing,” says Singh. “The danger is that ASEAN doesn’t consolidate its efforts. If you want to look at ASEAN as being the playground where only ASEAN’s best work, you may not see it. That’s because you’ll see lots of professionals from other countries coming to ASEAN to work.”

“If you’re looking at having only young people of ASEAN working in ASEAN, that’s not something we can achieve. We have to encourage it [young ASEAN working in ASEAN], but we have to open up the opportunities across the world.”

Role of Universities

There is little doubt that human capital development will be crucial to the ASEAN Economic Community’s feasibility. While globalization has made it easier for companies to fill positions by looking beyond ASEAN, continued reliance on such a strategy will be unsustainable.

So what is stopping ASEAN governments from addressing this obvious obstacle to the economic community’s success?

“First of all, we recruit from a globalized workforce because the ASEAN workforce is globalized,” explains Arnoud De Meyer, President of Singapore Management University. “Lots of Singaporeans, Thais, and Malaysians work overseas and therefore we contribute to the global workforce, and so it’s logical that we take some from the globalized workforce.”

“We need to think in flows instead of ‘we are gaining or losing people’.”

“There is no political will to do this. I don’t see how any ASEAN politician can talk about free movement of labor – it’s just not conceivable in the short run”

He adds, “Secondly – and I say this as the President of a university – we have to invest in updating our universities. I think Singapore has an interesting landscape of higher education, but there are a number of good universities that are sprinkled around ASEAN. The current supply is not high enough for the demand of good people studying in them. You need to create a number of very good universities within ASEAN.

“Third, we should stop being so defeatist about ourselves. Let’s be convinced about the fact that we have very good people, and let’s give them the opportunities to develop. If we constantly return to the United States or Australia and say, ‘We can find people [to hire] from there’, we are shooting ourselves in the foot!”

The Next Step

Beyond MRAs, Singh highlighted qualifications benchmarking as the next step in the development of the AEC’s labor policy.

“Case in point: We have an ASEAN Federation of Accountants that was formed 12 years ago,” Singh says. “It was a slow process but they’ve agreed to the concept of an ASEAN Chartered Accountant. They’ve agreed that that’s the qualification they would like in the region.”

“The next step is about benchmarking what that qualification means. It took 12 years to get to this point.”

Given the widely mentioned AEC Blueprint 2025, ASEAN might need to accelerate its pace of integration not just in labor terms to achieve its goals of “economic growth by increasing trade, investment, and job creation”. The ultimate determinant of when, and if, the AEC really takes off boils down to political will to open up domestic markets.

“Total migration across ASEAN is 18.8 million, and only 6.5 million of those are formal labor migrants,” Groff said. “You have huge numbers of people in construction, household help, fisheries and other sectors that aren’t covered by binding ASEAN agreements.”

“I’m not convinced the political will is there. I think we need the political will and recognition of where the labor is and formalize that.”

De Meyer was definitive in his assessment: “There is no political will to do this. I don’t see how any ASEAN politician can talk about free movement of labor – it’s just not conceivable in the short run.”

He pauses before adding, sparking chuckles among the audience: “We will still be discussing this topic in 2025.”

But to millions of job seekers, and the companies that want them, it will remain serious business. By Perspectives@SMU, 01 April 2016

About the Author

Perspectives@SMU is an online resource that offers regularly updated business insights, information and research from a variety of sources, including interviews with industry leaders and Singapore Management University faculty. The resource can be accessed at http://www.smu.edu.sg/perspectives. This article was re-edited for clarity and conciseness.

Source: http://www.cfoinnovation.com/story/11170/asean-economic-community-dont-count-labor-mobility-accountants