Costs and Benefits of Cross-Country Labour Migration in the GMS 9789814311908

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Costs and Benefits of Cross-Country Labour Migration intheGMS

The Institute of Southeast Asian Studies (ISEAS) was established as an autonomous organization in 1968. It is a regional centre dedicated to the study of socio-political, security and economic trends and developments in Southeast Asia and its wider geostrategic and economic environment. The Institute’s research programmes are the Regional Economic Studies (RES, including ASEAN and APEC), Regional Strategic and Political Studies (RSPS), and Regional Social and Cultural Studies (RSCS). ISEAS Publishing, an established academic press, has issued more than 2,000 books and journals. It is the largest scholarly publisher of research about Southeast Asia from within the region. ISEAS Publications works with many other academic and trade publishers and distributors to disseminate important research and analyses from and about Southeast Asia to the rest of the world.

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The Cambodia Development Resource Institute (CDRI) The GMS Development Series is an initiative of CDRI. Established in 1990, CDRI is Cambodia’s leading independent development policy research institute. Its mission is to contribute to Cambodia’s sustainable development, and the well-being of its people, through the generation of high quality policy-relevant development research, knowledge dissemination, and capacity development. CDRI works to achieve this mission in partnership with Cambodian public institutions and civil society, and their regional and international development partners, with respect for the capacity of the Cambodian people and their institutions, for the value of local knowledge and experience, and for Cambodia’s history and culture. CDRI produces policy-relevant development research on: • • • • •

Economy, trade, and regional cooperation; Agriculture and rural development; Democratic governance and public sector reform; Natural resources and the environment; Social development;

with cross-cutting themes of inclusive growth, poverty reduction, sustainability, governance and institutional arrangements, gender equity, and conflict prevention and resolution. Located in the Phnom Penh suburb of Tuol Kork, the CDRI has ninetyfive staff members, including management, professional and technical staff, operations and support staff, of whom ninety-two are Cambodian. It also houses Cambodia’s most extensive development research library and resource centre. Its publications, in both English and Khmer, are available as free PDF downloads from its website at .

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The Greater Mekong Subregion Development Analysis Network (GMS-DAN) The Greater Mekong Subregion Development Analysis Network (GMSDAN) is a collaborative research network of leading development policy research institutes in Cambodia, Lao PDR, Thailand, Vietnam and Yunnan province of China. GMS-DAN’s current core members are: • The Cambodia Development Resource Institute (CDRI), Cambodia • The National Economic Research Institute (NERI), Lao PDR • General Department of Statistics, National Committee for Planning and Investment, (formerly National Centre of Statistics), Lao PDR • Thailand Development Research Institute (TDRI), Thailand • Central Institute for Economic Management (CIEM), Vietnam • Institute of Economics, Vietnam Academy of Social Sciences, Vietnam • ASEAN Regional and Industrial Development Research Centre, Faculty of Management and Economics, Kunming University of Science and Technology, Yunnan, China The GMS-DAN has, with the support of the Rockefeller Foundation, undertaken collaborative research, and published research reports and associated publications, on the following topics: • The Impact of the Asian Financial Crisis on the Southeast Asian Transitional Economies • Labour Markets in Transitional Economies in Southeast Asia and Thailand • Off-farm and Non-farm Employment in Southeast Asian Transitional Economies and Thailand • The Cross-Border Economies of Cambodia, Laos, Thailand and Vietnam • Pro-poor Tourism in the Greater Mekong Subregion • Labour Migration in the Greater Mekong Subregion • Agricultural Trade in the Greater Mekong Subregion • Assessing China’s Impact on Poverty Reduction in the Greater Mekong Subregion.

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GMS Development Series 2 A CDRI Publication

Costs and Benefits of Cross-Country Labour Migration in the GMS Edited by Hossein

Jalilian

Institute of Southeast Asian Studies Singapore and

First published in Singapore in 2012 by ISEAS Publishing Institute of Southeast Asian Studies 30 Heng Mui Keng Terrace Pasir Panjang Singapore 119614 E-mail: [email protected] Website: http://bookshop.iseas.edu.sg All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the Institute of Southeast Asian Studies. © 2012 Institute of Southeast Asian Studies, Singapore The responsibility for facts and opinions in this publication rests exclusively with the authors and their interpretations do not necessarily reflect the views or the policy of the publishers or their supporters. ISEAS Library Cataloguing-in-Publication Data Costs and benefits of cross-country labour migration in the GMS / edited by Hossein Jalilian. 1. Labour market—Mekong River Region. 2. Mekong River Region—Emigration and immigration. I. Jalilian, Hossein. II. Title: Costs and benefits of cross-country labour migration in the Greater Mekong Sub-region HD5821 A6C83 2012 ISBN 978-981-4311-89-2 (soft cover) ISBN 978-981-4345-33-0 (hard cover) ISBN 978-981-4311-90-8 (e-book, PDF) Cover photo: Migrant workers at work. Source: CDRI. Typeset by Superskill Graphics Pte Ltd Printed in Singapore by Fabulous Printers Pte Ltd

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CONTENTS Acronyms and Abbreviations List of Figures, Tables and Boxes List of Contributors 1.

Migrants of the Mekong: Wins and Losses Hossein Jalilian and Glenda Reyes

2.

Economic Costs and Benefits of Labour Migration: Case of Cambodia Chan Sophal

3. 4. 5.

Economic Costs and Benefits of Labour Migration: Case of Lao PDR Department of Statistics (DoS), National Economic Research Institute (NERI) Economic Costs and Benefits of Labour Migration: Case of Thailand Srawooth Paitoonpong, Yongyuth Chalamwong, Chothiga Sukaruji and Angkana Piamkulwanich



Economic Costs and Benefits of Labour Migration: Case of Vietnam Nguyen Thi Kim Dung and Cu Chi Loi

6.

Migrants of the Mekong: Lessons Hossein Jalilian and Glenda Reyes

Index

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ix xiii xxiii 1

118

190

242

305 359

405

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ACRONYMS AND ABBREVIATIONS 3D ADB AMC ASEAN ATM AVRR BREAD CARAM CCVI CDRI CGD CI CIEM CLS DAN DRC DFID DOLAB DOLISA FDI FGDs FOREX GATS-4 GCIM GDP GFMD

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Dirty, difficult, and dangerous jobs Asian Development Bank Asian Migrant Centre Association of Southeast Asian Nations Automated Teller Machine Assisted Voluntary Return and Reintegration Bureau for Research in Economic Analysis Coordination for Action Research on AIDS and Mobility Certificate of Confirmation for Visa Issuance Cambodia Development Resource Institute Centre for Global Development Certificate of Identity Central Institute for Economic Management Cambodian Labour Supply company Development Analysis Network Development Research Centre UK Department of International Department Department of Overseas Labour Departments of Labour, War, Invalids, and Social Affairs Foreign Direct Investment Focus Group Discussions Foreign Exchange Market General Agreement on Trade in Services Mode 4 Global Commission on International Migration Gross Domestic Product Global Forum on Migration and Development

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  GMG GMS GSO GPS ha HDI HH HRD IDMC IFAD IFC ILM ILO IMF IMTM IOM JILPT KIIs km KLT LAK Lao PDR MLSW MoFAIC MoI MOLISA MoLVT MOU MTOSOB MWF NCIWA NEM NERI NIEs NIS NGO NPIC

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Acronyms and Abbreviations

Global Migration Group Greater Mekong Subregion Vietnam’s General Statistics Office General System of Preference hectares Human Development Index Households Human Resource Development International Displacement Monitoring Centre International Fund for Agricultural Development International Finance Corporation International Labour Migration International Labour Organization International Monetary Fund Interministerial Task Force for Migration International Organization for Migration Japan Institute for Labour Policy and Training Key Informant Interviews Kilometres Korean Language Proficiency Test Lao Kip Lao People’s Democratic Republic Ministry of Labour and Social Welfare Ministry of Foreign Affairs and International Cooperation Ministry of Interior Ministry of Labour, War, Invalids and Social Affairs Ministry of Labour and Vocational Training Memorandum of Understanding Manpower Training and Overseas Sending Board Migrant Welfare Fund National Committee on Illegal Worker Administration New Economic Mechanism National Economic Research Institute Newly Industrialized Economies National Institute of Statistics Non-Government Organisations National Polytechnic Institute of Cambodia

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Acronyms and Abbreviations

NSC ODA OECD POEA PPP RCP RGC SEZ TAO TDRI THB TOKTEN UN UNAIDS UN DESA UNDP UNHCHR UNIFEM UNODC UNPD UNINSTRAW USAID US$ VND WB WDI WEO WTO

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xi

National Statistics Centre Official Development Assistance Organization for Economic Cooperation and Development Philippines Overseas Employment Agencies Purchasing Power Parity Regional Consultative Process Royal Government of Cambodia Special Economic Zone Tambon Administration Organization Thailand Development Research Institute Thai baht Transfer of Knowledge through Expatriate Nationals United Nations UN Programme on HIV/AIDS UN Department of Economic and Social Affairs UN Development Programme UN Office of the High Commissioner on Human Rights UN International Development Fund for Women UN Office on Drugs and Crime UN Population Division UN International Research and Training Institute for the Advancement of Women United States Agency for International Development United States dollars Vietnamese dong World Bank (The) World Development Indicators World Economic Outlook World Trade Organization

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LIST OF FIGURES, TABLES, AND BOXES Chapter 1 Figure Figure Figure Figure

1.1 1.2 1.3 1.4

Figure 1.5 Figure 1.6 Figure 1.7 Figure Figure Figure Figure

1.8 1.9 1.10 1.11

Figure 1.12 Figure 1.13 Figure 1.14 Figure 1.15 Figure 1.16

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GMS-5 Core-Periphery Migration International Migrant Stock by World’s Regions International Migrant Stock in the GMS by Country Registered GMS-3 Migrant Workers in Thailand by Country of Origin, 2007 Sectoral Distribution of GMS-3 Migrant Workers in Thailand, 2007 Formal GMS Migrant Workers in Key Non-GMS Countries, 2002–07 Human Development Index 2007 Scores of Selected Countries Demographic Trends in GMS Countries Remittance Inflows to Developing Countries Remittance Inflows to GMS Countries Remittance Channels Used by Lao and Cambodian Migrant Workers in Thailand Capital Inflows to GMS Countries, 2007 Remittance Use by Lao Migrant Households in the Past Five Years Remittance Use by Cambodian Migrant Households in the Past Five Years Average Monthly Earnings of Sample Irregular Cambodian and Lao Migrant Workers in Thailand Remittances as Percentage of Personal Consumption Before and After Crisis

10 12 15 17 18 19 23 30 37 38 38 40 43 43 47 52

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xiv 

List of Figures, Tables, and Boxes

Figure 1.17 Sources of Financing for Migration, Percentage of Cambodian Migrant Workers Figure 1.18 Average Annual Income and Expenditure of Cambodian Migrant and Non-Migrant Households in Thailand Figure 1.19 Average Variable Costs Incurred by Lao and Cambodian Migrant Workers in Thailand Figure 1.20 Average Variable Costs Incurred by Lao Migrant Workers in Thailand in Two Years Figure 1.21 Migrant Workers in Thailand on Nationality Verification Table 1.1 Table 1.2 Table 1.3 Table 1.4 Table 1.5 Table 1.6

Box 1.1 Box 1.2 Box 1.3 Box 1.4

Employment Trends in the GMS Countries Remittance Behaviour of Sample Lao and Cambodian Migrant Workers in Thailand Skilled Emigration Rates by Income Group Average Fixed Costs Incurred by Sample Lao and Cambodian Migrant Workers in Thailand Average Net Economic Benefit (Thailand Survey) Average Net Economic Benefit (Lao PDR and Cambodia Surveys) Coming from Isolation: Brief Backgrounds of Cambodian, Lao, and Vietnamese Emigration Motivations for and Determinants of Remittance Brain Drain or Brains in the Drain? The Dilemma in Brain Migration Net Economic Returns of Migration to Thailand at Micro Level

52

55 69 70 80 25 49 57 67 72 73

14 51 57 71

Chapter 2 Figure 2.1

Figure 2.2 Figure 2.3

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Number and Proportion of Official Cambodian Migrant Workers by Destination Country (as of January 2008) Cambodian Institutions Engaged in International Labour Migration Management Recruitment Flowchart

124 127 129

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List of Figures, Tables, and Boxes

Figure 2.4 Figure 2.5 Figure 2.6 Figure 2.7

Table 2.1 Table 2.2 Table 2.3 Table 2.4 Table 2.5 Table 2.6 Table 2.7 Table 2.8 Table 2.9 Table 2.10 Table 2.11 Table 2.12 Table 2.13 Table 2.14 Table 2.15 Table 2.16 Table 2.17 Table 2.18

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xv

Locations of the Six Study Communities Percentage of Sample Households with Sufficient or Surplus Rice Output Economic Status of Sample Migrant Households Based on Self-Perception Change in Economic Status of Sample Migrant Households Based on Self-Perception, 2002 versus 2007

132

Population and GDP of Selected Countries, 2005 Number of Cambodian Migrant Workers Sent Officially by Destination Country and Gender Workers’ Remittances and Compensation Received by Employees Key Characteristics of Study Communities Number of Households in Study Villages and Survey Sample Gender Distribution of Sample Migrant Workers Destinations of Sample Migrant Workers in Their Most Recent Trip Occupation of Sample Migrant Workers on Their Most Recent Trip Average Earnings of Sample Migrant Workers on Their Most Recent Trip to Thailand Average Fixed Costs Incurred by Sample Irregular Migrant Workers Sources of Financing Migration, Percentage of Sample Migrants Net Benefits of Emigration to Thailand Cost of Sending Cambodian Workers to South Korea by Expenditure Item Remitting and Non-remitting Migrants in the Past One Year Average Remittances Sent Each Time and in the Last Trip Average Remittances Sent in the Past One Year and Five Years Average Remittances by Occupation and Location Average Remittances by Gender and Location

121

137 169

170

123 125 131 133 136 138 140 142 144 145 147 149 151 152 153 154 155

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List of Figures, Tables, and Boxes

xvi  Table Table Table Table Table Table

2.19 2.20 2.21 2.22 2.23 2.24

156 157 157 160 161

Table 2.31

Remittance Channels Used Average Remittances Spent Expenses Financed by Remittances Returns from Productive Use of Remittances Sources of Annual Household Income Average Household Expenditure on Non-food Items in the Past One year Average Household Expenditure on Non-food Items in One Month Average Household Consumption of Food in the Past One Week Type of House Owned by Sample Households Average Value of Houses Owned by Sample Households in 2002 and 2007 Values of the Assets Owned by Sample Households in 2002 and 2007 Reasons for Improved Economic Status Based on Self-Perception Proposed Cost Reductions by Item of Expenditure

Box Box Box Box Box Box

Case of a Male Migrant Worker in Malaysia Case of a Male Migrant Worker in Thailand Case of a Young, Female Migrant Worker in Thailand Case of a Seasonal Migrant Worker at the Thai Border Cases of Local Remittance Agents Excerpt from Subdecree 57

136 141 143 146 158 180

Table 2.25 Table 2.26 Table 2.27 Table 2.28 Table 2.29 Table 2.30

2.1 2.2 2.3 2.4 2.5 2.6

163 164 165 166 167 168 171 174

Chapter 3 Figure 3.1 Figure Figure Figure Figure

3.2 3.3 3.4 3.5

Figure 3.6

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Main Border Crossing Points Used by Lao Migrant Workers Location of Case Study Area Sectoral Output Proportions in the Case Study Area Reasons for Labour Migration to Thailand Monthly Expenditure Patterns of Lao Migrant Workers Remittance Use during Last Five Years

195 206 213 214 225 229

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List of Figures, Tables, and Boxes

Table 3.1 Table 3.2 Table 3.3 Table 3.4 Table 3.5 Table 3.6 Table 3.7 Table 3.8 Table 3.9 Table 3.10 Table 3.11 Table 3.12 Table 3.13 Table 3.14 Table 3.15 Table 3.16 Table 3.17 Table 3.18 Table 3.19 Table 3.20 Table 3.21 Table 3.22

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Number of Registered Lao Migrant Workers in Thailand, 2001–07 Socio-economic Development Indicators for Lao PDR and Thailand, 2007 Infrastructure, Information, and Communication Links of Study Villages Age Structure of the Case Study Population Education Level of the Case Study Population Aged Fifteen Years and Above Occupational Structure of the Case Study Area Population Aged between Fifteen and Sixty Years Macroeconomic Indicators for Study Villages Prevalence of Labour Movement to Thailand in Case Study Area, 2007 Number of Migrant Workers from Case Study Area in Thailand Age of Sample Lao Migrant Workers in Thailand Education Levels of Sample Lao Migrant Workers in Thailand Employment Destinations of Sample Lao Migrant Workers in Thailand Employment Structure of Sample Lao Migrant Workers in Thailand Employment Status of Sample Lao Migrant Workers in Thailand Migrant Workers with Information about Working Conditions Migrant Workers Injured or Sick during Working Period Working Days and Times Average Monthly Earnings of Sample Lao Migrant Workers in Thailand Average Fixed Costs of Legal Labour Migration Average Monthly Expenditure of Sample Lao Migrant Workers in Thailand Average Net Benefit from Labour Migration to Thailand Remittance Channels

xvii

193 197 208 210 211 211 212 215 215 216 216 217 218 219 219 220 220 222 224 225 227 228

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List of Figures, Tables, and Boxes

xviii  Table 3.23 Table 3.24 Table 3.25 Table 3.26

Box 3.1 Box 3.2

Average Income and Expenditure of Households with and without Migrant Workers Contribution of Remittances to Building or Repairing Communal Assets in Last Five Years Contribution of Remittances to Total Production Value in Case Study Area Provinces Total Production Value in Case Study Area in Absence of Labour Movements to Thailand

230 231 232 233

Informal Channels of Labour Migration Contribution of Remittances to Community Development

194

Thai Workers Overseas by Destinations, 2007 The Migration Cycle Life Cycle of Economic Benefits and Costs of Labour Migration 4.4 Average Benefit per Person of Thai Migrant Workers by Demographic Background 4.5 Average Total Cost per Person of Thai Migrant Workers by Demographic Background 4.6 Net Return to Migration for Thai Workers by Demographic Background 4.7 Amount of Remittance Sent by Migrant Workers 4.8 Frequency of Remittance by Lao and Cambodian Migrant Workers 4.9 Amount of Remittance Sent by Cambodian and Lao Migrant Workers 4.10 Remittance Methods Used by Cambodian and Lao Migrant Workers

245 266

231

Chapter 4 Figure 4.1 Figure 4.2 Figure 4.3 Figure Figure Figure Figure Figure Figure Figure

Table 4.1 Table 4.2 Table 4.3

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Overseas Thai Workers from Northeastern Provinces, 2001 Number of Thai Workers Deployed Overseas and Sum of Remittances Received, 1990–2004 Foreign Workers in Thailand

267 279 279 281 289 293 294 295

245 246 249

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List of Figures, Tables, and Boxes

Table 4.4 Table 4.5 Table 4.6 Table 4.7 Table 4.8 Table 4.9 Table 4.10 Table 4.11 Table 4.12 Table 4.13 Table 4.14 Table 4.15 Table Table Table Table

4.16 4.17 4.18 4.19

Table 4.20

Box 4.1

Work Permit Extensions for Illegal Migrant Workers from Myanmar, Lao PDR, and Cambodia Number of People Living with HIV/AIDS in GMS Countries, 2001 Average Man-Years of Cambodian Migrant Workers as of 2007 Average Man-Years of Lao Migrant Workers as of 2007 Migrant Workers by Main Occupation before Migration Migrant Workers by Occupation when Working in Thailand Average Salary and Overtime Payment of Migrant Workers Estimated Total Economic Benefit per Trip by Item and Category Average Fixed Cost of Migrant Workers by Item and Category Average Variable Costs of Migrant Workers by Item and Category Estimated Total Variable Costs per Person Net Benefit of Migration to Cambodian and Lao Migrant Workers Benefits from Remittances Costs of Remittances Formal and Informal Remittance Channels Migrant Workers Who Never Sent Money Home by Reason and Nationality Household Economic Status Before and After Migration to Thailand

xix

250 261 273 273 277 278 282 283 284 286 287 288 290 290 291 296 296

Benefits and Costs of Remittances

290

Number of Formal Labour Migrants from Vietnam Share of Formal Labour Migrants by Destination, 2007

309

Chapter 5 Figure 5.1 Figure 5.2

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311

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xx Figure 5.3 Figure 5.4

Table 5.1 Table 5.2 Table 5.3 Table 5.4 Table 5.5 Table 5.6

Table 5.7 Table 5.8 Table 5.9 Table 5.10

Table 5.11

Table 5.12

Table 5.13

Table 5.14 Table 5.15 Table 5.16 Table 5.17

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List of Figures, Tables, and Boxes

Location of Surveyed Areas Financial Sources for Funding Initial Costs of Migration Formal Labour Migration from Vietnam by Destination, 2002–07 Formal Vietnamese Migrants in Lao PDR Migrant Workers from Quang Tri and An Giang Provinces by Occupation and Location Migrant Workers from Dong Hung District, Thai Binh Province by Occupation and Destination Average Monthly Income of Migrant Workers from Quang Tri and An Giang Provinces Average Fixed Costs of Migration for Far-border Migrant Workers from Quang Tri and An Giang Provinces Average Net Benefit to Informal Migrant Workers from Quang Tri and An Giang Provinces Average Monthly Earnings of Migrant Workers from Dong Hung District, Thai Binh Province Average Fixed Costs for Migrant Workers from Dong Hung District, Thai Binh Province Average Net Benefit to Migrant Workers from Dong Hung District, Thai Binh Province by Destination Country Average Net Benefit to Migrant Workers from Dong Hung District, Thai Binh Province by Occupation Average Income Earned by Vietnamese Migrant Workers in Non-GMS Countries Based on Government Data Average Cost Incurred by Vietnamese Migrant Workers in Non-GMS Countries Based on Data from Private Agencies Durable Assets Owned by Migrant and Non-Migrant Households Household Self-assessment on Living Standards Job Distribution Before and After Migration Formal Workers’ Remittances against Total Export Earnings

314 332

310 312 322 324 326

327 328 331 332

333

334

335

336 338 339 340 342

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List of Figures, Tables, and Boxes

Box 5.1 Box 5.2

Box 5.3 Box 5.4

Decent Work Deficit Experienced by Vietnamese Migrant Workers in Lao PDR, and Cambodia The Economic Costs and Benefits of Vietnamese Emigration to Non-GMS Countries Based on Other Sources Aggregate Remittance Inflows to Vietnam and Their Broader Impact How Remittances Changed a Fishing Village in Nghe An Province

xxi

330

335 342 344

Chapter 6 Figure 6.1

Net Migration Rates of Select Southeast Asian Countries, Number of Migrants per 1,000 Population 368

Table 6.1

Ratification Status of Key International Human Rights Instruments by GMS Country

Box 6.1 Box 6.2

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The Migration Hump: Nexus between Migration and Development Remittances for What? Some Non-Economic Risks of International Labour Migration

390

368 387

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List of Contributors Angkana Piamkulwanich is researcher for the Human Resource and Social Development Programme of Thailand Development Research Institute (TDRI). Chan, Sophal is a former senior research manager and research advisor at Cambodia Development Resource Institute (CDRI). Chothiga Sukaruji is senior researcher for the Human Resource and Social Development Programme of Thailand Development Research Institute (TDRI). Cu Chi Loi is vice director of the Vietnam Institute of Economy, Hanoi, Vietnam. Hossein Jalilian, Reader, University of Bradford, U.K., was the director of research at Cambodia Development Resource Institute (CDRI) (2007– 2010). Nguyen Thi Kim Dung is senior researcher and deputy director of the Research Department for Economic Institutions, Central Institute for Economic Management (CIEM), Vietnam. Glenda Reyes is a researcher at Cambodia Development Resource Institute (CDRI). Srawooth Paitoonpong is senior research specialist for the Human Resource and Social Development Programme of Thailand Development Research Institute (TDRI). Yongyuth Chalamwong is research director (Labour Development) of the Human Resource and Social Development Programme of Thailand Development Research Institute (TDRI).

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1 Migrants of the Mekong Wins and Losses Hossein Jalilian and Glenda Reyes

1. Introduction The fierce controversy in international migration is barely surprising. At its heart is the poignant debate regarding the universality and territorial application of basic human rights. In this state-centric system, the possession of legal citizenship has been the core basis for awarding a person with full state recognition and the protection of such rights as life, liberty, security, movement, expression, and a standard of living enough to guarantee his or her well-being. Where these rights do not or only partly get fulfilled in their countries of origin, some people venture abroad in the hope of improving their economic, political, and social circumstances. Lacking citizenship in their host countries, migrants in general tend to end up grappling with even greater uncertainty regarding the status of their rights. The tough challenge in translating the principles of non-discrimination and equality into reality for migrants is demonstrated not least by the failure so far to broaden the ratification of and accession to the International Migration Convention. As of April 2009, only forty-three states were parties to this convention (International Steering Committee 2009). The majority of these

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Hossein Jalilian and Glenda Reyes

state parties, none of which are from the Greater Mekong Subregion (GMS), are net sending countries. The struggle for migrant rights becomes a cause for greater concern if one appreciates how, for many migrants, emigration is fraught with danger and represents a long uphill battle against the constraints of poverty and freedoms. The journey has become more onerous with the marriage of migration, national security, and crisis management policies. Especially vulnerable are those conveniently classified as irregular migrants, though in reality some of these are refugees, stateless, or have been trafficked. Throughout the migration cycle, these migrants are at risk of abuse, enslavement, social exclusion, imprisonment, and deportation. Reaping net economic gains from overseas employment forces them to take informal, riskier routes to destination countries and reject registration opportunities to avoid tax payments and contributions to funds that are earmarked to fund their repatriation. Wishing to remit as much of their earnings as possible to their dependants back home, they need to be stringent with their own food and non-food consumption. Even with all the sacrifices, a beneficial relationship between international migration and development at the macro and micro levels is not a given. The question, “Is migration good or bad?” seems straightforward enough until one realizes how difficult it is to weigh the pros and cons of migrant movements against each other. With reference to labour migration, it may be that the net economic return is positive, but a comprehensive cost-andbenefit analysis of people’s movements would also factor non-economic considerations into the equation. Lest it becomes a serious threat to national unity and security, the political and social repercussions of labour migration have to be taken into account. Besides, cases such as that of the influx of Myanmarese workers into Thailand illustrate how the economic and noneconomic drivers of human mobility are at times so enmeshed with one another that it would simply be a mistake to undervalue the latter. This chapter and the individual GMS country studies on Cambodia, the Lao People’s Democratic Republic (Lao PDR), Vietnam, and Thailand, focus on labour migration. Sixth in the Development Analysis Network (DAN) series, this group of country studies had the specific research aim of filling an important gap in the rather limited literature on GMS migration. This gap refers to the lack of empirical and comparative information on the financial costs and benefits of intra-GMS labour migration at the micro level. The country chapters also dwell on other country-relevant trends and

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Migrants of the Mekong: Wins and Losses



issues, but the focus is on the economic underpinnings of labour migration. To achieve their collective aim, the country studies utilized both primary and secondary data. Primary data were mainly garnered fom the field surveys, focus group discussions (FGDs), and key informant interviews (KIIs) conducted separately and jointly by the DAN member research institutions. Data generated from these surveys form the chief bases for insights on the micro level economic returns from migration for GMS migrants and their households. Comparative descriptions of the survey samples are provided in Annex A. At the outset, it should be noted that some survey findings are conditioned by the samples’ characteristics. Without question, the GMS is an area worth investigating in labour migration studies, exemplifying as it does the core-periphery model of international mobility. Much like how Jupiter’s gravitational pull sucks in space objects, the centre (Thailand) attracts the majority of migrant movements from the peripheries (Myanmar, Cambodia, and Lao PDR, or the GMS-3; the GMS-3 plus Vietnam is called the GMS-4; the GMS-4 plus Thailand is called the GMS-5). The decision to make GMS labour migration the theme of the DAN 6 series therefore promised enriching contributions to migration research. The policy relevance of the series at the same time pertains to how its findings could help orient labour and migration policies into being more balanced and pro-poor by promoting a pluralistic understanding of the dynamics and issues behind migrant labour markets, and providing empirical proof of the financial costs and benefits, thus the poverty impact, of labour migration on migrant households. This chapter focuses on GMS labour emigration to Thailand, given that it is the predominant form of migrant movement within the GMS. The GMS group also includes Myanmar, and the Yunnan and Guangxi provinces of China. Much of the irregular worker movements to Thailand are accounted for by the Myanmarese, in light of which this chapter not only pools the findings of the individual country studies, but it also touches on the labour mobility from Myanmar to Thailand where possible. Following the tone of the individual case studies, its discussions focus overwhelmingly on economic drivers; however, this is done without prejudice against the non-economic drivers of labour migration whose significance, especially in such cases as Myanmarese worker movements, is recognized at the outset. Equally important, this chapter situates intra-GMS labour migration in broader migration developments and also fills some gaps and provides some updates that are missing in the country-level research.1 At the time the

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Hossein Jalilian and Glenda Reyes

country studies were being completed, the global crisis, for instance, was still unravelling and Thailand’s newest alien employment act was yet to be operationalized. The alleged final round of irregular worker registration in Thailand had also just taken place. The impact of these events on labour movements to Thailand was not really captured in the country studies. An appraisal of such impact, while perhaps incomplete, is one update that this chapter seeks to provide. Section 1 offers an overview of the contemporary migration discourse, definitional issues, and analytical framework, while Section 2 looks at some migration statistics. Section 3 discusses the drivers of intra-GMS labour migration, while Sections 4 and 5 look at the economic benefits and costs of migration at the macro and micro levels. Section 6 discusses migration management. Section 7 concludes.

2. INTERNATIONAL MIGRATION: DISCOURSE, DEFINITIONS AND ANALYTICAL FRAMEWORK 2.1 Three Enriching Influences on Contemporary Migration Discourse The discourse on international migration has come a long way. It has reached greater maturity and objectivity with the expansion of its consideration and inclusion of more stakeholders in the dialogue. From trade unionists and populist politicians to diaspora members and human rights ambassadors, protests have been made in an appeal to impede or ease international labour migration flows. Often, migration has been treated as if it is a zero-sum game. The contemporary discourse on migration has sought to subdue both intolerant tendencies and utopian ambitions, alter pessimistic outlooks, raise newer concerns, and bolster the impetus for improved unilateral, bilateral, and multilateral migration management. Three developments helped enrich the contemporary discourse on international migration. First is contemporary globalization, which is made distinct from earlier spates of globalization by its increased density of networks, increased institutional velocity,2 and increased transnational participation (Keohane & Nye 2000). While it has admittedly made more headway in the goods and financial markets, contemporary globalization has nonetheless introduced major transformations to the world of work. It has increased labour mobility via deepening regional integration, increasing infrastructure networks, accelerating information dissemination,

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and significantly pushing transport costs down. These in turn intensified the pressures on labour markets with respect to wages, job security, and upgrading of skills for movement between jobs (IOM 2008). In the case of the GMS countries, the deepening of their interconnectedness through ASEAN economic cooperation and the GMS Programme supported by ADB and other donors has facilitated greater flows of people to and from each of the Mekong countries. Contemporary globalization additionally challenged such traditional ideas as the trade-off between remittances and brain drain. By easing the formation of transnational communities, it also made emigration and migrant return less of a discrete event and increasingly more a part of a wider process of international exchange (IOM 2005). This decade’s most devastating events — the 9/11 terrorist attack, the Asian financial crisis of 1997–98, which had its epicentre in Thailand, and the global financial and economic crisis of 2007–09 — were all largely rooted in contemporary globalization. Their impacts on labour migration prove that globalization has undeniably impinged on the world of work in potent, novel, and multiple ways. Two other developments that have enhanced the contemporary discourse on international labour migration are the improvement in migration statistics and the advancement of legal and institutional frameworks relating to migration. What is interesting is that the key international organizations dealing with the knowledge base on international migration — the International Organization for Migration (IOM), the International Labour Organization (ILO), the United Nations (UN) particularly the UN Department of Economic and Social Affairs (UN DESA) and the UN Population Division (UNPD), and The World Bank — appear to have adopted differentiated data gathering responsibilities, resulting in a fragmented as opposed to a centralized database on migration related variables. However, individual initiatives to upgrade in-house data have been made. For instance, the IOM, both in support, and as a by-product, of its efforts to broaden its understanding of migration, has improved its data collection over the years (IOM 2005). The rise of multistakeholder institutions such as the Global Forum on Migration and Development (GFMD), the Global Migration Group (GMG), the International Dialogue on Migration, the Regional Consultative Processes (RCPs), and the Global Commission on International Migration (GCIM),3 has also facilitated greater information sharing. Conventions covering trafficking and child labour have also been widely ratified. Obviously, the progress in building the

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knowledge base and the legal and institutional frameworks on migration has significantly assisted research and policymaking. Progress is moving more slowly than the desired pace, however. The International Migration Convention, as mentioned earlier, has so far only attracted a limited number of state parties. In addition, the first multilateral legal framework on migration, the General Agreement on Trade in Services Mode 4 (GATS4) is supposed to aid the monitoring of international migration, thus information gathering, but limited official commitment has hindered implementation of GATS-4’s intents. With regard to migration within the GMS, a key hurdle to addressing migration issues has been the lack of reliable data. Except for the available official statistics on migration to Thailand, data are otherwise scarce (Soda 2009). The prevalence of irregular migration also naturally constrains the tracking of migration numbers. These data related problems have hindered progress in GMS migration research. Regional mechanisms dealing with migration have also been hampered by limited implementation and non-ratification. Issues so far touched upon will be looked at again in the following discussions. What this chapter wants to make clear at this point is that these three factors — contemporary globalization, enrichment of the knowledge base, and progress in international lawmaking and institutional building — have infused greater maturity into the discourse on migration.

2.2 Definitions International migration refers to the movement of persons from one state to another, with the intention of settling temporarily or permanently in a state other than the state of which the persons are nationals.4 Emigration refers to the exit of the migrant from the source country while immigration refers to the entry of the migrant into the destination country. These definitions are straightforward enough. Problems instead beset the definition of migration typologies: regular, irregular, legal, illegal, voluntary, and forced (trafficking), economic, and non-economic migration. By its very nature, the formal definition of irregular migration is at best an imprecise exercise. The term has been defined as referring to migrants whose status does not conform, for one reason or another, to the norms of the country in which they reside (IOM 2008). Apart from saying that irregular migration is essentially country-specific, this definition also aptly signifies that even within countries, “spaces of illegality”, as opposed to precise

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dichotomies, can better capture the statuses of various irregular migrants. These spaces are defined by the various levels of migrant compliance with employment terms, namely full compliance, non-compliance, and semicompliance (IOM 2008). Semi-compliance can generally be said to refer to the situation where either one of the immigration and employment status of the migrant is illegal. At the same time, it pertains to the situation of migrants whose immigration status in the host country is legal, but who are otherwise in partial or complete violation of the employment procedures or conditions of his or her immigration status or work contract (IOM 2008). Semi-compliance can be made to refer as well to the likes of the registered irregular migrants in Thailand. There are basically three types of migrant workers in Thailand: regular workers who are legal in terms of both work registration and immigration; registered irregular workers who are legal in relation to work registration, but illegal in relation to entry into the country; and unregistered, irregular workers who are illegal either in terms of immigration or work registration. The government’s regularization policy has targeted both types of irregular workers as elaborated on later. Thailand’s Alien Employment Act B.E. 2551 (2008) defines the regularity or legality of alien employment in the country on the condition of the possession of a work permit with little exception.5 Migrant status are also fluid, meaning that a migrant can be regular one minute, and irregular the next (ILO 2004; Sciortino & Punpuing 2009). The term “irregular migration” is said to be preferable to illegal migration for three reasons. First, most irregular migrants are not criminals. Second, whatever their status are, migrants have fundamental human rights that may be overlooked when they are classed as criminals. Third, linking irregular migration to illegality may provide justification for the neglect of their human rights, and inappropriate rejection of applications for asylum by asylum seekers caught up temporarily in an irregular status (Koser 2005; Carens 2008). Recognizing the implications of treating irregularity as synonymous with illegality, the UN endorsed the terms irregular migration and undocumented migration.6 Another migration typology is based on the degree of voluntarism in people’s movements. The concepts voluntary and forced migration fall under this category. It has been widely acknowledged that distinguishing voluntary from trafficked migrants is difficult. Even with full knowledge of the dangers ahead and under coercive environments, aspiring migrants have been known to proceed voluntarily with migration plans. In this

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relation, the migration status is also fluid, meaning that migration can be voluntary one minute and coerced the next. One other issue closely linked to this relates to the sometimes inseparable economic and non-economic natures of migration. For this very reason, migration in Africa, the region with the biggest concentration of internally displaced persons (UNHCR 2009; IDMC 2008), due mainly to armed conflicts, is very complex. It is hard to decipher to what extent voluntary migration in the region really is voluntary and purely economically driven. Another best example of this phenomenon can be found in the Mekong region. It would be too simplistic, if not outright wrong, to trace the root of Myanmarese emigration to economic factors alone. The motive of Myanmarese migrants could be equally about wanting to improve their economic welfare as fleeing a repressive environment.7 In other words, their migration could have been just as strongly driven by broader quality-of-life considerations. The above definitional complexities must be borne in mind when considering migration trends as well as migration policies. This chapter began with the issue of migrant rights which depend on migrant status and country context. The points made above on “spaces of illegality”, “fluidity of migrant status”, and how “irregularity is not tantamount to illegality” assume critical importance in delineating the status of migrants. The country specificity of migrant rights also needs to be appraised as it contradicts the understanding of migrant rights being universal.

2.3 Analytical Framework The research thrust of the country-specific studies finds basis in the tenets of various dominant migration theories and considers migration from both the macro (country-level/structural) and micro (household level/agencybased) perspectives. Hence, it rightly eschews the theoretical bipolarities that long arrested progress in migration research and instead adopts a pluralistic explanatory framework in aiming to capture the heterogeneous elements of migration.8 The studies’ interest in estimating the financial costs and benefits of labour migration is premised on the neoclassical economic theory that international labour migration occurs as a result of rational calculations showing net positive financial returns from working abroad. However, the choice of the household as the main unit of analysis on many occasions departs from the neoclassical economists’ single-minded focus on the individual. It instead resonates the key proposition of the

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new economics of labour migration — that households and other units of production are the more appropriate locus of analysis in migration studies. Even in the absence of differentials in wages and/or employment rates, migration can occur because of household risk diversification strategies. To explain international migration further, the individual case studies also tapped the elements of the push-pull model and theories of cumulative causation. The push-pull model advances the idea that there are push and pull factors in receiving and sending countries that instigate migration. Theories of cumulative causation, on the other hand, seek to explain the perpetuation of migration by referring to the role of factors such as migrant networks and supporting institutions. A broader understanding of intra-GMS migration, however, compels consideration of structural migration theories. This chapter presents a simple core-periphery model of intra-GMS labour migration that utilizes elements of new economics geography, segmented labour market theory, the push-pull model, and world systems theory. The concepts, “core and periphery”, were actually made prominent by the world systems theory, which, in relation to the migration theme, posits that it is the “disruptions and dislocations” in capitalist activities that cause migration (Hirschman et al. 1999). While evidence for this argument may be abundant during economic crises, it is taken as insufficient explanation for the growth of international migration during normal periods. In fact, outward migration, in some instances, continues even in the midst of economic shocks. While adopting the terms, “core and periphery”, therefore, the model presented here also draws from the precepts of the other structural theories. Figure 1.1 shows that the majority of migrant movements from the peripheral countries, Myanmar, Lao PDR, and Cambodia, are towards the core, Thailand. Coinciding with its full shift to a service- and industrydriven economy, Thailand evolved from a net emigrant into a net immigrant country starting in the early 1990s. Migrant movements from Vietnam, which is a semi-periphery country and shares no border with Thailand, are mainly in the direction of other destination countries.9 While the economic factors driving migration are discussed in detail in the succeeding sections, a snapshot of the characteristics of the core and non-core countries is provided below to explain the pull of the core state. The concepts, core, periphery, and semi-periphery, have not really been formally defined. In any case, these concepts can only be understood in

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Periphery Cambodia

Semi-Periphery Vietnam

Arrows in bold refer to the of theofmajority of international migrant movements. not inrefer bold to refer the direction of rest of migrant Note: Arrows Note: in bold refer to the direction ofdirection the majority international migrant movements. ArrowsArrows not in bold thetodirection of the the rest of tmigrant movements. Arrows pointing towards the outside of the circle refer to migrant movements to non-GMS countries. movements. Arrows pointing towards the outside of the circle refer to migrant movements to non-GMS countries. Source: Authors Source: Authors.

Periphery Lao PDR

Periphery Myanmar

CORE Thailand

FIGURE 1.1 Figure 1: GMS-5 Core-Periphery Migration GMS-5 Core-periphery Migration

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relative terms. Core countries are generally understood as having higher development relative to non-core countries. Peripheries are the least developed; semi-peripheries are those in between. The GMS case suggests further delineations to these concepts. Clearly, Thailand is the most developed relative to its GMS neighbours. Details about the development divide between Thailand and the other GMS countries are explored later; obviously, the divide is considerable. Thailand’s gross domestic product (GDP) is about twice as big as that of Vietnam and about forty times that of Lao PDR (WB WDI online).10 A look at the key sources of GMS countries’ growth reveals a clearer distinction between the core and noncore states. Thailand’s contemporary development is predominantly driven by industry and services, with agriculture only accounting for about 9 per cent of output. The output share percentage of agriculture in Cambodia, Lao PDR and Myanmar is not less than 30 per cent; at least 50 per cent of the workforces in these countries are employed in the sector. Vietnamese agriculture in the meantime accounts for roughly 20 per cent of the national output and more than half of the total national workforce. The saturation of the agriculture sector with cheap labour is partly due to labour market rigidities. It is not only the core country’s higher level of development per se that makes it attractive to migrants. The segmented labour market theory advances that the capital intensity of industrial production and therefore greater work stability in core countries during normal periods attracts workers from the labour-intensive agricultural sectors where employment is irregular. Rural farming households in the peripheries wish to lessen the risks to their income and diversify income sources by sending someone to work in non-agricultural sectors. Population dynamics in the core and non-core states likewise serve as push and pull factors. Again, details of these are examined in the next section. In brief, Thailand’s population is older than its neighbours. Job creation in the peripheral countries cannot keep up with their high population growth. Agriculture is already saturated and unappealing compared with other sectors, given the lower wages and the seasonal availability of work in the sector. This evolves into a push factor for outward migration. Meanwhile, the ageing population in the core country creates the need for an additional active workforce. The above core-periphery model offers a simple bird’s-eye view of intra-GMS labour migration. The world systems theory may have been criticized for its characterization of the relationship between core and

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non-core countries as exploitation, but its emphasis on connectedness and dependencies is right on track.

3. INTERNATIONAL MIGRATION IN NUMBERS The number of international migrants was put at 195 million in 2005, a quarter more than in 1990. Assuming that shocks have little impact on long-run migration trends, the international migrant stock is estimated to have increased to about 214 million in 2010 (Figure 1.2). The majority of the international migrant population is comprised of migrant workers and their families. In 2000, there were some 86 million labour migrants worldwide (ILO 2006b). In 2005, the roughly 94 million migrant workers plus their families comprised about 90 per cent of the total international migrants (ILM 2007). It is highly likely that all these figures are underestimates, however, given the huge, but indefinable number of irregular migrants.11 A rough count indicated that some 20 to 30 million individuals worldwide are unauthorized migrants (IOM undated). As a proportion of the total world population, the international migrant stock is very small, at about only 3 per cent. It follows that the percentage of economically active FIGURE 1.2 International Migrant Stock, by World’s Regions, Millions Figure 2: Interna�onal Migrant Stock, by World's Regions, millions

Figure 3: Interna�

Africa 2010e Asia 2005

Europe

2000

Lan America and the Caribbean North America

1990

Oceania -

50.0

100.0

150.0

200.0

Source: UN DESA, Internaonal Migrant Stock: The 2008 Revision

2005

2000

1990

250.0

Source: UN DESA, International Migrant Stock: The 2008 Revision.

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2010e

0 Source: UN DESA, Int

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13

migrants in the global workforce is also miniscule, likewise at about 3 per cent. Contrary to popular assumption, there are more north-to-north than south-to-north migrant movements. Considerable south-to-south labour migration also occurs, even in the absence of significant wage differentials. International labour mobility is constituted mainly of low-skilled labour taking on low-skilled employment in receiving countries. However, developed nations have been increasingly luring talented professionals, assisted by various policy enticements, such as the revision of points systems and relaxation of return policies for foreign students. The majority of migrant workers in developed destinations are concentrated in the industrial and service sectors.12 Asia has the largest international migrant population after Europe. It has also become the biggest supplier of immigrants to the rest of the world, with many countries in the region experiencing net emigration. China and India in particular account for the world’s largest diasporas. Among the subregions in Asia, Western and Southeast Asia have the lion’s share of the international migrant stock. The GMS-5 has accounted for a rising number of the migrants. However, compared with the ASEAN-5 (Brunei, Indonesia, Malaysia, the Philippines, and Singapore), such a share has remained modest. Between 1990 and 2010, the number of international migrants in the GMS-5 increased approximately by more than 170 per cent to 1.67 million, or from 3 to 12 per cent of the total international migrant stock in Southeast Asia. Thailand is the prime immigration country in the GMS-5, retaining about two-thirds of the international migrants based in the subregion (Figure 1.3). Of the 86 million migrant workers recorded in 2000, about 30 per cent were based in Asia. Similar to developed countries such as Australia and Switzerland, East Asian countries such as Singapore and Malaysia, and Chinese territories, Macau and Hong Kong, have high migrant labour dependency. Following the government’s conscious policy of enticing foreign talent, about one in three workers in Singapore were international migrants in 2007 (Price Waterhouse-Coopers 2008; Yeoh 2007). Thailand’s share of foreign workers in the local labour force was roughly 6 per cent in the same year (Sciortino & Punpuing 2009). As broached earlier, international labour mobility within the GMS predominantly involves movements to Thailand from the GMS-3 countries, Myanmar, Cambodia, and Lao PDR. Other movements, mostly undocumented, include those between Cambodia and Vietnam, Vietnam

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Box 1.1 Coming from Isolation: Brief Background of Cambodian, Lao, and Vietnamese Emigration The end of the Cold War marked a turning point in the migration histories of Cambodia, Lao PDR, and Vietnam. All these three countries were part of the socialist bloc battling with the United States and its allies for ideological supremacy. This affiliation inevitably dictated the direction and motive of migration outflows from these GMS countries during the Cold War. The shared borders and history with Thailand, however, means that Cambodian and Lao emigration to Thailand has long been established. Families, relatives, and friends have regularly travelled across the borders for personal or work purposes. With this background, formal economic migration is really a relatively new concept. Much of the change in the characteristics and understanding of migration came with the seismic shift in the global order and the end of political and economic isolationism in favour of more open borders and economies. In the case of Cambodia, both internal and external wars during the Cold War period resulted in the forced emigration of many Cambodians to the border with Thailand. Under Vietnamese occupation, there was also modest student and skilled migration to socialist ally nations to serve the bloc’s collective goal of industrial progress. With the end of Vietnamese rule and the collapse of the socialist bloc, large-scale resettlement, repatriation, and relocation of refugees and displaced persons along the border were conducted in a bid to put the country back on the road to political stability, economic restructuring, and national cohesion. This essentially marked the beginning of formal and voluntary economic migration from the country. The end of the Cold War was likewise a watershed in the migration history of Vietnam. Following the unification of the north and south under socialist rule in 1975, migrant outflows from the country were dominated by movements of skilled Vietnamese to fellow socialist states officially that were arranged among their governments. Again, the collective objective was to advance the industrialization of the socialist group. Even when doi moi or economic reform was introduced in 1986, the dissolution of the socialist bloc essentially terminated such movements. It was only in the late 1990s that official Vietnamese labour export was again actively revived. The traditional affinities and shared language between the Lao and Thai people have long facilitated their movements across the borders to each other’s countries. Colonialism, unfortunately, strained these historical ties and marked the start of the political separateness of, and economic differentials between, the two countries. The Thai economy took off while that of Lao PDR languished. With the introduction of the “New Economic Mechanism” and “the open door policy” in 1986, economic emigration from Lao PDR also started to escalate. Source: Authors; GMS country chapters.

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FIGURE 1.3 International Migrant Stock in the GMS by Country Figure 3: Interna�onal Migrant Stock in the GMS by Country

s Africa

2010e

Asia

Cambodia Lao PDR

Europe

2005

Myanmar Thailand

Lan America and the Caribbean

Vietnam

2000

North America Oceania

1990 0

500

1000

1500

2000

Source: UN DESA, Internaonal Migrant Stock:The The 2008 Source: UN DESA, International Migrant Stock: 2008Revision Revision.

and Lao PDR, Vietnam and China’s Guangxi province, and Lao PDR and China’s Yunnan province (Soda 2009). The Asian financial crisis, the 9/11 attack, and the recent global meltdown are watersheds in Thailand’s contemporary immigration history, affecting migration policies and, as a consequence, migration numbers. Migration trends in the country have also been influenced by the political environment, in particular, the relationship between the political leadership and the business sector, and the registration rounds conducted by the government. There have been two types of registration rounds: open registration rounds during which both registered and unregistered irregular migrants can be issued fresh work permits, and re-registration rounds during which only those previously registered and issued work permits can obtain fresh work permits. As a result of the Asian financial crisis, sharp declines in the number of registered GMS-3 workers in Thailand were recorded. The government clamped down on the issuance of work permits to foreigners in an attempt to compel businesses to hire Thai nationals and contain local unemployment. The government’s tougher approach, however, failed to dissuade irregular migrants. While the number of registered GMS migrants in Thailand decreased by about 70 per cent

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between 1997 and 1998, the number of unregistered GMS migrants doubled over the same period. With the reform of the migration policy under the new leadership of Thaksin Shinawatra in 2001, the open registration round for irregular workers was expanded to cover all provinces in Thailand and this caused the number of registered migrants to balloon by almost fivefold, or from 15 to 67 per cent of total migrant workers between 2000 and 2001 (Rukumnuaykit 2009; Martin 2007). As national security concerns gained primacy with the occurrence of the 9/11 attacks, it was thought best to encourage irregular migrants to come forward, thus enabling policymakers and law enforcement officials to study and track illegal movements better within the country. The number of registered migrants fell again after 2001 as only re-registration rounds were held. Between 2002 and 2003, the Thai government executed Memorandums of Understanding (MOU) on labour cooperation with each of the GMS-3 governments. However, the number of workers sent under the relevant MOUs was well below the quota, owing to the poor implementation of the agreements. Then in 2004, as a sign of the closer ties between Thailand’s business sector and the political leadership, another huge open registration campaign was held in the country, resulting yet again in a huge increase in the proportion of registered foreign workers from 29 to 85 per cent of the total migrant workers between 2003 and 2004 (Rukumnuaykit 2009; Martin 2007). Various “carrots and sticks” were offered to entice irregular migrants to register, and employers to follow the employer registration requirement. Between 2004 and 2009, only re-registrations, racked by operational difficulties, were held, causing the number of registered migrants to dwindle once more.13 Annex B provides a summary of the migrant registration rounds in Thailand since 2004 and their results. In 2005, some 143,110 foreign workers with work permit, and therefore legal in terms of employment, were in Thailand. The number of “illegal” foreign workers in 2005 was placed at a huge 1.77 million.14 More updated data indicate that about 2.4 million alien workers, both “legal and illegal” were in Thailand in 2007. The true scale of labour emigration to the country could be even more vast, however, given the possibly larger scale of untracked irregular migration. Of the 2.4 million foreign workers in Thailand in 2007, about 80 per cent or 1.9 million were of GMS origin. An overwhelming majority of these GMS labour migrants were unregistered. Only about 636,346 workers were registered, of which 535,732 were migrants who had participated in the regular registration rounds,15 10,540

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had registered under special registration schemes, 14,151 had been hired under the bilateral MOUs, and 75,293 had their national identities verified and been granted work permits (Figure 1.4). The gap between the import quota and the actual number of foreign workers sent under the bilateral MOUs reflects the snags in implementing the agreements, as do the delays in the certification of migrants. Workers from Myanmar represent 90 per cent of the registered GMS migrants in Thailand, none of whom had been sent under the MOU between the two countries. With reference to the latest and, according to the government, the last open registration round launched in July 2009, about half a million GMS-3 migrants failed to sign up to the nationality verification process, a pre-condition for the issuance of fresh work permits. These migrants face the threat of arrest and deportation (Saengpassa 2010). The sectoral distribution of the GMS-3 migrant population in Thailand somehow follows the typical labour force distribution in developing nations.16 Many of the GMS-3 migrant workers end up in the same lines of occupation where they would likely be employed in their respective countries — the so-called 3D (dirty, dangerous, difficult) jobs. As of December 2007, about 19 per FIGURE 1.4 Registered GMS-3 Migrant Workers in Thailand by Country of Origin, 2007 Figure 4: Regular GMS-3 Migrant Workers in Thailand by Country of Origin, 2007

Figure 6: Form Key Non-GMS R

500000 400000 300000 200000 100000 0 Cambodia

Lao PDR

Myanmar

Entrants under MOUs

Ce rfied workers under MOUs

Registered

Re gistered under special scheme

Source: Sciorno and Punpuing (2009), Mekong Migraon Network (2008)

Source: Sciortino and Punpuing (2009).

2007 01 Costs_Benefits.indd 17

Agriculture 19%

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cent of the GMS-3 migrant workers in Thailand were based in agriculture, Figure 6: Formal 15 per cent in construction, 13 per cent in fish processing, and 11 per cent Figure 4: Regular GMS-3 Migrant Workers in Thailand Key Non-GMS Re in domestic service (Figure by 1.5). Country of Origin, 2007 Outward labour migration from the GMS to non-GMS countries is dominated by movements towards other Asian nations as well, particularly 500000 the newly industrialized economies (NIEs), Malaysia, Taiwan, and South 400000 migrant workers officially sent to Malaysia and South Korea. Cambodian Korea constituted 300000about two thirds of the total sent to all destination countries between 2002 and 2007.17 Over the same period, Vietnam had half 200000 of its officially sent migrant workers in the two countries; more than 30 per 100000 cent were in Taiwan. Thailand, as hinted earlier, is not a leading destination 0 country for Vietnamese migrant workers. Meanwhile, Malaysia and South Korea are not key destination countries for Thai labour migrants. Taiwan Cambodia Lao PDRof formal Thai worker emigration, at instead accounts for the lion’s share Myanmar roughly 43 per cent between 2002 and 2007 (Figure 1.6). Entrants under rfied workers under MOUs in general is most The vulnerability ofMOUs internationalCelabour migrants Registered Re gistered under special scheme manifest during economic shocks. The worst of the employment impact Source: Sciorno and Punpuing (2009), Mekong Migraon Network (2008)

FIGURE 1.5 Sectoral Distribution of GMS-3 Migrant Workers in Thailand, 2007

2007 Agriculture 19% Others 42% Construcon 15%

Domesc Service 11%

Source: Sciortino and Punpuing (2009).

Fish Processing 13%

Thailand Vietnam Cambod 47%

Note: Percentages refe workers as percent o countries; in the case the sum of formal wo and Thailand. Source: Thailand, C chapters; Sciortino an map courtesy of Goog

)

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Figure 6: Formal FIGURE GMS Migrant Workers in 1.6 Formal Migrant Workers in KeyCountries, Non-GMS Countries, 2002–07 Key GMS Non-GMS Receiving 2002-2007

kers in Thailand 07

Thailand: 65,699 7% Vietnam: 45,142 11% Cambodia: 3,984 21%

mar rkers under MOUs

under special scheme

Thailand: 37,343 43% Vietnam: 139,955 33%

Network (2008)

griculture 19%

Thailand: 39,716 4% Vietnam: 162,009 39% Cambodia: 8,978 47%

Construcon 15%

Fish ocessing 13%

Note: Percentages refer to the number of formal migrant

Note: Percentages refer to the number of formal migrant workers as percent of the total sent to all workersin as percent of thethetotal sent tototheallsumdestination destination countries; the case of Cambodia, total refers of formal workers sent to in the case of Cambodia, the total refers to South Korea,countries; Taiwan and Thailand. Source: Thailand, Cambodia and Laoworkers PDR country Sciortino and Punpuing the sum of formal sentchapters; to South Korea, Taiwan (2009); IOM (2006). and Thailand.

Source: Thailand, Cambodia and Lao PDR country chapters; Sciortino and Punpuing (2009; IOM (2006); map courtesy of Google image

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of crises threatens to fall more heavily on foreign workers, given that job crunches typically lead to populist cries for prioritization of nationals in the labour market. Migrants’ actual exposure to shocks, as demonstrated in the recent global financial and economic crisis, can be differentiated, however. This differentiated impact is based on several factors, primary among which is the employment category, thus the skill type, of the foreign worker in question. At the country level, the migration impact of the crisis depends on such factors as the extent of reliance on migrant labour and remittances. Severe crises are expected not only to affect migration numbers as they occur. By modifying the economic prospects of many destination and receiving countries, and hence some fundamental drivers of labour mobility and migration policies, crises are expected to have implications for both the quantity and quality of migrant labour employment beyond the duration of the crises. The blow of the recent global downturn was seen primarily in labour migration flows, not stocks. Mass return migration did not occur. As mentioned earlier, the number of international migrants worldwide is estimated to have grown by 9 per cent to 214 million between 2005 and 2010. Migration flows, however, waned in many cases as widespread job crises cut demand for immigrant labour and induced preferential policies in favour of nationals. Migration flows, particularly to the Organization for Economic Cooperation and Development (OECD) countries were seen to experience their first major decline since the 1980s (OECD 2009). There were also indications that unemployment struck migrant workers harder than nationals. In countries such as Spain and the United States for instance, the unemployment rate among immigrants almost doubled from the time the crisis began (OECD 2009). Foreign workers in procyclical sectors such as manufacturing, construction, and tourism, were the hardest hit, these sectors having been most severely affected by the recession. By contrast, those in agriculture, fishing, domestic service, and other 3D jobs were felt to have weathered the crisis better, with the general dislike of such jobs by the nationals helping migrants keep their employment. Sectors that require specialized training as in health, information technology, and extractive industries (Papademetriou & Terrazas 2009) appear to have warded off the effects of the crisis as well. Quite the opposite, their growth, hence their demand for highly skilled foreign workers, is expected to have continued. Consistent with this, services sectors in countries such as the United States and Ireland witnessed increases in employment (Awad 2009).

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In the case of Asia, key receiving countries, having succumbed hard to the impact of the crisis, enacted policies meant to impede migration flows. Together with fellow key destination states, Malaysia, and South Korea, Thailand froze the issuance of new work permits to foreign workers. It also postponed its planned alien worker registration while the government threatened to deport hundreds of thousands of unregistered migrants. As in the case of other countries, its migrant workers based in the manufacturing sector, which saw sizeable job losses due to the downturn, appeared to have been the most vulnerable (Abella & Ducanes 2009; Awad 2009). It was also feared that migrant earnings and working conditions deteriorated during the crisis as foreign workers were compelled to accept worse employment terms just so they could keep their jobs. Despite all these, there appears to have been no significant change in migration trends in Asia overall. Emigration did not subside from major source countries (Abella & Ducanes 2009). No mass return migrations took place. The high cost of emigration, the uncertainty of being able to return to destination countries, and the similarly bleak economic prospects in source states, were key factors that deterred migrant return while dreams about improved welfare kept emigration alive. Between 2005 and 2010, the international migrant stock in Thailand is estimated to have grown by 18 per cent to 1.16 million (Figure 1.3). One of the lessons from past crises, the most recent one included, seems to be that attempts to reduce migrant stocks attain only limited success.18 Crackdowns and tougher policies and attitudes only tend to push migrants underground.

4. THE INTRA-GMS MIGRANT LABOUR MARKET: FORCES DRIVING SUPPLY AND DEMAND 4.1 Supply Drivers What explains the so-called “great migration” from developing countries (IOM 2005) of workers willing to handle 3D jobs? Why does the export of highly skilled nationals continue unabated despite the universal recognition of the importance of skilled human capital in national development? Why do GMS-3 migrants risk moving to Thailand where they are described as generally “working in difficult and exploitative conditions” (Sciortino & Punpuing 2009) or in an “an atmosphere circumscribed by fear, violence, abuse, corruption (and) intimidation” (Human Rights Watch 2010)? There

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are both agency-based and structural explanations for the increasing supply of labour migrants. The succeeding discussions may focus on the economic determinants of international labour mobility in view of the contents of the GMS country chapters, but again, in no way is the occasional inseparability of economic and non-economic drivers of migration underrated, as argued at the outset. The predominance of labour migration flows towards the north and more developed areas in certain regions such as Thailand in the GMS suggests the centrality of economic differentials as determinants of labour migrant supply. At least three economic differentials between the sending and destination countries are of relevance in this regard: the employment opportunity differential (the difference in availabilities of employment opportunities or, put simply, the existence of labour surplus); the wage differential (the difference in wages); and the decent work deficit (the difference in work conditions, employment benefits, and labour rights compliance). Generally speaking, all are a function of the development divide between the source and receiving countries.19

4.1.1 The Development Divide The development divide, as mentioned in the section on conceptual framework, underpins the major difference between the core and non-core states. The world output share of advanced economies as a group may have been declining steadily, distinctly so in the past decade; however, their output continued to grow at about 2.5 per cent20 before it contracted in 2009 due to the crisis and, with their population growths reined in, they have still managed to raise their output per capita further. On the downside, this sustained the extensive income gap between different economic groupings. By 2008, the high income group’s GDP was thirty times bigger than that of the low income group; its per capita GDP was about twenty-eight times higher. Among GMS countries, the development divide between Thailand on the one hand, and Cambodia and Lao PDR on the other (average),21 is extremely wide at the ratio of about 28:1 in terms of GDP and 4:1 in terms of GDP per capita (WB WDI online).22 Thailand’s poverty headcount against the international poverty line of US$1.25 a day was a mere 2 per cent; compare this to Vietnam’s 20 per cent, Cambodia’s 40 per cent, and Lao PDR’s 44 per cent.23 In the human development index (HDI) 2007 listing, Thailand ranked 87 out of 182 countries, while Vietnam

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ranked 116, Lao PDR, 133, Cambodia, 137, and Myanmar, 138 (UNDP 2009; see Figure 1.7 for HDI 2007 scores). In general, higher economic development has equipped more developed areas with larger pools of resources to ensure labour market opportunities, higher wages, and decent work for their people, while empowering the capabilities of such people to advance the necessary enabling environment themselves. At the micro level, aspirations of either the individual or the household to progress closer to, or be in, the same state fuel labour migration. This understanding emphasizes migrant decisions based on “relative deprivation”, as opposed to “absolute deprivation”. Relative deprivation, as the more potent explanation for migration propensities, is a major tenet of the new economics of labour migration.

4.1.2 The Employment Opportunity Differential There is a preponderance of involuntary unemployment, both structural and macroeconomic, and working poverty24 in developing countries that concerned governments and affected individuals wish to overcome. In FIGURE 1.7 Human Development Index 2007 Scores of Selected Countries

1 0.9 0.8 0.7

Norway Thailand Vietnam

0.6 0.5 0.4 0.3 0.2

Lao PDR Cambodia Myanmar

Niger

0.1 0 Source: UNDP (2009).

Source: UNDP (2009)

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general, the pace and nature of economic growth have not matched labour force growth and characteristics. Labour market rigidities and imbalances have resulted in a huge bulk of individuals with low productivity saturating the agriculture sector and informal economy. Either actual labour market needs are not met by the skills offered in the labour market, or there are insufficient opportunities to utilize the skills present in the labour force. Given continuously burgeoning population and group of new market entrants, the tight labour market becomes more and more competitive with even highly skilled individuals finding themselves unemployed, or employed in unrelated jobs with salaries incommensurate with their qualifications. Knowing that structural inflexibilities and wage stickiness in the labour market take a long time to adjust25 and, at times, underestimating the cyclical nature of unemployment in their countries, developing country governments seem quick to exploit avenues, including labour export, that will help ameliorate the burden of involuntary employment and working poverty in their territories. In the case of the GMS, the world saw among its member countries some of the fastest economic growth in the past decade. These economic takeoffs apparently benefited local labour forces by reducing unemployment, though structural problems and low economic bases have left many in the GMS-4 doing seasonal work in the agriculture sector, without steady jobs, underemployed, and suffering from chronic poverty. As can be gleaned from Table 1.1, Thailand stands out from its GMS neighbours in that its structural transformation paved the way for a significant employment shift to non-agricultural sectors. About 40 per cent of its workforce can be found in services, while 20 per cent is based in industrial sectors. Irregular employment in agriculture, for low or no wages, and the consequent poverty, are known to be important drivers of internal and international migration. Based on the above, there is, in general, a grave and protracted problem of employment opportunity differential between more and less developed areas. Unsurprisingly, working poverty in the latter group is remarkably high given that the same conditions engendering unemployment inhibit the capacity of the working poor to rise above the poverty line through job earnings. In 2007, the top two regions with the highest, and alarming, concentration of working poor (against the US$2 per day poverty line) were Sub-Saharan African and South Asia, at more than 80 per cent of total employment (ILO 2009). Unfortunately, corresponding information for GMS countries is not readily accessible.

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–0.2 –0.1 –2.2 –0.2 0.6

1995–2005 1.7 2.5 3.6 4.2 1.9**

1995 1.5 2.3* 1.4 4.0 2.5

2005

Change in Unemployment unemployment rate rate 51.9 47.1 69.0 39.3 45.8

1995 54.4 56.8 47.4 — 52.3

2005

Employment- to-population ratio 1.3 3.1 2.7 1.9 2.2

1995–2005

4.1 9.0 7.0 8.9 8.3

1995–2005

Annual labour Annual GDP force growth growth rate rate

Notes: *Based on the results of the Cambodia Socioeconomic Survey 2004; **1996 figure. Sources: ADB 2009, WB WDI CD-ROM 2008, LABORSTAT, NIS 2008, NIS Online Statistics.

Thailand Cambodia Lao PDR Myanmar Vietnam



Countries

Table 1.1 Employment Trends in the GMS Countries

46.7 81.4 85.0 85.8 71.2

1995

38.6 60.3 78.5 — 57.2

2005

Agriculture’s share in total employment

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4.1.3 Wage Differentials An indicator of labour market convergence is wage convergence. This is an upshot of the Stopler-Samuelson factor price equalization theorem that posits that free trade eliminates price differentials which in turn even up factor prices (Samuelson 1948). In the neoclassical economic perspective, it has been presumed that labour mobility leads to wage convergence and that in a state where real wages have converged, the key motivation for migration disappears. It was the pioneer of the neoclassical migration theory, the Harris-Todaro model, which enshrined the understanding of wage differentials as the necessary and dominant explanation to worker movements. These neoclassical presumptions have been rebuffed on both theoretical and empirical fronts. A number of studies found wage and employment opportunity differentials to be statistically significant predictors of migration only about half of the time; in some cases, they were even found to engender the reverse of the expected impact. The elasticity of migration to wage and employment opportunity differentials, therefore, proved to be not as high as proposed by the Harris-Todaro model. Despite the effect of data limitations, one can possibly see broader quality-of-life considerations possibly have equal, if not greater, standing as explanatory variables (Quillin & Mansoor 2006). While there certainly is excellent merit in arguments questioning how superior wage differentials trigger labour migration, it can hardly be disputed that higher wages are a key attraction for rational workers and a major inducer of worker movements.26 Data on actual wages are scarce and disaggregated. One approximation is that wages in advanced countries commonly exceed those in developing countries by a factor of four to twelve (Freeman 2006). Among the GMS countries, Thailand is way ahead of its regional neighbours in terms of wage levels. The mean wage per worker in the country is noted to be in the US$3,000–US$3,500 range while the average wage in the others is somewhere under US$1,500 per worker (WB & IFC 2009). In the discussion on the economic benefits of migration, country survey results on migrant earnings in Thailand will be analysed in relation to this issue. Higher wages in general have been found to be positively associated with higher labour productivity and economic development as represented by GDP per capita. A large part of the differences in wages across countries has been found to be attributable to differences in economic development

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and labour productivity (ILO 2008a; Rodrik 1999). As already discussed, advanced economies have been able to inject constant increments in their per capita income. As regards labour productivity (defined as GDP per person employed), an evident improvement was realized in the past decade or so. As for the GMS countries, the wide gap in wage levels between Thailand and the GMS-4 clearly mirror the labour productivity and per capita differentials between the two. Thailand’s GDP per capita significantly surpasses that of the GMS-4 as discussed earlier. Meanwhile, labour productivity in Thailand is about 3.5 times that of its neighbours.27 The disparities discussed above give credence to the findings that, despite the growing tide of migration, there have been no convincing indications that discernable wage convergence or factor price equalization in labour markets have been taking place.28 Given that international labour markets, the GMS included, are far from liberalized, that migrant stocks remain small relative to total country populations, and that large disparities in economic development and labour productivity persist, no convincing conclusions about the realization of wage convergence can be put forward as yet. As elaborated later in the chapter, it has likewise been debated whether migrant inflows depress wages in destination countries, thus trimming the gap step by step. Whether the migration tap will close when wage differentials disappear is another contentious assumption. Early on, it was raised that the explanatory power of wage differentials has been empirically undermined. Migrant decisions must at least equally value other — broader quality-of-life — considerations.

4.1.4 Decent Work Deficit The problem of decent work deficit has been paid much attention by the ILO as the institution advanced its Decent Work Agenda. The decent work deficit is constituted by four specific gaps, namely the employment gap (that is, the employment opportunity differential), the rights gap, the social protection gap, and the social dialogue gap. The rights gap refers to the shortcomings in implementing labour rights. It has been noted that close to two out of every five countries have serious problems with regard to freedom of association. The social protection gap, on the other hand, refers to inadequacies in the provision of social security benefits. The social dialogue gap pertains to the under representation or exclusion of certain worker groups (for example, workers in the underground

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economy, domestic workers) in the dialogue (ILO 2001). As in the other types of inequities, the decent work deficit works as an incentive for labour migration and overcoming it also represents a non-economic motivation to working overseas. The trade-off between simply providing employment to their citizens and enforcing decent work rights, which may be too costly for businesses, is one important dilemma faced by developing country governments. Labour export must have been one of the means chosen to work around this trade-off. An indicator of decent work deficit is vulnerable employment, which refers to the share of contributing family workers and own-account workers in total employment. This category of workers is less likely to have formal work arrangements, social protection, and safety nets to cushion the impact of economic downturns (ILO 2007). Vulnerable employment rates are very high, reaching 77 per cent in South Asia, 61 per cent in Southeast Asia and the Pacific, and 51 per cent in East Asia in 2005 (ILO 2009). Vulnerable employment in Thailand may be high compared with advanced economies, but it is much lower than that in the GMS-4. It is estimated that, in 2004, vulnerable employment stood at 87 per cent in Cambodia and 74 per cent in Vietnam, while it was 53 per cent in Thailand (WB WDI CD-ROM 2008).

4.2 Demand Drivers What necessitates labour migrant demand? What propels the demand for foreign labour despite the presence of employment shortages in destination countries themselves? What are the rational motivations for hiring foreign workers when doing so could potentially lead to depression of wages, additional competition for social welfare, and displacement leading to social unrest? As in the case of labour supply, micro-level (employer-based) and structural influences are stimulating labour migrant demand. Economic determinants are key factors driving demand for foreign labour; still, economic constraints at the structural level are rooted in non-economic, particularly, demographic, pressures. The demand for migrant labour is mainly driven by labour supply deficiencies and other labour market gaps in destination countries. It spans the entire skills ladder, though the demand for high-skilled workers has received kinder reception as evidenced by the conscious policies of host country governments to lure them into their territories. The market for

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low-skilled migrants is more strictly regulated, but the need for them in destination countries is similarly pressing. Born out of the apprehensions over the harsher impact of the recent global crisis on low-skilled migrants, pleas have been made to recognize the equal worth of such migrants and their valuable contribution to crisis recovery.

4.2.1 Labour Supply Deficiencies The world population is projected to swell from about 6.5 billion in 2005, to 9.1 billion by 2050. The bulk of this increase will originate from less developed countries. Between 2005 and 2050, the total population of the more developed regions is forecast to grow by a mere 4.8 per cent, while that of the less developed regions is projected to bloat by 48.7 per cent.29 Without net migration, the population, particularly members of working age, in the more developed regions would have declined (IOM 2008). This underscores the paramount importance of international migration to the developed world. The phenomenon of international migration serving as a counterweight to declining and ageing populations has been called replacement or compensatory migration.30 In the case of the GMS countries, Thailand’s population was growing at less than 1.5 per cent per year back in the mid-1980s when the populations of its neighbours in the subregion were still growing at the range of 2 to 4 per cent per year. The fertility rate in Thailand was already at three births per woman in the mid-1980s while the corresponding rates in its neighbouring countries were in the range of four to six births per woman.31 Thailand’s population growth is predicted to turn negative by 2040, while its neighbours’ populations are expected to grow continuously, though at single-digit rates.32 As illustrated in Figure 1.8, what this effectively suggests is that Thailand’s population is ageing and its dependency ratio is expected to leap from 43 per cent in 2005, to 60 per cent in 2050. While Vietnam is projected to follow the same trend, the dependency ratios of Cambodia and Lao PDR are expected to decrease by a significant extent, and that of Myanmar to increase slightly. With the least developed GMS-3 economies unlikely to be able to absorb fully the pressure from their burgeoning labour forces, emigration to nearby Thailand could become an even bigger outlet for such pressure. The sparse supply of high-skilled workers in destination countries has prompted their governments to lure talented professionals vigorously into joining their workforce. Different criteria have been adopted to define

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2030

2010

Thailand

2030

2010

Cambodia

2050

1990

2050

1990

2030

Lao PDR

2010

1990

Source: UN, World Population Database: 2008 Revision.

Source: UN, World Populaon Database: 2008 Revision

0

20

40

60

80

100

2010

Myanmar

2030

1990

2050

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2050

FIGURE 1.8 Demographic Trends in GMS Countries Figure 8: Demographic Trends in GMS Countries

2050

2030

2010

Vietnam

Populaon aged 0-14

Populaon aged 15-64

Populaon aged 65+

30 Hossein Jalilian and Glenda Reyes

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1990

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high-skilled workers, but education has been consensually treated as the fundamental indicator. In general, highly skilled workers are considered to be those who have completed tertiary education. Given that intraGMS migration is overwhelmingly low-skilled, the DAN 6 case studies dwell little on skilled migration and its concomitant issues, such as the brain drain. Even emigration from Thailand and Vietnam is mostly low-skilled. Vietnamese immigrants in the NIEs and Gulf states mostly work in construction, garments, electronic assembly, plantations, hotels and restaurants and domestic service (Vietnam country chapter). Many of the Thai migrant workers, on the other hand, are usually classified as labourers, technical workers, and craft and trade workers. Very few occupy professional positions and hold jobs in the services sector. Only 6 per cent of the total overseas Thai workers in 2007 had a bachelor’s degree (Thailand country chapter; Chalamwong & Prugsamatz 2009). Nonetheless, because of its implications for national development and because Thailand must at least be mulling over the problem of potential greater brain drain in the future, a textbox on brain migration is included in this chapter (see Box 1.3).

4.2.2 Other Labour Market Gaps Compared with high-skilled immigration, the inflow of low-skilled migrants in receiving countries is far more strongly restrained and regulated. The huge scarcity of high-skilled workers has created consequential labour shortages and thus built up competition for their talents. By contrast, domestic supplies of low-skilled workers are greater in size and the risks associated with their employment are substantial enough for receiving countries to consider carefully the benefits of absorbing them and limit their temporary worker programmes. Concerns centre on the lack of valueadded from these immigrants beyond the specific arrangement for which they were hired, as well as on their integration into host societies, given local sensitivities towards bringing in additional labour competition where local unemployment exists. The overstaying of migrants in breach of their contracts has justified these concerns, not to mention the smuggling and trafficking of low-skilled migrants into destination countries. Sectoral shortages in low-skilled labour supply do arise, however. Agriculture, for instance, experiences seasonal upsurges in labour demand that can normally be satisfied only in part by the local workers of destination

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countries; hence, hiring migrants becomes necessary. Pro-cyclical sectors, such as construction also have their own timely surges in demand that benefit from the migration of foreign labourers who are often cheaper than their native counterparts. Increasing aversion to 3D jobs has also paved the way for the employment of foreign migrants, regular or irregular, in these jobs. It is interestingly pointed out that despite the return of some one million Thai migrants to their home country due to the recent global meltdown, Thai employers still cannot find enough workers to do 3D jobs (Cambodia country chapter). Such aversion to 3D jobs among nationals normally results after they have gained further education, improved their skills, and thus raised their wage expectations. Interestingly, many migrants in low-skilled occupations have also come to replace nationals who have themselves migrated. Another intriguing fact is that significant low-skilled migration is intraregional. The seasonal labour shortages in agriculture, for instance, are commonly filled by intraregional or cross-border migrants. This is indeed the case for Thailand, specifically for its provinces sharing borders with the other GMS countries. Reasons for this include greater ease of intraregional movements owing to the lower costs of travel, and the social, cultural, and political affinities linking neighbouring states.

5. THE ECONOMIC BENEFITS AND COSTS OF INTRA-GMS LABOUR MIGRATION: MACRO AND MICRO LEVELS The economic benefits and costs of international labour migration have been well contended. Theoretical contentions historically fell under two headings, depending on their view of whether migration enhances or constrains development. The so-called “migration optimists” or “internationalists”, basically consisting of neoclassical theorists and developmentalists, advanced the argument that migration has had beneficial impact on development. This has been purportedly realized, thanks to factor price equalization and the counterflows of capital and knowledge ensuing from migration. For the optimists, in no way does this suggest that migration does not result in any losses for sending countries specifically; only that such country-specific losses are: one, offset by the global gains; two, smaller compared with the benefits; and three, can be addressed by policy

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changes. Opposing this view were the so-called “migration pessimists” or “nationalists” who drew from the insights of historical structuralism. Simply put, these theorists argued that emigration has exacerbated the underdevelopment of sending countries and trapped them in that situation. Economic take-off necessitates a critical mass of highly skilled and highly educated people in view of their direct economic contributions and the positive externalities gained from their presence. Significant emigration, from the viewpoint of the pessimists, therefore snatches such vital assets away from less developed countries.33 Notably, the debate barely touches on the net impact of low-skilled migration. Contemporary discourse on migration has essentially shunned this simplistic bipolarity whose idealistic appeal helped fuel populist calls and political rhetoric either blindly championing or rebuffing international migration, and long prevented the popularization of a pluralistic theory on people’s outward movements. Globalization has been spreading the effects of migration, both positive and negative, to sending and receiving countries. It has made the distribution of gains and risks less linear and exclusive. Enhanced data and understanding of the dynamics of migration have made it more possible to exploit the good in what could otherwise be purely detrimental events. In addition, the heightened awareness of the issues involved, the mutual recognition of the benefits of migration to all parties, and the institutional mechanisms that have brought sending and receiving countries together for the sake of dialogue and joint action, have defused, to some extent, the divisiveness which before indiscriminately pegged losers against winners in some kind of zero-sum game. While the risks and losses emerging from migration cannot possibly be phased out, migration can and should be made a positive-sum endeavour. This is argued based on appreciation of the fact that labour migration has become an integral and inevitable consequence of contemporary globalization. In particular, as disparities in standards of living between countries remain stark, attempts to strangle migration will likely do more harm than good. The economic benefits and costs of migration accrue throughout the migration cycle, which includes planning, recruitment and preparation, transit, arrival and reception, return and reintegration, or return migration (Thailand country chapter). The costs and benefits of migration also accrue at both the micro and macro levels. However, while the gains at the micro level are more or less clear-cut and tangible, whether or not sending

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countries in particular lose more than they benefit from international migration remains dubious. Net global gains may be positive, but the distribution of these is a heated point of contention. Moreover, noneconomic sensitivities and security concerns can overshadow economic advantages as evidenced by the tightening of migration restraints, despite the many economists advancing the argument that the economic gains from voluntary labour migration are significant.

5.1 Macro-Level Benefits 5.1.1 Benefits to Sending Countries What are the benefits that accrue to sending countries and justify the determination of labour export as a strategy for employment creation and human capital development? Even if the immediate effects of emigration are virtuous, are the long-term repercussions also just? As broached above, migration has tangible, direct and indirect benefits at the micro level that improve the welfare of migrants and their families. The case is less clear at the macro level. If deliberated well, the labour export policies of sending country governments must have sprung out of difficult choices concerning short-term and long-term relief, and microeconomic and macroeconomic well-being. Briefly, the economic benefits of migration to sending countries relate to the so-called three Rs — recruitment, remittances, and returns (IOM 2005). Other key benefits emanate from the existence of diasporas. These benefits, together with return migration, are tackled briefly in Box 1.3. Although separate discussions are devoted to the benefits on the one hand and the costs on the other, it is important to note that in the real world, it is difficult to determine which are purely costs, and which are purely benefits at the macro level. Even in the case of remittances, for instance, there are labour supply effects (for example, they make beneficiaries “lazy”), which may make remittances harmful rather than beneficial to the recipient economies in the long run, as discussed later. This caveat must be borne in mind when assessing the macroeconomic advantages and disadvantages of labour mobility. 5.1.1.1 Recruitment One of the drivers of migration touched on earlier refers to employment opportunity differentials. Involuntary employment caused by macroeconomic

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and structural problems is widespread in sending developing countries. This problem is compounded by demographic pressures that continually generate a huge number of new entrants to an already tight labour market. In Cambodia, about 250,000 individuals enter the job market each year. Its leading industry — garments — only employs about 350,000 during peak production (Cambodia country chapter). Labour export offers a means by which governments can reduce joblessness and underemployment in their countries. It also improves the employment profile of sending countries by reducing labour competition at home and freeing up actual or prospective jobs that can then be offered to others in the labour force — and those who are not employed. The vacation of jobs by those who emigrate to find work opens up job opportunities for previous non-members of the labour force, women in particular, effectively increasing labour force participation rates. Through all the foregoing, emigration provides relief, even if only temporary, to already fraught developing economies, typically in the midst of transformation. In the process, it also appeases domestic frustrations over hardships in employment seeking and therefore helps to avert the possibility of social breakdown. In addition to the above, the employment effects of labour emigration can, at least theoretically, push up wages in the countries of origin in accordance with the notion of factor price equalization. However, previous discussions have already relayed the lack of evidence supporting this principle. Not only the enormity of the labour surplus in developing countries, but also the small number of labour emigrants as a percentage of domestic labour forces impedes wage improvements. Again, the latter is underpinned by the still illiberal nature of international labour markets which, overall, act as a wedge to wage convergence. Earlier, it was mentioned that the mean wage per worker in Thailand is at least twice as high as those in other GMS countries. It is possible that if not for international migration, there could have been an even wider gap in the earnings. Because many known systematic studies have focused on the impact of migration on wages in destination countries, it is hard to provide a body of convincing evidence to the wage impact of migration in sending countries. There are few studies on the subject, but they have looked at individual countries and their findings hardly converge on a single conclusion.34 Again, because the emigrant population accounts for only a small share of the total workforce, wage movements in many sending countries are likely to be predominantly influenced by other factors, including the domestic cost of living.

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5.1.1.2 Remittances35 As external resource flows, remittances are very attractive. Not only are they less volatile and more resilient to shocks compared with other private capital, they themselves also provide insulation from such shocks. Remittances are generally countercyclical, that is, they tend to rise during economic downturns, natural disasters, and other types of catastrophes as migrants augment their transmissions so that their families can smooth their consumption and satisfy emergency needs better. At the micro level, there are several types of motivations underpinning remittance behaviour and these are discussed in detail later. Even if self-interest cannot be erased completely (thus, its reductive effect on remittances), altruism in general likely surpasses all other intentions in times of crises. Another attraction of remittances is that they are unrequited transfers, meaning they do not result in any other contractual obligation. The size of remittance inflows to developing countries is huge, the recorded amount increasing from a mere US$18 billion in 1980, to an estimated US$336 billion in 2008. The rise was particularly steep from 2000, with the yearly increase averaging a significant 18 per cent (Figure 1.9). With the migrant stock not nearly increasing at the same rate, this escalation in remitted migrant income can be attributed to a myriad of factors, including reduction in remittance costs, improved data capture and measurement of flows, increased monitoring following the 9/11 terrorist attack, depreciation of the U.S. dollar, and growth in migrant income (Ratha & Mohapatra 2007). The most recent global crisis, however, caused a contraction in remittance inflows to developing nations of around 6 per cent in 2009 compared with 2008. Still, the total remittance volume was above pre-crisis levels (Figure 1.9). It is unlikely that official remittance figures reflect the actual amount of remittances, given the sizeable volume of migrant income transmitted via unofficial channels, mostly used by irregular migrants. Some remittance flows are also not captured owing to limited infrastructure coverage, data gathering limitations, lack of regulation over money transfer companies, accounting rules, and recording errors.36 It is extremely difficult to ascertain the size of unrecorded remittances, but there is consensus that it is large and official numbers are gross underestimates of the true totals. Several estimates closely coincide and place the amount of unrecorded remittances within the band of 40 to 50 per cent of total official remittances.37 Mirroring the soar in global remittances over the past three decades, recorded remittance inflows to

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FIGURE 1.9

Figure 9:Remittance Remi�ance Inflows to Developing Countries, USD million US$ million Inflows to Developing Countries,

Figure 10 Remi�ance Inflows to GMS 10,000

400,000

9,000

350,000

2008: USD 336 b

300,000

8,000 7,000 6,000

250,000

5,000

200,000

4,000

150,000

3,000

100,000

2,000

50,000

1,000

-

Source: Ratha et. al. (2010) Source: Ratha et al. (2010).

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009e

-

Source: Ratha et. al. (2010)

the GMS-3 countries swelled from almost nil in the 1980s to about US$476 million in 2008. This GMS-3 total, however, is modest compared with the remittances flowing to Thailand and Vietnam (Figure 1.10). Due to the prevalence of remittances going through informal channels, the true volume of these inflows is also likely to be much bigger. Survey results from both the Cambodia and Thailand country studies show that more than 70 per cent of the Cambodian migrant workers in Thailand dispatch their remittance through middlemen. The banking system or money transfer agents such as Western Union are hardly used. The rest of the migrants just take their savings with them when they go home or request people from their social networks to take the money to their families on their behalf. These modes of remittance are similarly popular among Lao workers in Thailand. However, one finding that stands out from the Lao PDR survey is that many Lao migrants also make use of the Thai banks to remit money (Figure 1.11). Remittances from the registered GMS-3 migrants in Thailand were estimated at roughly US$177 million per year minimum. Including transfers from unregistered migrants, this annual amount, however, balloons to an estimated US$315 million. Remittances from Thailand largely account for the total remittance inflows to Myanmar and Lao PDR.38 In the case

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38

FIGURE 1.10 Remittance Inflows to GMS Countries, US$ million

million

Figure 10 Remi�ance Inflows to GMS Countries, USD million 10,000 2008: USD 7.6 b

9,000

2008: USD 336 b

8,000

Vietnam

7,000

Thailand

6,000

Myanmar

5,000

Lao PDR

4,000

Cambodia

3,000 2,000 1,000 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009e

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009e

-

Source: Ratha et. al. (2010)

Source: Ratha et al. (2010).

FIGURE 1.11 Remittance ChannelsChannels Used byUsed Laobyand Migrant Workers in Thailand, Figure 11: Remi�ance LaoCambodian and Cambodian migrant percentage of remitting migrants workers in Thailand, percent of remi�ng migrants 100 16.7

80

20

19.1

12.8

60 40

17.9

25.8 3.1

15.1

Through networks

50 80.4

70.7

In person

21.3

71.1

63.6

32.1

Private money transfer agents

0 Lao Survey Thailand Survey

Cambodia Thailand Survey Survey

Lao workers

Cambodia workers

Average

Notes: person" means means that thethe migrant brings brings the remiance home personally vising or returning to or Notes: “In"Inperson” that migrant the remittance homeupon personally on visiting his place of origin; networks" means that thenetworks” migrant asksmeans his or her friends, returning to "through his place of origin; “through that the relaves, migrant fellow asks migrants his or her and other contacts in his social networks to send the money on his or her behalf; "private money transfer agents" friends, relatives, fellow migrants, and other contacts in his social networks to send the money overwhelmingly refer to individual agents or middlemen asked by the migrant by phone or in person to remit on on hishis ororher behalf; “private money transfer overwhelmingly refer the to individual money behalf (except in the Lao PDR case whereagents” about 40% sends money through Thai bank) agents or middlemen by the country migrantchapters by phone or in person to remit money on his or her behalf Source: Thailand, Laoasked and Cambodia (except in the Lao PDR case where about 40% sends money through the Thai bank). Source: Thailand, Lao and Cambodia country chapters.

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of Cambodia, Thailand is similarly a major source of official remittance inflows though other countries have recently assumed this role as well. In 2008, official remittance inflows to the country reached US$325 million in total (Figure 1.10) with source countries including Malaysia, South Korea, and Japan. Cambodian migrant workers in Thailand and Malaysia earn less than their counterparts in South Korea and Japan (Asia Economic Institute 2009) and this likely adjusted the proportions in remittances of GMS-3 worker groups, especially in recent years. Official remittances are bigger than official development assistance (ODA) in many developing countries. Including unofficial transmissions, they also exceed other private capital flows, such as private equity and foreign direct investment (FDI). In 2007, remittances were far more sizeable than ODA, and FDI inflows in the case of all the top remittance-receiving countries: India, China, Mexico, the Philippines, and Poland (with the exception of FDI in China and Poland).39 Given data uncertainties, it is difficult to provide the same conclusion about the dominance of remittances among capital inflows in GMS-3 countries. These countries also happen to be heavily aid- and FDI-dependent and most of their outward migration is for low-paid jobs in Thailand. Taking only official volumes into account, remittance transfers to these countries lag behind ODA and FDI inflows. Among the GMS states, only in Vietnam, whose migrant movements are mostly towards NIEs, do remittances clearly surpass ODA and FDI inflows in volume (Figure 1.12). The picture may be different, however, if unofficial remittances are taken into account. In light of the above, what perhaps needs to be emphasized is not that remittances are important, because they evidently are, but how are they important and in what manner can they be mobilized as a force for development. The links between remittances and their developmental effects at the macro level are not straightforward, unlike the case at the micro level where the welfare of migrants and their families is directly and tangibly enhanced by remittances. The broader-level benefits of remittances are tainted by the costs directly associated with them. Keeping this in mind, one sees that the macroeconomic benefits of remittances are mainly realized through their impact on national poverty and macroeconomic growth. 5.1.1.2.1 Remittances and Poverty Results of cross-country studies reveal a strong positive relationship between remittances and poverty. One such study using data for seventy-four countries found that a 10 per cent increase in per capita official international remittances results in a 3.5 per cent decrease in the

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40

FIGURE 1.12 Capital Inflows to GMS Countries, 2007, US$ million

Figure 12: Capital Inflows to GMS Countries, 2007, USD million, 10,000

Remiance Inflows

8,000

FDI Inflows 6,000

ODA Inflows

4,000 2,000 (2,000)

Cambodia Lao PDR

Myanmar Thailand

Vietnam

Source: WB WDI 2009 Online, Ratha et. al.(2010)

Source: WBWDI 2009 Online, Ratha et al. (2010).

proportion of people living in poverty.40 Some results on the householdlevel impact of remittances from the GMS country studies support this finding. The effect of remittances on inequality, however, has been found to be ambiguous. Assessments have varied in their final findings, ranging from the shrinking of inequality, to lack of effect on disparities, to even worsening income gaps.41 Despite the divergent conclusions of formal studies and notwithstanding the statistical difficulties of capturing changes in inequality, there is reasonable ground to believe that while remittances may help alleviate poverty, the same might not be the case for inequality, both national and international. In areas where inequities are already high to begin with, remittances can engender further polarization (Wescott & Brinkerhoff 2006). Recalling the Migration Hump Theory, which focuses on the paradox of how poorest countries have lower emigration rates than upper-lower and lower-middle income countries, relatively better-off households in relatively better-off countries are really the ones that are capable of sending (more) people abroad for employment as they are less tied by financial constraints.42 It is hard to infer from the GMS country survey data how the economic standing of their sample households was linked to their capacity to send migrants because of the

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problem of endogeneity, that is, these data already reflect the impact of migration. In the case of the Cambodia study, for instance, which presents a breakdown of the sources of migrant and non-migrant income, simply ignoring remittances will not suffice as the existence and/or size of the other income sources may likely have been influenced by the implications of migration as well. Interestingly, the Lao PDR chapter describes its case study areas as having better infrastructure and lower poverty incidence by national standards. As in the previous instance, these could be the effects rather than the determinants of migration. The Vietnam chapter, however, explicitly identifies the weak participation of the poor in emigration as a problem. This low participation rate has been traced back to the financial difficulties faced by poor households, and also to their weaker access to government support, low language proficiency, low education level, and health problems. 5.1.1.2.2 Remittances and Macroeconomic Growth The relationship between remittances and economic growth is conditioned by how remittances are utilized. What moulds the relationship in particular is the extent to which remittances are used for consumption or for investment. Arguably, there is little benefit to growth if most remittances are spent on consumption and investments that are not really growth enhancers. In contrast, investments channelled to human capital improvement and entrepreneurial activities must have significant positive impact specifically on long-term growth. At the very heart of the new economic theory of labour migration is the belief that migration, that of skilled workers in particular, is beneficial primarily because it stimulates human capital formation. Unfortunately, relevant studies diverge on their conclusions in relation to whether consumption or investment dominates remittance use. Three conflicting findings have emerged in this regard.43 First have been the findings that the majority of remitted monies are spent on consumption. Smaller remittance portions are allocated to savings or investments, but many of these do not necessarily boost economic activity. Among these are household investments in existing housing, land, and jewellery. These are unlike investment in business, education, and agriculture for instance. Worse, it has been found that remittances actually reduce investments by promoting greater consumption or housing expenditure (Page & Plaza 2006) and fuelling greater dependency on external transfers. The second

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group of findings poses that a significant proportion of remittances do end up as productive investments, both in human and physical capital.44 The third group of findings asserts the fungibility of remittances, which means that remittances are spent like any other source of household income and thus have the same contribution to development (Adams 2008). In fact, many households typically pool their income and decide their budget without generally discriminating on its source. In this view, the “whole household approach” is advocated when assessing the effects of remittances (de Haas 2008). The Lao PDR and Cambodia study found that an overwhelming proportion of migrant households used 56 per cent of the remittances for house construction and 25 per cent for daily expenses, primarily food. Only about 12 per cent were used for productive investments, particularly investment in business and the purchase of transport equipment, as well as inputs and machinery that enhance agricultural production (Figure 1.13). The Cambodian migrant households were not very different. They used about 69 per cent of the remittances they received in the past five years for consumptive purposes.45 Twenty per cent was used for daily expenditure, also primarily food, 18 per cent for house building and repair, and 13 per cent for debt repayment. Agriculture was also a key beneficiary of the productive use of remittances, with about 12 per cent of the remitted monies being spent on fertiliser, land cultivation, and agricultural machinery. Only 2 per cent of the transfers were used for education and 9 per cent for health care (Figure 1.14). Incidentally, the Vietnam chapter also points out how only 6 per cent of its survey respondents thought that their work overseas has had a positive effect on their children’s education. An interesting point to highlight is the significant amount of remittances devoted to house construction and repairs. This practice is common among migrant households. It suggests the high value attached to a house, as a status symbol or otherwise. The discussion so far is based on the insinuation that remittancefinanced consumption has little beneficial impact on macroeconomic growth. This has been questioned, however, under the notion that remittances used for consumption have a multiplier effect on income: one dollar of remittance spent on consumption will generate more than one dollar in aggregate demand. This multiplier effect has been found to be significant. Remittance-financed consumption of goods and services

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FIGURE 1.13 Remittance Use by Lao Migrant Households in the Past Five Years

House construc�on Daily expenditure Increasing agricultural produc�on Buying transport equipment Business investment Others

Source: Lao country chapter.

FIGURE 1.14 Remittance Use by Cambodian Migrant Households in the Past Five Years

House construc�on

House construc�on Daily expenditure

Daily expenditure Increasing agricultural produc�on Buying transport equipment Business investment Others

Debt repayment Durable household equipment Increasing agricultural produc�on Health Educa�on

Source: Cambodia country chapter.

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has been described as an important stimulus to domestic industries and economies of Asian sending countries (Stahl & Arnold 1986).46 The beneficial link between remittances and macroeconomic growth is also mediated by the countercyclicality or the resilience of remittances to shocks. As broached earlier, remittances tend to increase in times of crisis, be they natural disasters or economic or political in nature. In this capacity, not only do remittances serve the goal of smoothing household consumption, they also help stabilize economies struck by crisis or otherwise experiencing fluctuations in other resource flows via compensating for foreign exchange losses.47 Furthermore, remittances can help macroeconomic growth through other means such as improving a country’s credit rating, and helping raise additional financing with better terms in capital markets.48 Despite these credible intermediaries to the remittance-macroeconomic growth nexus, statistical findings on the subject have led to mixed conclusions. On the one hand, some findings have detected a positive correlation between the two variables. By overcoming capital market imperfections and permitting migrants to accumulate assets, remittances are noted to have a virtuous impact on growth.49 The other body of evidence debunks this beneficial link and suggests instead the lack of positive correlation between remittances and output growth.50 Rather strong conclusions from another study intimate that remittances could even have a detrimental effect on growth owing to the moral hazard problem (Chami et al. 2003, 2005). Another source of the problem, discussed later, is the potential Dutch Disease effect of remittances.

5.1.2 Benefits to Receiving Countries A sign of the greater maturity of the contemporary discourse on people’s movements is how international migration has increasingly been understood as more a need to be managed, rather than a problem to get rid of. Because of the politics and the xenophobia involved, the macroeconomic contributions of foreign workers have often been lost on the citizens of the host countries. It has taken a lot of synchronized effort to defend the macroeconomic case for international migration. For the developed world, migrant labour has become such a vital asset that their economic absence could only result in potentially disastrous outcomes. The gains for destination countries include output and per capita increase, relief on demographic and labour market pressures, and fiscal contributions. Because

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some of these were already examined in the section on demand drivers, only a brief discussion follows. With low-skilled guest workers being generally cheaper than their local counterparts, labour immigration admittedly also helps the competitiveness of employing firms and the host countries in general. This was already pointed out earlier in relation to Thailand. There are also positive externalities resulting from the employment of migrant labour. For instance, demand for migrant workers also creates the need for local workers to manage them. The size of the gains to receiving countries depends on the characteristics of the immigrant population, including their work status, skill type, productivity, and complementarity with native workers. 5.1.2.1 Output and Per Capita Increase The textbook demand and supply model of economics suggests that immigration shifts the receiving country’s labour supply curve to the right. Assuming that demand does not change (and deferring the discussion of the wage effects till later), immigration effectively increases the national output and, deducting their earnings from the total, the net output or the so-called “immigration surplus” accrues exclusively to the natives (Borjas 1995). Based on this method, the United States additional income gain from immigration was estimated at US$8 billion in 1997 (IOM 2005). Also based on this method, migrant contributions to the Thai economy were estimated at US$53 million in 2005, raising the country’s total GDP to US$157 million. Another calculation suggests that immigrants in Thailand contributed about 1.25 per cent of the country’s GDP in 2005 (Martin 2007). As cautioned earlier, economic benefit from immigration depends in part on the productivity of the migrant population. 5.1.2.2 Relief on Demographic and Labour Market Pressures The discussion on labour demand drivers demonstrates how international migration has become a necessity, and not just a phenomenon to cope with, for many receiving states. For high-income countries to counter the rapid reduction in their working-age population, they would have to maintain the average net emigration levels of the 1990s, even if their fertility rates were to increase (IOM 2008). By the same token, the ageing population of Thailand has required the importation of working-age migrants who can at least sustain previous output levels, and whose fiscal contributions can help finance Thailand’s social security system. As explained in more

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detail later, GMS migrants in Thailand are more likely to be net tax payers than net welfare recipients. Foreign workers in the Thai economy are also essential for replacing Thais who emigrate for employment overseas, and to satisfy labour shortages in seasonal and procyclical sectors. As more and more native workers are able to build successfully on their credentials, 3D jobs are being increasingly shunned and left for migrants to do.

5.2 Micro-Level Benefits 5.2.1 Overcoming the Economic Differentials It is the individual migrants together with their dependants who stand to benefit clearly from migration. Overseas employment allows the migrant to earn a wage that is higher than the opportunity cost of him or her abandoning actual or prospective employment in the source country. This opportunity cost may be even ambiguous at certain periods, given that unemployment and underemployment may be chronic in the migrant’s native country, suggesting that the migrant may be unemployed or underemployed for a long time and therefore has no concrete and steady income stream with which he or she could compare the gains from outward migration. For agricultural workers back home however, whether paid or unpaid, their departure may come at the cost of loss in household agricultural productivity. Labour migration also allows the migrant to escape the (bigger) decent work deficit at home which subjects him or her to (worse) substandard working conditions, with inadequate rights and social protection. In this regard, however, it is important to isolate the case of irregular migrants as they often face even shoddier working environments and, by virtue of their status, have more uncertain legal entitlements. By and large, foreign workers earn less than their native counterparts in their host countries. Thus, they are considered cheap labour that can enhance the competitiveness of receiving countries and their direct employers. Their earnings, however, are generally higher than those received by comparable workers in their countries of origin. One estimate uncovered a nearly 200 per cent increase in the real income of new migrant workers relative to what they would have earned in their native countries (The World Bank 2006, Global Economic Prospects). GMS migrants in Thailand generally receive wages that are lower than those paid to comparable Thai workers,

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with a wider gap for irregular migrants. Still, these wages are considered higher than what they would get if they were to work in their states of origin. Results from the Lao survey show that the average salary of Lao migrant workers in Thailand is well below the average standard minimum wage in their host country. Including the pay for working overtime (about two hours extra per day, six days a week) and Sundays, migrant workers in the Lao sample receive US$131 per month or US$5.03 per day on average. Assuming only twenty-six normal working days (eight hours of work per day), the average minimum wage in Thailand is already US$136 per month or US$5.24 per day.51 The disparity is considerable and more than explains the attractiveness of migrant labour to Thai employers. The Thailand survey appears to confirm this disparity. Its Lao respondents had current52 monthly salaries of US$65 to US$84. Factoring in overtime pay, on average they earn even less than those in the Lao survey sample (Figure 1.15). In whichever case, a similar range of earnings for comparable work in Lao PDR is harder to come by. The opportunity cost of Lao labour

FIGURE 1.15 Average Monthly Earnings of Sample Irregular Cambodian and Lao Migrant Figure 15: Average Monthly Earnings of Irregular Lao and Cambodian Migrant Workers in Thailand, US$ Workers in Thailand, USD 158

200 160

136

131

107.5

120

116.25

80 40 0 Lao Survey

Thailand Survey* Cambodia survey Thailand survey*

Lao workers Average Minimum Wage in Thailand (no overme)

Cambodian workers

Average Monthly Earnings (including overme)

*The poron shaded dark blue refers to the current basic salary; the poron shaded light blue refers to overme pay; Thailand survey figures refer to the average of the earnings of irregular wokers with and without document.

Note: The Thailand,portion Lao and Cambodia samples , however, havesalary, significantthe differences See Annex *The darker shaded refers survey to the current basic lighterin characteriscs. shaded portion refers to for the survey sample descripons; The exchange rate used for the calculaon of the average minimum wage rate is overtimeAUSD1=THB32. pay; Thailand survey figuures refer to the average of the earnings of irregular workers with and without Source:document. Thailand, Lao PDR and Cambodia country chapters Note: The Thailand, Lao and Cambodia survey sample, however, have significant difference in characteristics. See Annex.

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emigration is a mere US$12 or so per month on average, according to the country chapter. Also, most of the sample migrants in the Lao survey and all the sample migrants in the Thai survey are irregular. Following the MOU, Lao workers sent under bilateral arrangement must be entitled to the legal wage rates in the areas where they are working. The Thailand survey results for Cambodian workers seem to affirm this. The current salary of Cambodian labourers sent under the MOU is US$167, about US$35 more than the current salaries of the irregular Cambodian workers (Figure 1.15). Earnings of US$130 or so are hard to come for many people in Cambodia. Findings from the Cambodia survey indicate that should they have not chosen to go abroad for work, its sample Cambodian migrants would have earned US$1.5–2 per day on average in their villages, rather than US$3–6 for those in Thailand, and US$4–9 for those in Malaysia.53 It is vital to understand, however, that the differences in earnings captured by the surveys could be partly due to sample characteristics and may not be representative of the situation of the entire migrant population. The work areas of migrants, for one, have a bearing on the level of their earnings. The Thailand chapter explicitly recognizes, for instance, that the sample Lao migrants were based in north--east Thailand where the wage rate is lower compared with central Thailand, where the sample Cambodian migrants were working.

5.2.2 Contribution of Remittances to Household Poverty Reduction While the positive effect of remittances on the macroeconomy may still partly depend on several factors (for example, use of the remittances), remittances have a direct and guaranteed positive effect at the household level as they supply or augment household income. In this capacity, remittances, which can be in cash or kind, can be a useful tool for household poverty reduction. 5.2.2.1 Remittance Behaviour Enormous growth in international remittances has been witnessed in the past three decades. Recorded remittances to the GMS-3 jumped from zero in 1980 to almost US$480 million in 2008. The actual volume could be much bigger, however, in view of the remittances that are sent via informal means and are therefore hard to capture. Earlier, it was pointed out how many

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Cambodian and Lao migrant workers in Thailand make use of middlemen and social contacts to transmit monies to their families back home. Migrants are not homogenous in terms of remittance behaviour. Not all migrants remit money and the frequency and amount of remittance differ among those who do. One finding that stands out from the Thai survey results is that Lao workers are, by and large, more generous remitters than the Cambodians. About 89 per cent of the sample Lao migrant workers had remitted money since coming to Thailand. All but 10 per cent of the remitters sent money on a regular basis, usually every month. Despite earning more than their Lao counterparts, the share of remitters in the sample Cambodian migrant population was smaller, at 70 per cent. Also unlike the Lao workers, many of the Cambodian migrants had no regular remittance schedule (Table 1.2). The majority of the Cambodian non-remitters cited insufficient earnings as the reason for their failure to send anything. Many of the Lao non-remitters likewise cited this ground, but a significant 22 per cent of them instead referred to the problem of lack of access to money transfer agents (no Cambodian worker cited this reason). This implies is that there would be more Lao remitters if remittance channels became more accessible. The Cambodian survey, on the other hand, found that in the year up to the time of the survey, 84 per cent of its sample Cambodian migrants in Thailand sent remittances to their families. All those working near the border transmitted money to their dependants one way or another. Assuming that the Lao workers in its sample remit all their savings, the Lao study estimated the average remittance of each worker at US$62 per month or US$682 per year.54 Meanwhile, the Cambodia survey found that its sample Cambodian workers in Thailand remitted an average of

Table 1.2 Remittance Behaviour of Lao and Cambodian Migrant Workers in Thailand*

Lao workers Cambodian workers

Share of remitters in total sample workers 89% Share of monthly remitters in total remitters 67% Average remittance amount of 50% of the remitters US$469–938

70% < 5% US$234–469

Note: *Since coming to Thailand; the estimated average length of stay in Thailand is 3.8 years for Cambodian workers, and 4.1 years for Lao workers. Source: Thailand chapter.

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US$116 in their last trip, US$191 in the past one year, and US$1,118 in the past five years.55 Those working as domestic helpers remitted the largest amounts on average. As they do not normally pay for accommodation and food, it can reasonably be assumed that they are able to save more than the migrants in other occupations. Given their different evaluation periods, the results of the Thailand survey on remittance amounts are not comparable with those of the Lao and Cambodian surveys. However, they also confirm that Lao workers are generally more generous remitters than Cambodians. Since coming to Thailand, about half of the sample Lao migrants have sent home between US$469 and US$938, while the same share of sample Cambodian migrants have only sent between US$234 and US$469 (Table 1.2). A mere 1 per cent in both worker groups have sent more than US$1,500 since working in Thailand. Motivations for remitting are not the same among migrants, nor are they static. Box 1.2 details several types of motivations from both the individual and household standpoints. It also touches on other determinants of remittance, including macroeconomic variables and remittance costs. The GMS country surveys were unable to capture this dimension of remittance behaviour fully, though they were able to provide empirical support on some aspects. 5.2.2.2 Reductive Effect on Household Poverty Remittances reduce household poverty directly by supplying or augmenting family income and, indirectly, through its second-round effects (which depend on use), its multiplier effects, and its macroeconomic impact. A growing set of evidence shows that remittances do lessen household poverty. Both older studies that were commonly based on small household surveys and newer studies that utilize national censuses and larger surveys have converged on the conclusion that household poverty goes down with remittances. It was discovered, for instance, that remittances trimmed down the poverty headcount ratio by 11 per cent in Uganda and 6 per cent in Bangladesh (Ratha & Mohapatra 2007; WB 2006). In rural Mexico, findings from a rural household survey posit that international remittances reduce both the poverty headcount by 0.77 and poverty gap indices by 0.53, though significant variations exist among different areas (Taylor et al. 2005). From the collected evidence, it can be gleaned that not only do remittances reduce the number of poor people, but they also decrease the depth of poverty, that is, how far the remaining poor are from the poverty line.

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Box 1.2 Motivations for and Determinants of Remittance A migrant’s decision to remit is spurred by either or both microeconomic and macroeconomic considerations. At the micro level, a huge amount of remittances are sent home out of a personal desire or sense of responsibility to bolster the welfare or comfort of family members. This has been termed in the literature on the subject as the altruistic motive. Another personal motive for sending remittances is self-interest (also called the “investment” motive), which characterizes those remittances that are sent to enhance the migrant’s own wealth (Addison 2004; Solimano 2003; AmuedoDorantes undated; Chami et al. 2005). With this motive, migrants handle remittances similarly to any financial returns that can be used to enhance their financial portfolios. After considering the gains to saving or investing in the destination country, the migrant may in the end choose to invest a portion of their income in assets in their native countries should that prove more profitable. In this scenario, the migrant’s family can be entrusted to oversee the migrant’s investments.56 As explained earlier, remittances have been found to rise during crises, suggesting countercyclicality and the centrality of the altruistic motive. Responding to economic downturns, natural disasters, national emergencies, and other types of catastrophe, migrants have been known to increase their remittances to enable their families to smooth their consumption and satisfy emergency needs (so-called “consumption smoothing” better). Empirical evidence on the countercyclicality of remittances has been uncovered. It was found, for instance, that remittances as share of personal consumption rose after natural disasters in Bangladesh, the Dominican Republic, Haiti, and Honduras and as financial crises struck Indonesia, Thailand, and the Philippines in 1997 (Figure 1.16). Another set of micro-level determinants of remittance behaviour considers the interests of both the household and the migrating member. This has partially come out of the perceived and tested insufficiency of individual altruism as motivation (Lucas & Stark 1985; Brown 1997; Bouhga-Hagbe 2006). This group of explanations reflects the assumption of new empirical approaches that migration is more of a household decision than just the exclusive choice of the migrant. As many aspiring migrants cannot finance the full investment entailed by emigration and as their departure effectively causes them to renege on their family obligations (those that can be performed only with their physical presence at home, such as taking care of their parents, or doing household chores), their family members then normally need to help finance the associated costs and take over their responsibilities. The Cambodian survey findings provide evidence to this effect. They show that only about 6 per cent of the Cambodian respondents relied on their own savings in financing the costs of their migration to Thailand. For 44 per cent of the respondents, tapping their household savings was the only way they could have afforded such migration (Figure continued on next page

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52 Box 1.2 — cont’d

1.17). This financial assistance from the family essentially binds it and the migrant into an “implicit contract”, based on the principle of reciprocity or quid pro quo: the household will help the individual migrate, subject to future receipt of remittances as a form of repayment (Addison 2004). Another finding from the Cambodian survey is that nearly half of the sample Cambodian migrants borrowed money to finance their migration, explaining to some extent the significant portion of remittances allocated to debt repayments as shown earlier. The resort to loans, rather than household savings, does not, however, necessarily free the migrant’s family from financial responsibility during the whole migration process. The burden of repaying the loans may fall partially or heavily on the families, especially the loans of irregular migrants, in the event of no or insufficient remittances. Figure 16: Remiances as Percent of Personal Consumpon Before and Aer Crisis T-2

T-1

20.0

FIGURE 1.16 Remittances as Percentage of Personal T (Crisis) T+1 T+2 Consumption Before and After Crisis Figure 16: Remiances as Percent of Personal Consumpon Before and Aer Crisis

15.0

T-2

10.0

20.0

5.0

15.0

0.0

10.0

Bangladesh Domin ican Repu blic

Hai

Mexico

T-1

Thailand

T (Crisis)

T+1

T+2

FIGURE 1.17 Figureof 17: Sources offor Financing for for Sources Financing Migration, Migraon, percent of using Cambodian Cambodian Migrant Workers Migrant Workers Figure 17: Sources of Financing for Migraon, percent of using Cambodian Migrant Workers household savings 44

Indonesia

loans 49

5.0 0.0 Bangladesh Domin ican Repu blic

Hai

Mexico

Thailand

Indonesia

Source: Adapted from The World Bank (2006).

own savings 6%

others 1%

household savings 44

loans 49

Source: Cambodia country chapter

Source: Cambodia country chapter.

own savings 6%

others 1%

Cambodia country chapter Another explanation of the same strand involves the existence ofSource: an implicit contract with the goal of spreading risks among family members or insuring against economic shocks from both sides (the principle of co-insurance) (Lucas & Stark 1985). Migration essentially permits risk sharing or hedging. In other words, it allows the migrant to come to the aid of the family in times of crisis by sending remittance and, likewise, for the family to help the migrant when the migrant is in need, financially or otherwise. When assessing the motives behind the remittance behaviour of migrants, it is, however, important to note that motives are most likely not static. They may change depending on the overall circumstances faced by the migrant and or the household. In addition, any or all of the above mentioned motives may be embedded in one another and therefore at work at the same time.

Macroeconomic influences on the migrant’s decision to remit include exchange rates, interest rates, and even the political situation at home, and government regulations. Although exchange rate shocks are known to have triggered the countercyclical characteristic of remittances, foreign exchange movements really have opposing dual effects and this makes the determination of their net impact difficult. A depreciation

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of the native country’s currency has the simultaneous effect of making both the recipient household and the migrant relatively “richer” (Bouhga-Hagbe 2006). With the household able to afford more goods and services with the same level of migrant income sent, the migrant may retain or even reduce the amount of his or her remittance. However, it is also possible that higher income (in terms of the native country’s currency) may drive the foreign worker to augment his or her remittance transfers instead. Interest differentials have also been found to have significant effect on remittances (Mouhoud et al. 2008). Tying this up with the microeconomic motives discussed above, the difference in domestic and foreign interest rates must weigh significantly in the migrant’s portfolio management decisions, specifically whether to save or invest in the destination or source country. Meanwhile, political stability impinges on the decision to remit as such factors affect the safety and or liquidity of investments made. Government regulations, of course, have a bearing on this, apart from helping determine the upfront costs and ease of sending remittances (Adams 2008; Mouhoud et al. 2008). Obviously, remittance costs are key determinants of remittance behaviour. In the case of formal money transfer outfits, the costs differ according to factors which affect the remittance fee (e.g. remittance amount, the source location and destination, or the remittance corridor, speed of transmission) and the operators’ foreign exchange spreads. The price of remitting is regressive, that is, it is more expensive for small transfers which are usually what what the poorer migrants can afford. With few remittances and competitors in the money transfer business, so-called low-volume corridors are characterized by higher transfer prices. By and large, south-south remittances are also noted to be priced more expensively than north-south transfers due to impediments such as capital and foreign exchange controls (Kalan & Akyut 2005; WB 2006; Ratha 2007). In 2004, the average price was reportedly around 12 per cent of the principal (WB 2006). A decline in remittance costs was admittedly seen over the years due to improvements in payment systems, which in turn have been spurred by technological innovation, intensified competition, increased remittance volumes, improved regulatory environment, and the introduction of new remittance products.57 However, the cost of remittance, at least that via established money transfer operators, remains more expensive than via the informal routes. This, together with the limited accessibility of money transfer outfits, lack of trust of impersonal agents, and low financial literacy, drives the high demand for informal remittance channels. Given the threat posed by the global crisis on remittance volumes, reducing remittance fees has become a pressing task. A five-percentage point reduction in remittance costs relative to the remittance volume can purportedly result in more than US$15 billion annual increase in remittance inflows to developing countries.58

As suggested above, poverty reduction by means of remittances is realized through both the direct income and indirect effects of such transfers. While there is debate on the macroeconomic contribution of remittances, given the question about their usage, the micro level impact

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of such transfers can be more assuredly described as positive. They can obviously relieve households from a certain degree of poverty by enabling greater consumption and investment and effectively freeing them from credit constraints. Earlier, it was discussed how remitted funds were used by the sample Lao and Cambodian migrant households for the purchase of consumption goods as well as investment. Two critical intermediaries in the positive relationship of remittances with poverty reduction are investments in education and health care. These are two well known factors that increase the poor’s chances of exiting poverty by, at the minimum, allowing them to find and retain remunerative employment which in turn triggers a virtuous cycle of further human capital formation and improvement. Their prominence as development inducers has increased with today’s knowledge-based economies. Once again, that remittances enable more people to attain education, thereby increasing a nation’s human capital, is the core premise for the controversial argument of the new economics of labour migration that brain drain is ultimately beneficial. Available evidence supports the existence of a positive association between remittances and education. A case study on Mexico, for instance, found that children in migrant households, especially females, complete significantly more years of schooling.59 A positive correlation between remittances and health of migrant families has also been uncovered. It was noted that in Guatemala, Nicaragua, and Sri Lanka, children in remittance recipient households have higher birth weights and better health indicators than other households.60 Given this positive linkage between remittances on the one hand, and education, health, and poverty outcomes on the other, it therefore does not bode well that remitted monies to the sample migrant households in the Lao and Cambodia surveys were predominantly consumed. The Cambodia survey in particular found that of the remittances received in the past five years by Cambodian migrant households, only 2 per cent were allocated to education, and 9 per cent to health care. A more probing investigation by the Cambodia survey revealed that remittances did not have a conclusive impact on the economic status of its sample receiving households. Overall, migrant households were no better off than non-migrant households.61 The latter group was in fact found to have had higher annual income than the remittance receiving households on average (US$2,280 versus US$2,110). The reason for this is that many of the non-migrant households got higher income from agriculture and some entrepreneurial activities. They were also recipients

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of more internal remittances. In other words, income from other sources more than compensated for their non-receipt of international remittances. In terms of expenditure, non-migrant households were again found to have spent more than the households with migrants on average (US$616 versus US$492) (Figure 1.18). There was no difference in spending on food between the two groups. Weekly food consumption averaged US$11.3 in the case of non-migrant households, and US$11.5 in the case of households with migrants. With regard to expenses on house construction and repairs however, migrant households clearly outdo non-migrant households, again reflecting the value that migrants and their dependants place on their house as a status symbol. In the year up to the time of the survey, migrant households had spent roughly US$492 on house repairs and household items, four times more than the spending on the same items by non-migrant households. The average value of their houses increased by 80 per cent between 2002 and 2007, while that of the non-migrant households’ houses rose by 40 per cent over the same period. As far as self-perception goes, more than half of the migrant households believe that their welfare moderately improved, owing mainly to the job opportunities across the border and how this increased labour force participation within the family and therefore income generation. A significant 28 per cent,

FIGURE 1.18 Average Annual Income and Expenditure of Cambodian Migrant and Non-migrant Thailand, US$ Figure 18: Average Annual Income andHouseholds Expenditure of in Cambodian Households With and Without Migrants in Thailand, USD 2500 Non-migrant household

2000

Migrant household

1500 1000 500 0 Total income Income from Internal Income from agriculture remiances small businesses Note: Expenditures are for the year prior to the survey. Source: Cambodia country chapter

Total Expense on expenditure house repairs & items

Note: Expenditures are for the year prior to the survey. Source: Cambodia country chapter.

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however, perceived no change in their status and some 12 per cent actually reported a moderate worsening in their poverty situation. The findings of the Thai and Lao surveys were more straightforward. About 97 per cent of the sample Cambodian migrant households reported that their economic status was improved by having a member working in Thailand. Only 78 per cent of the sample Lao workers felt the same; 22 per cent reported not seeing any difference in their economic welfare after migration. However, the Lao study uncovered a difference of US$200 in the income and US$260 in the expenditure of migrant and nonmigrant households in favour of the former. On this basis, it concludes that households with migrant workers have better economic status than those without.

5.3 Macro-level Costs 5.3.1 Costs to Sending Countries The potential benefits of international labour migration to sending countries may be huge in magnitude, but so may be the potential costs. Brain drain is probably the issue that has attracted the most attention in this regard and been the subject of the most heated debate (see Box 1.3). There are two other important, but less talked about, costs relating to labour mobility, in particular to remittance flows. These are the dependency syndrome and Dutch Disease. Once again, while remittances have direct and tangible benefits at the micro level, their impact on the sending country’s economy is ambiguous. Aside from the reasons already discussed for this, the negative feedback effects of remittance transfers also help clarify the ambiguity. 5.3.1.1 Labour Supply Effects of Remittances Remittances can reduce labour force participation rates and increase underemployment through potentially instilling the dependency syndrome and altering labour supply decisions at the household level. There are three possible alterations that dependence on international remittances can engender. The first refers to withdrawal from the labour force because of the choice to substitute labour for more leisure. Because of poorer employment prospects for women, this impact of remittances may be more apparent among female beneficiaries, such as the wives of male migrants. This gender bias aside, the tendency to “get lazy” with the perceived sense of security provided by predictable remittance flows may be observed in all household

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BOX 1.3 brain Drain or Brains in the Drain? The Dilemma in Brain Migration Table 1.3 Skilled Emigration Rates (percentage) by Income Group, 2000 High income Upper-middle income Low-middle income Low income

3.5 7.9 7.6 6.1

Source: Docquier & Marfouk (2004).

There has been more emigration among the high-skilled than among other skill groups. In 2000, high-skilled emigrants comprised 5.7 per cent of the global tertiary-educated labour force. In the same year, medium-skilled emigrants comprised 1.8 per cent of the global secondary-educated labour force, while low-skilled emigrants represented 1.1 per cent of the global primary-educated labour force. In all regions of the world, the emigration rates of the high-skilled have been considerably higher than those with inferior skills (except in North America). This situation was as true in 2000 as it was in 1990 (Docquier & Marfouk 2004; Burns & Mohapatra 2008). The explanations for outmigration of high-skilled workers from less developed countries are not different from the reasons for labour migration from such countries in general. On the supply side, the differentials in employment opportunity, wage, and decent work discussed above are what generally detract talent from less advanced nations. The distinction, however, with lower-skilled labour is that there is pressing and strategic demand for high-skilled workers domestically. Indeed, there is real demand for health workers in developing countries which carry the much heavier burden of lower life expectancy, higher mortality, and higher exposure to infectious diseases.62 The same is true for scientists and engineers as many developing countries markedly lag behind advanced nations in scientific and technological development. Unfortunately, developing countries have insufficient capacity to absorb scientists and engineers, given their inferior level of development. If it is not the lack of employment opportunity, then lower wages and indecent work conditions (for example, poor research facilities, lack of funding), dishearten, demoralize, or dissuade many talents from pursuing employment in their countries of birth. On the demand side, none other than the increased skill-focus of the immigration policies of developed countries demonstrates the fierce demand for foreign professionals. The labour supply deficiencies and declining dependency ratios in developed countries partly fuel this demand. More and more health workers for example will be needed to attend to the needs of the burgeoning old-age population. The other way to look at it is that, with the huge fiscal costs attendant to an ageing population, “importing” continued on next page

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BOX 1.3 — cont’d taxpayers is among the options available to help cover pension and health care benefits (Kapur & McHale 2005). Averting stagnation of growth in this globalised era compels advanced nations to bank on knowledge, whether available domestically or beyond their borders. Obviously, globalization has vastly increased the need, ease, and pace of highskilled migration by several means. It has catapulted knowledge-based industries into the position of key growth drivers. Based on this need, it has softened barriers to movement of professionals by allowing supply-demand gaps to be addressed by regional arrangements.63 Additionally, technological inroads to human resource recruitment (e.g. online) have made it much easier to tap professionals from around the globe. The effect of the revolution in information and communications technology has come as far as engendering the so-called “virtual brain drain” (Teferra 2004). There is, of course, a host of other means by which globalization has affected highskilled labour migration as it has affected migration in general, including, through significantly reducing travel costs and intensifying brain circulation. However, the impact of globalization on skilled labour mobility has perhaps been channelled most through its injurious effects, that is, effects that have widened the economic differentials between more and less developed countries. From around the time the debate on the flight of human capital surfaced in the 1960s until the late 1990s, the dominant sentiment was that high-skilled labour migration was nothing but detrimental to sending countries. Newer literature advancing “beneficial brain drain”, “brain gain”, “brain circulation” or the “new economics of brain drain” have, however, surfaced since then, challenging the conventional wisdom. More nuanced approaches have also taken a more cautious approach to high-skilled emigration in consideration of the varying rates of human capital flight and pre-migration human capital levels. Though far from muting the conventional wisdom that sending countries are losers in regard to this issue, the contemporary discourse on migration has come to entertain the likelihood of sending countries ending up as net winners or losers, depending on the configuration of the various benefits and losses ensuing from the outmigration of their talents. Weighing the appeal of high-skilled labour migration for sending countries based on the cost-benefit approach involves pitting the welfare (that is, the income, growth, and productivity loss from the decrease in human capital stock), fiscal (for example, taxes, educational subsidies), and indirect losses (for example, intragenerational spillovers, knowledge transfer, investment) against the direct (for example, remittances; employment creation) and indirect or contingent (for example, increased educational investment, skills, knowledge and technological transfer, transnational networks, business capital) benefits associated with sending high-skilled personnel abroad. This approach carries the problem of setting actual, straightforward, and upfront output and fiscal costs against mostly probable, contingent, and longer-term benefits.

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Remittances from high-skilled migrants are, of course, direct benefits as mentioned; however, it has been found that high-skilled migrants tend to remit less (Niimi & Ozden 2008). On the matter of diasporas, the positive externalities from mobilizing them can be huge. They are largely untapped reservoirs of sophisticated knowledge and catalysts of knowledge exchange. They have facilitated technological transfers and diffusion, and buttressed trade and investment linkages between sending and destination countries by helping to overcome information asymmetries (Page & Plaza 2006), promoting market-based institutions in their home countries (Burns & Mohapatra 2008), exploiting their positions and transnational relationships to influence policymaking and facilitate negotiations, and becoming sources of capital themselves. Also, though there appears to be a mound of convincing proof to the gains coming from diasporas, it must be understood that the effectiveness of diasporas is not a given. There are as many (if not more) failures as successes in the engagement of expatriate communities.64 There is also no guarantee that return migration can reverse previous human capital losses. The following conditions will have to be met for return migration to generate human capital gains in the source countries: returnees must have enhanced or acquired more skills while abroad; the skills enhanced or acquired abroad must be of relevance to the needs of the concerned source country; and returnees must actually put to use those skills during their stay. There has been evidence that these conditions are fully met in only few cases.65 Incidentally, one of the stark findings from the GMS country studies is that the skills or knowledge gained by many of their sample migrant returnees from Thailand has been wasted because of the lack of compatible job opportunities. The Vietnam study, for instance, found that many returning migrants just end up working in the agriculture sector again. Complications also affect the concept of losses from brain migration. Output losses for, instance, can be merely imputed costs, given the insufficient employment opportunities for high-skilled labour, such as scientists and engineers, in developing countries as already mentioned. Given all these, it is thus hardly surprising that the empirical evidence on net brain drain or gain is inconclusive.66 This, however, should not be used to eclipse the fact and significance of gross brain drain, that is, scarce and badly needed skilled human capital is being siphoned from developing countries at consequential rates.

members. The second possible alteration constitutes movement away from formal to informal labour. Again, this type of labour supply decision may be anchored on the too-good substitution, viz. the decision to consume more leisure in place of work. Some sort of voluntary underemployment ensues as part-time work is perceived to be more acceptable, with remittances feeding directly anyway into the household budget. The problem of moral

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hazard is also traceable in this labour supply behaviour. In general, informal labour is less secure than formal employment. The expectation of stable remittance flows can push beneficiaries towards this riskier sector, believing as they may that remittances effectively insure them from the adverse consequences of their decision. The third alteration consists of movement away from wage employment to self-employment. Remittances thaw capital constraints and, as such, can encourage household beneficiaries to venture into entrepreneurial activities. Again, moral hazard may characterize this behaviour as remittances may be considered as insurance to inefficiency, risky decisions, or complete failure. Empirical studies provide evidence to the occurrence of these three types of labour supply alterations associated with receipt of remittances. Studies involving Filipino and Nicaraguan migrant households, for instance, found a reduction in the labour supply of non-migrant members, particularly women, and an increase in the self-employment of men (Rodriquez & Tiongson 2001; Funkhouser 2006).67 The GMS country chapters do not touch on these particular labour effects of remittances. Findings on the use of remittances show a small percentage of such transfers being converted to business investment, and this could have altered household labour supply decisions. A complication to pinpointing the negative impact of remittances on the labour market is the difficulty of separating the positive impact from the negative impact in empirical results. As earlier discussed, one of the “three Rs” or key benefits of migration relates to recruitment. By resulting in employment vacancies, migration opens up employment opportunities for previously non-members of the labour force, especially women. From a household perspective, the absence of the migrant member may necessitate the non-migrant member to take his or her place in the workforce. This could counterbalance any adverse knock-on effect of remittances on labour supply. 5.3.1.2 Dutch Disease Effect Originally coined in the 1970s to refer to the effect of a huge natural gas discovery in the Netherlands, the term “Dutch Disease” is now generally used to refer to the loss of competitiveness of a country’s tradeable sector resulting from a real exchange rate appreciation caused by a natural resource boom or massive capital inflows. The exponential increase in remittances has inevitably sparked concerns about such transfers triggering the Dutch Disease effect. Their capacity to do so is channelled through their “spending

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effect” and “resource allocation effect” (Athukorala & Rajapatirana 2003; Acosta et al. 2007). The claim is that remittance inflows result in higher household disposable income which, assuming income elasticity, leads to increase in spending and expansion of aggregate demand. Given the limited domestic supply of non-tradables and exogenously driven prices of tradables, the excess demand exerts upward pressure on the prices of non-tradables, hence on the relative prices of non-tradables to tradables (the real exchange rate), making the tradable sector less competitive (the “spending effect”). Increase in the prices of non-tradables attracts further production to the sector, inducing transfer of resources from the tradable sector and in time potentially causing deindustrialization (the “resource movement effect”) (Lartey et al. 2008; Bourdet & Falck 2006; Acosta et al. 2007). Another transmission mechanism by which remittances can yield the Dutch Disease effect pertains to the “labour supply effect” just discussed above. A decrease in labour supply engendered by dependence on remittances can push up wages in the tradable sector. This effectively increases production costs and reduces the competitiveness of said sector (Acosta et al. 2007). The limited empirical evidence on the Dutch Disease effect of remittances is mixed. On the one hand are those studies which found remittances to be associated with real exchange appreciation and loss of export competitiveness. The Dutch Disease impact may be significant for some countries that are receiving huge amount of remittances relative to the size of their economies, are facing constraints in the expansion of their tradable sector, and where remittance inflows are largely spent on nontradables (Gupta et al. 2007; Ratha & Mohapatra 2007). On the other hand, a study found that remittances do not seem to have negative impact on the competitiveness of recipient countries. This is mainly because remittances are self-correcting, that is, they are deterred by overvalued exchange rates (Rajan & Subramanian 2005; Gupta et al. 2007). The use of remittances likewise encroaches on the link between remittance flows and the Dutch Disease effect. An assumption supporting a positive link is that remittances are spent on scarce non-tradables. There are many cases, however, when received monies are spent on non-scarce services such as hiring low-skilled construction labour. Another assumption is that remittances are chiefly used for consumption as opposed to investment and savings, ultimately expanding the demand for both tradables and non-tradables. Previous discussions indicate that this is the case for Cambodia and Lao PDR. The

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Thailand chapter points out that remittances do not seem to be causing real exchange appreciation adversely impacting on the country’s trade competitiveness.

5.3.2 Costs to Destination Countries At least three labour market concerns arising from immigration are central from the standpoint of destination countries. First, do immigrants take jobs away from natives? Second, does immigration push down wages? And third, do immigrants increase the costs of social welfare?68 It is important to examine the validity of these concerns given the nuances in the impact of migration across sectors and skill levels. Available analyses have in fact posed that there are aspects of these concerns that are not substantiated by economic realities. It is perfectly within reason to harbour these suspicions — that is they are valid as research questions — but conclusions and responses will have to be tempered by empirical evidence. 5.3.2.1 Job Displacement As mentioned, a popular concern among native workers in destination countries is that immigrants are directly competing with them for jobs. Standard labour market model suggests that in the scenario where wages are sticky and do not immediately adjust to supply and demand changes, a boost in labour supply caused by the influx of immigrants would reduce employment opportunities for native workers. Studies, however, show that realities do not necessarily correspond with the movements predicted by textbook economic models which assume homogenous labour. A factor of importance is the substitutability of native workers for foreign workers belonging to a specific category. Other equally important factors to consider are the changes in labour demand caused by increased investments and aggregate output, as well as the difference between short-term and longterm effects. Needing consideration as well is the previously discussed driver and benefit of international migration for destination countries, namely the satisfaction of labour market gaps. The labour mix of native and immigrant workers suggests heterogeneity not only across skills and educational attainment, but also across work experience, labour productivity and other so-called unobservable skills (for example, characteristics tied with being born in different countries). The emphasis on worker characteristics other than skills is important as

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even for a given skill category, native workers and immigrants cannot be readily labelled as perfect substitutes. Surveys of the skills and occupational composition of immigrants versus the natives in fact reveal that, in many instances, migrants complement rather than compete with the natives.69 Foreign workers in Thailand were noted to be substitutes for low-educated Thai workers, but complements for the higher-educated nationals (Martin 2007; Sciortino & Punpuing 2009). However, it must not be overlooked that low-skilled migrants in Thailand also have long recognized differences with native workers that bar them from being perfect substitutes for the latter. One of such attributes is their lack of proficiency in the Thai language. In the discussion on replacement migration, it was also mentioned how low-skilled migrants typically take up jobs in the 3D sector and other low-skilled occupations increasingly snubbed by native workers as their qualifications improve. Seasonal and procyclical sectors such as agriculture and construction also benefit from migrants satisfying their seasonal labour shortages. At the other extreme is the high-skilled migrant group which is an extremely valuable asset for destination countries given that they help fill their unmet demand for talent. In all the aforementioned cases, modest competition between migrants and local workers is apparent. Furthermore, the process is not static in that labour supply shocks induced by immigration also eventually invite adjustments in labour demand,70 leading to additional job opportunities. As complements in the production process, high-skilled immigration may create jobs for less-skilled workers, natives and migrants alike, and vice versa.71 Also, as discussed elsewhere, migration stimulates consumption and investment, either entrepreneurial or in human capital. By doing so, it expands aggregate demand, thus helping create additional demand for labour. 5.3.2.2 Wage Depression The position that immigration flows must be curbed because foreign labour dampens wages and reduces the incomes of native workers appears to be rather simplistic and perfunctory if set against the rich distinctions that characterize the impact of immigration on various sectors, skill sets, and other categories. Many studies seeking to gauge the impact of immigration on the wages of native workers have aptly assumed that, again, the substitutability of migrant and native-born labour must not be universal and is instead dependent on the observable and unobservable features of the workers. The likelier case is that new immigrants are

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competing with and affecting more the wages of old immigrants as opposed to the nationals. The substitutability of low-skilled workers is also likely greater than of other worker types. There is thus no consensus as to how immigration impinges on the wages of native labour. Findings fall under three categories — those that found wage depression to be associated with immigration; those that found no significant relationship, positive or negative, between the two variables; and those that found immigration to be associated with even positive increases in wages of native workers.72 Studying the relationship between wages and migrant intensity is complicated, again, by the problem of endogeneity. It can be safely assumed that migrants are attracted to areas featured by higher wages. The wage impact of immigration also gets defused as native workers may be driven to avoid and/or leave areas with high migrant intensity. One study found a change in the relationship between migrant intensity and wages in Thailand from positive to statistically insignificant on factoring in the endogeneity problem. In relation to Myanmarese migrants in Thailand, it was found that a 10 per cent increase in the Myanmarese migrant share leads to a 0.185 per cent decrease in wages of Thai workers. The problem of endogeneity renders the preciseness of this figure uncertain, however. The minimum wage law must work as a ceiling on wages and therefore must ideally prevent the depression of Thai wages below this ceiling; however, it is noted that minimum wages are hardly implemented in the country (Bryant & Rukumnuaykit 2007; Martin 2007). 5.3.2.3 Higher Social Welfare Costs Another concern for receiving countries that has been used as justification for immigration control is the contention that more developed countries have become “welfare magnets” for emigrants from less developed nations. As already mentioned, migration is essential for richer nations as it helps relieve the pressure from increasing dependency ratios. Accepting highskilled migrants in particular is tantamount to “importing” taxpayers that can help finance the fiscal costs of attending to a rapidly ageing population. However, with most immigrants of the low-skilled type, immigration may ultimately impose a net welfare burden, rather than a net tax gain, on the receiving government. This particular issue has hardly been explored in the case of Thailand; however, given the characteristics of its migrant population, it can be presumed that Thai migrants are marginal net taxpayers. While most foreign workers in Thailand are of prime working age and fall well

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within the taxpaying bracket, the irregular status of the majority enables them to escape tax liabilities. Given their level of earnings, most of them are eligible anyway for the income tax exemption.73 Regardless, migrants still pay taxes such as value-added tax on purchased goods and services (Martin 2007). Even when the social security law in Thailand does not discriminate against foreigners, the clandestine status of the majority of migrant workers in the country makes it unlikely that they will seek and be considered eligible for social protection. Ignorance of their entitlements and problems such as the language barrier and restrictions on their freedom of expression and association make it much more difficult for migrants to push for their rights to social security benefits. These same problems inhibit many registered migrants from availing themselves of the health services to which they are entitled by virtue of the health insurance payments they made during the registration process (Martin 2007). Thailand’s educational policies may have become more liberal, but they still limit access to free education for migrants with an identification card (Sciortino & Punpuing 2009). Together with the language barrier, the fear of being discriminated against and worse, of being exposed, and therefore arrested and deported, also discourages migrant schooling.

5.4 The Micro-Level Costs Labour migration is an expensive venture that nonetheless attracts many willing participants because of the expectation that future revenue streams would more than compensate for their actual or prospective income flows in their respective countries. Labour migration is largely a household decision, one of the reasons being that its initial financial costs normally need to be spread among family members. In many cases, this assistance from the family is then repaid in the form of remittances under an implicit household contract as earlier discussed. Access to credit markets and assistance from diaspora members (usually in terms of alleviating information asymmetries and reducing the psychological costs of migrating) also significantly ease the initial financial burden of securing overseas employment. Where any or all of these three factors — household financial capacity, credit access, and diaspora assistance — are absent, the initial investment in labour migration works as a serious enough constraint to bar migration, regardless of the enormity of expected returns. Because the legal channel of migrating is often more expensive in terms of direct monetary costs and more restrictive for

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low-skilled applicants, the appeal of underground migration pulls many people despite its higher non-monetary costs. Throughout the cycle of migration, labour migrants incur fixed costs (which can be direct upfront costs or costs payable ex-post facto), variable costs, and opportunity costs. Fixed costs principally include brokerage fees, passport, visa, and permit costs, and travel expenses. Fees charged by recruitment agencies can be excessive and in breach of government regulations. The lack of transparency and problem of asymmetric information put applicants at a serious disadvantage. They, however, often have no choice, but to comply with agency recruitment procedures. The burden of payment and duration of liability are case-dependent. In certain cases, the fees are advanced by the agency or the employer for payment by the migrant during the course of his or her employment through salary deductions. This is normally the arrangement concerning GMS-3 migrants in Thailand. In this regard, significant desertion rate has become one of the serious problems facing recruitment agencies. Migrants have been known to renege on their employment contracts to avoid paying the brokerage fees fully. Since fees payable to formal recruitment agencies are considered very high74 relative to the capacity of many applicants and compared with the fees of intermediaries brokering illegal migration, underground recruitment has flourished despite the high risk of being cheated by middlemen. Passport costs have also tended to be high. It has been noted, for instance, that passports cost more than 10 per cent of per capita domestic product in some countries (De Brauw 2007). With regard to travel expenses, the party responsible for the costs also varies. The longer the distance of the country of destination from the source country, the higher this cost is and the bigger the poverty constraint on labour movement. By implication, cross-border and regional migration, especially where free trade areas exist, is more affordable from a financial perspective. Meanwhile, variable costs chiefly refer to expenditure during migration, including on food, accommodation, transportation and communication, and medical care. At this stage, diaspora members become valuable as providers of information on how variable costs can be trimmed to the minimum possible, and as a source of emotional assistance that can reduce the psychological costs of living overseas, which in turn may have financial implications (for example, medical attention). Several costs can also be incurred upon return migration, the majority of which are debt repayments. A cost calculation using the human capital approach gives equal importance to the opportunity costs

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of migration. Such costs chiefly pertain to the migrant’s forgone earnings or the lost productivity in household production. Many migrants from developing countries used to be unpaid workers in household agricultural production. Thus, as mentioned earlier, the loss of productivity upon their departure constitutes a significant opportunity cost (WB 2006). The GMS country survey findings on the costs of labour migration to Thailand reveal some expenses that are most major for both Cambodian and Lao migrant workers. As can be seen in Table 1.4, brokerage fees are the main fixed costs for regular and irregular migrants alike. While this is the case, however, such fees are incomparably higher for regular migrants than they are for the irregular ones (with document) (average of US$555 versus US$24). This is obviously because irregular migrants use the services of illegal brokers and can enter Thailand simply through a border pass which should cost less than US$1 at a time. Total spending on border passes for Cambodian irregular workers (with document) reached US$26 according to the survey results. This suggests that guest workers crossed the border several times, needing several stamps in the process, and/or that some informal fees have been paid. Meanwhile the brokerage fees Table 1.4 Average Fixed Costs Incurred by Sample Lao and Cambodian Migrant Workers in Thailand, US$

Lao workers

Legal

Cambodian workers

Irregular Irregular Legal with without document document

Irregular Irregular with without document document

Brokerage fee Passport Border pass Physical check-up Transportation Others

484 42 — 37 47 16

15 14 1 4 9 13

96 — — — 10 —

625 110 — 10 2 —

33 4 26 — 77 10

136 — — — 81 —

Total

626

56

106

747

150

217

Note: Data on costs of Lao legal migration is from the Lao country chapter; the rest are from the Thailand country chapter; regular migrants refer to the workers sent under MOUs; irregular migrants with document refer to those who entered Thailand with relevant travel documents; those without document are those who entered Thailand without any travel documentation. Sources: Thailand and Lao PDR country chapters.

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paid by regular migrants typically include visa, work permit, application, and initial travel costs. Due to the inability of many applicants to afford to pay for them, the fees are normally advanced by the Thai employers and deducted later from the guest workers’ earnings. Totalling US$625, the recruitment fees were equivalent to about 3.7 months of the regular Cambodian workers’ earnings on average. Recruitment agencies in Cambodia are said to charge 20 per cent of a migrant’s monthly earnings on average in a one-year period. Meanwhile, a decree in Lao PDR permits recruitment companies to charge a maximum of 15 per cent of a migrant’s monthly wage over the duration of their employment (Vasuprasat 2005; Cambodia and Laos country chapters). Three other interesting revelations from the collected data are that passports cost more than they should, that irregular migrants spend almost nothing on physical examination, and that transportation costs differ widely between regular and irregular workers. A passport in Cambodia should only cost about US$40. For this price however, the applicant would have to wait between two to three months to get a passport. In practice more than US$100 is paid for faster processing of the passport application; this amount includes some informal fee. Results of the Thai survey show that Cambodian migrant workers in Thailand spent US$100 on average to get their passport, suggesting that they resorted to the more speedy process. Initial travel to Thailand cost the Cambodian irregular workers about US$79 on average. Their trip, as described in the country chapter, involved crossing the border and walking through remote fields for hours at night before being stashed in a truck like logs for transport to their worksites. Such clandestine movements to Thailand plausibly entail extra payments to facilitate the risky journey. In the case of the Lao workers however, the opposite was found to be true; that is, illegal travel costs much less than legal transport. Two other important costs found in the Lao study were income tax payments and social security contributions, which represented about 8 and 6 per cent, respectively, of the total migration costs incurred by regular Lao workers over a two-year period. These costs are not incurred by the irregular migrants. Among the variable costs and across worker categories, food is the most dominant expenditure on average, followed by personal effects (that is, clothing, footwear, and personal care) (Figure 1.19).75 One intriguing revelation from the survey data is that Cambodian irregular workers spend much less on food than regular workers (not more than 30 per cent compared with 50 per cent of total variable costs). In the meantime, they

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FIGURE 1.19 Average Variable Costs Incurred by Lao and Cambodian Migrant Workers in Thailand, Percentage of Total

Figure 19: Average Variable Costs Incurred by Lao and Cambodian Migrant Workers in Thailand, percent of total Food 100.0

Communicaon cost

80.0

Personal effects

60.0

Leisure & recreaon

40.0

Accommodaon Remiance fees

20.0

Brokerage fee in last 2 yrs

0.0 Irregular Irregular with without document document Lao workers

Legal

Irregular Irregular with without document document

Transportaon Medical expense Others

Cambodian workers

Note: Calculaon of total costs is based on average man-years of 3.8 for Cambodian workers and 4.1 for Lao workers. Source: Thailand country chapter

Note: Calculation of total costs is based on average man-years of 3.8 for Cambodian workers and 4.1 for Lao workers. Source: Thailand country chapter.

spend significantly more on remittance fees (about 13 per cent compared with 4 per cent of total spending). As earlier discussed, the irregular migrants chiefly make use of informal remittance channels, which, by and large, cost less than the formal means. Their much higher spending on remittance fees may therefore be taken to mean only that they remit more frequently than their regular counterparts. The irregular workers were also found to have spent on medical care while the regular workers have not. Also of interest from the survey results is how the migrant workers devote, on average, 13 per cent of their total spending on communication, and 10 per cent on leisure (Figure 1.19). The Lao survey results confirm the dominance of food and personal effects in the spending of both regular and irregular migrant workers. It also explores how irregular workers have higher expenditure on medical care, communication, and leisure (Figure 1.20). In totality, the survey results provide strong empirical proof on how legal migration is far more expensive than illegal migration, effectively fuelling the flow of irregular migrants. In the case of the Cambodian workers, the total financial costs of moving to and working in Thailand

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70

FIGURE 1.20 Average Variable Costs Incurred by Lao Migrant Workers in Thailand in Two Years, Percent TotalWorkers in Thailand in Figure 20: Average Variable Costs Incurred by Laoof Migrant 2 Years, percent of total

Food

100.0

Personal Effects

80.0 Transportaon

60.0

Communicaon Accommodaon

40.0 Leisure & recreaon

20.0

Medical cost Others

0.0 Regular

Irregular

Source: Lao PDR country chapter

Source: Lao PDR country chapter.

legally were 1.5 times more than the total costs of doing the same by illegal means; for the Lao workers, they were about 1.7 times more. Unless the costs of regular migration are trimmed down, underground movements cannot be expected to wane. It is important to point out, however, that the survey findings are also influenced by their samples’ characteristics. The Thailand survey, for instance, explicitly raises the issue of how the disparities in costs incurred by its sample migrant workers must have been conditioned in part by the occupations of such workers. For example, unlike its sample irregular migrant group with document, its sample irregular migrant workers without document were working as housemaids and/ or restaurant staff who were mostly provided with free accommodation and food, and did not have to spend on commuting to work. This clearly reduces their variable costs. With the financial benefits and costs threshed out, Box 1.4 elaborates on the cost-and-benefit analysis and shows the net economic returns to Cambodian and Lao labour emigration to Thailand based on the survey results.

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Box 1.4 Net Economic Returns of Migration to Thailand at Micro Level The neoclassical economic theory of migration posits that international migration results out of a rational calculation of the economic gains and losses involved. Positive net economic returns stimulate outmigration while negative net economic returns would discourage it. At the individual level, a comprehensive cost and benefit analysis would involve pitting the present values of the financial costs and benefits incurred by the migrant throughout the migration cycle against one another (Equation 1).76 Previous sections discussed the direct benefits in the form of earnings (salary plus overtime and other extra pay) and direct costs in the form of fixed and variable costs. The departure of the migrant also has an opportunity cost in the form of lost earnings and/or household output contribution. There are a number of positive and negative spillovers as well, one being the welfare improvements financed by remittances. Due to the difference in their work status and, with this, the terms and conditions of their employment, the average net returns for regular and irregular workers are expected to vary.

Net Return (NPV) =

n n C f it Bit Cvit – – ∑ ∑ ∑ t t t t = 1 (1 + r ) t = 1 (1 + r ) t = 1 (1 + r ) n

(1)

Results of the individual GMS surveys only make it readily possible to get the net direct returns from regular and irregular migration up to the time of the survey itself. Assuming a negligible discount rate for simplicity’s sake, and using the survey data, the country studies calculate the net returns by simply deducting the total costs, comprising the fixed and variable costs, from the total earnings (Equation 2). Aiming to estimate the total net gain throughout the entire migration period, the Thailand study addresses the limited time coverage of the survey by assuming that the migrants’ salary and variable costs for their first trip were valid for the entire probation period (equivalent to four months), while their salary and variable costs at the time of the survey were valid for the rest of the employment period. Migrants are assumed to receive overtime pay only after the probationary period. Using cohort tracing, Cambodian workers were estimated to have an average employment period in Thailand of 3.8 years. The average duration for Lao workers was estimated at 4.1 years.

Net Return =

n

n

∑ B – ∑C t =1

it

t =1

n

f it

– ∑ Cvit t =1

(2)

With the above assumptions, the Thai study found that across all worker categories, net returns were positive. The regular Cambodian workers collected the greatest net benefit amounting to US$2,704, which is US$400 more than the average net gain incurred by their irregular counterparts. One notable finding is that irregular workers

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72 BOX 1.4 — cont’d

with document received more net benefit relative to those without documentation. The difference is particularly of note in the case of the Lao workers, having reached about US$500. The net returns across all worker categories can be considered significant. They averaged about US$2,311 over the migration period, which is equivalent to US$50 per month or US$600 per year. This just about covers the opportunity cost or forgone earnings of the Lao and Cambodian workers. However, it is important to remember that these lost earnings were usually inadequate to cover the workers’ expenses back home while their net return from working in Thailand represents their savings. The Cambodian and Lao surveys, which looked into the benefits and costs incurred by their nationals working in Thailand for two years, similarly found a net gain. Comparing their results, the regular Cambodian workers once again received the biggest net benefit. The net returns incurred by the irregular workers, however, turned out to be much lower than the net gains uncovered by the Thai survey for the same worker group. The findings of the Cambodia and Lao surveys also partly contrast with each other. The Cambodia survey confirmed the bigger benefit accruing from regular migration vis-a-vis irregular migration, but the Lao survey found just the opposite. Table 1.5 Average Net Economic Benefit (US$) (Thailand Survey)*

Lao workers



Irregular with document

Irregular without Legal document

Cambodian workers Irregular with document

Irregular without document

Total benefits   Salary   Overtime pay Total costs   Fixed costs   Variable costs

6,194 4,047 2,147 4,011 56 3,955

4,023 3,109 914 2,102 106 1,996

10,091 8,008 2,083 7,387 747 6,640

6,510 5,941 569 4,116 150 3,966

7,713 6,072 1,641 5,361 217 5,144

Net returns

2,183

1,921

2,704

2,394

2,352

*For the entire employment period based on the average man-years calculated. Source: Thailand country chapter.

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Table 1.6 Average Net Economic Benefit (US$) (Lao PDR and Cambodia Surveys)*

Lao workers (Lao PDR survey) Total benefits Total costs Net returns

Cambodia workers (Cambodia survey)

Regular

Irregular

Regular

Irregular

3,252 2,665 587

2,882 1,553 1,329

5,060 2,680 2,380

2,000 1,400 600

*For two years. Sources: Lao PDR and Cambodia country chapters.

6. MIGRATION MANAGEMENT A litany of reasons can be put forward as to why the movements of people are difficult to manage. Leading such reasons is the fact that human rights issues tend to accompany movements of people, legal or illegal. Also, some discriminatory treatment will almost always arise out of awareness of the socio-economic attributes of migrants that cannot be controlled even by the finest points system that seeks to weed out the unwanted and choose only the crème de la crème. The challenges facing, and, therefore, the end objectives of, migration management by source countries on the one hand, and destination countries on the other, differ in important respects; at the same time, there are common elements within them that instituting bilateral, regional, and global mechanisms to manage migration flows makes absolute sense. Migration management is extremely important as there is probably no policy barrier of whatever level of sophistication or sanction that can fully block migration. From a human rights perspective, the social costs of migration, even when irregular, cannot simply be ignored and made to bear exclusively on the migrants. This section describes the national and international migration policies involving the GMS countries, situates them in broader migrant management trends, and discusses the problems besetting them, together with the effects of the change in the security landscape and the economic crisis.

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6.1 Destination Country Migration Management Along with the current wave of globalization came both unique opportunities and massive difficulties for destination countries. The enhanced interconnectedness of the world’s peoples and economies has certainly made it easier for them to tap foreign labour to fill the gaps in their labour market needs. At the same time however, the increased flow of irregular migrants has heightened concerns over labour market distortions and job displacement of native workers, increased social welfare costs, and stress on social cohesion among others. The most recent global recession has also made receiving countries rethink the role that migrant workers play in economic recovery and sustainability. Topping these economic considerations, security concerns pertaining to migration have suddenly assumed foremost importance with the terrorist attack against the United States in 2001. The terrorists responsible for the attack entered the United States with valid visas; some of them overstaying their visa validity dates (IOM 2005). Unsurprisingly, migration management has, since the 9/11 attacks, been made adjunct to the global war on terror. Today’s migration management by host countries utilizes a mix of permanent and temporary migration programmes. A useful analogy depicts migration openings as “the front door” for high-skilled migrants, “the side door” for temporary workers, and “the back door” for unauthorized and illegal immigrants. Underpinning these various programmes is the straightforward goal of welcoming skilled workers and permitting them to settle, while rotating lower-skilled migrants in and out of the host country (IOM 2008). Some shift in host country perception of low-skilled migration — from mostly undesirable to mostly a necessity — has taken place. The recognition of the need for low-skilled migration stems from an understanding of the drivers of labour migrant demand, of how not all low-skilled activities can be exported overseas, and, especially with the occurrence of 9/11, of how it would be wiser to open up legal channels for low-skilled migration rather than push such movements underground in which case the security risks would be grim. All in all, temporary migration injects labour markets with much needed greater flexibility and fluidity as globalization now and then creates demand for new skills and, by its very nature, exacts global mobility of workers. At least ideally, temporary migration also soothes political and social objections to immigration, including concerns about

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indefinite stay in the host country and the migrants’ often problematic integration into the host society. The shift towards a more accepting view of low-skilled migration is far from complete and universal, however. Thailand, for instance, clearly has mixed views on how to approach the challenge posed by the millions of low-skilled migrants in its territory. This is reflected in the contradictions in its economic and migration policies. Thailand’s 10th National Economic and Social Development Plan maps the road towards economic rehabilitation and higher economic competitiveness, but has not given rightful attention to the country’s burgeoning problem of labour shortage in low-skilled sectors. At the ministerial level, the lack of a cohesive approach to migration management is evident. This policy inconsistency is attributable to differences in objectives and agenda (Huguet 2008; Chalamwong & Prugsamatz 2009). To go back to the subject of national security, Thailand’s government has not lost sight of what 9/11 came to reveal about the unprecedented level of exposure to foreign attack, given the marriage between globalization and terrorism. On the positive side, national security concerns provided the much needed impetus for reforming the country’s migration policies. Partly because of the impact of 9/11 and the change in the premiership in Thailand, 2001 was a watershed in the country’s migration management. It ushered in the so-called “half-open door” policy (Thailand country chapter) and finally led to the reform of the registration system and the creation of the key host agency dealing with irregular migrants, the National Committee on Illegal Worker Registration (NCIWR). However, putting national security considerations at the heart of migration policy design has had frightening ramifications. It challenged even more the aim of framing a cohesive migration policy that is deferential to the migrants’ human rights. The 2008 Alien Workers Employment Act, which, together with the Immigration Act and the Labour Protection Act, constitutes the current legal backbone of Thailand’s migration policy, explicitly cited national security as among the three considerations in the admission of foreign workers into the country, the other two being the career opportunities for Thais, and the demand for foreign labour according to developmental needs. In the interests of national security, the act actually allows law enforcement officials to enter establishments with suspected illegal migrants and arrest those migrants without any warrant. This has been strongly denounced by human rights activists who see it as contradictory to the international conventions that Thailand has ratified.

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Given their time of completion, the GMS country studies were not able to really critique this latest foreign worker act of Thailand. Generally, the temporary migration or “side door” programmes of today are micro in approach, that is, they seek to appease specific labour market needs. Under Thailand’s guest worker admission process, several types of work permit can be issued precisely for such a purpose. On top of the regular work permit that can be granted as per Section 7 of the alien employment act, there are the permits issuable to foreigners hired under the law on investment promotion and Section 12 of the act; to aliens residing and wishing to work near the borders under Section 14 of the same act; and to GMS-3 workers hired under the relevant MOUs. The incorporation of Section 14 into the alien employment law has been strongly commended as it endows the government’s migration policy with the flexibility that is desperately needed to address seasonal or cyclical labour shortages. Meanwhile, the adoption of the MOUs, to be discussed in detail in the section on bilateral management, is intended to open up the legal channel for labour emigration to Thailand and reduce the flow of irregular migrant workers. It has been the case, however, that only a proportion of the requested work permits eventually get approved. Part of the post-9/11 reform of Thailand’s migrant admission process was the compulsory registration of all employers wishing to hire foreign workers. Only employers that meet specific requirements, such as that of capital, can obtain registration. Then, true to the explicit consideration given to Thai career opportunities under the alien employment act, the Ministry of Labour first gives Thai nationals the opportunity to apply for job vacancies identified by employers. In the case of unmet demand, the ministry then sets the quota for hireable migrant workers. One strong criticism is how there is little clarity about the deciding factors governing the quota determination. Information on the sectoral and occupational manpower needs at the subnational level, which should be an important consideration in setting the quota, is scarce (Rukumnuaykit 2009). The formal application process for work permit is very tough. Because of the complexity of the process and other problems such as little understanding of the procedure and lack of knowledge of the language, many aspiring migrants apply through their employers or recruitment agencies. Managing the “backdoor” is obviously the biggest challenge facing Thailand, given its overwhelming number of irregular migrants. As discussed earlier, there are various spaces of migrant illegality and this

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challenges migration policies to be innovative, dynamic, and flexible. A central objective of Thailand’s post-9/11 migration policy is the regularization of irregular workers through the conduct of open registration and re-registration rounds. Under Thailand’s Immigration Law, people entering Thailand without a visa are illegal and subject to deportation and/or any other penalties. That said, Section 17 of the same law allows the interior minister to exercise discretion in implementing the said condition (Muntarbhorn 2005; Thailand chapter). It has formed the legal basis for the open registration and re-registrations conducted so far and the cabinet decisions that explicitly approved them. As explained in Section 3, open registration rounds targetted both registered and unregistered migrant workers while re-registration rounds only involved the renewal of the work permits of those already registered. Special registrations have also been held in Thailand’s southern provinces in view of some acute labour shortages there. Note that these registration programmes are not akin to amnesty programmes. Registered alien workers who are able to secure work permits only attain a quasi-legal status. They may have legalized their employment, but not their immigration status; hence, they are still liable for deportation. Registrations prior to 2001 were limited in sectoral and provincial coverage. The reform of Thailand’s migration policy in 2001 came with the expansion of migrant registration campaigns and the administration of various “carrots and sticks” to entice and force migrants to sign up. Largely ignorant of the procedures and the local language, many irregular migrants rely on their employers to apply for work permits on their behalf. Employers also normally advance the costs of registration and work permit application which are later deducted from the salaries of their foreign workers. This dependence effectively makes the migrants vulnerable to abuse and cheating by their employers. The high incidence of employers holding foreign passports and registration and travel documents hostage is well known. The total costs involved tend to be equal to or, in fact, even significantly more than the monthly earnings of irregular workers, based at least on the GMS country survey results. Not counting the unsuccessful 2005 round, there have been seven open registrations to date. The first nation- and industry-wide open registration was held in August 2001. A total of THB4,250 or about US$133 needed to be paid per worker to cover the registration fee, the deportation deposit, the card, and the cost of health examination (Sciortino & Punpuing 2009). Money needed to be

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paid out again for the renewal of the six-month work permit. The next open registration round was held in August 2004.77 The 2004 registration was a pilot test for several new government policies, including the compulsory registration of employers wishing to hire migrant labour and the issuance of the 13-digit identification card to migrant workers. The total cost of registration and work permit application went down to THB3,800 or roughly US$119 due mainly to the reduction of the registration fee from THB900 to THB100 (from US$28 to US$3) (Sciortino & Punpuing 2009), a “carrot” intended to engage more irregular workers into the registration process. Between 2005 and the open registration in 2009, only re-registrations were held, causing the number of registered migrants in Thailand to shrink as explained in Section 2. A clear signal of a more uncompromising migration containment policy, the 2009 registration was officially announced to be the final round (The Nation 2010). It was limited in sectoral coverage and, more importantly, came with the implementation of the new cabinet resolution conditioning the legalization of the workers’ immigrant status and issuance of fresh work permits on verification of nationality. 28 February 2010 was the expiry date for all the work permits issued in the 2009 round, and the deadline for nationality verification. Failure to have completed the verification process by this date exposed workers to the threat of immediate deportation. Not all employers or migrants seek work permits, nor do all requested permits eventually get approved. The employer demand for migrant workers stood at approximately 1.6 million in 2004 and 1.9 million and 1.3 million in the next two years, but the government quota and total migrant registrations were well below these figures. On average, the total number of work permits issued represented only about half of the total number of permits requested by employers (see Annex B). One reason for this was that the government barely satisfied the huge employer request for migrants in “other sectors”. In 2006, requested migrants for these sectors numbered 552,080, or 41 per cent of the total employer demand; however, the quota was set at only 87 per cent of the total request and, worse, granted work permits reached a meagre 9 per cent.78 For each stage of the application process, the number of involved migrants also goes down. With reference to the 2004 registration, for instance, only about 70 per cent of the migrant workers who were able to obtain an ID card, got their work permits. The number of migrants involved shrank significantly during the health examination process (Sciortino & Punpuing

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2009). The chief reasons for underperformance are well explained in the GMS country chapters and include poor dissemination of information about the process, high registration costs, inaccessibility of registration venues, short registration periods, slowness of the process, red tape, and the inability to meet eligibility requirements, such as that of being tied to a certain employer. This latter requirement has been criticized sharply as it proves that Thailand’s migration policy continues to be somehow out of touch with reality. Many migrant workers often switch employers, jobs, and place of work; thus, they are by design largely excluded from the process. Eventually, the government allowed the use of the same permit even with a change in employer, but only under exceptional circumstances. A change in employer entails a change in work permit, which means having to spend more cash, something that many migrants cannot afford. With regard to re-registration, unregistered workers are automatically excluded. Some employers also find it in their interest not to register their guest workers to avoid tax obligations and maintain a free rein on how they pay and treat migrant workers. The cost of registration in terms of money and effort (for example, employers have to report routinely the employment status of their migrant workers) may also be considered lower than the cost of simply bribing labour inspectors and law enforcers if caught. By the same token, some migrants find it in their interest to remain undocumented to avoid being tied to one employer. Those likely to fail the health examinations, even for illnesses that can be cured with medical assistance, cannot be expected to participate in the rounds either. Infection with HIV/AIDS is not a ground for deportation, but even awareness of this is unlikely to encourage the infected migrant to come forward because it can still be a basis for employment dismissal. There is also the frustration that registration does not entitle them to all the rights conferred on Thai workers. While registered workers gain access to the same medical benefits afforded to nationals, they remain deprived of other social security benefits and workers’ compensation, not to mention civil and political rights, such as freedom of association, assembly, expression, and movement. The requirement of nationality verification has additionally made the process more difficult and riskier. About 1.4 million migrants were able to register by 28 February 2010, meaning that at least 300,000 failed to show up during the registration period (Hseng Khio Fah 2010). Out of the 1.4 million, 70 per cent were undergoing the verification process, but only a meagre 7 per cent had been able to get their nationalities verified

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and work permit secured as of 9 March 2010 (Figure 1.21). Myanmarese migrants constitute most of the no-shows during registration and of those who are hesitant to undergo verification. This is hardly surprising given that many of the Myanmarese migrants in Thailand are from ethnic minorities (for example, Kayin/Karen, Kayinni/Kayah, Shan, Mon, Rakhine) who have been under constant threat of harassment and persecution because they have a history of insurgency against the ruling junta and/or are refused citizenship by the Myanmarese military government. Nationality verification, which involves submitting biographical information for official confirmation and securing a certificate of identity or temporary passport, is easier for Cambodian and Lao workers because they can do it in their countries’ consular offices in Thailand, and/or with the assistance of the officials sent to Thailand by their governments. For Myanmarese migrants, the process is onerous (it is said to comprise thirteen steps) and risky given, first and foremost, the junta’s insistence that the verification can only happen on Myanmarese soil. The complexity of the procedure is no better illustrated than by the proliferation of unregulated brokers, charging unreasonably high fees. The total cost of nationality verification for Myanmarese migrant workers can be as much as THB10,000 (Hall 2009; Hall 2010) or more than US$300. Incomplete information about the FIGURE 1.21 Migrant Workers in Thailand on Nationality Verification (NV)

Figure 21: Migrant Workers in Thailand on Na�onality Verifica�on (NV) 1,400,000 1,200,000 1,000,000

Registered migrants as of 28 Feb 2010 and eligible for NV

800,000

Migrants in the NV process

600,000 Migrants who completed NV & obtained work permit

400,000 200,000 0 Total

Myanmar Cambodia

Lao PDR

Source: Mekong MIgraon Network, Migrant Assstance Programme Foundaon

Source: Mekong Migration Network, Migrant Assistance Programme Foundation.

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verification procedure has made it more difficult for all the GMS-3 migrants to see the process through. The outpouring of criticism and denunciation that followed the “be verified or be deported” policy imposed by the Thai government was entirely expected. The Thai Government retracted its ultimatum to some degree, allowing migrants who began the nationality verification process to work in Thailand, subject to renewal of their work permits and payment of the corresponding fees (Migration News 2010). This is hardly a consolation, however, for those who did not sign up for verification. Other conditions that came with the effectivity of the 2008 foreign employment act made regularization more difficult, costly, and unappealing for many migrants and employers alike. Following Section 23 of the new law, for instance, registered irregular migrants can only renew their work permits consecutively twice, for two years each. This means that migrants cannot work legally in Thailand for more than four years in a row, a restriction many would not want to submit to. Two other features of the new act that attracted a torrent of criticism are the foreign worker levy, and the repatriation fund. Mimicking the practice in Singapore and Malaysia, Section 11 of the act requires all Thais wishing to hire aliens to pay a fee. Put simply, the central purpose of the levy is to curb the import of foreign workers, particularly irregular ones. For those employing low-skilled foreign labour, the levy ranges from THB200 to THB600 per worker, depending on the province and sector of employment (IOM 2009b; Migration News 2010). There is nothing that explicitly bars employers from deducting this fee from the migrants’ wages, or directing the use of the collected money to developing the skills of migrant and/ or Thai workers. Meanwhile, Section 15 of the foreign employment act requires some amount to be automatically deducted from the migrants’ wages and deposited in a “savings” fund that can be tapped to cover the costs of the migrants’ return to their countries of origin upon the expiry of their work permits. This specification is yet to be implemented, pending decision on its details. The regularization scheme represents the amicable face of the Thai policy on irregular migration. On the other side of the coin is the government’s tough stance on border control, arrest, detention, deportation, and prosecution. Between 2005 and 2006, the number of irregular alien workers arrested by the Thai immigration police swelled by 42 per cent. Those deported increased by 25 per cent, while those prosecuted for hiring, hosting, or smuggling foreign workers increased by 15 per cent.79

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Past worries about deportation, however, are nothing like the dread about the threat of mass deportation following the announcement that the 2009 registration was the final round.

6.2 Sending Country Migration Management Migration management is no easy assignment for sending countries as the factors they have to weigh during policymaking run counter to one another at times. Not all countries of origin have explicit labour export policies, but, in whichever case, an outflow of workers has become more of an inevitable occurrence, thanks to the increased porosity of borders and the intermingling of economic and non-economic drivers of people’s movements. Given their near inevitability and development and social impact, such outflow will have to be regulated one way or another. There are two obvious dilemmas that sending countries, especially those with explicit labour export programmes, confront first-hand. The first refers to the gargantuan challenge of how to maximize the benefits, given the well known costs of labour emigration. The second dilemma refers to how to allow and promote overseas employment of nationals while ensuring that the rights of such nationals are protected at all stages of the migration cycle. A migration management strategy that can effectively address these dilemmas must first and foremost have sound legal and institutional foundations. While informal worker movements to Thailand from Cambodia and Lao PDR are long established given the countries’ shared borders and history, formal labour emigration is a relatively modern phenomenon as briefly explained earlier. Hence, the labour export policies of Cambodia and Lao PDR are really just in the infancy phase. With the adoption of the MOUs on labour cooperation between them and Thailand, such policies gained some direction and substance; even with this, however, there has hardly been a Cambodian or Lao migration management strategy to speak of. In the case of Cambodia, there is barely a mention of labour emigration in the National Strategic Development Plan 2006–2010, its key development blueprint. Under Section 4 of the plan, it is simply mentioned that migration issues constitute one of the considerations in socio-economic policymaking and that the provision of assistance to aspiring Cambodian migrant workers is one of the measures for employment creation. Two subdecrees and a circular are all that chiefly make up the national legal and regulatory

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framework on migration (Chan 2009). As it is currently worded, the MOU with Thailand can hardly be called a binding document. There are no formal enforcement and dispute resolution mechanisms provided under it. Under Subdecree 57, recruitment agencies wishing to operate in the country are required to make a US$100,000 deposit with the Ministry of Labour and Vocational Training (MoLVT). This requirement effectively limits entry into the business. If we assume in good faith that the deposit is indeed intended to fund worker repatriation, the amount seems too much given that most of the Cambodian workers are just in neighbouring Thailand. The deposit accrues no interest to the agency and, apparently in practice, does not get returned. In 2009 there were eighteen recruitment agencies in Cambodia, all privately owned (Chan 2009). Unlike the case of huge net sending countries such as the Philippines and Bangladesh, Cambodia does not have a separate government overseas employment agency. Migration management has been basically just added to the many responsibilities of already existing ministries, primarily the Ministry of Foreign Affairs, MoLVT, Ministry of Interior, and the Council of Ministers. The institutional framework further comprises two interministerial bodies, namely the Inter-Ministerial Taskforce for Migration and the Inter-Ministerial Working Group for the implementation of the MOU with Thailand (Chan 2009; Cambodia country chapter). In the case of Lao PDR, the preparation process for the adoption of its MOU with Thailand was what essentially spurred the formulation of a national labour export policy and its integration into broader development plans. The government adopted a decree on labour export in May 2002 and an implementing instruction two months later. These documents assigned the Ministry of Labour and Social Welfare (MLSW) the authority to issue licences to recruitment agencies. Unlike the Cambodian regulations, they only require agencies to pay insurance fees of US$150 per worker bound for Thailand, equivalent to the price of a return ticket per worker bound for other countries. These fees are deposited with the Bank of Lao PDR. To cover the agencies’ operational costs, a maximum of 15 per cent is allowed to be deducted from the monthly wages of workers. In 2009, about nine recruitment agencies existed in Lao PDR, three of which were state owned. As in Cambodia, there is no separate government overseas placement bureau in Lao PDR. Unlike Cambodia, however, the overarching development blueprint of Lao PDR, called the National Socio-economic Development Plan 2006–2010, explicitly promotes a national labour export

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policy. It openly expresses support for labour emigration, encouraging the upgrading of workers’ skills to enable greater participation in overseas labour markets that pay higher wages. In December 2002, a decree prohibiting Lao migrants from working in illegal, toxic, and “disgraceful” jobs was issued (Labour Migration undated). This can be interpreted to mean that the many Lao migrants taking up 3-D jobs in Thailand are in breach of their government’s policy. Having mostly the same provisions as that of Cambodia, Lao PDR’s MOU with Thailand is not a legally binding document. Like Vietnam, Myanmar has a migration policy that has been described as heavily interventionist (Wongboonsin 2003). Unlike Vietnam, however, Myanmar has a migration policy that actively discourages emigration, particularly that of women. The State Peace and Development Council adopted Law 367/120–(b) (1) that actually makes it illegal for Myanmarese people to migrate to Thailand. A prison sentence of up to seven years potentially awaits those brave enough to emigrate. Myanmar’s Immigration Act of 1947 also makes it illegal for those who left to return to the country without a valid passport or certificate (Caouette & Pack 2002). This largely explains the fear of many Myanmarese migrants in Thailand to undergo the nationality verification process which requires them to return first to their country and secure the certificates from there. Myanmar’s MOU on labour cooperation with Thailand was signed in June 2003. Like the other MOUs, it is hardly a legally binding document. Unlike the others, however, and as discussed later, it has been far more difficult to implement. Migrant protection must be present before and after departure. Predeparture protection entails decreasing or eliminating the susceptibility of applicants to abuse by private recruiters. The financial angle of recruitment has gained particular attention because application fees have often tended to be so high as to be prohibitive. To address this problem, sending countries have resorted to fee regulation and even the imposition of a legal ceiling on fees, as in the case of Lao PDR. To be able to regulate the overall operations of private recruitment agencies, registration and licensing have also been mandated. The threat of criminal action against errant recruiters also provides a degree of insulation from abuse. The problem, however, is that violation of regulations persists, with recruiters exploiting the relative ignorance of would-be migrants. Fees imposed by legal brokers also remain uncompetitive with the costs of tapping illegal intermediaries, as seen in the Cambodian and Lao cases. Protection of

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migrants post-departure is also vital given the significant incidence of contractual violations and abuse by employers. Engagement in bilateral arrangements has been one instrument by which sending countries seek to secure the cooperation of employing countries in protecting their migrant workers. As seen in the case of GMS-3 migration to Thailand, the number of workers sent via bilateral arrangements, however, tends to constitute a small percentage of the total migrant flows. International covenants provide blanket and inclusive protection to migrant workers; however, as elaborated later, the adherence of national labour standards to international laws is weak. Equally important, knowledge of what they are up against is a source of migrants’ power and guards against recruiter and employer abuse. Thus, improving dissemination of reliable information on such matters as prospective labour markets and migrant rights, and easing migrant integration into the host society, is a core mission that has been embarked on by sending countries. Support services, such as pre-departure training, as well as the posting of labour attachés in destination countries, have been put in place to this end. There has been no systematic training of GMS-3 migrants before leaving for Thailand, explaining in part the confusion about, and accusations of, contract violations and fraudulance from all parties post-departure. Also, against the background of inadequate legal framework, or problematic implementation of relevant laws and regulations, the effectiveness of services in terms of ultimately reducing recruiter or employer abuse has been limited.

6.3 International Migration Management Single handedly managing migration would be extremely difficult without a certain degree of bilateral, regional, and global cooperation. To the sending countries, protection of the rights of their migrant workers necessitates collaboration with destination countries, compliance with an international legal framework, and assistance from regional and international institutions. Without these ingredients, migrant worker protection would be a hardpressed task, given its very nature and how globalization has increased the complexity of protecting overseas workers, particularly irregular migrants, and deepened the linkage between international migration and issues such as human rights, economic crisis management, and terrorism. Bilateral arrangements between source and host states have been a useful measure to regulate two-way worker movements, ensure minimum protection for

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migrant labour, and widen the pathway to regular migration. The number of such agreements remains limited, however, due mainly to reluctance on the part of destination countries. Such reluctance has been rationalized on the basis of the existence of national immigration policies and the desire to avoid accusations of discrimination (IOM 2008). Furthermore, differences have been traceable in the scope and degree of enforceability of bilateral arrangements — on the one hand are the treaties whose provisions are binding among the parties, and on the other, non-binding agreements such as MOUs. Encouraged by the 1999 Bangkok Declaration on Irregular Migration, the execution of bilateral MOUs on labour cooperation has been a key strategy utilized by the Thai government to regulate the entry and exit of GMS-3 workers to and from its territory. As discussed earlier, MOUs between Thailand and each of the GMS-3 countries were signed in 2002 and 2003. These MOUs share the following key provisions: (1) permission for a quota-bound entry and time-bound stay of legal GMS-3 workers in Thailand; (2) key steps in the alien worker importation process; (3) the automatic deduction of 15 per cent of a migrant worker’s monthly salary for deposit in a savings fund that can be used to finance worker repatriation or deportation; (4) the entitlement of migrant workers to the same wage ceilings and other benefits granted to Thai workers, based on the principle of non-discrimination and equality; (5) protection of alien workers according to the domestic law of the receiving country; and (6) cooperation on the prevention of illegal employment. The alien importation process under the MOU essentially begins with the receiving country setting the official labour import quota for each sending country, taking into account employer demand. This quota is then made known to the governments of the sending countries, particularly their ministries of foreign affairs and labour. The information is then passed on to the recruitment agencies. Based on this information from the government and/or direct request from employers in Thailand, recruitment agencies in sending countries advertise the job vacancies and/or mobilize brokers to scout for potential applicants. Recruiters then assist applicants in submitting the required documents and undergoing the required health examination. Successful applicants are then assisted in signing employment contracts and obtaining the necessary travel documents, such as a passport from national ministries, and a visa from the Thai embassy in the sending countries. Migrants then travel to Thailand to report to their employers and secure their work permits. As

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broached elsewhere, employers typically advance the costs of application and deduct them from the migrants’salaries later. Admitted workers are allowed a two-year initial stay and a two-year extension. In the course of their employment, they have to pay taxes to the Thai government and contribute 15 per cent of their salaries to the savings fund. On finishing their term of employment, which cannot exceed four years, they have to return to their home countries where they can claim back their savings fund contributions plus interest. Should they wish to work again in Thailand, they would have to wait for a period of three years to elapse. The implementation of the MOUs has not been without serious delays, which is not surprising given these documents are not legally binding. Senior Official Meetings are held regularly to see through the execution of the MOUs, but these by no means constitute a formal enforcement mechanism that upholds the rights of migrants under the MOUs. Thai survey results found that the salaries of Cambodian and Lao foreign workers sent under the bilateral MOUs meet the minimum wage, but in average terms only. For those whose wages actually fall below the minimum wage, the absence of a formal enforcement and dispute resolution mechanism under the MOUs precludes the sending country governments from pressuring the host government into implementing its domestic labour law which generally does not discriminate between Thai and guest workers. As is also widely pointed out, the regularization scheme interferes with the implementation of the MOUs. Knowing that they can eventually get regularized, migrants can simply choose the cheaper and faster informal route to Thailand. As explained in more detail in Section 5, the GMS country survey results corroborate the lower initial financial cost of informal vis-à-vis formal labour emigration to Thailand. Moreover, the mandatory tax payments and savings fund contributions that legal workers have to make are burdensome financial responsibilities throughout the course of employment that can leave the migrants with little savings. Legally problematic, the savings fund is yet to be actualized.80 Whether migrants will be able to recover fully their savings fund in their home countries is already doubtful. The legal recruitment process also takes longer and is complicated even for the recruitment agencies themselves. Securing documents in provinces and then travelling several times to the capital to process applications are no doubt time consuming, not to mention costly. As cited elsewhere, passport issuance alone can take two to three months in Cambodia. Quicker processing demands a much higher price, often

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including some informal payment. In Lao PDR, the labour export process is said to take ninety days on average (Lao country chapter); however, given the long list of tasks that needs to be done from the village to the district and provincial levels in both sending and receiving countries, the entire process could take as much as six months to complete (Vasuprasat 2008). Conditions such as very costly deposit requirements also discourage entry into the recruitment industry, limit competition in the business, and partly underpin the proliferation of illegal labour export agencies and brokers. The high rate of desertion among migrants in Thailand is one other critical problem faced by recruitment companies, given that they are ultimately responsible for either advancing application costs, or shouldering the cost of replacing runaways. One Cambodian recruitment agency was said to be dealing with a 40 per cent desertion rate (Cambodia country chapter). The implementation of Myanmar’s MOU with Thailand has been exceptionally difficult. Progress was nil until recently when nationality verification was finally agreed to be undertaken in Myanmar (Rukumnuaykit 2009). At least as of January 2008, no Myanmarese worker had been sent under the MOU. All in all, the number of workers sent under the GMS-3 MOUs with Thailand fell short of the labour import quota — a mere 19 per cent of the total to be specific (Mekong Migrant Network 2010). A number of these migrants, enough to be cause for concern, did not even finish their contracts for reasons yet to be fully investigated (Martin 2007). It is also uncertain how Thailand’s 2008 alien employment law which is yet to be fully operationalized will impinge on the MOUs signed with the GMS-3 countries. Even if no explicit mention of cooperation on migrant regularization can be found in the MOUs, much of the bilateral action and discussions during the Senior Official Meetings have focused on this task (Vasuprasat 2008). A key role of the sending countries in the regularization scheme is their issuance of the certificate of identity or the temporary passport which serves as proof of successful nationality verification. For reasons already thoroughly discussed, the success rate of this initiative has been low. Regional migration management has similarly involved binding and non-binding initiatives. The European Union is a prominent example where migration management has arguably been the most successful when integrated explicitly in legal frameworks governing economic integration plans. However, the European Union’s achievement in freeing labour movements within the region has not only taken decades to attain

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and consumed substantial financial and institutional resources, but it has also been the feat of countries with relatively less economic opportunity differentials and which share the same economic and political philosophies of capitalism and democracy; hence, the European Union’s experience is difficult to replicate. Cooperative effort by the GMS-5 countries in managing regional migration via either the ASEAN or GMS grouping is far from comparable. The ASEAN Framework Agreement on Services to which the GMS-4 countries are signatories only incorporates a narrow window for international labour movement, mainly of the highly-skilled who hold nationally recognized qualifications.81 The GMS countries have also signed the ASEAN Declaration on the Protection and Promotion of the Rights of Migrant Workers, the ASEAN Declaration on Transnational Crime, including trafficking, and the ASEAN Declaration against Trafficking in Persons Particularly Women and Children. These declarations, however, are not legally binding nor is there any known binding arrangement at the GMS level. Born out of the Coordinated Mekong Ministerial Initiative against Trafficking, the MOU on Cooperation against Trafficking in Persons in the GMS was signed. Where conditions for forging binding regional arrangements are missing, informal mechanisms have helped. Regional consultative processes (RCP),82 for instance, have assisted in bridging the understanding of migration-related issues among participating states. One known RCP is the Colombo Process in which Asian countries including GMS states, Thailand, and Vietnam, participate. Major international instruments dealing directly and indirectly with labour migration and working standards have long been in place. The problem is that some of these instruments have not been ratified or acceded to, or even if they were, are not reflected in the national laws, or fully complied with and enforced. None of the GMS countries, as mentioned at the outset, is party to the major international migration covenants, particularly ILO Conventions No. 97 and No. 143, and the International Convention on the Protection of the Rights of all Migrant Workers and Members of their Families (the International Migration Convention for short). As implied in its title, the International Migration Convention upholds the rights of migrant workers, regular or irregular, on the basis of the principle of non-discrimination, though with some caveats. It extends to the migrant workers’ families the guarantee of rights and freedoms, including the right to liberty and security, freedom of movement, expression, religion, and association, and equality with nationals before

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the court and in relation to remuneration and work conditions, social security, and emergency medical care. Rights such as equal access to education are still reserved for regular migrants under the convention. Although they are not parties to the said major agreements, the GMS-4 countries are parties to key international human rights treaties.83All these treaties uphold the principles of equality and non-discrimination, which simply means that the entitlement to human rights is not based on one’s nationality, immigration or work status, and other criteria. Except for the political right to vote and run for office, all rights and freedoms are equally applicable to citizens and non-citizens. As mentioned at the start, the first multilateral framework touching on global labour migration, the GATS-4, has also been adopted as an integral part of the WTO agreement on trade in services. Only the barest minimum, however, has been committed under this agreement, with the member states generally just keen on attracting high-skilled workers and apprehensive of low-skilled temporary migration gaining permanency (IOM 2005). GATS commitments are also enduring, which can be interpreted as running counter to the need for flexibility in migration policies. The international regime on global labour movements is more prominently featured by non-binding multilateral initiatives. Among these are the ILO Resolution Concerning a Fair Deal for Migrant Workers in the Global Economy, and the International Agenda for Migration Management. International institutions as the GFMD, GCIM, the IOM, and the ILO have also worked together and separately to deepen global cooperation in migration management and address problems affecting labour mobility. However, these efforts have been thwarted by preference for unilateralism in dealing with labour flows. It has been pointed out that, as a matter of principle, some Thai laws converge with, while others diverge from, international labour and migration standards. Thailand’s criminal and civil codes, labour protection act, and social security law are largely equally applicable to migrant workers, regardless of their nationality, immigration and work status. Meanwhile, no more than part three of the Thai constitution, entitled Rights and Freedoms of Thai Nationals, privileges only the citizens when it comes to such entitlements as freedom of expression and rights against forced labour. The divergence of some national laws from international legal standards in principle results from non-ratification or accession and non-

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reflection of some legal commitments in national legislation. The heightened consideration of national security concerns has also exacerbated the gap. As implied above, Thailand is yet to become a party to ILO Conventions Nos. 97 and 143 and the International Migration Convention. These conventions bestow freedoms such as association, collective bargaining, and equality in employment to migrant workers. The country’s labour relations act limits the access of foreign workers to such rights, particularly the right to form a trade union. Parts of the prevailing alien employment act and accompanying regulations also deviate from the country’s international legal commitments. Under the claim that it is chiefly in the interest of national security, law enforcement officials are given the authority to enter premises where irregular migrants are suspected to be working and/or living, and arrest such migrants even without court warrants. Informants responsible for the location of the migrants are rewarded. There are also existing provincial decrees that, in the name of national security, have set strict perameters on the action of foreigners working in their territories. In what are considered clear breaches of fundamental human rights, these decrees curb migrants’ freedom of movement and assembly by restricting their access to and use of transport vehicles and telecommunications, imposing curfews, and driving employers to maintain a tight rein on their foreign workers, lest they want to be liable for any potential damage caused by them (Muntarbhorn 2005; Human Rights Watch 2010; Rukumnuaykit 2009). In practice, Thailand’s compliance with, and enforcement of, migrant rights have been problematic. Even when the rights of the migrants, regardless of their status, are clearly protected under national laws, corruption, ignorance of the law, employer non-compliance, and pure xenophobia have led to widespread transgressions of such rights. Assertion of the right to minimum wage and working conditions can simply result in the employer firing the worker. It is obvious that the situation of irregular foreign workers is more precarious. It is not only that their application for union membership or social security will most likely be turned down even though this is not (clearly) prohibited by law, but also, given the severe legal provisos and regulations approved in the name of national security, they are at serious risk of working and living in degrading conditions, being hunted, chased down and maltreated, and being deported to where they came from.

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7. CONCLUSIONS The near inevitability of labour migration in the currently more integrated and permeable world of workforces, all countries, net sending and receiving alike, to concede to the intransient nature of the phenomenon and to take a more proactive stance in defining the economic and human faces of its impact. The discourse on migration has gained enough maturity to oppose the dominance of the one-dimensional thinking that labour migration is nearly all about wage differentials. The flight of Myanmarese migrants illustrates that labour migration is at times as much about escaping deprivation of rights and freedoms as it is about economic deprivation. The simple core-periphery model of migration presented in this chapter emphasizes the economic development dividend that underlies the pull of the core state in accordance with its focus on the economic dimension of labour migration. The GMS-3 country survey findings provide strong evidence to this model. Simply put, getting a job or getting a job that pays better is cited as the key driver of worker mobility. Although most of them end up in the same occupations that they are most likely to have had in their home countries (contrary to the tenet of the segmented labour market theory), the financial opportunity cost of not exploiting cross-border job opportunities comes at great expense in terms of both individual and household welfare. Another divide, however, characterizes the GMS, this being the democratic divide that mainly drives many Myanmarese workers to run the risk of leaving their families and returning at the cost of their lives. That their and their Cambodian and Lao counterparts’ expectations of a better quality of life, economic and non-economic, are often crushed, given the demeaning treatment they are subjected to once in Thailand, is a sobering reflection. The perception that intra-GMS labour migration is chiefly economic wrongly leads to the thinking that the issues of importance are mainly economic and that the solutions to the problems are exclusively of the same nature. “Is migration good or bad?” was the question stated so simply at the beginning of this chapter, but the answer, as the discussions have shown, is far from straightforward. What is at least clear is that the relationship between labour migration and development is not a given. Economic plans would be flawed to assume that labour export and import are necessarily and automatically or, put in another way, by themselves, beneficial. The reassuring bit is that an enormous good can come out of this unstoppable

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dynamic. Labour migration can be significantly beneficial if the intervening factors are handled well. On the part of the sending country, factors mediating the link of worker mobility to economic growth and poverty reduction are the poverty constraints on migration, remittance use, diaspora links, and return migration. On the part of the receiving country, two key intervening variables are satisfaction of labour market gaps and fiscal contributions. The initial recommendations briefly touch on these mediating factors. Before moving on to that, however, it must be noted that though this chapter separated macro and micro level benefits and costs of migration for a more organized discussion, these two levels must not be considered separately from each other when mulling over how labour migration can be exploited to help bring about sustainable and equitable development. The GMS country studies all converge on the finding that labour emigration to Thailand is profitable to migrant workers and their households. How these net gains can be translated to net gains at the macro level depends in part on how the intervening factors are managed at the micro level, which, in turn, depends on the enabling conditions provided at the macro level. The truth of the matter is that the poorest groups can barely afford and therefore rarely take advantage of migration opportunities, especially those by formal means which all the country studies conclusively found to be so expensive as to be prohibitive. Formal recruitment better ensures rights protection, but it is an unaffordable luxury for many aspiring migrants. Brokerage fees are simply exorbitant; even though the agency and or the employer initially shoulder the cost, the expenses are deducted from the migrant workers’ salaries later. Passports are expensive, owing partly to the informal payments that have to be made if passport issuance needs to be expedited. The formal recruitment process is simply too time consuming for many migrants who have already waited long enough for their economic and non-economic needs to be satisfied. Interventions aimed at enhancing the affordability of regular migration, making it less a privilege and more a right, must be pursued if migration is to become a viable livelihood strategy for the poor and therefore a stronger force for poverty reduction and equitable development. That remittance helped raise the well-being of migrant households is one of the findings common to all the country studies; however, this welfare enhancement did not apply to all the migrant household respondents and was at times reported as being inadequate to enable migrant families to

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break free from poverty. The thorough discussions on remittance use and associated drawbacks earlier in the chapter help illuminate the reasons for this being the case. One determinant of the nature and extent of the impact of remittances on household poverty is whether they are mostly consumed or invested. Based on the country survey findings, most remittances are indeed consumed. A modest share ends up in agricultural and business investment and little goes towards investment in education and health care. This obviously has important implications, for the macroeconomic impact of remittances. Once again, the new economics of labour migration anchors its supportive stance on international migration in its perceived positive effect on human capital formation. Empirical findings such as only minimal proportions of remittances being translated into educational investments dilute the credibility of the theory. To exploit the good in worker mobility, this intervening problem must be addressed. Much like how they aggressively pursue other private transfers, governments must cultivate the same drive and creativity in trying to maximize the potential of remittances. After the first step of encouraging more remittance inflows by enhancing the accessibility, innovativeness, and affordability of formal remittance channels, the strategy that follows must enable financial incentives for more productive use of remittances. Diasporas, as described earlier, are huge resource pools waiting to be tapped. They can strengthen trade, business, and knowledge links between sending and receiving countries and therefore infuse greater momentum to regional integration efforts. This can only be, however, if they are accounted for, established a relationship with, and mobilized. In the case of the GMS, even just putting descriptive statistics on worker movements is barely possible because of the prevalence of irregular migration. The establishment of formal links and cooperation with regular migrant workers is more feasible and promising, but the number of such migrants specifically from the GMS-3 countries is small and made even smaller by the many incidents of worker desertion. Meanwhile, the status of irregular migrants precludes them from initiating trade, business, and knowledge links. The importance of the regularization policy catering to existing irregular migrants becomes highly evident in this regard. Diasporas thriving underground cannot be of use; once out in the open, their mere size gives a hint of their strong potential as a driver of trade, business, and knowledge creation. Their mobilization has to be prepared for. In tandem with the above, returnees deserve special attention. Another common finding from the country studies is that many migrant returnees

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have not seen any career advancement despite their accumulation of additional and more advanced skills. Put bluntly, this is an undeniable waste, reflective of the incorrect understanding that the story of migration ends when remittances have been made, the migrant’s employment contract expires, and he or she returns to his or her home country. In any case, the lack of job opportunities where the migrant can put his or her new or improved skills to good use is a valid explanation for this problem. Community development, to which remittance use can be purposively directed, or as part and parcel of the cross-border development efforts in the subregion, is a short and long-term remedy to this predicament. Ensuring that immigrant workers fill the gulfs in labour markets rather than unfairly augment competition in sectors whose labour needs can be met by nationals is a key way of maximizing the net gain and minimizing the social backlash from alien employment on the part of destination countries. As pointed out earlier, international migration has turned into more than a process that host countries need to contend with begrudgingly. It has become a necessity that dependent countries need to accept openly and willingly as an integral component of their development road maps. Thus, the situation where foreign worker acceptance is a policy exception and containment the policy norm, is not really helping net immigrant economies such as Thailand whose low-skilled sectors depend heavily on migrant labour. A careful and periodic mapping of the present and future labour needs at both national and subnational levels will enable the government to gauge the extent of flexibility it needs in managing guest workers. This open and flexible migration policy runs counter to the many ultimatums and threats of blanket deportations that have been issued, backed by a rather cavalier attitude towards the migrants’ contributions to the Thai economy, which, as described earlier, are significant. The regularization policy must be continued to the benefit of at least existing irregular migrants in the country. This is necessary if fiscal contributions by the migrants are to be taken advantage of. The finding that migrants in Thailand have so far not imposed a net fiscal burden on the Thai economy has partly been due to luck. Many irregular migrants are simply too afraid to tap the social security system, or openly exploit public goods. Still, it is possible that they already are a net fiscal burden; it is just that the difficulty of tracking their movements makes this hard to verify. Based on the official labour needs assessment, another open registration round (that is not undermined by background threats) must be conducted for the benefit of existing irregular migrants in the country.

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The opening for low-skilled migrants must not simply be tantamount to a “half-open door”; rather, it must resemble a “revolving door” that rotates migrant workers according to need. The stakes in migration management have become higher, given the marriage of migration, national security, and crisis management policies. The implications of this marriage can be more positive or negative, depending on the frame of mind that determines their operationalization. It could have widened the opportunity to address the human rights concerns springing from the treatment of many migrants like criminals and slaves, or it could have presented the perfect window of opportunity for hawks and economic nationalists in the government to enforce actions that otherwise would have been clear breaches of basic human rights, if not for that simple but powerful announcement that they are done in the name of national security. It seems like the latter opportunity has been more seized upon in Thailand. Internalized from a human rights perspective, the primary objective of regularization, for instance, should not simply be to increase the economic benefits from the presence of migrants, or to ensure national security primarily; rather, it should be equally, if not more about, ensuring that the migrant workers are better protected and given respect in the complete sense of the word. Armed with the realization that international migration has become a necessity for highly migrant dependent countries, sending countries should know that they could be more assertive in getting the needs of their migrant workers met, and that they no longer simply need to comply meekly with the wishes of destination countries. Progress in bilateral cooperation in name only does not accomplish much. Agreements that are enforceable, not least aspects touching on the labour rights of migrant workers, must be negotiated more forcefully into fruition. Becoming state parties to the International Migration Convention and the other major ILO conventions would strengthen the legal case for migrant protection, but only to a limited extent. Ratifications and accessions to these treaties hold nothing but empty promise if they are not consequently backed by improvements in national legislation. Sending countries should muster more courage in advancing their interests, especially given the findings that labour migration can lead to greater economic polarization. Rather than working to close the development divide between the core and periphery, labour migration could instead trap the sending countries in underdevelopment and reinforce and worsen inequality. This validates the worst fears of the pioneers of the core-periphery model.

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A whole gamut of specific recommendations is provided in the country chapters and in Chapter 6. In sum, these recommendations serve the purpose of addressing the intervening problems that undermine the relationship between labour migration on the one hand, and growth and poverty reduction on the other. The migrants of the Mekong can be either a force for greater national and regional progress and solidarity, or they can be a force spurring greater divisiveness and economic polarization. The outcome depends on the management of the wins, losses, and lessons from migration.

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Major destination country: Thailand, mostly crossborder Number of migrant workers: 151 migrant workers Gender profile: 65% of the migrant workers are female Age profile: 61% are between 24 and 44 Education profile: low education overall, with only 8% having upper secondary schooling Major sectors of employment: construction, domestic service, agriculture Major destination country: Lao PDR and Cambodia, with most movements cross-border and ending up near and far border Number of migrant households: 207 migrant households with 208 migrant workers Gender profile: 61% of the migrants are male Age profile: average age for both male and female migrants is 40 Education profile: low education overall, with 35% of the migrants having some degree of high school education Major sectors of employment: trade activities, agriculture, hired work

Lao PDR 3 provinces Xayaburi Savannakhet Champasak

Vietnam 2 towns and Lao Bao town, Quang Tri    313 2 districts in Chau Doc town, An Giang 3 provinces An Phu district, An Giang

Household Characteristics Major destination country: Thailand, with most going deep inside the country, followed by those along the border; minor destination country: Malaysia Number of migrant households and workers: 310 households with 538 migrant workers Gender profile: 65% of the migrant workers are males Major sectors of employment: agriculture, construction, fishing

Total Sample Households

Cambodia 6 villages in Sramor Meas, Battambang    526 4 provinces Krasaing, Battambang Kork Thnung, Banteay Meanchey Romduol, Banteay Meanchey Sieam Peay, Kampong Thom Knoy, Prey Veng

Country Sample Areas

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Major destination countries: Taiwan and Malaysia; minor destination countries: Taiwan, Hong Kong, and South Korea Number of migrant households: 148 migrant households with 148 migrant workers Gender profile: 77% of the migrants are female Age profile: most migrants are between 30–40 years old Education profile: better education than the migrants to Thailand, with 80% of the migrants having graduated from lower secondary school Major sectors of employment: domestic service; factory work Major destination country: Thailand from Cambodia Number of migrant workers: 151 migrant workers Gender profile: 62% of the migrant workers are male Age profile: 64% are below 30 Education profile: 79% have no education Major sectors of employment: agriculture, fishing Major destination country: Thailand from Lao PDR Number of migrant workers: 61 migrant workers Gender profile: 39% of the migrant workers are male Age profile: 97% are below 30 Education profile: 85% have no education Major sectors of employment: food shops/restaurants, agriculture Major destination country: Taiwan from Thailand Number of migrant workers: 40 migrant workers Gender profile: 65% of the migrant workers are male Age profile: 68% were between 30 and 45 Education profile: low education overall, with 91% having received vocational training Major sectors of employment: non-household personal services

-Dong Hung district, Thai Binh    198

Thailand Cholburi Rayong Samutsakorn

Ubonrajathani Nakornpanom

Udorthani

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Unlimited registrants during the 6th Registration Round Limited for one year Limited to one employer Can change place of employment

Limited to registrants during the 6th Registration Round Limited for one year Can change employer, but only under exceptional circumstances Can change place of employment

THB3800 for those already with work permit THB4250 for those with only ID card

2005 Re-registration to the 6th 1881520 1773349 705293 Registration Round (in %) Burmese: 76.5 Cambodian: 10.7 Laotian: 12.8

2006 Re-registration to the 6th 1333703 1226106 668576 THB3800 Registration Round for 1-year Burmese: 85.1 permit Cambodian: 7.2 Laotian: 7.7

Conditions on Work Permit

Possession of the temporary residence ID card (Tor Ror 38/1) Limited for one year Limited to one employer Limited to the place of employment

Number of Cost Migrants Who Received/Renewed Work Permits

2004 6th Registration Round 1598752 1512587   1284920 849552 THB3800 for 1-year (in %) (in %) permit Burmese: 71.1 Burmese: 74.6 Cambodian: 14.3 Cambodian: 13.0 Laotian: 14.0 Laotian: 12.4

Year Round Employer Government Number of Demand Quota Migrants Who Registered

Annex B: Summary of Migrant Registration Rounds in Thailand since 2004

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Limited for one year, renewable for 2 years Can change employer, but only under exceptional circumstances Can change place of employment

Work permit valid until 28 February 2010 Renewal of work permit from 28 February 2010, contingent on nationality verification

2008 Re-registration to the 6th 501570 Registration Round Burmese: 95.0 Cambodian: 2.4 Laotian: 2.6 Special Registration for Southern Provinces

2009 7th Registration Round 1054261 (as of 792175 (as of 8 Sept 2009) 29 Aug 2009) Burmese: 74.5 Burmese: 79.2 Cambodian: 14.1 Cambodian: 9.6 Laotian: 11.5 Laotian: 11.2

Note: (1) An open registration was actually held in 2005, but this was declared unsuccessful. (2) Blank means that information cannot be obtained for the item in question. Sources: Mekong Migration Network, Migrant Assistance Programme Foundation, Sciortino & Punpuing (2009), Paitoonpong & Chaksirinout (2007), Rukumnuaykit (2009), IOM (2009 – Migrant Information Note Issue 3).

Limited to registrants during the 6th Registration Round Limited for one year Can change employer but only under exceptional circumstances Can change place of employment Limited to registrants during the 6th Registration Round

2007 Re-registration to the 6th 1028365   535732 Registration Round (estimate) Burmese: 91.3 Cambodian: 4.6 Laotian: 4.0 Special Registration for 11817 10540 Southern Provinces

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Notes   1. For this reason and given the varying assumptions embedded in some of the data and calculations presented in the country chapters, this chapter occasionally uses comparative data from external sources rather than the country studies.   2. Institutional velocity refers to how rapidly a system and the units within it change due to intensity of contact (Keohane & Nye 2000).   3. This closed down, however, in 2005. See .   4. Adapted from the IOM definition cited at . Adapted from the definition of a migrant worker under the International Migration Convention.   5. For example, based on Thailand’s 2008 Alien Employment Act, cross-border employment is allowed on possession of a temporary permit. Migrant work, under the law on promotion of investment and other laws is also allowed while the permit is being processed.   6. See UN General Assembly Resolution 3449 (1975).   7. In all of The World Bank’s six governance indicators for instance, Myanmar was never at more than the fifth percentile in 2008 (Kaufmann, Kray & Mastruzzi 2009).   8. See de Haas (2008) for exploration of this issue.   9. The Vietnam country chapter explains that little effort has been done in establishing formal channels of migration between Vietnam and other GMS countries, except with Lao PDR. The migrants in Thailand, about 100,000 in 2005, mostly used the informal means. Undocumented migrants include Vietnamese students who overstay their visas to do paid work after graduation. Formal Vietnamese workers in Lao PDR numbered 440 in 2007. The number of informal workers is said to be large. 10. GDP figures are in real PPP terms (constant US$2,000). 11. The uncertain status of irregular migrants also results in recording errors. Where data on irregular migrants are available, access to such data is also difficult. 12. The estimated 2000 sectoral distribution of international migrant workers in industrialized nations was as follows: 10 per cent in agriculture, 40 per cent in industry, and 50 per cent in services. Women migrant workers dominated already highly feminized sectors (IOM 2008). 13. There was actually another open registration held in 2005, but it was unsuccessful because of the introduction of the costly bail fund. Only about 14,000 migrants registered (Sciortino & Punpuing 2009). 14. Based on the Thailand chapter. 15. This figure refers to those who registered in the February and June 2007

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re-registrations. The additional 10,540 registered under the special registration schemes in the three southernmost provinces of Thailand (Mekong Migration Network 2008). 16. The labour force distribution in developing countries is typically characterized by a huge bulk of the workers employed in agriculture, followed by services, and then industry. IOM (2008) put the percentage distribution in general at 40-20-40 (40 per cent in agriculture, 20 per cent in industry, and 40 per cent in services). 17. The Cambodian Government’s one-China policy has prevented the sending of Cambodian migrant workers to Taiwan through official channels (IOM 2006). 18. Castles (2009), Manning (2000), Development Research Centre on Migration, Globalisation, and Poverty (2009). 19. For this reason, decent work deficit is also treated as an economic differential. 20. Average real GDP growth for 1999–2008 (IMF WEO April 2010 database). 21. No comparative data for Myanmar though the country is likewise classified as low-income by WB. 22. GDP and GDP per capita figures are in real, PPP terms (constant US$2,000). 23. Based on the latest data for the period 2000–07 (UNDP 2009). 24. According to Kapsos (2004), the term “working poor” refers to individuals who both fall below an accepted poverty line and participate in the labour market. The concept thus takes into account not only poverty data, but also the countries’ specific labour market characteristics, such as the size of the working age population, the labour force participation rate, and the unemployment rate. 25. Structural unemployment has been depicted as long-term chronic unemployment that has the potential to become permanent due, for instance, to technological unemployment (i.e. increases in labour productivity means that the same level of output can be achieved with fewer number of workers). Measuring the extent to which unemployment is structural, cyclical, or transitional, is unfortunately an imprecise exercise as the different types of unemployment have aspects embedded in one another. See Jones & Riddell (1998) and Riddell (1999) for instance. 26. Immigrants, however, tend to earn less than nationals. OECD (2008) noted that immigrants, particularly those in OECD countries (except Australia), earn less than the native workers. Page & Plaza (2006) further noted that case study evidence shows that most immigrants from developing countries suffer an earnings penalty, higher inactivity levels and unemployment rates than nationals. The section on migration benefits touches on this topic in relation to the GMS case.

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27. Data were sourced from WB WDI CD-ROM 2008. 28. See, for instance, IOM (2008), Kennan & Walker (2010). 29. Based on data from United Nations, World Population Database: 2008 Revision. 30. See for instance United Nations (2001). 31. Data are sourced from WB WDI CD-ROM 2008. 32. Based on data from World Population Database: 2008 Revision. 33. See de Haas (2008) & IOM (2005). 34. For instance, no discernible rise in wages has been detected in Bangladesh, India, Indonesia, or Sri Lanka, but upward pressure on wages has been identified in certain sectors in the Philippines and Pakistan. The lack of discernible rise in wages in the first four states has been attributed to the small share of emigrants relative to the labour market, the previous unemployed status of the migrants, or the easy replacement of those who left without a significant decline in worker quality (Lucas 2004). 35. Except as specified, remittances here refer to international remittances. 36. For instance, the reporting of small transactions is not required in many remittance source countries (Page & Plaza 2006), remittances transmitted through post offices are often not reflected in official statistics, money transfer companies are neither regulated nor supervised by the central bank or any other financial authority in many countries (de Luna Martinez 2005), and remittances are often misclassified as export revenue, tourism receipts, nonresident deposits, or even FDI (The World Bank 2006). 37. See Adams (2005); Adams & Page (2005, 2003); Page & Plaza (2006); World Bank (2006); Addison (2004). 38. The Lao country study estimates the size of remittance inflows to the country at about US$170 million. 39. Based on data from Ratha et al. (2009) and WB WDI CD-ROM 2008. 40. See Adams & Page (2005). See also Spatafora (2005) and Page & Plaza (2006) for accounts of the negative relationship between remittances and poverty. 41. See McKenzie & Rapoport (2004) for a case study on sending communities in Mexico concluding that remittances reduce inequality; See Barham & Boucher (1998) and The World Bank (2006) for accounts of how high remittances appear to have increased inequality in a Nigerian community; and see The World Bank (2006) for accounts of how remittances in the case of Ghana and Sri Lanka appear to have had no significant effect on economic inequity. 42. See Chapter 6 for more on the Migration Hump Theory. 43. See Adams (2008) for instance. 44. Woodruff & Zenteno (2001) found for instance that remittances account for nearly 20 per cent of the capital invested in micro-enterprises throughout urban Mexico.

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45. This figure excluded education and health care, which in the Cambodia country chapter, was treated as consumption items. 46. See also Ratha (2003) and UN-INSTRAW (2007). The latter cautions that the benefits of multiplier effects are uneven; they can benefit only social sectors that already have an advantageous position. For instance, the multiplier effect may benefit women less as they generally have a less advantageous market position than men. 47. Ratha & Mohapatra (2007) note for example that remittances work effectively as an informal “stabilization fund” in Latin America, long reliant on foreign financing and vulnerable to commodity price shocks. 48. For instance, the securitisation of remittance flows has helped banks in developing countries (e.g. Brazil, Egypt, Mexico, and Turkey) raise funds since 2000 at a lower cost and with longer maturity (Ratha 2007; WB 2006). 49. Faini (2003); The World Bank (2006); Page & Plaza (2006). 50. See, for instance, Spatafora (2005) who also found no significant relationship between remittances and such variables as education levels and investment ratios. 51. Based on the standard minimum wage of THB141 to THB184 in Thailand, as mentioned in the Lao PDR chapter. 52. The Thai survey distinguishes between two types of salaries, namely the initial salary, which is the salary received during the probation period, and the current salary, which is the salary received after the probation period. 53. See Sciortino & Punpuing (2009) for more on the wage differentials between Thai workers and GMS migrants. In the case of domestic service for instance, the study mentions that the approximate monthly earnings of Thai workers fall between THB5,900 and THB7,000, while those of registered migrant workers fall between THB1,000 and THB4,000, and those of unregistered workers, between THB700 and THB1,000 per month. 54. Assuming an eleven-month stay in Thailand and a one-month stay in Lao PDR. 55. Mention of the past one year or past five years should be taken to mean the year or five years up to the time of the survey. 56. A crude though inconclusive test of whether the altruism or self-interest prevails as a motive involves examining the correlation between remittances and family income. A positive correlation connotes the dominance of altruism as the motive (when the household’s relative deprivation increases, the migrant sends more money to counter such a fall) whereas a negative correlation suggests the superiority of self-interest (when the household becomes worse off, remittances also fall); see Lucas & Stark (1985), Brown (1997), Adams (2005). 57. For instance, the U.S.-Mexico corridor is noted to have seen a decline in

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remittance costs of 60 per cent (to US$11 from US$26 in 1999) due to increased competition. In the case of the Philippines, an innovative mobile phone-based remittance system, which features comparatively lower costs, has been initiated; see Taylor (2004), Ratha (2007), The World Bank (2006). 58. The World Bank, . 59. See Hanson & Woodruff (2003). For other accounts of supportive evidence, see Page & Plaza (2006), Ratha & Mohapatra (2007). 60. Ratha & Mohapatra (2007). For other accounts of supportive evidence, see Page & Plaza (2006) and Hildebrandt & McKenzie (2005). Note, however, that the social costs of migration, such as the absence of parental supervision, can overshadow the virtuous impact of remittances on education and health outcomes. For instance, the Mexican case study also found that children in migrant households are less likely to be breastfed, fully vaccinated, or visit a doctor in the first year of their life (Hildebrandt & McKenzie 2005). 61. All immediate analyses and figures exclude findings on Sramor Meas province where sample migrants were in Malaysia. 62. In 2008, life expectancy at birth for low-income countries was 57 compared with 80 for high-income countries; neonatal mortality was 37 per 1000 live births, compared with 4 per 1000 live births; and reported cases of cholera and tuberculosis were 143,948 and 635,689 respectively compared with 28 and 40,477 (WHO 2010). 63. Recognition of professional credentials and academic equivalence in such free trade areas as the European Economic Area has accelerated skilled labour mobility. Certain regional agreements also carry explicit clauses on labour trade; those on high-skilled labour are much more open than those pertaining to the lower-skilled (IOM 2008). 64. Factors affecting the utility of a diaspora are its size, maturity, and motivation behind the establishment of diaspora networks. Globalscot, ChileGLobal, and Mexico Talent Abroad Network are examples of successful formal diasporas (Kuznetsov 2006). 65. In the case of Bangladeshi and Sri Lankan returnees from the Gulf States, there has been little evidence of an upgrade in their skills. A study concerning Pakistani returning migrants reports that 81 per cent of the returnees, and 84 per cent of employers felt that the skills acquired by the migrants while abroad were largely irrelevant (IOM 2005). Furthermore, the determinants of return migration suggest that not all returning migrant elites will put their skills to use once back home. Indeed, some migrants return to their countries of birth to retire. 66. For sample studies, see Docquier & Marfouk (2005), Beine et al. (2001), AngelUrdinola et al. (2008), Chand & Clemens (2008). 67. See Acosta (2006) and Amuedo-Dorantes & Pozo (2006) for other studies.

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68. These questions were raised in IOM (2005, pp. 167–71). 69. See, for example, Peri (2006) and Ottaviano & Peri (2005, 2006). 70. The importance of considering the effect on labour demand is stressed, for instance, in Levine (2006). 71. Defending its recruitment of immigrants, Cypress Semiconductor Corp., for instance, stated that one R&D job creates nine additional jobs; this means that failure to hire its eighty immigrant researchers translates to a loss of 720 jobs, about 500 of which are occupied by native workers (Rodgers 2009). 72. For studies pertaining to the debate on the wage impact of immigration in the United States, see Levine (2006), Anderson (2006), Borjas (2006), Card (2005), Peri (2006), Ottaviano & Peri (2005, 2006). 73. Foreign workers in Thailand are exempt from paying tax on the first THB100,000 of taxable income (Martin 2007). 74. Because of information asymmetries and limited immigration opportunities, private recruitment agencies are said to be reaping huge profits. This has time and again raised the issue of regulating these institutions (The World Bank 2006). 75. Because of its different evaluation period, findings on variable costs from the Lao PDR survey cannot be integrated. 76. This equation is adopted from the Thailand country chapter. 77. There was actually another open registration held in 2005, but it was unsuccessful because of the introduction of the costly bail fund. Only about 14,000 migrants registered (Sciortino & Punpuing 2009). 78. Based on data presented in Martin (2007). 79. Based on data from Vasuprasat (2008) and Sciortino & Punpuing (2009): between 2004 and 2007, the number of deportees increased by 75 per cent. 80. According to Vasuprasat (2008), the 15-per cent compulsory savings to be deducted from the migrants’ wages is in breach of ILO Convention No. 95 entitled, “Protection of Wages”. Thailand, however, has not yet ratified this Convention (ILOLEX). 81. Article V of AFAS provides a window for mutual recognition of professional qualifications by professional regulatory authorities. 82. For more on RCPs, see IOM (2008). 83. See Chapter 6 for further discussion on this.

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2 ECONOMIC COSTS AND BENEFITS OF LABOUR MIGRATION Case of Cambodia Chan Sophal

1. INTRODUCTION Cambodia is a relative latecomer in terms of cross-border labour migration. Most outmigrants travel by illegal or informal means, mostly to Thailand, while the legal option is relatively new, costly, and inconvenient for most. Related government agencies face the increasing challenge of managing labour emigration, which is expected to rise due to both internal and external factors. Since the creation of productive jobs does not keep pace with the annual addition to the labour force of some 250,000, especially given the economic downturn in 2009, the emigration pressure is likely to increase. Higher wages in destination countries such as Thailand, Malaysia, Korea, Japan, and Singapore, are also a pull factor. From 1998 to the end of 2008, about 25,000 workers were officially sent overseas, according to the official statistics of the Ministry of Labour and Vocational Training (MoLVT). However, approximately 180,000 Cambodian workers were in Thailand, many of whom were undocumented (IOM 2006). Thus, Cambodia’s labour migration to Thailand deserves a closer look.

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While it is generally preferable to create jobs and development in the country, it is advisable to have sound management of labour emigration to reduce the risks and costs and maximize benefits for migrants. If well managed, labour migration provides considerable employment and income not only in the short and medium terms, but also in the long term in the case of many countries in the region. Labour outmigration can contribute to poverty alleviation. Remittances to Cambodia, which likely include nonmigrant remittances, were estimated at US$200 million or 3.23 per cent of GDP in 2005. By way of comparison, in the same year, Thailand received remittances of US$1.2 billion, Vietnam, US$4 billion, the Philippines, US$13.5 billion, and Bangladesh, US$4.2 billion (WB WDI 2007). Based on a review of secondary data, reports and interviews with officials (both in Cambodia and Thailand), this study provides a brief overview of the trends and major issues of Cambodian labour migration. However, as part of the regional study, the main focus of the study is to assess the financial costs and benefits at both the individual migrant and household levels. For this purpose, a survey of 526 households in six communities selected purposively, focus group discussions (FGDs), key informant interviews (KIIs), and in-depth interviews of migrants temporarily visiting home were undertaken in September and October 2007. Section 2 provides background information on migration trends, drivers, and policy relating to Cambodia. Section 3 describes the case study methodology and profile. Sections 4 and 5 present the study findings on the economic returns from migration and its impact on households. Section 6 discusses some relevant major issues, and Section 7 concludes.

2. BACKGROUND 2.1 Migration Trends and Drivers The last two decades have seen a change, from forced emigration of refugees or displaced people to the Cambodian-Thai borders due to civil war and political instability during the 1980s to the late 1990s, to voluntary migration in search of work at the borders or well inside Thailand and other countries. A new wave of Cambodians migrating to work in Thailand has emerged in the last decade. There are basically two types of labour migrants: those who work and stay for months or years inside Thailand, and those who work in the areas near the border, mostly doing farm work. The longrange Cambodian migrants are engaged in construction, manufacturing,

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plantation work, domestic help, and fishing, mostly dirty, difficult, and dangerous (3D) jobs (IOM 2006). Despite the return of one million Thai migrants from overseas as a result of the global economic downturn, Thai employers cannot find enough workers to do 3D jobs.1 There are both push and pull factors driving labour migration. Having achieved high economic growth over the last decades, receiving countries need to fill their demand for low-skilled labour due to their economic expansion and the diminishing attraction of such jobs among their relatively well-trained workforce. The availability of jobs in the receiving countries and the lack of jobs in sending countries are major causes of such labour movements. The relatively higher incomes in more developed countries also attract workers from poorer countries. Unskilled, poor labour from the GMS goes to Thailand, while semi-skilled workers from Thailand travel to richer East Asian nations (WB 2007). However, high national income is only one of various conditions generating demand for foreign workers. Many migrants are still found in lower-income countries. Wage differential and high job mobility from low-end occupations to upper occupations have contributed to labour shortages and a mismatch of supply in the labour markets. Hence, labour market distortions and inefficiency have generally contributed to high demand for foreign workers in receiving countries. Cambodia’s labour emigration has increased its momentum since the 1990s, due partly to the return of peace in Cambodia and successive occurrences of natural disasters such as droughts and floods (CDRI 2007b; Chan & So 1999). The initial sending areas were in Banteay Meanchey and Battambang provinces. At present, migrant workers not only come from these areas that used to receive returned Cambodian refugees from Thai border camps, but they also come from many other provinces in the country. Fewer migrants come from rural and remote areas where communications and infrastructure are severely limited. Although Thailand continues to be the largest destination country for Cambodian migrants, other emerging destinations include Malaysia, South Korea, Saudi Arabia, Taiwan, Singapore, and Japan. Table 2.1 suggests a clear relationship between national income and migration, but no relationship between migration and population size. The low-income countries such as Cambodia, Lao PDR, and Vietnam are net sending countries, while the high-income countries such as South Korea, Singapore, and Japan are net receiving countries who accept migrant workers to meet their demand for unskilled or low skilled workers as

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Table 2.1 Population and GDP of Selected Countries, 2005 Country Position in labour Population Population migration (million) growth (%) Cambodia Lao PDR Vietnam The Philippines Thailand Malaysia Korea, Rep. Singapore Japan

Net sending country Net sending country Net sending country Net sending country Net receiving country Net receiving country Net receiving country Net receiving country Net receiving country

14.1 5.9 83.1 83.1 64.2 25.3 48.3 4.3 127.8

1.96 2.26 1.16 1.75 0.84 1.80 0.44 2.39 0.01

GDP per capita (US$, constant 2000) 402 396 538 1,129 2,441 4,437 13,210 25,845 39,075

Source: WB WDI (2007).

their labour force moves upwards. Oddly enough, the poorer laboursending countries — Lao PDR, Cambodia, and Nepal — receive scores of migrant workers from their neighbouring countries, Vietnam, China, and Thailand, both legally and illegally. They normally outcompete the local workers and receive higher pay. This is related to the question of relative skills and other push factors. Worthy of note is that Thailand and Malaysia, both higher, middleincome countries, send and receive migrant workers, while the Philippines, a lower middle-income country, is the largest sending country in Asia. It is also interesting to note that net sending countries generally have higher population growth than net receiving countries. Godfrey et al. (2001), Maltoni (2006), and CDRI (2007a) elaborate a number of push factors causing the increase of emigration, including chronic poverty, landlessness, lack of employment, poor access to markets, materialism, debt, and natural disasters such as drought and flood. These causes are assisted by other factors including improved communication and infrastructure, and increase in demand for unskilled labour in Thailand and other Asian countries, including Malaysia, South Korea, Japan, and Taiwan (AMC 2002). Many countries have found that environmental degradation contributed to the increasing number of internal and later, external migrants. In

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Cambodia, where 70 per cent of land used to be forested, it can be argued that deforestation has created more jobs in clearing land and farming and, as a result, has mitigated the pressure to migrate and work overseas. Nevertheless, once the degraded forests are cleared and farms are developed, workers will have to look elsewhere for jobs. In Thailand, the majority of migrant workers are from Myanmar, followed by those from Lao PDR and Cambodia. Year after year, continuous negotiations have been conducted involving government, business, and labour agencies, in an effort to arrive at a rational way of managing the flow of these workers without unduly affecting the economic prospects of the Thai people (Paitoonpong & Chalamwong 2007). The Ministry of Labour in Thailand granted quotas to migrant workers from the three countries. However, not all could be translated into work permits. For instance, 227,275 jobs could be granted to Cambodian workers, but only 183,541 (81 per cent of the quota) registered, and 110,601 (49 per cent of the quota) were provided with work permits as part of the regularization programme initiated in 2004. This clearly indicates that the implementation of work permits was problematic and should be improved. Cambodian migrant workers are also quite dispersed in Thailand, though there is relative concentration in Bangkok and the eastern and central regions. The quota provided for the eastern region was much higher than the number of work permits actually granted. This means that the demand for Cambodian workers is high. During a field investigation in Thailand, conducted by the author in collaboration with the Thailand Development Research Institute (TDRI), Cambodian workers expressed their interest in obtaining work permits at the required costs. However, there were no services provided, partly because the registration times were infrequent and the intention was not to encourage new workers to enter Thailand illegally and then be granted a work permit. There are basically two types of migrant workers from Cambodia: regular and irregular. Table 2.2 provides statistics on the Cambodian migrant workers officially sent to three countries since 1998. From 1998 to 2008, there were 25,538 official worker trips to Malaysia, South Korea, and Thailand. Of this total, 13,324 were sent to Malaysia, 3,984 to Korea, and 8,231 to Thailand. Although this stock cannot be strictly compared with the flow of migrants working in Thailand, it indicates that the total number of migrants sent officially was less than 20 per cent of the estimated 180,000 who have crossed into Thailand informally (Figure 2.1). The majority of

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13,324

Total

1,998

0 0 307 342 246 73 105 467 231 174 53

Total

M

F

11,326

3,984

3,429

554

120 .. .. .. 86 .. .. .. 195 .. .. .. 504 .. .. .. 803 .. .. .. 500 756 638 118 704 675 519 155 1,309 468 432 36 1,459 1,501 1,341 160 3,045 584 499 85 2,601

F

Korea

8,231

.. .. .. .. .. .. .. .. 445 5,670 2,116

Total

Note: * It should be noted that 180,000 workers are estimated to have worked in Thailand so far. Source: Ministry of Labour and Vocational Training (official statistics).

120 86 502 846 1,049 573 809 1,776 1,690 3,219 2,654

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

M



Total

Malaysia



5,586

.. .. .. .. .. .. .. .. 226 3,935 1,425

M

Thailand*

2,645

.. .. .. .. .. .. .. .. 219 1,735 691

F

25,538

120 86 502 846 1,049 1,329 1,483 2,244 3,636 9,473 4,770

Total

Table 2.2 Number of Cambodian Migrant Workers Sent Officially by Destination Country and Gender

120 86 195 504 803 618 859 1,345 1,845 4,865 3,292

F

11,013 14,525

0 0 307 342 246 711 624 899 1,791 4,608 1,478

M

Total

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Figure 2.1 Number and Proportion of Official Cambodian Migrant Workers by Destination Country (as of January 2008)

Sources: MoLVT, UNIFEM (2006), IOM (2006).

workers sent to Malaysia were women, serving as domestic helpers or housemaids, while most of those to South Korea were men, working in factories. Although Thailand has received migrant workers from Cambodia since 1994, most are undocumented irregular workers. Official sending only started in 2006, following the adoption of the MOU on labour cooperation between Thailand and Cambodia. The registration rounds conducted by the Thai Government, however, presented the opportunity for irregular Cambodian migrant workers to legalize their employment status; as a result of the 2004 registration, about 111,000 of them received their work permits. For those who still have an irregular status, the Cambodian MoVLT suggested that the Thai Government deport them so that they could be sent back again by legal means. However, this legal means, which costs about US$600 per worker, is too expensive for many workers. Cambodia cannot simply specialize in or rely on sending workers overseas for long-term development. However, if managed well,

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employment overseas can mitigate demographic pressure in the medium term, while employment creation in the country does not keep pace with the rapid increase in the labour force of 250,000 new labour market entrants per year, which is put into better perspective when compared with the current 350,000 jobs in the whole garment industry, by far the leading industry in Cambodia. There has been slow progress in the expansion of jobs in the garment sector, which started with about 200,000 workers in 2000. It is unlikely that this sector will be able to employ substantially more workers, given that it is already declining, having faced both the global economic downturn and tougher competition from China and other countries, as the favourable market access concessions provided by the United States and the European Union expired in 2008. The country also benefits from migrant remittances which, as mentioned earlier, reached about US$200 million in 2005. This is modest compared with the remittance inflows to Vietnam and Thailand which amounted to US$4 billion and US$1.6 billion respectively the same year (Table 2.3). As more Cambodians are expected to migrate, specifically to higher-paying destination countries, remittance inflows to the country are however expected to increase.

Table 2.3 Workers’ Remittances and Compensation Received by Employees Country

1996

1998

2000

2002

2003

2004

2005

US$ milllion The Philippines Bangladesh Vietnam Thailand Cambodia Lao PDR

4,875 5,130 6,212 9,735 10,243 1,345 1,606 1,968 2,858 3,192 .. .. .. 2,714 2,700 1,806 1,424 1,697 1,380 1,607 12 120 121 140 138 45 50 1 1 1

11,471 13,566 3,584 4,251 3,200 4,000 1,622 1,187 177 200 1 1

as % of GDP The Philippines 5.88 Bangladesh 3.31 Vietnam Thailand 0.99 Cambodia 0.34 Lao PDR 2.40

7.87 3.64 .. 1.27 3.85 3.91

8.24 12.75 4.18 6.02 .. 7.74 1.38 1.09 3.31 3.27 0.06 0.05

12.66 6.16 6.81 1.12 3.01 0.05

12.65 6.32 7.08 1.00 3.37 0.04

13.70 7.08 7.63 0.67 3.23 0.03

Source: WB WDI (2007).

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2.2 Migration Management 2.2.1 National Institutional Framework It is important to understand how international labour migration is institutionally managed in order to understand the complexity of and major issues on cross-border labour migration of Cambodian workers. Four ministries are actively engaged in the administration of international labour emigration from Cambodia. They are MoLVT, Ministry of Interior (MoI), Ministry of Foreign Affairs and International Cooperation (MoFAIC) and the Council of Ministers (Figure 2.2). There are also two interministerial institutions comprising members from these four institutions which have different mandates. The Interministerial Working Group for Implementation of MOU with Thailand is to mainly implement the MOU, while the Interministerial Taskforce for Migration (IMTM) is to mainly discuss migration issues and provide recommendations to the Royal Government of Cambodia (RGC).

2.2.2 Bilateral Management The MOU between Thailand and Cambodia was signed on 31 May 2003. It spells out how to send new migrants legally and touches on the resolution of illegal migrant employment. The two processes are illustrated in detail in Figure 2.2. As part of the implementation of the MoU, the Cambodian Government issued a decision on 10 January 2005, which created the above mentioned Interministerial Working Group for Implementation of the MoU with Thailand. This committee is tasked to identify Cambodian nationals working in Thailand. This stemmed from the reasonable argument that the Myanmarese, Lao, and Cambodians look alike and thus there is a need to verify the number of Cambodian migrant workers. The committee travelled to Thailand to provide the certificate of identity (CI) to Cambodian migrants who had been working in Thailand and worked alongside the Thai interministerial taskforce which comprised staff from Thai Ministry of Labour, Ministry of Interior, and Ministry of Health. In 2004, the Cambodian committee interviewed Cambodian workers and issued them with a CI for the price of THB1,500, whereas the Thai committee provided work permit to the workers and charged about THB4,000, which included the

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Department of Employment and Manpower

General Directorate of Labour

Ministry of Interior

Department for Issuing Passports

Department of AntiHuman Trafficking

National Committee for Population and Development

Council of Ministers

Interministerial Working Group for implementation of MOU with Thailand (chaired by the Director General of MoLVT)

Manpower, Training and Overseas Sending Board

Ministry of Labour and Vocational Training

Source: Author’s summary based on various documents and interviews.

Embassies

Ministry of Foreign Affairs

Interministerial Taskforce for Migration (co-chaired by Minister of Women’s Affairs and Minister of Labour and Vocational Training)

Figure 2.2 Cambodian Institutions Engaged in International Labour Migration Management

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cost of a health check for inclusion in the health insurance scheme. Thus, the average total cost of obtaining a CI and work permit, which was valid for only two years, was about THB5,500 in 2004. The MOU stipulates the procedure for sending migrant workers legally to Thailand. The process, based on practice, is summarized in Figure 2.3. Recruitment according to the labour demand in Thailand is at the core of this formal emigration process. On receiving information about job vacancies, recruitment agencies place advertisements on the radio, in local newspapers, and through their networks, to generate interest and applications from potential workers. When workers come to their office to apply for work overseas, they have to submit legal supporting documents, mainly an identity card or family book, to be able to have their application form processed at MoLVT. Not all applicants have the necessary documents to support their applications, contributing to some delay in the process. Alternatively, there are brokers in the provinces who recruit workers in the villages or communes and the recruitment companies pay them up to US$40 per applicant. This is practised widely and raises the cost of sending workers overseas. In some cases, local teachers or commune councillors fill out the application forms on behalf of the candidates for which they are paid a fee of US$5 to US$20 per applicant by the provincial broker, depending on the number of applications obtained.2 Applicants are then required to prove their physical competency by passing a medical examination at a public hospital in Phnom Penh. They are responsible for paying the cost of the medical examination which is about US$10. It is widely believed that the medical examination is just a formality. The next step is to wait for approval from the Department of Employment and Manpower of MoLVT, which also costs some money. With the approved list of workers, the Minister of MoLVT sends a letter to the Minister of Interior to request issuance of passports for the workers. The passport cost increased from US$20 to US$45 in March 2007. The cost is higher, however, for passports processed more quickly. When ready, workers are transported by bus to the workplace in Thailand through the Poi Pet border checkpoint. Most of them receive little briefing about the new areas and work conditions, as will be discussed in more detail later. The brokers in Thailand send their agents to pick up workers from Poi Pet by bus. It costs only about US$10 per person on average to transport workers from Poi Pet to the workplace inside Thailand.

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Figure 2.3 Recruitment Flowchart

Cambodian Embassy in Thailand

Labour demand from MOL, Thailand based on approved indicative demand from employers

Ministry of Foreign Affairs, Cambodia

Thai Embassy in Cambodia

MLVT reviews & informs agencies on labour demand

Provincial Labour Office reviews employer demand for importing workers

Employers in Thailand seek quota from MOL and /or directly contact counterpart agencies in Cambodia for workers (send copy of documents to agency)

Employers sign contract with agency & send advance expenses (50%) to cover recruitment costs.

Employers receive name list, inform MOL for arranging visa with Thai embassy in Cambodia

Employers receive workers, pay another 50% to agency, arrange health check, and obtain work permit

Agencies seek approval from MLVT based on agreed quota to advertise for workers

Advertise/inform broker/agents in the province/ district/ village on labour demand & required qualifications

Sign service & loan contracts with workers, arrange official documents (health check, ID, passport)

Send name list to employer, sign employment contract, obtain visa, provide pre-departure training, to workers, dispatch to Thailand & inform MLVT, employer before sending

Monitor & ensure compliance with contract by employers & assist workers who are facing problems

Workers start working in employer premises Recruitment time 3-6 months (1-2 months in Thailand & 2-4 months in Cambodia) Average costs THB20,000 -25,000.

Take loan from employer or agency or self-financing

Source: Author’s summary based on various documents and interviews.

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3. CASE STUDY METHODOLOGY AND PROFILE 3.1. Methodology 3.1.1 Selection of Study Communities A field trip was conducted from 11 to 13 August 2007 to visit several communities in four provinces where substantial numbers of outmigrants were reported. These are Battambang, Banteay Meanchey, Siem Reap, and Kampong Thom provinces. A total of fifteen villages, comprising 1,129 households, were covered in this preliminary visit. Commune authorities, village chiefs, and villagers were interviewed for basic information on outmigration. Following the pre-survey trip, six sending communities were selected for study. Since Thailand is by far the dominant destination for Cambodian migrants, five of the study villages were chosen in this regard. The other village, Sramor Meas, has many of its migrants in Malaysia. Some key relevant characteristics of the communities are presented in Table 2.4 and their locations are shown on the map in Figure 2.4.

3.1.2 Household Survey A household survey was conducted in September and October 2007 on 526 households residing in the six selected villages. The sample households were purposively selected to represent two groups: households with labour migrant members and households without labour migrant members. The composition of the two groups in the sample is the same as that in the population, so, overall, the total sample represents the total population. On the first day in the village, the survey team worked with the village authorities in listing from door to door, to produce the two lists of households. As earlier mentioned, there were a total of 1,129 households in the six study communities. Out of this total, 55 per cent or 616 households had members who had worked in Thailand in the past five years (Table 2.5). About 50 per cent of the migrant households, and between 30 and 50 per cent of the non-migrant households, were selected randomly for interview. A team of four conducted the household survey. Each enumerator interviewed six households per day; thus, twenty-four households were interviewed in a day. It took four days to complete the household survey

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Table 2.4 Key Characteristics of Study Communities Village Number of Estimated Key households % of destination households of migrants with migrant members

Differentiated characteristics

1. Sramor Meas, Prey Svay 263 29 Malaysia commune, Morng Reussey district, Battambang province

Muslim ethnic group

2. Krasaing, Chroy Sdao 209 72 Thailand commune, Thmar Korl district, Battambang province

Migrating to Thailand

3. Kork Thnung, Banteay 105 53 Thailand Neang commune, Prasath district, Banteay Meanchey province

Lao ethnic groups, doing well by migrating to work in Thailand

4 Romduol, Phnom Leap 280 50 Thailand commune, Preah Net Preah district, Banteay Meanchey province

Quite poor despite labour migration

5. Siem Peay, Preah Damrey 162 83 Thailand commune, Stoung district, Kampong Thom province

Quite far from Thailand and the national road

6. Knoy, Prey Phnao 110 57 Thailand commune, Pea Raing district, Prey Veng province

A province very far from Thailand, closer to Phnom Penh and Vietnam

Source: CDRI field trip 11–13 August 2007.

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Krasaing Sramor Meas

Kork Thnung

Rumduol

Siem Peay

Khnoy

Figure 2.4 Locations of the Six Study Communities

8

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1,129

263 209 105 280 162 110 526

88 90 74 91 91 92 47

33 43 70 33 56 84 616

75 150 53 140 135 63 55

29 72 50 50 83 57

310

48 49 39 45 67 62

59

55 54 53 49 74 67

Sample HHs as Number of Migrant Number of Migrant HHs as a percentage migrant HHs* households as migrant HHs a percentage of total in the village a percentage in the sample of total HHs HHs in of total HHs in the sample the village in the village

Note: *Migrant households refer to the households with migrant members in Thailand in the past five years. Source: CDRI survey of 526 households in six villages in September and October 2007.

Total

Sramor Meas Krasaing Kork Thnung Rumduol Siem Peay Knoy

Village Number of Number of HHs in HHs in the village the sample

Table 2.5 Number of Households (HHs) in Study Villages and Survey Sample

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in the study villages; around 100 households per village were surveyed. A census was conducted in the smaller villages of Kork Thnung and Knoy where there were only some 100 households. The household survey primarily captured the following themes: household assets, income and expenditure; socio-economic characteristics of migrants; economic costs and benefits of migration; social impact of migration; and scale, mechanism, and impact of remittances. Recall was a major way of obtaining information for the past five years. Households were asked to compare their present situation with that before and after their members migrated.

3.1.3 Qualitative Approach 3.1.3.1 Focus Group Discussions Following the household survey, three FGDs were conducted in each village with the following: (1) eight participants among the knowledgeable villagers and authorities to recall trends over the past ten years and collect information related to the whole village; (2) eight participants representing better off households with successful migrant workers; and (3) eight participants representing households that have migrant workers, but remain poor. Participants in the FGDs were randomly selected from representatives of households. Together with the key informant interviews, the FGDs took about two days to complete. 3.1.3.2 Key Informant Interviews In-depth interviews were conducted with key informants of the study villages as well as government officials, external development partners, and NGO staff members. At the community level, key informants included moneylenders and money transfer agents, local NGOs active on labour migration issues, commune councillors, and district authorities. 3.1.3.3 In-depth Interviews with Migrants Visiting and or Returning Home It was expected that some migrant workers would return home during Pchum Ben, a prominent Buddhist ceremony, between 1 and 15 October 2007. Enumerators found around twenty migrant returnees for interviews, which covered issues such as jobs and living conditions, work experience, income, choice of destination, risks, remittances, and future plans.

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3.2. Profile 3.2.1 Prevalence of Cross Border Migration Since each study village was carefully and purposively selected, the survey sample was intended to suffice in representing the stories of interest for the whole village. The sample size in each of the six villages is relatively large, varying from 33 to 84 per cent of the total village population (Table 2.5). Overall, 526 households out of the 1,129 households in the study villages were surveyed. Between thirty-nine and sixty-seven households in each village sample were migrant households. In total, there were about 310 migrant households, which is about 59 per cent of the entire sample, and 50 per cent of the total number of migrant households in the study villages. Siem Peay had the highest share of migrant households, accounting for 83 per cent of the total households in the village. Sramor Meas, the village with most of its migrants in Malaysia, had the smallest share at 29 per cent. Sramor Meas is home to Muslims, or Chams in Khmer, whose characteristics well match those of Malaysian Muslims (See Box 2.1 for an illustrative case). The sample migrant households reported a total of 538 migrants between them, all irregular migrants, with Siem Peay accounting for the biggest percentage, followed by Krasaing. About 65 per cent of the migrants were men. Only Kork Thnung had more female than male migrants. About 90 per cent of the migrant workers from Knoy village, the furthest study village from Thailand, were male (Table 2.6). Most migrants from this village worked in the fishing industry on the coast of Thailand. All those working on fishing boats were men, as found during the field visit to Thailand.

3.2.2 Factors Causing Migration FGDs in the villages explored the reasons that pushed many of their inhabitants to migrate and even risk their lives entering another country illegally. In general, respondents cited poverty and lack of incomegenerating activities at home, in the areas near their village and elsewhere in Cambodia, as the main reason for migrating to work in Thailand. Higher wages in Thailand are a key pull factor, but given the choice, the respondents would strongly prefer to work in Cambodia, even for 20 to 30 per cent less than the average wages in their localities. This would at least enable them to work close to their families. One particular village, Siem Peay, seemed to have a distinct reason for much of its emigration.

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BOX 2.1 Case of a Male Migrant Worker in Malaysia You Rimas, 42, a Muslim living with his family of six in Sramor Meas Village, Svay Daun Keo Commune, Maung Reussey District, Battambang province, has been to Malaysia to work. He decided to work in Malaysia to earn more money to support his family. Rimas was introduced to a man said to be able to help with his passport application. Once he got his passport, he flew to Malaysia with a few other Muslims who have relatives in Malaysia and stayed there on a one-month tourist visa. To get to Malaysia, Rimas spent around US$500 on passport and air ticket. Rimas found a job which paid him US$150 a month. He lived in fear of being arrested by the police because he did not have a work visa. He faced great difficulties in hiding from the police and looking for new jobs when his employment term finished. Despite these difficulties, Rimas managed to stay and work in Malaysia for thirteen months. Rimas mentioned that the wages for the same of work in Cambodia would not have been much less than those in Malaysia. But what he gained that could not be provided through working in Cambodia was life experience and language skills. Rimas has been able to save enough to buy more cows, believing that these cows will help his family have a better living. He showed no interest in going back to work in Malaysia because he wanted to stay and look after his family. Rima suggested that the government create more jobs in Cambodia so that workers are not flowing out of the country because the working conditions in the country are better than those overseas. However, the government should provide better conditions for those who want to work overseas and he insisted that migrants should be given legal advice and any other support they might need during their stay in a foreign country. Source: CDRI: in-depth interview with migrants in September 2007.

Table 2.6 Gender Distribution of Sample Migrant Workers Village



Sramor Meas Krasaing Kork Thnung Rumduol Siem Peay Knoy Total

Number

Percentage

Male

Female

Total

Male

Female

Total

34 62 33 53 87 80

33 43 38 26 40 9

67 105 71 79 127 89

51 59 46 67 69 90

49 41 54 33 31 10

100 100 100 100 100 100

349

189

538

65

35

100

Source: CDRI survey of 526 households in six villages in September and October 2007.

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Many villagers had lost a lot of money to a bogus saving scheme created by a few people.3 Risking the venture to Thailand was the last resort for them; their initial success led more to follow in their footsteps. In general, households with migrants cultivated less rice. The survey found that in five of the six villages, the per centage of households without migrants that cultivated sufficient for rice for their own consumption, or a surplus, exceeds that of those with migrant members. The differential is most significant in Rumduol village, one of the poorest villages among the case villages (Figure 2.5). Participants in the FGDs and KIIs suggested that rice productivity in the village is very poor (0.5 to 2 tonnes per ha) due to lack of irrigation and fertilizer, vulnerability to adverse weather changes, and lack of farming opportunities for many months of the year.

3.2.3 Destinations Most of the migrants from the six study villages were in Thailand, the exception being Sramor Meas. Migrants from Kork Thnung, Rumduol, and Knoy travel deep inside Thailand while migrants from Krasaing and Siem Peay stay just near the borders, doing mostly agricultural work (Table 2.7). Note, however, that even in the villages where the majority of migrants Figure 2.5 Percent of Sample Households with Sufficient* or Surplus Rice Output Figure 3. Percentage of households having sufficient rice or more from own cultivation HH with MG

HH without MG

100 90 (%) 80 70 60 50 40 30 20 10 0 Sramor Meas

Krasaing

Kork Thnung

Rumduol

Siem Peay

Knoy

Note: *Sufficient means the household produced enough rice for its own consumption. Source: CDRI survey of 526 households in six villages in September and October 2007.

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263

3 24 66 71 18 81

Inside Thailand

190

0 75 1 2 108 4 60

57 3 0 0 0 0 513

60 102 67 73 126 85

Along Malaysia Total Thai border

Number

Source: CDRI survey of 526 households in six villages in September and October 2007.

Total

Sramor Meas Krasaing Kork Thnung Rumduol Siem Peay Knoy

Village

51

5 24 99 97 14 95

Inside Thailand

37

0 74 1 3 86 5

Along Thai border

Percentage

Table 2.7 Destinations of Sample Migrant Workers in Their Most Recent Trip

12

95 3 0 0 0 0

Malaysia

100

100 100 100 100 100 100

Total

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work near the border, a significant number still eventually work in areas deep inside Thailand, such as Bangkok. Kork Thnung village in Banteay Meanchey province has an interesting background. The majority of the villagers are ethnic Lao, and they or their descendants having lived in Lao PDR. They can speak Thai well, as do most Lao. With this advantage, they have a longer experience of working in Thailand doing various jobs including housework. It is the village that has the most migrants working as housemaids. Since they speak fluent Thai, they are less vulnerable and are more successful in the migration business. The village is probably the best off among the six study villages.

3.2.4 Occupation Overall, the majority of migrants do agricultural and construction work. Fishing is the third largest employment for migrants from the six study villages, and a significant proportion work in factories in Thailand. There is no significant difference in terms of gender distribution in construction, agriculture, manufacturing, and other jobs. However, mostly male migrants work in the fishing industry, and mostly female migrants do housework (Table 2.8). According to the FGDs and key informant interviews, migrants do all sorts of things, including transplanting rice, sugar cane planting and harvesting, tree planting, restaurant services, working on rubber plantations, and raising pigs. It is acknowledged that most of their occupations are 3D jobs. The type of work undertaken is considerably different among the study villages. In their most recent trip to Thailand, sample migrant workers from Sramor Meas generally did construction (mostly men) and factory work (mostly women) in Malaysia. The overwhelming majority from Krasaing and Siem Peay villages found farm work in Thailand, mostly near the border. The majority from Knoy village worked in the fishing industry (mostly men), while most of the migrants from Kork Thnung village worked in the construction sector (Table 2.8).

4. ECONOMIC COSTS AND BENEFITS 4.1 Earnings As mentioned above, higher earnings from working in Thailand serve as a strong pull factor. During the time of study, the average wage for a

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Male Female Both

Male Female Both

Male Female Both

Male Female Both

Male Female Both

Male Female Both

Krasaing

Kork Thnung

Rumduol

Siem Peay

Knoy

All villages

99 34 133

18 1 19

11 1 12

26 10 36

24 21 45

4 0 4

16 1 17

Construction

138 80 218

0 0 0

71 37 108

11 3 14

1 1 2

51 34 85

4 5 9

Agriculture

Source: CDRI survey of 526 households in six villages in September and October 2007.

Male Female Both

Sramor Meas

Village

62 5 67

58 3 61

4 2 6

0 0 0

0 0 0

0 0 0

0 0 0

Fishing

4 24 28

0 2 2

0 0 0

0 5 5

1 11 12

2 4 6

1 2 3

House work

Table 2.8 Occupation of Sample Migrant Workers in Their Most Recent Trip

15 24 39

0 2 2

0 0 0

6 2 8

1 1 2

2 0 2

6 19 25

Factory

18 10 28

0 1 1

0 0 0

7 3 10

3 3 6

3 2 5

5 1 6

Others

336 177 513

76 9 85

86 40 126

50 23 73

30 37 67

62 40 102

32 28 60

Total

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BOX 2.2 Case of a Male Migrant Worker in Thailand Chem Chan, 41, married with four children and living in Krasaing Village, Tameun Commune, Thmar Kaul district, Battambang province, was a seasonal migrant worker in Thailand. In the last five years, he has spent at least four months a year working in Thailand. He chose to work in Thailand because his household owned no agricultural land, and there were no well paid jobs available in his village. Chan travelled with fifteen other villagers to the border pass point and paid 70,000 riels for an initial seven-day border pass. The pass has to be renewed weekly by paying 2,000 riels for every renewal. The payment for renewing the pass posed no financial constraint on Chan, but he had to travel to the border to have the pass renewed and it cost him 7,000 riels one way and a whole day, which translated to losing a day’s work. Chan made 10,000 riels a day and spent, on average, 2,500 riels on food. He saved approximately 150,000 riels per month. He never sent money home during his stay in Thailand; he brought all his savings home when he visited his family. With these savings, Chan was able to allocate some money for his children, run a small grocery store at home, buy fishing gear, and repay debt. These are now the sources of income that help sustain his household livelihood. Chan planned to lease more fields to increase his rice cultivation so that his household would not face food shortage. Although Chan earned more money, working far away from home posed an emotional stress on him. He had to leave his wife alone to take care of the children. Visiting his family cost a lot of money that he did not want to waste, so he restrained his desire to visit his family unless it was necessary. Chan said that he would not go to work in Thailand if there were regular jobs paying around 8,000 riels per day in or near his community. The available jobs in his community at the moment pay around 5,000 riels per day, which is far too low to maintain a decent household living. Chan suggested that the government consider lowering the cost of the initial border pass from 70,000 to 30,000 riels. Source: In-depth interview with migrant workers in September 2007.

day’s work that villagers could earn was around US$1.5 to US$2, whereas comparable work in Thailand offered US$3 to US$6 and in Malaysia, US$4 to US$9 (Table 2.9). In their most recent trip, sample migrant workers in Thailand near the Thai-Cambodian border earned the least — less than US$3 per day — with the smallest variation (standard deviation less than US$1) on average. A real case is narrated in Box 2.3 below. Monthly earnings from doing agricultural work along the border amounted to only US$70

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Table 2.9 Average Earnings of Sample Migrant Workers on Their Most Recent Trip to Thailand Monthly earnings Daily wages (US$)* (US$)* Destination Type of work Standard Standard N Mean Mean deviation deviation Inside Thailand

Construction Agriculture Fishing Housework Factory Others

115 27 24 22 14 21

4.59 3.88 3.80 3.73 4.25 4.90

1.12 1.47 1.69 1.51 1.47 3.73

116 101 114 109 120 131

38 42 51 44 38 110

Along Thai-border

Agriculture Fishing

183 8

2.79 2.89

0.83 0.67

70 169

43 89

Malaysia

Construction Agriculture Housework Factory Others

15 7 6 22 6

8.88 6.22 3.47 5.79 6.38

2.28 1.61 1.55 1.42 2.60

197 121 96 135 137

75 62 59 50 40

Note: * This is the level of earnings for the irregular migrants surveyed. The regular or MOU migrants make about US$200 per month in Thailand. Source: CDRI survey of 526 households in six villages in September and October 2007.

on average, about the same as the average monthly wage of garment workers in Phnom Penh. The issue, however, is that the garment industry in Cambodia has the capacity to employ only 350,000, while about 250,000 youths enter the labour force every year seeking work.

4.2 Costs Depending on the destination and distance from the migrants’ homes, the fixed cost for migrants to reach their destinations illegally varies from as little as US$4 (to reach just the other side of the border in Thailand) to US$1,370 (to go to Malaysia), based on the survey results. However, even the journey to Malaysia can cost just US$38 for those who know how to make the overland trip through Thailand on their own. The cost for an illegal migrant to get to a workplace in Bangkok or elsewhere deep inside Thailand is ordinarily between US$70 and US$100. This is in a way like the “smuggling cost”. It is the fee charged by ringleaders in both Cambodia and Thailand to smuggle migrants from the village in Cambodia to the

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BOX 2.3 Case of a Young Female Migrant Worker in Thailand Chantha, a nineteen-year-old woman from Rumduol village, Phnom Leap commune, Preah Net Preah district, Banteay Meanchey province, grew up in a poor family of four. She was unemployed, heard from other villagers that there were well-paid jobs available in Thailand, and decided to go there to seek work. She contacted a ring leader who had already taken a few villagers to Thailand via the Beung Trakuon border gate. To reach the intended workplace, Chan Bory province, the ringleader asked her for 250,000 riels (about US$60). Chantha’s household could not afford to save such a big sum of money, and was forced to borrow the money from the moneylender. The 250,000 riels paid to the ringleader was not inclusive of everything. Chantha needed to pay 30,000 riels more for her travel from her home to the Beung Trakuon border gate, which took her four hours in two stages, Rumduol to Svay Sisophon, and Svay Sisophon to Beung Trakuon. After she arrived at Beung Trakuon, the ringleader called another ringleader in Thailand to pick up Chantha and others and take them to Chan Bory. Chantha earned 14,000 riels per day while her daily consumption cost her only 2,500 riels. Chantha worked hard, but was happy that her hard work paid off. She expected to save 172,500 riels per month. With that saving, she could pay off the debt and send some money to support her family. On the fifteenth day of her work, her expectations came to a sudden end and her hope completely vanished when she and other fellow villagers were arrested and imprisoned by the Thai police. In the end, she could not even recover the cost of transportation and the fee paid to the ringleaders. She was kept in an overcrowded room, and provided with unacceptably poor quality food. The room was so packed with illegal migrant workers that it was impossible to move about. On the third day of her imprisonment, the Thai police extradited her and others to Cambodia via the Poi Pet border check point. Working in Thailand, Chantha had to live with fear of arrest and imprisonment by the Thai police. Also there are some employers who exploit workers’ illegal stay by refusing to pay their salaries and threatening to report those who voice their dissatisfaction to the police, the end result of which has never been pleasant. Chantha said that if there were regular jobs available in her community or near her village, even if they only paid 5,000 riels per day, she would take that job because she could stay with her family free of fear and threat. Moreover, Chantha wants to learn better rice farming techniques which could help her household produce higher yields, or to meet her household’s rice consumption needs at least. Although Chantha had such a horrific experience, she conceded that working in Thailand allows workers to earn more income which can lift their families out of extreme poverty; learn new skills; and get to know foreign places. However, these expectations are bound to the condition that workers are fully protected by laws; otherwise, workers are simply vulnerable to exploitation by foreign employers. Source: In-depth interview with migrant workers, September 2007.

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Inside Thailand Malaysia

Inside Thailand Malaysia Along Thai border

Inside Thailand Along Thai border

Inside Thailand Along Thai border

Inside Thailand Along Thai border

Inside Thailand Along Thai border

Sramor Meas

Krasaing

Kork Thnung

Rumduol

Siem Peay

Knoy

81 4

18 108

70 3

66 1

21 3 78

2 55

N

102 28

69 9

87 52

52 4

71 649 14

94 429

Mean

Source: CDRI survey of 526 households in six villages in September and October 2007.

Destination

Village

40 6

26 8

39 47

28 —

43 54 11

44 275

Standard deviation

Table 2.10 Average Fixed Costs Incurred by Sample Irregular Migrant Workers (US$)

18 25

10 4

6 5

5 4

3 618 3

63 38

Minimum

236 38

113 63

238 100

88 4

177 711 75

125 1,370

Maximum

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workplace in Thailand. This fee is inclusive of transportation costs, but migrants need to have significant amounts of pocket money as well. It was reported by a key informant in Thailand during the fieldwork there that ringleaders in Thailand (who are Thai) receive extra payment from employers for delivering migrant workers, which can be as much as THB2,500 or about US$70 (using the exchange rate of THB35 to US$1). The whole trip is conducted underground. Migrants currently working in Thailand, but having a break at home, told the study team that they were guided to cross the border at night. They then had to walk through remote fields for several hours before they were put in a waiting pick-up truck. They were laid in the truck just like logs and were covered with plastic for the journey of several hours to reach the work sites. The common points to cross into Thailand are Malai and Boeung Trakuon. Those travelling to work in Malaysia through recruitment agencies in Phnom Penh go by land via Thailand which takes two nights and three days, according to the FGD participants and individual migrant workers. As migrants are generally not from the better off households, they are unlikely to have money to pay for trips to Thailand, especially those going deeper into Thailand which, as cited above, can cost US$70 to US$100. They tend to take loans, mostly at interest rates of 4–5 per cent per month, as reported in the FGDs. Our survey found that, overall, about half of the sample migrants took loans to pay for the fee and only 8 per cent could use their own savings, while 42 per cent tapped their household savings (Table 2.11). Key informants participating in an FGD in Rumduol village believed that all the migrants had to borrow money to cover expenses

Table 2.11 Sources of Financing Migration, Percentage of Sample Migrants Village Own savings Household savings Sramor Meas Krasaing Kork Thnung Rumduol Siem Peay Knoy All villages

17 3 6 0 3 20 8

9 59 33 23 50 55 42

Took loan

Other

Total

64 38 61 74 47 25 49

10 0 0 3 0 0 2

100 100 100 100 100 100 100

Source: CDRI survey of 526 households in six villages in September and October 2007.

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BOX 2.4 Case of a Seasonal Migrant Worker at the Thai Border Ratha, aged twenty-five, lives in Siem Peay village, Preah Damrey commune, Stoung district, Kampong Thom province, with his wife and one child, and was a seasonal migrant worker in Thailand near the Thai border. In the last five years he and his wife have spent at least four months a year working in Thailand at, or near, the Thai border, leaving their child behind in his parents’ care. They went to work in Rak Yorng province, Thailand, to earn the money to pay off their debt and expected to save some money to build their own home. Ratha and his wife travelled to the Beung Trakuon border point and waited for five days before entering Thailand guided by a Thai ringleader. The total cost of the guide is THB2,500 per person. The first THB500 was prepaid to the ringleader before getting on the pick-up truck that transported them to the farm, with the balance of THB2,000 to be deducted from their monthly salary within four months off starting work. Ratha worked illegally in Thailand. He could have asked to obtain a six-month work permit issued by the Thai authority, but he could not afford THB3,800 for the permit. The permit is only valid for six months and the renewal costs THB3,200. Ratha managed to save an average of 250,000 riels per month worked in Thailand. Besides this monetary gain, he has learned some Thai language for communication, handicraft skills, such as furniture and souvenir making, and agricultural techniques, such as cucumber cultivation and pest management. Ratha expressed no intention of working illegally in Thailand, provided regular jobs are available in the village or nearby the commune even if they only pay 8,000 riels per day. The irregularly available jobs in the village or commune currently pay only 5,000 riels per day. He said that he will save money to buy a water pump to grow cucumbers, since he has learned plantation techniques from Thailand. He urged the Cambodian Government to negotiate with the Thai Government to allow Cambodians to work in Thailand on a lower-cost work permit. He suggested that if the six-month work permit cost only 150,000 riels and the six-month renewal only 100,000 riels, people would be willing to work legally so that they could be lawfully protected and free from exploitation. Source: In-depth interview with migrant workers in September 2007.

to get to Thailand. However, our household survey found that 74 per cent of the migrants from Rumduol took loans, while 23 per cent used household savings. One of the participants in the FGD comprising only returned migrant workers in Rumduol village reported having taken out two loans to pay for her two trips to find work in Thailand in the past four months. Both her trips were cut short as she was arrested while working at a construction site in Bangkok and sent home for having no

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legal documents. She was in debt to the sum of about THB6,000 (or US$170) which, at the time of study, she was unable to repay. She later chose to work as a housemaid in Banteay Meanchey provincial town. The fixed cost to get to a work site in Thailand via formal means through a recruitment agency is about US$700. Moreover, prospective migrants have to wait several months for the process to be completed before they can leave. This is quite prohibitive for many who cannot even afford to pay US$70–US$100 without having to take out an expensive loan. This is why recruitment agencies and employers in Thailand find ways of advancing the payment of US$600 (some agencies require migrants to put down US$100 to cover some costs such as passport and health examination fees). Most of the money comes from the employer in Thailand. However, a number of workers do not wait to repay the cost over the period of one year as agreed in their contract with the company. After landing in Thailand and working for a couple of months, they leave the workplace to join the massive number of underground unregistered migrant workers.

4.3 Net Benefit Table 2.12 compares the financial costs and benefits of individual migrants to Thailand, by both irregular and legal (sent under an MOU) routes. For the irregular channel, this can be done for three timeframes, daily, monthly, and

Table 2.12 Net Benefits of Emigration to Thailand (US$)

Irregular

Legal (MOU)

Daily Monthly Yearly Daily Monthly Yearly

2 years

Total Benefits 5 Direct   (net income) 5 Overtime Total Costs 2   Fixed 0   Variable 2 Total net   earnings 3

4 years

100

1,000

10

230

2,530

5,060 10,120

100 4 70 10 60

1,000 80 700 100 600

6 880 4 1 3

150 1,760 120 30 90

1,650 3,520 1,340 350 990

3,300

6,600

2,680 700 1,980

4,660 700 3,960

30

300

6

110

1,190

2,380

5,460

Source: CDRI survey of 526 households and migrants in six villages in September and October 2007 and migrants in Thailand in November 2007.

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yearly. The figures are rounded up for simple explanation and calculation to highlight the major differences between the two groups. For the legal routes, there is more predictability so the cost and benefit estimation can be done for more time frames, namely daily, monthly, yearly, two years, and four years. Data were obtained from the interviews with migrant workers in Thailand and are also simplified for big picture analysis. Workers sent under an MOU to Thailand can initially work for a period of two years and renew their employment for a maximum of another two years. The total net earnings per year of an irregular migrant are only US$300, while those of a legal migrant are US$1,190. This is because the total benefit from working outside the MOU framework amounts to only US$1,000 on average, compared with US$2,530 for the legal route. It is clear that migrating through legal means is far better in terms of financial earnings, not to mention safety. The cost of formally sending migrant workers to South Korea decreased from as high as US$3,000 per worker when private companies were processing the sending, to US$892 when the government, that is, the Manpower Training and Overseas Sending Board (MTOSB), took charge from January 2007 onwards. This is a massive success which accrues directly to workers. The huge reduction was due to the elimination of the heavy “dispatch fee and expenditure”, which were charged by a private company (Table 2.13). The MTOSB did not charge migrant workers any of these fees, nor the education or orientation fee, or government tax. Since January 2007, when it assumed its task, to the time of this study, the MTOSB has sent about 800 workers. This is a concrete example which proves that the reducing the cost of sending workers overseas is quite feasible.

4.4 Other Benefits and Costs The FGDs with migrant households revealed other benefits from migration besides earning money, including gaining knowledge of the Thai language, learning truck and tractor driving skills, apprenticeship training, construction, and various factory skills. However, FGD participants complained about difficulties, such as the absence of household members to help with household chores, looking after the elderly and young children, raising animals, collecting water and firewood, and doing the farming. There was also great concern among parents or relatives at home with regard to the safety and well-being of family members who are working overseas. They think about their food

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Table 2.13 Cost of Sending Cambodian Workers to South Korea by Expenditure Item (US$) # Description By MTOSB

By private company (CLS)

Total Fee 892 2,955   1 Korean language 30 — proficiency test   2 First medical 42 180 check-up1   3 Second medical 25 check-up   4 Passport 50 200   5 Visa Issuance 50 50   6 Pre-departure 120 — training at NPIC*   7 Letter of inquiry 35 40   8 Airfare 420 460   9 Airport tax 18 18 10 Cambodian style 20 — uniform & name tag kit 11 Escort and 27 — assistance in escorting 12 Application 5 — Education & —   orientation fee2 Government tax — 150 Accident insurance — 30 Dispatch fee — 575 Dispatch expenditure — 1,072 13 Other3 50 —

Payment to

HRD-Korea (1 month before KLT-test date) Dept. of Occupational Safety and Health (1 week after KLT-Test result announcement) Dept. of Occupational Safety and Health (1 week before departure) Dept. of Statistics and Passport (after test announcement) The Korean Embassy (after receiving CCVI “Certificate of Confirmation for Visa Issuance”) NPIC (after signing labour contract) Ministry of Justice (after signing labour contract) Travel agent (5 days before departure) Airport authority (on departure date) Private company (5 days before departure) MTOSB (5 days before departure) MTOSB (5 days before departure) 180 Private company (CLS) Partially to the Directorate General of Labour Korean insurance company Private company (CLS) Private company (CLS) Various parties

Notes: (1) In the case of the private company, the medical check-up is done at a private clinic. (2) Education is undertaken at the school run by the Cambodian Labour Supply company (CLS). (3) This can be workers’ expenditure on telephone calls, transportation, and accommodation during the training. * NPIC refers to the National Polytechnic Institute of Cambodia. Source: MoLVT.

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consumption, possible dangers in the workplace given their 3D jobs, harassment by others, drinking habits, and involvement in conflicts and drug use. They worry about the safety of the children whom some migrants took along with them. Participants in the study appeal to the government to make it less costly for them to migrate legally — not more than US$100 per person for a one year period. They also pointed out that the time taken to get a passport and work permit is at least three months, which is too long.

5. HOUSEHOLD IMPACT 5.1 Remittances Remittance is one of the most important variables for the study. It is basically the savings that migrants aim for in their pursuit of migration. It is quite challenging to estimate the precise amount of remittance migrants send home. First, people may not reveal the true amount as they tend to hide their income. Second, there is the problem of memory lapse, especially if the last remittance was months or years ago. Third, there are different time frames for the remittance inflows to consider. Some migrants keep going back to work near the border, while some only return home after a year, and some had not worked abroad in the last two years. Fourth, a number of migrants might soon return with their savings, but respondents at home could not be certain. We tried to address these challenging issues surrounding the issue of remittance by interviewing household members to get the best estimate possible for the past five years, the past one year, and the most recent single trip.

5.1.1 Share of Remitting Migrants Our survey found that 100 per cent of the migrants that worked in the areas just over the border, doing farm work, had remittance to send home (Table 2.14). These people go to work from a few weeks to a few months at a time and then come home with the remittance. Their earnings are not as significant as those working deep inside Thailand or in Malaysia, and most of them have to find a broker to send money home as it is not easy for them to go home frequently, the barriers being both the cost and legality involved. For those working in the areas near the border, it is a case of “low risk, low return”.

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Table 2.14 Remitting and Non-remitting Migrants in the Past One Year Destination Type of work



Number

Percentage

Yes

No

Total

Yes

No

Total

Thailand, well inside

Construction Agriculture Fishing Housework Factory Other Sub-total

79 16 48 20 10 16 189

36 11 11 2 4 5 69

115 27 59 22 14 21 258

69 59 81 91 71 76 73

31 41 19 9 29 24 27

100 100 100 100 100 100 100

Thailand near border*

Agriculture Fishing Sub-total

184 8 192

0 0 0

184 8 192

100 100 100

0 0 0

100 100 100

Malaysia

Construction Agriculture Housework Factory Other Sub-total

14 5 3 20 6 48

2 2 3 5 0 12

16 7 6 25 6 60

88 71 50 80 100 80

13 29 50 20 0 20

100 100 100 100 100 100

429

81

510

84

16

100





Total

Note: *These refer to short-term migrants who bring the money home themselves. Source: CDRI survey of 526 households in six villages in September and October 2007.

However, not everyone working deep inside Thailand was reported to have sent money home. Overall, only 73 per cent of this type of migrant had sent remittance home in the past one year. The highest per centage (91 per cent) of migrants sending remittance home was in the housework category. The smallest proportion was found among those doing agricultural work far from the border. As many as eleven out of twenty-seven migrants doing this type of work were reported as sending no money home. This could well be due to the fact that the other migrants will bring their savings with them when they return. The case is similar for the migrant workers in Malaysia. Overall, 20 per cent of the forty-eight workers in Malaysia (50 per cent in the housework category) had not yet sent money home (Table 2.14).

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5.1.2 Remittance Volumes The amount of remittance varies depending on the kind of work the migrants do and the time dimension. It is unsurprising that remittances from the last trip for migrants from Krasaing and Siem Peay villages were the smallest as these migrants worked for short stretches at a time, close to the border. On average, they sent home or came back with around US$30 to US$84 for the last trip, which lasted between a few weeks and a few months. Migrants who went deeply inside Thailand and stayed longer for each trip remitted between US$150 and US$180 on average for the last trip. Remittance over the past one year exceeded that for the last trip, but not by a great amount. This reflects the fact that people do not make many trips in a year because most are at home to work during the seasonal rice cultivation. In the past five years, as far as the interviewees could recall, average remittance inflows to each study village varied between US$550 and US$2,050, with Kork Thnung village, where Lao ethnics reside, receiving the biggest amount. It is interesting to note that remittances from Cambodian migrants in Malaysia were not superior to those from migrants in Thailand, though wages in Malaysia are generally higher than those in Thailand (Table 2.14). Table 2.15 shows the volume of remittances sent home by migrants each time and in the last trip, which could yield remittances sent more

Table 2.15 Average Remittances Sent Each Time and in the Last Trip (US$) Remittances sent each time Remittances in most recent trip Village Standard Standard N Mean Maximum N Mean Maximum Deviation Deviation Sramor Meas Krasaing Kork Thnung Rumduol Siem Peay Knoy

50 25 53 46 38 69

114 145 101 95 52 118

163 174 95 71 57 108

750 875 500 409 250 750

50 25 53 46 38 68

440 233 412 207 70 319

546 248 626 172 86 327

3,125 900 3,250 818 300 1,500

Source: CDRI survey of 526 households in six villages in September and October 2007.

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than once per trip. Migrants from Siem Peay village sent the least amount for both categories, reflecting their inferior income from farm work just over the border. In contrast, the last trip, which might have been longer than one year, resulted in more than US$3,000 worth of remittances for migrants from Sramor Meas and Kork Thnung. Table 2.16 presents the remittances sent by migrants from each village within one year and five years. With the exception of Siem Peay village, the level of remittances did not vary remarkably. Broken down by work type and workplace, Table 2.17 indicates that doing farm and fishery work near the border yields the least remittance, while doing housework seems to generate a lot of savings. Being a housemaid generally does not require accommodation and food expenditure, especially for those who live with their employer. In the past one year, respondent migrants in domestic service remitted US$334 on average, and US$1,460 in the past five years. This was mostly the case for Kork Thnung village’s Lao ethnic migrants who can speak the Thai language well. It is important to note the remarkable variations in remittances in many occupations (indicated by the large standard deviations). While the average remittance per annum from migrant construction workers was US$218, at least one migrant reportedly sent home US$1,100. In the past five years, at least one migrant remitted as much as US$4,500 from her work as a housemaid in Thailand.

Table 2.16 Average Remittances Sent in the Past One Year and Five Years (US$) In past 1 year

In past 5 years

Standard Standard N Mean Maximum N Mean Maximum Deviation Deviation Sramor Meas 30 Krasaing 24 Kork Thnung 43 Rumduol 42 Siem Peay 41 Knoy 54 All villages 234

192 208 267 201 74 292 211

209 198 197 160 88 274 211

750 900 750 818 300 1,100 1,100

52 27 59 50 50 78 316

616 480 899 384 128 650 552

948 876 795 455 174 688 733

6,000 4,500 3,525 2,500 938 3,713 6,000

Source: CDRI survey of 526 households in six villages in September and October 2007.

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Table 2.17 Average Remittances by Occupation and Location (US$) Past 1 year Past 5 years Standard Standard N Mean Maximum N Mean Maximum Deviation Deviation Inside Thailand Construction Agriculture Fishing Housework Factory Others

70 12 32 19 10 16

265 156 183 334 322 275

218 164 157 268 209 277

1,100 600 750 900 750 1,100

87 619 19 201 55 539 21 1,460 10 650 18 505

595 203 660 1,196 571 587

2,500 900 3,713 4,500 1,713 2,500

Along Thai border Agriculture Fishing

43 1

61 250

65 —

270 250

51 4

143 231

207 107

900 375

15 5 3 20 6

731 768 151 708 386

839 703 165 1,287 191

3,125 1,500 342 6,000 700

Malaysia Construction Agriculture Housework Factory Others

5 4 3 13 4

302 384 65 138 176

298 308 91 103 229

625 750 171 300 515

Source: CDRI survey of 526 households in six villages in September and October 2007.

There is generally an interest to know the differences between the male and female migrant respondents. In terms of remittances in the past one year and five years, migrant women working deep inside Thailand generated more remittances than migrant men working in the same locations. On average, female migrants sent home US$279 in the past one year, compared with the US$241 remitted by the men. The corresponding figures for the five year time frame were US$560 and US$806 respectively (Table 2.18). The opposite was true for migrants working in the areas just across the border. Male migrant workers sent more money home. This is because the farm work there is physically demanding and wages are not paid monthly, but generally based on output per day. For instance, men can pull up more cassava roots and cut more sugar cane than women and therefore get paid more accordingly. As for the migrants in Malaysia, there

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Table 2.18 Average Remittances by Gender and Location (US$) Past 1 year Past 5 years Standard Standard N Mean Maximum N Mean Maximum Deviation Deviation Inside Thailand Male Female

109 50

241 279

210 239

1,100 1,100

145 65

560 806

614 917

3,713 4,500

44 13

171 120

238 125

900 438

26 23

777 501

1,262 436

6,000 1,500

Along Thai-border Male Female

35 11

79 62

103 59

500 150 Malaysia

Male Female

12 17

201 196

245 190

625 750

Source: CDRI survey of 526 households in six villages in September and October 2007.

was little difference between the remittances sent home in the past one year. The larger remittances from the men in the past five years were the result of their having worked longer in Malaysia.

5.1.3 Remittance Channels Very few reported using banks to remit part of their income, reflecting the low rate of bank usage in Cambodia as a whole. The most popular means of remittance depends on where people are working. Of those working deep inside Thailand, 85 per cent sent money home through middlemen who connect the migrants with their families by telephone; they have to pay about 4 to 5 per cent of the remittance amount as commission for the service. Only 14 per cent of the migrants working just over the border used this approach, whereas 84 per cent sent money home by relying on other trusted migrant workers. As for the migrants working in Malaysia, 75 per cent sent remittances home via middlemen who travel directly between Malaysia and Cambodia. Most of the rest (23 per cent) relied on other migrants to take their savings home (Table 2.19).

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156 Table 2.19 Remittance Channels Used Destination

Middleman using telephone

Middleman travelling directly

Other migrant

Bank

Other

Total

13 1 0

1 0 1

181 44 44

7 2 0

1 0 2

100 100 100

Number of migrants Inside Thailand Along Thai border Malaysia

154 6 0

7 0 33

6 37 10

Percentage of migrants Inside Thailand Along Thai border Malaysia

85 14 0

4 0 75

3 84 23

Source: CDRI survey of 526 households in six villages in September and October 2007.

5.1.4 Remittance Use There is a long-standing debate about whether remittances contribute to the development of the sending communities or simply make them dependent on income from destination countries and keep them underdeveloped. It is argued that migrant households spend, as opposed to save, most of the remittances they receive and that such spending is mostly devoted to consumption. We therefore paid serious attention to understanding how people use remittances. Our survey found that most of the remittances to the sample migrant households were spent, leaving a very small proportion regarded as savings. There was no significant difference among the villages in terms of the proportion saved, except for Knoy village, whose migrant members appeared to earn and save more than those from the other villages (Table 2.20). This reflects the “high risk, high return” from the fishing industry in which most migrants from Knoy village are engaged. We purposively divided expenditure into two types, namely consumption (including non-productive spending), and productive. As illustrated in Table 2.21, households receiving remittances spent 87 per cent on consumption, and 13 per cent on productive expenditure over the past year. The shares change to 80 on consumption and 20 per cent on productive expenditure over the past five years. Under consumption,

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Table 2.20 Average Remittances Spent (US$)

In the last trip

In the past one year

Village name Remittance Remittance Remittance Savings Remittance Savings spent spent Sramor Meas Krasaing Kork Thnung Rumduol Siem Peay Knoy

182 84 152 149 29 168

155 75 138 134 27 121

13 10 13 4 2 40

138 111 300 226 46 270

119 96 277 207 43 225

21 9 24 19 3 43

Total

122

14

103

173

20

153

Source: CDRI survey of 526 households in six villages in September and October 2007.

Table 2.21 Expenses Financed by Remittances, percentage of total Expenditure Consumption General consumption (mostly food) Debt repayment Medical treatment Purchase of non-productive assets (idle land, TV) Education and training House improvement House maintenance or repairs House building Durable household items Loan to others without interest Productive Fertilizer for farming Land for production Machinery for agriculture Vehicles for business Investment in new business Expansion of existing business Loan to others at interest Other Total

Past year

Past 5 years

77 20 12 8 5 2 3 3 15 7 2 23 3 5 4 2 1 0 1 6

81 23 14 12 7 4 3 3 4 8 4 19 7 3 2 0 1 1 0 5

100

100

Source: CDRI survey of 526 households in six villages in September and October 2007.

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Box 2.5 Cases of Local Remittance Agents Case 1: Remittance Agent in Preah Net Preah District, Banteay Meanchey Province Since he knew many people migrating to Thailand and sending remittances to Kralanh or Chup district, the agent went into the business of transferring money via telephone with the help of two people in Thailand who are in charge of collecting and transferring money. He first set up his business in 2005 with a capital of THB50,000 (this business is operated in Thai currency). He usually handles transactions of THB12,000 to 50,000 per month; however this amount increases to THB30,000 per day on average during the few days of Pchum Ben. The average remittance migrant workers send home is between THB2,000 to 5,000 per month. His brokers in Thailand charge remitters 1 per cent of the remittance amount and he takes an extra 3 per cent of the remitted amount for the service in Cambodia. The brokers in Thailand transfer money to his bank account and, three hours afterwards, he contacts the private bank in Serey Sorphorn, Banteay Meanchey to check his account. Once it is confirmed that the money has been transferred to his account, he gives the money to the migrant’s family, net of his service charge of 3 per cent. He also has to pay a bank fee of THB30 for every THB10,000 transferred. Migrant workers are not responsible for this payment. Case 2: Remittance Agent in Stoung District, Kampong Thom Province This agent started his business a year ago to support his brother who had lost both his feet in a traffic accident. No one else could replace his brother in this business. He refused to reveal the starting capital for his business. For internal remittances, he charges 4,000 riels for every 100,000 riels, or 4 per cent of the remittance amount. As for money transfer from Thailand, migrant workers, mostly working in Bangkok or near Bangkok, send home THB1,500 to 2,000 at a time on average: those who have worked for one year or more send about THB10,000 at a time. He has only five to 10 customers per month. Thus, he handles transactions of THB20,000 to 30,000 per month and around THB50,000 during Pchum Ben. He does not have any business bank accounts. He just receives instructions from his brother in Poi Pet. Once migrant workers have transferred money to his brother’s account, his brother calls him to transfer or give the money to the worker’s family. He does not know how much his brother charges for his service, but he charges 1.5 per cent. Every 10 days, he goes to Poi Pet to collect the remittance from his brother. He understands that most of the workers have already paid for the service in Thailand but he does not know the exact amount. Case 3: Remittance Agent in Romduol Village, Phnom Leap Commune, Preah Net Preah District, Banteay Meanchey Province The agent started his business in 2007 after he stopped working in a fishing lot in 2005 and found that many people in Romduol village found it difficult to transfer money

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from Thailand to their families. The starting capital for his business was THB100,000. He charges workers 2.5 per cent of the remittance amount, and the broker in Svay Sisophon takes 0.5 per cent of the amount for his service. So in total, the service fee is 3 per cent of the remitted money. In addition, a broker in Thailand charges workers THB50 each time they send remittance. He has to pay 50,000 riels a month to the post office and THB2,000 for the Thai telephone service which can be as much as THB3,000 during Khmer New Year, Pchum Ben, and other major ceremonies. He is the only one running this type of business in his village. Ordinarily he can transfer THB20,000 to 30,000 per month, but during major national holidays this can rise to THB200,000. He can advance money to people in case of emergency and would then contact their relatives in Thailand to get his money back. Each worker sends THB300 to 1,000 on average. To run this business in his village, THB100,000 capital is not enough because the migrant workers can altogether transfer up to a total of THB200,000 per month. As a result, he sometimes needs to borrow more money from his friend and pays interest of THB300–400 for every THB100,000 (or 3 to 4 per cent of the loan principal) per month. He has not had any problems since setting up his business because the broker is in the same village. Seven agents/shops provide this service in Phnom Leap village. He said he can net profit of THB1,500 per month from his business. Source: In-depth interview with migrant workers in September 2007.

food and other general expenses were the largest expenditure, followed by debt repayment and health care. Durable assets and housing were also major expenditures financed by remittances. There was little spending on human capital development; only 4 per cent of remittances spent in the past one year reportedly went to education and training. Only modest proportions of remittances in the past year were used to buy fertilizer (7 per cent), land (3 per cent), and machinery (3 per cent) for agricultural production. Spending on these items was reported to have yielded favourable profits as summarized in Table 2.22. Young migrants also reported using remittances to buy mobile phones and motorbikes. It is hoped that more remittances will be spent on productive purposes once the basic necessities, which are the priority, have been met.

5.2 Wealth Comparison between Households with and without Migrants This section attempts to assess the impact of labour migration on household well-being. The perfect way to do this would be to know the counterfactual situation, that is, what would have happened if the household

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Table 2.22 Returns from Productive Use of Remittances, Percentage Remittance use Purchase of motorbike or vehicles for business Purchase of land for production Purchase of fertilizer for farming Investment in new business Expansion of existing business Loan to others for interest Other spending on productive assets or business

Past year

Past 5 years

— 34 34 0 66 71 23

8 18 62 21 133 38 28

Source: CDRI survey of 526 households in six villages in September and October 2007.

member(s) had not migrated. However, this is not feasible. What can be inferred though is, as some people have migrated, there has been less competition or fewer people looking for day labour in the community or wider Cambodia. This could have raised the wages for those who do not migrate. A popular question that the study seeks to answer is “Which have done better over time, the households with migrant workers or the households without migrant workers?” There are two hypotheses, namely that migrant households make more income due to the migration of members and because they were poor in the first instance, and this is the reason why they sent members to work abroad. We found that the validity of these hypotheses depends on a number of factors, such as land ownership patterns in the village, and the costs and benefits of working in Thailand or Malaysia. Table 2.23 presents detailed household income by source to allow useful comparison between the households with and without migrants. Rather than repeating the data by describing them in detail, readers are invited to examine the differences in each source of income. The level of income reflects the economic status of the village. Kork Thnung appears to be the richest among the six study villages. A sample household in Kork Thnung on average, made around US$3,000 per annum, while in Rumduol, the poorest village, a sample household earned between US$1,000 and US$1,500 per annum. Households without migrant workers made more income from agriculture and other sources, resulting in a bigger total income. This was especially true in those villages where the level of landlessness was high (Krasaing, Kork Thnung, and Siem Peay). In Krasaing, nearly 50 per cent of the households did not own agricultural land and instead relied

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Krasaing

Kork Thnung

Rumduol

Siem Peay

Knoy

355 — 127 7

196 4 17 3

428 5 8 1

433 57 16 1

599 159 — 15

59 97 43 15

153 83 14 10

55 13 8 7

47 1,062 31 48 6 142 8 3

586 24 35 5

468 489 220 442 508 774 214 260 82 92 1,255 649 — — 137 — 445 — 245 — 36 — 307 — 0 — 346 — 22 — 3 — 222 — — — — — 6 20 — — — 7 1 — — — 123 — 3 — — — — — — — — — 26 3 6 66 87 236 16 79 35 206 119 136 13 14 — 224 24 102 2 5 4 54 5 80 163 16 497 309 579 337 266 92 299 260 430 216 8 25 95 85 0 2 37 20 7 9 — 2 — 0 2 — — 8 — 2 3 — — — 0 10 — 9 — — 2 12 1 — — — 8 35 96 94 0 10 40 34 11 9 — 2 67 55 84 382 109 380 50 270 94 310 91 56 13 5 — 20 22 16 45 1 5 8 9 5 79 65 85 70 18 198 119 102 17 176 64 121 893 812 1,117 1,790 1,386 2,313 941 1,132 630 1,356 1,977 1,235 1,533 1,353 1,930 2,635 2,474 3,433 1,460 1,518 1,022 1,717 3,663 2,101

382 — 79 7

MG No MG MG No MG MG No MG MG No MG MG No MG MG No MG

Sramor Meas

Notes: MG = Households with migrants in past five years (cross-border); No MG = Households without migrants in past five years. Source: CDRI survey of 526 households in six villages in September and October 2007.

Crop sale Pig sale Cattle sale Poultry sale Total income from sale of agricultural   produce In Thailand, far away In Thailand, nearby In Cambodia, near border In Malaysia Other areas in Cambodia From relatives overseas Total remittances Fishing Foraging Other CPR Total CPR Income Small trade/business Rental and interest Other Total other income Total income

Village

Table 2.23 Sources of Annual Household Income (US$)

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heavily on migrating to work in Thailand for their meagre income. The exception was Knoy village where households with migrant workers had higher total income than those without migrant workers. This village is far from Thailand and it costs around US$100 for a person to get to Thailand’s coastal area to work in the fishing industry. Poor households generally cannot afford even the initial costs of migration. It is also important to compare household expenditure. Tables 2.24 and 2.25 show the differences in expenditure between villages, and between households with and without migrant workers. Consistent with the patterns of income described above, households without migrants in Krasaing, Kork Thnung, Rumduol, and Siem Peay villages spent more than those with migrants. There was not much difference in terms of expenditure on clothing and house repairs. By contrast, the data indicate large variations in expenditure on weddings and other ceremonies between villages and between households with and without migrants. It is interesting to note that the Cham village did not have as much spending on this category, reflecting different traditions. Expenditure on food by households with migrants and without migrants was not considerably different. On average, each household consumed about US$12 of food in a week, or less than US$2 per day. However, the value of the food consumption does not reflect the economic status of the villages because the price of food items varies from one village to another. Based on Table 2.26, it can be concluded that the sample households with and without migrants were not significantly different in terms of food consumption, which is the core element of welfare. Housing has traditionally been taken as an indicator of household welfare. Aware of the memory lapse problem, we only asked the respondents about the major assets they owned in 2002 and 2007, assuming the villagers must have a better recollection of key assets, primary of which is housing — its type and value. At the aggregate level, the change in types of houses in the six study villages was the same for households with and without migrants between 2002 and 2007. It is interesting to note that the percentage of houses roofed with tiles, considered the best type of house in most Cambodian villages, stayed the same for both the migrant households (33 per cent) and the nonmigrant households (27 per cent). Significant improvement was, however, seen in the shift from thatched houses to wooden houses roofed with tin sheets, the average type of house in the villages; this type of house more than doubled in number in the five-year period (Table 2.27).

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MG No MG

MG No MG

MG No MG

MG No MG

Kork Thnung

Rumduol

Siem Peay

Knoy

54 47

42 38

56 44

63 65

66 54

126 82

76 126

127 196

137 137

121 78

90 93

Health treatment

98 92

76 176

105 105

171 346

123 159

45 33

Wedding & other ceremonies

134 133

80 50

96 92

104 60

15 218

73 64

House repairs and items

Notes: MG = households with migrants in past five years (cross-border); No MG = households without migrants in past five years. Source: CDRI survey of 526 households in six villages in September and October 2007.

MG No MG

Krasaing

58 45

Household Clothing category

MG No MG



Sramor Meas

Village

Table 2.24 Average Household Expenditure on Non-Food Items in the Past One Year (US$)

98 89

33 71

27 43

49 86

26 34

43 25

Other non-food

608 545

382 486

504 565

607 728

357 754

366 316

Total

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MG No MG

MG No MG

MG No MG

MG No MG

MG No MG

Krasaing

Kork Thnung

Rumduol

Siem Peay

Knoy

2 2

2 2

2 2

5 7

3 2

2 2

Toiletries and personal effects

4 4

2 5

6 4

7 8

4 6

6 4

Education costs

2 2

1 3

2 3

5 8

8 5

3 3

Food outside home

Notes: MG = Households with migrants in past five years (cross-border); No MG = Households without migrants in past five years. Source: CDRI survey of 526 households in six villages in September and October 2007.

MG No MG

Sramor Meas

Village Household category

Table 2.25 Average Household Expenditure on Non-Food Items in One Month (US$)

1 1

2 4

2 3

4 6

2 3

1 3

Utilities

10 9

6 14

12 13

21 29

17 16

12 11

Total

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MG No MG

MG No MG

MG No MG

MG No MG

MG No MG

MG No MG

Sramor Meas

Krasaing

Kork Thnung

Rumduol

Siem Peay

Knoy

3.50 3.41

4.00 3.50

5.61 5.02

3.64 3.57

5.29 4.16

7.08 5.07

Rice

1.17 1.17

0.77 1.70

2.28 2.57

3.17 3.38

1.87 2.45

1.88 1.10

Meat

2.73 2.53

3.21 3.01

2.67 2.31

3.20 3.24

4.08 3.17

3.17 2.98

Fish

0.12 0.19

0.07 0.26

0.12 0.16

0.19 0.18

0.29 0.26

0.41 0.89

Eggs

0.98 0.86

0.93 0.95

1.18 1.15

1.31 1.33

0.88 1.01

1.14 1.70

Vegetables

Notes: MG = Households with migrants in past five years (cross-border); No MG = Households without migrants in past five years. Source: CDRI survey of 526 households in six villages in September and October 2007.

Household category

Village

Table 2.26 Average Household Consumption of Food in the Past One Week (US$)

0.78 0.59

0.49 0.81

0.80 0.51

1.17 1.82

0.86 1.29

0.34 0.35

Other

9.29 8.75

9.46 10.22

12.66 11.72

12.68 13.53

13.28 12.34

14.03 12.10

Total

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Table 2.27 Type of House Owned by Sample Households, percentage of total

Thatched HH house Village type Sramor Meas Krasaing Kork Thnung Rumduol Siem Peay Knoy All villages

MG No MG No MG No MG No MG No MG No MG No

2002



Wooden house Wooden house roofed with roofed with tin sheets tiles

2007

2002

52 15 50 18 34 10 37 10 19 — — — 49 18 54 28 21 14 — 4 4 2 4 29 10 28 12

29 35 66 61 67 57 39 46 18 41 10 7 36 43

2007

2002

Other

2007

2002

2007

52 17 29 56 15 26 90 85 86 11 11 59 37 34 70 10 9 72 28 59 56 52 59 43 16 82 76 11 85 89 54 33 33 60 27 27

2 — — 3 3 7 2 — 2 — 4 4 2 2

4 — — 5 3 6 2 — 2 — 5 — 3 2

Source: CDRI survey of 526 households in six villages in September and October 2007.

However, at the village level, some significant nuances were revealed. The best type of house for the two groups of households almost doubled in Sramor Meas, the Cham village, where a remarkable number of residents migrate to work in Malaysia and spend less on weddings, ceremonies, and alcoholic drinks. In 2002, 51 per cent of the houses were thatched, but in 2007 the share of this worst type of house declined to 16 per cent due to the rising number of better quality houses. The main change in the other five villages, which had a lot more tile-roofed houses in 2002, was from thatched to tin-roofed houses (Table 2.27). In Kork Thnung village, households without migrant workers owned no thatched houses at all in 2002, but 19 per cent of the households with migrants did. In 2007, all of these households owned better houses. A similar change is observed in Siem Peay village. In 2002, households without migrants had houses of better quality than thatched ones, but 21 per cent of the households with migrant workers owned this type. In 2007, only 14 per cent of the migrant households still had thatched houses.

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However, the percentage of households without migrants owning houses with tiled roofs dropped from 59 to 43 per cent between 2002 and 2007 (Table 2.27). Table 2.28 provides a more precise indicator of housing quality, that is, the value of houses, for better comparison of the welfare of households with and without migrants. Overall, a handsome increase in the value of houses owned by both groups of households between 2002 and 2007 was reported. The extent of the increase was larger for households with migrant workers in Sramor Meas, Krasaing, Kork Thnung, and Siem Peay villages, while the opposite was true for Rumduol and Knoy villages. It is interesting to note that, in general, the value of the houses owned by households with migrants was higher than that of the houses owned by households without migrants, but not by a large amount (in both cases, the house values ranged from US$1,000 to US$3,000). Still, in terms of housing at least, it is fair to say that the households with migrant workers tend to do better. This reflects the value Cambodian people put on housing. The

Table 2.28 Average Value of Houses Owned by Sample Households in 2002 and 2007 (US$)

Village

HH type

House value 2002 Mean



House value 2007

Standard Mean deviation

Standard deviation

Change Mean

%

Sramor Meas

MG No

498 418

697 434

1,249 793

1,626 621

751 375

151 90

Krasaing

MG No

298 389

410 604

1,398 1,139

3,457 1,670

1,100 751

370 193

Kork Thnung

MG No

1,565 3,020

1,785 3,279

2,709 3,434

2,542 2,414

1,144 414

73 14

Rumduol

MG No

809 695

1,225 871

1,347 1,271

1,473 1,437

539 576

67 83

Siem Peay

MG No

672 591

565 374

1,290 914

1,014 738

618 322

92 54

Knoy

MG No

1,469 1,216

967 554

1,936 1,822

1,104 943

467 607

32 50

Source: CDRI survey of 526 households in six villages in September and October 2007.

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168

first thing they spend their substantial savings on is housing, as reported by many FGD participants. However households without migrants owned and increased their nonfinancial assets (other than land) more, relative to households with migrant workers. This reflects the necessity for them to have other means to make a living. It should be noted that households with migrant workers owned more livestock than those without (Table 2.29). Some spent their remittances on raising livestock, which is a popular way to make savings productive, and a basic strategy to build household assets and generate income.

5.3 Self-perceptions of Household Status Households with migrant workers were asked to compare themselves with the rest of the households in their village in terms of socio-economic status. More than half believed that they had middle status, 30 per cent perceived they were poor, while 3 per cent considered themselves very poor (Figure 2.6). It is interesting to note that 12 per cent reported they were well off and 1 per cent claimed they were rich. This indicates that not Table 2.29 Values of Assets Owned by Sample Households (US$) in 2002 and 2007 Village



HH type

Sramor Meas Krasaing Kork Thnung Rumduol Siem Peay Knoy

MG No MG No MG No MG No MG No MG No

Assets, excluding savings, land and house Change

Livestock Change

2002

2007

2002

2007

95 90 129 246 318 880 283 291 98 111 538 259

259 164 172 724 293 203 226 758 250 121 94 135 952 706 287 115 971 653 205 76 3,186 2,306 262 139 541 258 91 434 602 312 107 335 304 206 209 208 426 314 283 136 1,165 627 117 604 550 291 113 631

992 1,111 106 96 114 274 508 454 224 206 546 482

US$ %

US$ % 268 352 (29) (19) 39 135 74 119 16 71 (59) (150)

37 46 –21 –17 52 97 17 35 8 52 –10 –24

Source: CDRI survey of 526 households in six villages in September and October 2007.

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Figure 2.6 Economic Status of Sample Migrant Households Based on Self-Perception, percentage of total

Very poor 3%

Rich 1%

Well-off 12%

Poor 30%

Medium 54%

Source: CDRI survey of 526 households in six villages in September and October 2007.

only the poor send their household members to work abroad. In fact, the very poor tend not to be able to afford even the cost of travel to Thailand, not to mention Malaysia or elsewhere. Migrant households were also asked to compare their socio-economic status in 2007 with that in 2002. The response was quite positive. More than half (65 per cent) reported they were more well off than before; 53 per cent believed they were moderately more well off, and 7 per cent, much more well off. Only 13 per cent said they had become poorer, while 27 per cent believed their status remained the same (Figure 2.7). Although this is about their perceptions and the reasons for being better off could include other factors beside remittances, it broadly suggests that migration has done more good than harm to the sample migrants’ households in general. As pointed out earlier, a strict impact analysis would require counterfactual analysis, which is not feasible for this study.

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Figure 2.7 Change in Economic Status of Sample Migrant Households Based on Self-Perception, 2002 versus 2007

Moderately poorer 12%

Much more Much well-off poorer 7% 1%

About the same 27% Moderately more well-off 53%

Source: CDRI survey of 526 households in six villages in September and October 2007.

Those households that reported they were better off in 2007 compared with 2002 were asked to give key reasons for this in order of importance. The most significant reasons given were: more job opportunities across the border (which means migration), increase in the number of household members able to help generate income, and higher agricultural production yields (Table 2.30). The fact that households now have more members of working age reflects the age profile of Cambodia’s population. Those born during the baby boom in the 1980s can now help provide labour to earn income for the family or, at least, for themselves without having to depend on their parents. The addition of income-earning household members contributed to the increase in migration, and agricultural and other economic activities, in and outside the households. It is also encouraging to see that households cited higher yield of agricultural production as a major reason for the improvement in their household economic well-being. Investment in irrigation, improved seeds,

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Table 2.30 Reasons for Improved Economic Status Based on Self-Perception Reasons for being better off in 2007 compared to 2002

1st reason

2nd reason

39

23

31 21 3 3 3

38 23 7 1 7

100

100

More job opportunities across the border Increase in number of members able to help   generate income Higher yield of agricultural production Own more agricultural land More job opportunities at the border Others (specify) Total

Source: CDRI survey of 526 households in six villages in September and October 2007.

and agricultural extension initiated by the government, development partners, non-governmental organizations (NGOs) and the households themselves have borne fruit. Participants in the FGDs cited better rice seed and rainfall as major factors in the past few years. Despite some progress, the predominant obstacle to further improving agricultural production and income is inadequate irrigation. Without irrigation, farmers reported that they do not want to risk applying fertilizers, especially if they have to borrow to get it at a very high interest rate. Without water control, farmers also do not want to risk expensive seeds, which could yield much more than traditional varieties.

6. MAJOR ISSUES 6.1 Obstacles to Regularization As mentioned, the total cost of obtaining a CI and work permit averaged about THB5,500 in 2004. A number of migrant workers interviewed explained that the total cost of obtaining the CI and work permit was really between THB6,000 and THB8,000.4 This included travelling and other costs. Employers would often advance payment to the workers and deduct the repayment from their wages over a period of six months or so. Thus, it is likely they charged interest for the money they advanced. In any case, the total fee was quite high compared with the migrant

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workers’ savings of about THB1,500 per month. This discouraged many workers from obtaining registration documents and so they remained as undocumented migrant workers in the country. Most workers interviewed reported that to their knowledge, less than 30 per cent of the Cambodian workers on the same site (about thirty to fifty Cambodian workers on each site) had obtained a work permit and CI. This is actually quite consistent with the report from MoLVT that only about 50,000 of the estimated number of 180,000 Cambodian workers came forward and were issued a CI in 2005. However, only about 6,000 did so in 2007, which led the Thai Government (in the annual meeting in November 2007) to extend the period of registration into 2008. The main reason for this is speculated to be that employers in Thailand did not take their workers to register with the Cambodian and Thai committees. In order for Cambodian workers in Thailand to register themselves with the Cambodian interministerial committee working in Thailand, the information has to be given to them. Information dissemination in Thai language and through public means may not be effective because most Cambodian workers may not be able to access or understand it. The Thai Ministry of Labour was reportedly requesting employers to notify the workers to go and register themselves. This was perhaps the only and most effective way to reach the Cambodian workers, though it relies heavily on the cooperation of employers in Thailand. If the Thai employers failed to inform their migrant workers, the information would not have reached them and they remained uninformed and thus unregistered. The Cambodian committee observed that a number of Thai employers did not inform or take their migrant workers to register. Generally speaking, there have to be incentives for employers to cooperate on this matter or serious enough penalties if they refuse to. There is a claim that certain employers prefer hiring undocumented workers because there are certain benefits for them in doing so.5 Once again, it was discovered during a field investigation in Thailand conducted by the author in collaboration with TDRI that Cambodian workers were interested in obtaining work permits at the required costs. However, no services were provided. The limits on the regularization policy are likely intended to encourage workers to refrain from using illegal channels and opt for legal means of entering Thailand instead. These two parallel processes are really intertwined. As long as migrants can enter Thailand illegally and then receive official recognition later, they will tend to choose this way because it costs just US$100 and takes only a few days,

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even though there are serious risks involved. This would undermine the formal procedure of sending workers through the MoLVT, Thai embassy, and recruitment agencies, which costs workers US$600 each and takes at least three months. Clearly, informal channels need to be shut down if the legal means is to be widely effective. At the same time, the legal channel needs to be less expensive and faster. As part of the agreement between the Thai and Cambodian authorities, the issuing of border passes valid for two years has been piloted. Holders of a two-year border pass have to return to the border to get it stamped every week and must pay THB20 each time. This may cost THB1,040 per year if it is stamped for fifty-two weeks. But the costs of time and travel are higher. The two-year pass can be obtained at the Poi Pet border checkpoint and is only provided to residents of certain districts on the Cambodian-Thai border. This is mainly for those who do farming near the border.

6.2 Obstacles to Formal Emigration 6.2.1 High Cost and Long Processing Period The cost of formal emigration is much too high compared to the cost of informal emigration, as seen in the survey results. Sending regular workers to Thailand costs about US$700, of which US$100 is paid by the worker, and US$600 is advanced by the recruitment agency or Thai employer. Repayment to the agency or employer, about THB2,000 a month, is deducted from workers’ salaries for a period of ten months. This cost is very high compared with the average salary of THB6,000 per month earned by the workers. Workers would have to do a lot of overtime in order to generate significant savings to send home, which is the main purpose of their migration. The informal fee charged by illegal brokers is only US$100 per person. Furthermore, it only takes three days for a worker to land illegally in Thailand where the employers are waiting, a significantly short time compared to the three to six month application and waiting period for those emigrating by legal means. It is thus understandable that most workers still choose to go through illegal routes despite the risk of being arrested and sent back due to their illegal entry. The experienced ones re-enter Thailand themselves and pay only about US$50 on transportation costs. Because the illegal routes are difficult for both the Cambodian and Thai authorities to control tightly, mainly due to the long border between the two countries, it is important that legal emigration becomes affordable

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and convenient for workers. It is proposed that the cost of US$700 be lowered to US$300, and the process be hastened by both the Cambodian and Thai Governments. Of the US$700, US$480 is spent in Cambodia: the passport fee should be reduced from US$150 to US$50, and other expenses from US$220 to US$40 (Table 2.31). This would reduce the costs incurred in Cambodia from US$480 to US$200. The recruitment agency fee of US$70 on average will be retained. The grey area is the other expenses that are unknown. This amount of US$220 is the result of subtracting the known expenses from US$700. These include the fees paid to brokers at various levels. Also, part of it could go to the recruitment agencies and part could go to other government agencies. Understandably, it would be unrealistic to eliminate this cost, but it should be reduced to US$40 in

Table 2.31 Proposed Cost Reductions by Item of Expenditure (US$) Expenditure Item

Current Cost

Proposed Cost

Expenditure going to Cambodia 480 200 Passport 150 50 Medical check-up 10 10 Exit fee 5 5 Training 15 15 Travel 10 10 Recruitment agency income 70 70 Other expenses* 220 40 Expenditure going to Thailand 220 100 Work permit 106 30 Application form 3 3 Medical Check-up 18 18 Visa fee 59 15 Travel to site 20 20 Other expenses 14 14 Total 700 300

Comments Details provided below

Details unknown To be proposed to Thai government Committed by Thai government already

Note: * This is worked out by subtracting the known expenses from the total fee charge. It should include fees provided to brokers at the commune and provincial level as well. Source: Interviews with recruitment agencies and workers in 2007, and author’s suggestions for proposed cost.

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total if the intention is to cut the cost of legal emigration and encourage workers to use it. The Thai Government should reduce the work permit fee from US$106 to US$30 (THB1,000), and the visa fee from US$59 to US$15 (THB500) so that the total costs incurred from the Thai side would be decreased from US$220 to US$100. According to the Thai Ministry of Labour, the visa fee should have been reduced to THB500, but was still pending implementation at the time of study.6 Thus, the major contribution that should be further provided by the Thai Government is to reduce the the work permit fee. When a lot more workers choose to arrive in Thailand legally, the Thai Government will gain more fees from issuing work permits, in addition to the greater benefits on many other fronts. Other costs such as that of the application form and other unspecified expenses could remain the same because they are not that significant. Consideration should also be given to the idea of a “one-stop service” to handle the process. This could be set up in areas such as Banteay Meanchey and Battambang, from where many workers migrate to work in Thailand. Representatives from the recruitment agencies, MoLVT, passport office, and the Thai embassy should be present at the one stop service to accept applications and provide results to workers. This could help workers tremendously as it would enable them to save on time and the cost of travelling the long distance to Phnom Penh. The whole process should not take more than two months. This may require serious discussion among the officials of the Ministry of Labour in Thailand and MoLVT. In Cambodia, passports for civil servants are issued by the MoFAIC, while passports for non-civil servants are issued by the MoI. The processing of ordinary passports is undertaken by the Bureau of Passports under the Department of Statistics and Passports. The Bureau of Passports has only one office with about seventy-five employees to process passport applications in the whole country. The general director of the national police signs the passports to validate them. As passports are required for visa application and international travel, a critical bottleneck is created when both the price is too high and the processing time is too long. The official fee for ordinary passports is now US$120, since the US$20-increase from 5 March 2007 when the microchip for e-passports was introduced.7 Reportedly however, an informal fee of about US$19 also normally needs to be paid, making the total fee US$139. This fee is for passports to be issued within two to three months. It used to be done

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within one month, but the introduction of the microchip has extended the processing period. Should a passport be required sooner, it can be ready in one week, but at the price of US$224. This means issuance in one week is possible, but very expensive. People in Sramor Meas village who migrate to Malaysia through legal means reported that they had to pay between US$120 and US$150 to obtain a passport within one and a half months. The government acknowledged that the price of ordinary passports was too high for migrant workers, who are generally from poor families. In an attempt to address this problem, the government officially charged migrant workers only US$20 until 5 March 2007, and between US$40 to US$45 after 5 March 2007, provided these workers were approved by the Minister of MoVLT, and included in a stamped list submitted to the Minister of Interior. In late 2008, the Cambodian prime minister ordered the MoI to make passports free or levy the smallest cost possible for migrant workers. In practice, however, the processing fee remains above US$50 and it takes not less than two months for the passports to be issued. This prolongs the whole process of sending workers overseas so substantially that it affects the confidence of applicants and employers in Thailand. Most workers cannot wait five to six months to take up employment overseas. Hence, they are forced to buy their passports within one week. They have to pay about US$150 to US$200 themselves, or repay their employers from their salary later; either way, they must bear this huge cost. By comparison, the passport fee in Vietnam is only US$12 (VND200,000) and passports are issued in five working days. In Thailand, the fee is US$30 (THB1,000) and processing time is just three to five working days. In Lao PDR, the passport fee is about US$35. Moreover, these countries have many offices to process passport applications, including provincial offices, whereas Cambodia has only one small office in Phnom Penh. This physical limitation is clearly a constraint to processing all the applications within a shorter time. It is not clear whether the processing period is intentionally kept at two to three months so that people who need passports sooner have to pay a much higher price. It is unclear where the extra payments go. As mentioned, the addition of microchips since March 2007 has extended the time it takes to process passports. This causes a huge problem for recruitment agencies. It makes it difficult to retain applicants who, because of the longer waiting period, are more likely to give up and choose to do something else, or approach informal brokers instead who can take them to Thailand in two days for as little as US$100. In light of this, the fast

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track mode costing US$150–200 per worker has become more common. This constitutes a substantial part of the total cost of formal emigration. The request for quicker issuance is sensible and should be possible for the government to fulfil. At the time of study, the MoVLT was waiting for a response to an official letter that had been sent to Interior Ministry officials requesting that passports be issued in one month or less.8 The office of the Bureau of Passports is a small building and therefore always overcrowded, as it deals with up to 500 applicants a day.9 At the National Workshop on Foreign Employment Administration in Cambodia on 26–27 July 2007, a representative of the MoI acknowledged the appeal for faster processing of passports, but explained that the introduction of e-passports required the addition of a microchip which had extended the processing period. He also cited the lack of capacity in terms of both human resources and facilities to process passports. As for the price of the passport, the representative mentioned that this is set by the Ministry of Economy and Finance. Given the high fee paid for passports, facilities and equipment to process them should not be lacking. Revenue from passports is more than adequate to purchase the necessary equipment and hire enough human resources to carry out the task. The most effective way would be to specify the minimum number of working days for issuing passports in a government declaration. If five working days is not feasible, then ten working days should be. For instance, the total passport fee might be US$50 (US$40 official fee and US$10 unofficial fee, assuming that eliminating under-the-table payments is unrealistic) for migrant workers and other citizens. In the past one year, about 80,000 passports have been issued. This brought in total gross revenue of about US$13 million, with the passports priced differently. Net revenue for the state should have been US$8.6 million supposedly. There are approximately seventy-five officials in the office to issue passports. Suppose the salary is US$100 per month on average, the total cost of staff for one year would be US$0.09 million. Total printing costs and microchips should be about US$2 million (at US$25 each). Thus, the claim that government has no money to employ more staff is not a valid excuse. Even if the number of staff is tripled, and the average salary is tripled to US$300 per month, the total expenditure on staff salaries would still be only US$0.81 million. To reiterate, it is recommended that the total passport price should be US$50 for either migrant workers or ordinary citizens, and the

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passport should be delivered in two weeks’ time (ten working days). Of the US$50 fee, US$40 goes to the state and US$10 goes to the passport office (under-the-table money). For the next one year, this new policy should see 200,000 people applying for passports. This would bring a net revenue for the state of US$3 million and informal payments of US$2 million. The state can employ 225 officers to issue passports with a payroll of US$0.81 million — a salary of US$300 per month each on average. The US$0.81 million could be spent on†six offices and operations costs throughout the country. State revenue would decline by US$5.6 million, which will go to passport holders, 100,000 migrant workers (of 180,000) in Thailand alone could become legal and make a net gain of US$50 million per year, or US$200 million over four years (the legal limit on length of employment in Thailand). The monthly basic salary of a legal migrant is US$50 more than that of an illegal migrant, as evidenced by the survey results. There would also be much greater benefit in terms of legal compliance, security, and resolution of social issues. This is definitely a pro-poor policy to consider. If the approximately 200,000 workers are all to be given a passport, the total cost would be US$10 million at the rate of US$50 each. The one small office in Phnom Penh would not be able to handle this volume of demand. The MoI would need to open more than one office in Phnom Penh. More importantly, MoI should open offices in a few major provinces such as Banteay Meanchey, Battambang, Kampong Thom, Prey Veng, and Kampong Cham, where there are large numbers of workers seeking work overseas. These offices would handle the applications and delivery of passports, meeting not only the acute need for passports, but also cutting the travel costs for provincial people. The general director of the National Police in Phnom Penh could approve passports using an “electronic” signature, but the provincial offices would be responsible for any wrong issuance.

6.2.2 Recruitment Issues Due to the lack of advertising means, networks, and general public awareness, not many people approach recruitment agencies or their brokers. This means that recruitment agencies opt for quantity rather than quality. Recruitment or screening of applicants is apparently not very strict or serious, feeding the problem of workers absconding from the workplace once in Thailand. A considerable number of workers return home or join the

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group of irregular workers in Thailand when they find the work too hard, or become unwilling or unable to repay the costs. Although there are no statistics on runaways, one source in Thailand reported that one Cambodian recruitment agency was faced with the consequences of 40 per cent of the workers it had sent having absconded. As detailed below, this poses a huge financial risk for recruitment agencies because they are responsible for the bulk of the costs mostly advanced by Thai employers and rely on monthly payments to recover their costs for up to ten months. 6.2.2.1 The issue of visa application When a passport is issued, the recruitment company needs to obtain employment commitment or a request letter from employers in the receiving country. This is done through the Ministry of Labour in the host country. Then, application for a work visa is made to the embassy in Phnom Penh. Complaints were made by recruitment agencies in Cambodia that, at the time of the study, it took one month to get a work visa from the Thai embassy in Phnom Penh. The Thai embassy accepts visa applications only two days a week. The cost of the non-immigrant visa at the time of study was THB2,000 (or US$59), which was quite large for poor workers and added significantly to the total cost of US$700. Again, according to the Ministry of Labour in Thailand, this was to be reduced to THB500 as part of an effort to reduce the cost of sending labour legally. A request is therefore made for the Thai Government to enforce this reduction and shorten the time it takes to issue a work visa. 6.2.2.2 Lack of standardized contract between workers and employers in receiving countries A big issue cited by many interviewees is the lack of a standardized contract between workers and employers in receiving countries for workers to study before they depart. Despite the many years of sending workers to Malaysia, this still has not been done. The idea is to improve the predictability of the work agreements and facilitate the understanding of workers, many of whom may not have an adequate level of literacy. UNIFEM is reportedly willing to help in producing this standardized contract.10 There should be three contracts for the worker to sign: the service contract between the migrant and the agency; the loan contract; and the employment contract between the worker and the employer in the receiving country. Subdecree 57 issued by the Cambodian Government spells out

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the requirements for an employment contract and what it should look like (see Box 2.6). Quite a number of details are proposed to be included. However, this subdecree is binding only in Cambodia. Implementation has been weak due to the lack of detailed information provided by the receiving countries or employers. Furthermore, issues on the employment contract cannot be unilaterally resolved, especially given that Cambodia is not a major sending country. The contract may be issued, signed, and enforced in Cambodia, but it may not be enforceable in the receiving country if employment contracts are not acknowledged there. Hence, this issue needs to be agreed and discussed in the bilateral or multilateral meetings. It is necessary to have a contract that is enforceable, both domestically and internationally. There have been a number of cases where the workers’ employment contracts have been replaced once they reached their countries of employment. 6.2.2.3 Lack of standardized package of pre-departure training Pre-departure training is important in preparing workers for cultureshocks and familiarizing them with the receiving country’s rules. Currently, a few NGOs, especially the Coordination for Action Research on AIDS and Mobility (CARAM), are active in providing specific training on health, BOX 2.6 Excerpt from Subdecree 57 Article 8: In accordance with the agreement stated in the contract, the receiving party shall pay for services and the preparation of relevant document to the providing party. Article 9: The employment contract shall mention clearly: – Name and address of each party; – Date of the commencement and the termination of the contract; – Place of work and job specifications; – The skills of workers; – Salary and allowances; – Part of salary and other allowances which shall be sent to the workers’ family; – Hours of work, days-off and annual leave; – Accommodation, meals, clothing and medical care. Source: Subdecree 57 by Cambodian Government.

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HIV/AIDS, and human rights to workers going overseas. Recruitment agencies also provide various pre-departure training between them, depending on the destinations of the workers. However, there is a call for a standardized package of training materials. An ILO project based in Phnom Penh is providing training assistance on this matter but it had a hard time finding a suitable consultant in the country with the experience to develop the package and deliver the training.11 Therefore, at the time of the study, there was still no systematic pre-departure training for workers, which should be mandatory. It should also be a means to regulate migration. MoLVT should then issue a policy requiring pre-departure training. Another issue cited by many interviewees is that some workers do not pay attention to the training or briefing. They seem to assume that the work will be alright. This could be because either they are poorly educated, or they are careless. Recruitment agencies should be more selective about recruitment and pay better attention to the importance of briefing or predeparture training. Sending ill-performing workers may not just result in losses for the sending companies, but may also affect the reputation of Cambodian workers negatively as a whole. CARAM provides pre-departure training but does not recruit workers. 6.2.2.4 The problem of desertion The requirement for recruitment agencies or employers to bear the cost of sending workers is problematic. The agencies stand to lose if workers abscond from work. So far, desertion, especially in Thailand, is quite high, as reported by the recruitment agencies. It is likely that some legal workers are tempted to run away from their debt to join the large crowd of irregular workers. This is not a unique problem: Dang (2007) reports that the ratios of Vietnamese workers’ desertion were 27–30 per cent in Japan, 20–25 per cent in South Korea, and 9–12 per cent in Taiwan. Employers in Thailand advance the costs, some in full (THB20,000) in one payment, while some pay in two instalments. They then deduct THB2,000 from the monthly salary of each worker for a period of ten months. To ensure that the workers will stay and the money will be repaid, some recruitment agencies send a staff member to stay with the workers, provide them with some support, and hold their passports as a form of security. Withholding passports acts as collateral, but is not very effective. Since it is not difficult to cross the Thai-Cambodian border as a massive

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number of workers do, some workers can easily leave their passports behind and take the risk of going to other places in Thailand or return home. In this case, recruitment agencies are required by the employers in Thailand to find new workers and replace the missing ones at no charge. This makes recruitment agencies vulnerable to loss even though Thai employers advance the fees. The consequence might be that recruitment agencies would then raise the fee to make up for the losses; the fee could be as high as US$700. Another problem is that a number of workers find the work too hard, against their expectations, and want to return home by any means. It could be that they were not briefed adequately or accurately before they accepted the job, or the anticipated and actual job turned out to be different. The agencies are partly to blame for worker desertion as they fail to recruit workers properly as most professional human resource companies do. They are not selective enough in accepting workers. Their aim is largely to earn the recruitment fee as quickly as possible, so they send whoever they can without careful screening of applicants. If workers are not screened well, as long as the fees are advanced by companies/employers as in the current arrangement, they are likely to flee from their debts, desert their jobs, run away, and swell the ranks of irregular workers where they are likely to face other problems. This will only create a bad image for Cambodian workers and therefore less demand for them in the future. It is not easy for recruitment agencies to settle the problem of desertion. In some cases, they request the Thai embassy to prevent the runaways from receiving other visas that would enable them to re-enter Thailand. It remains a messy deal without any good solution. Unlike in South Korea or Malaysia where most migrant workers are legal and cannot easily return home without a passport, the case of Thailand is a special one for Cambodia to consider. Due to the location and loose border control, it is conducive to workers’ desertion. Tens of thousands of Cambodians can cross the border day in day out without a passport. One solution to the above problem of runaways would be if the workers’ costs of formally obtaining employment in Thailand were lower. It is understandable that most workers find it hard to repay the fee of US$600 within ten months, in addition to the US$100 they paid earlier. Thus, lowering the cost to US$300 as discussed above would help greatly. In addition, if the fee was borne by workers, it could help also resolve the problem of desertion. This would also release recruitment agencies from

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the financial burden of reimbursing employers’ costs in case of worker desertion. Other ways for migrant workers to obtain money to pay for fees would have to be put in place if the poor are to be able to migrate and work in other countries. 6.2.2.5 Alternatives to advance payment by recruitment companies If the objective of the Cambodian and Thai governments is to have labour migrants go through the recruitment agencies, there should be more agencies. If most workers were to return home after two to four years as stated in the MoU, then there would be a need to serve the estimated 180,000 workers currently in Thailand, only a minority of whom are legal. However it is assumed that there is no perfect system to prevent people from illegally crossing borders in search of employment in Thailand. With the present circumstances, it could be said to be a huge success should the system be able to encourage 50 per cent of workers to go through the formal channel. Eventually, it is hoped that all migrant workers to Thailand will be re-sent legally. Currently, there is labour demand for 20,000–30,000 workers in Thailand. A lot more effort is needed to capitalize on this demand. The problem of workers running away can be dealt with by finding a way for workers to obtain a special loan either with or without interest. Such a loan could be secured from banks, micro finance institutions, NGO credit programmes, community saving schemes, or relatives. Competent workers seeking larger benefits from working overseas would need to have cash or a loan to pay the recruitment agency. Such a loan should be endorsed by the local authority or any recognized entity that could vouch for the applicant’s credibility. In this arrangement, recruitment agencies should be closely monitored by competent MoLVT staff. This is to avoid potential misuse of money paid by workers, though payments could be made when employment is secure and the workers are ready to make a trip. This credit arrangement, however, could be biased against poor and vulnerable workers who do not have cash or cannot obtain a loan.

6.3 Lack of Institutions and Human Resources to Manage Labour Migration MoLVT recognizes the lack of human resources and institutional capacity to manage labour migration. This includes the capacity to raise awareness

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among potential workers in the provinces, and to supervise and inspect recruitment agencies. The problem of runaways is partly due to the lack of careful recruitment of workers by agencies and brokers, or the lack of briefing for workers. A number of Cambodian workers interviewed in Samutsarkorn in Thailand reported that they had been misinformed about their salary — they were told that they would earn THB10,000–12,000 per month, while they actually earned only THB5,500. One worker gave up a decent job in a spa in Siem Reap, but in the end she could only earn this kind of money by doing a lot of overtime.12 It could be that the high cost of formal recruitment is due to the overly high profits targeted by recruitment agencies. However companies’ profits cannot be set by government; the fees they charge can likely only be brought down by competition. The Provincial Departments of Labour and Vocational Training are not very active because of the general lack of human and financial resources. Some do not yet have a staff structure as the MoLVT itself is a new ministry. The scope for formalizing labour migrants is so huge that MoLVT will need their provincial departments to help play a crucial role in raising awareness, disseminating information regarding policies and regulations, and processing applications by recruitment agencies to be located in the provinces in the future. At the time of the study, there was no provincial committee to deal with labour migration. The whole business was still centralized.

6.4 Work Conditions and Welfare in Receiving Countries While working in Thailand, migrant workers are required to secure health insurance as set out in the MOU. This is a benefit for the workers since, at the time of the study, the premium was only THB30 (US$0.90), which is not much compared with their income of US$100 to US$150 per month. Social welfare costs 15 per cent of base salary, 5 per cent of which is paid by the employer, 5 per cent by the Thai Government, and the other 5 per cent by the worker. This is considered a good deal for registered workers in Thailand. However, migrant workers are under remarkable stress during the first three months when they have to pay all of these costs, but do not earn much from overtime work. Many run away from the workplace during this time.13 In case of dispute, the immediate person to help workers is the company staffer who ensures that workers follow the contract and repay

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the costs advanced by the company. The Cambodian Government has proposed the creation of the position of labour attaché at the Cambodian embassies in those countries with significant numbers of Cambodian migrant workers. This is likely to happen. However it remains to be seen whether one person can deal with the many issues that could arise from tens of thousands of workers. A number of NGOs have been active in advocating proper preemployment training, especially in relation to the protection of women and guarding against the spread of HIV infection. Among these, CARAM is the most active. However, there is no standardized contract that helps workers and related parties to identify potential problems and prevent them. This was a major problem raised by many parties interviewed. To date, no other measures have been introduced to provide protection for migrant workers during pre-employment and pre-deployment, workplace inspection, crisis management/evacuation, and settlement of disputes. There is little in terms of controlling and auditing the working conditions of migrant workers abroad. There is no government budget for officials to make the trip abroad. In current practice, the recruitment companies pay for government officials to make a trip every two years. There are no official reports on the working conditions of migrant workers from MoLVT.

7. CONCLUSION AND RECOMMENDATIONS Our case studies strongly indicate that the economic benefits from labour migration outweigh the economic costs. The majority of respondent migrants managed to earn money and send remittances home, though quite a few failed and are in serious debt as a consequence. This is essentially because they chose to cross the border to seek work in Thailand illegally, often with the help of a ringleader. Although it is not possible to evaluate the precise impact of migration, which requires a counterfactual analysis, sample households with migrant workers were at least found to be not worse off than those without migrants. There are many limitations affecting Cambodian workers’ decisions on whether to choose the formal or legal way to work in Thailand. Key among them is the high cost of becoming a legal migrant. The cost for migrants to arrive in Thailand legally should be lowered by both the Cambodian and Thai governments from the current US$700 to US$300. Passport fees should also be lowered. There should

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be more offices issuing passports in both Phnom Penh and key provinces such as Battambang, Siem Reap, and Prey Veng. Labour migration should be better managed as it provides employment opportunities while there are unlikely to be enough jobs in Cambodia in the short and medium terms. For this, several actions are needed. Institutional arrangements should be improved. MoLVT should have a department that is directly responsible for labour migration and more competent staff to deal with migration issues. A more comprehensive migration policy and legal framework should be considered. There should be more recruitment companies and offices in the provinces where there are large numbers of workers migrating to Thailand. Consideration should be given to the idea of providing a “one-stop service”, at least in those areas where many workers migrate to work in Thailand. This arrangement would help workers tremendously. Subdecree 57 should be revised to accommodate new developments. The required deposit, currently set at US$100,000, for establishing a recruitment agency should be reduced in order to increase the number of services in this sector. Workers should be more carefully selected by recruitment agencies to avoid the problem of desertion. This could perhaps be done with the help of NGOs. Recruitment companies should be allowed to charge workers the fees to go and work in Thailand to avoid the problem of desertion. Thailand stands to benefit from the influx of migrant workers and should therefore help to formalize the status of the workers there. Processing costs (for work permit and visa) should be lowered by the government. The option of employing migrant workers illegally should be reduced over time in order to promote the formal employment of migrant workers. There should be incentives to employ legal workers and disincentives for employing illegal ones. There should be a way to legalize the status of those already working in Thailand without requiring them to acquire passports and visas in Phnom Penh. All costs associated with legalizing migrant workers should be minimized.

Notes   1. H.E. Seng Sakda’s remarks at the workshop on labour migration policy formulation in Cambodia on 5 May 2009.   2. Three brokers at the village level and provincial town level in Prey Veng province were interviewed.   3. Villagers reported to the research team that in 2002, a few people set up a

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savings scheme providing up to 20 per cent interest per month. They provided the interest to a few households to make it look real. Having witnessed this, many villagers soon sold their land and assets and placed whatever cash they earned in the savings scheme. It turned out to be a scam in the end. The offenders ran away with the money, but were reportedly also caught and imprisoned by the local authorities later on. The money cannot be returned to the villagers, however. Many respondents asserted that this was the reason that triggered the migration to Thailand.   4. Fieldwork was conducted by CDRI as part of another research project on economic costs and benefits of migration.   5. The other issue is that it was not possible to apply for a work permit and at the applicants’ convenience as they were only issued at specific times of the year, and even every two years. Technically speaking, it was not possible for those who entered Thailand after 2004 to get a CI and work permit even if they wanted to. Thus, the process of documenting and regularizing the migrants already in Thailand before 2004 was only partially successful. The reason was the high cost of the process and perhaps the lack of information and a system for dealing with Thai employers effectively.   6. Meeting with Thai officers at the Thai Ministry of Labour on 15 November 2007.   7. Cambodia was quick to adopt the e-passport, perhaps the first country in the region to do so, without consideration of its significant cost. This added an extra US$20 or more to the cost of each passport. A six-person Malaysian team was hired to provide microchips and implant them in passports which costs US$20 per passport according to a passport office. This cost really seems too high.   8. H.E. Seng Sakda in a meeting on 16 August 2007.   9. Personal communication with officials, November 2007. 10. According to a meeting with H.E. Seng Sakda and his subordinates on 16 August 2007. 11. Personal communication with an ILO project officer, 26 July 2007. 12. Based on CDRI fieldwork in Thailand, November 2007. 13. Ibid.

References Acharya, S. “Labour Migration in the Transitional Economies of South-East Asia”. Working paper on migration and urbanization. Bangkok: UNESCAP, 2003. Asian Migrant Centre. Migration in the Greater Mekong Subregion: An Annotated Bibliography. Hong Kong: Asian Migrant Centre Ltd. and Mekong Migration Network, 2002a. ———. Migration Needs, Issues and Responses in the Greater Mekong Subregion:

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A Resource Book. Hong Kong: Asian Migrant Centre Ltd. & Mekong Migration Network, 2002b. ———. Asian Migrant Yearbook 2002–2003: Migration Facts, Analysis and Issues in 2001–2002. Hong Kong: Asian Migrant Centre Ltd. and Migrant Forum in Asia, 2004. ———. Resource Book: Migration in the Greater Mekong Subregion. Hong Kong: Asian Migrant Centre Ltd. & Mekong Migration Network, 2005. CDRI. Annual Development Review 2006–07. Phnom Penh: CDRI, 2007a. ———. Participatory Poverty Assessment: We are Living with Worry All the Time. Phnom Penh: CDRI, 2007b. Chan, S. and S. So. “Cambodian Labour Migration to Thailand: A Preliminary Assessment”. Working paper no. 11. Phnom Penh: CDRI, 1999. Dang, N.A. “Labour Export from Vietnam: Issues of Policy and Practice”. Paper for presentation at the 8th International Conference on Asia Pacific Migration Research Network, Fuzhou, China, 25–29 May 2007. Godfrey, M., S. So, S. Tep, D. Pon, and C. Katz. “A Study of the Cambodian Labour Market: Reference to Poverty Reduction, Growth and Adjustment to Crisis. Working paper no. 18. Phnom Penh: CDRI, 2001. IFAD. Sending Money Home: Worldwide Remittance Flows to Developing Countries. Rome: IFAD, 2007. IMF. “Cambodia: Macroeconomic Developments”. Presentation at the Cambodia Outlook Conference 2008, Phnom Penh Hotel, Phnom Penh, 2008. IOM. Review of Labour Migration Dynamics in Cambodia. Phnom Penh: IOM Cambodia, 2006. Maltoni, B. “Impact of Remittances on Local Communities in Cambodia: The Case of Prey Veng Province”. Unpublished paper, 2006. MoLVT. MoLVT Strategic Plan 2006–2010. Phnom Penh: MoLVT, 2007. ———. Report on Achievements in 2007 and Directions in 2008. Phnom Penh: MoLVT, 2008. Morris, E. “Promoting Employment in Cambodia: Analysis and Options”. Draft working paper prepared for the MoLVT, Phnom Penh, March 2007. Ministry of Social Affairs, Veteran and Youth Rehabilitation (MOSALVY). Policy and Strategy on Social Affairs in Cambodia (revised edition). Phnom Penh: MOSALVY, 2002. Paitoonpong, S. “Thailand’s Demand for Labour in the next 50 years”. Slides presented at Development Analysis Network First Research Team Workshop, 26–27 March 2007, CDRI, Phnom Penh. Paitoonpong, S. and Y. Chalamwong. “Cross-border Labour Migration in the GMS: A Study on Remittances” (Thailand Country Report 1- Preliminary Review). Paper prepared for Development Analysis Network First Research Team Workshop, 26–27 March 2007, CDRI, Phnom Penh.

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Todaro, P. and S. Smith. Economic Development (ninth edition). London, New York: Pearson Education Limited, 2006. Tuot, S. “Cross-Border Labour Migration in and out of Cambodia”. Cambodian Economic Review, issue 3, June 2007. UNIFEM. “Cambodian Women Migrant Workers: Findings from a Migration Mapping Study”. United Nations Development Fund for Women Regional Programme on Empowering Women Migrant Workers in Asia. Phnom Penh, 2006. The World Bank. Cambodia: Halving Poverty by 2015? Poverty Assessment 2006. Phnom Penh: The World Bank Cambodia, 2006. ———. World Development Indicators CD-ROM. Washington, D.C.: The World Bank, 2007.

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3 ECONOMIC COSTS AND BENEFITS OF LABOUR MIGRATION Case of Lao PDR Department of Statistics, National Economic Research Institute

1. INTRODUCTION One of the most significant effects of regional economic integration is migration for the purpose of employment.1 The number of international labour migrants has increased rapidly over the past decade. According to the Asian Migrant Centre (AMC), there were at least two million migrants in the GMS in 2004. Many previous studies observed that migrants generally move from countries with relatively low income levels such as Cambodia, Lao PDR, Myanmar, and Vietnam, to those of higher economic standing, such as Thailand. Economic reasons are identified as the main determinant of such movements. The city of Bangkok in Thailand is regarded as the hub of labour migration in the GMS. However, there is currently no accurate figure for the number of migrant workers in the city. As a result of the migrant registration scheme conducted by the Thai Government in 2004, there were approximately 1.3 million registered migrant workers in

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Thailand by said year. The biggest share (72 per cent) came from Myanmar, followed by migrant workers from Lao PDR and Cambodia (14 per cent from each).2 Like their geographic neighbours, Thai people also move to higher income countries. However, Thai labour migration is typically to countries outside the GMS such as South Korea, Taiwan, Hong Kong, and Singapore, among others. Labour migration is a significant phenomenon that is transpiring as a result of regional economic integration processes in the GMS. This phenomenon attracts considerable attention and interest from many stakeholders and associated parties. At present, there are a number of research works and publications that focus on this issue. However many questions still remain unanswered, especially regarding the economic costs and benefits of labour migration and its effect on the local economy. For example, the financial cost of labour migration for the individual is yet to be fully understood, and so is the effect of their earnings on the local economy. This chapter seeks to help fill this research gap. It also explores other migration related trends and issues pertaining to the case of Lao PDR, with the aim of advancing policy recommendations. To accomplish this, it used various methodologies, namely desk research, key informant interviews (KIIs),3 focus group discussions (FGDs) and consultations with partner research institutes and surveys.

2. BACKGROUND 2.1 History and Trends Labour migration between Lao PDR and Thailand is not a new phenomenon, especially not for people who live along the Lao-Thai border. Crossing the border to visit friends or relatives, trade, or seek employment, or engage in other income generating activities are long-established traditions and make up part of the relationship between the border communities located on both sides of the Mekong River. Despite this historical context, an exceptionally large amount of labour migration to Thailand only began in the 1990s. This was a result of Thailand’s economic development and Lao PDR’s adoption of a comprehensive reform programme called the New Economic Mechanism (NEM) in 1986, which led to regional integration and an “open door policy”. Until recently, there have been no reliable statistics on the number

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of Lao migrant workers in Thailand. Estimated figures vary from 150,000 to 300,000 people. There are two different types of Lao migrant workers in Thailand: regular and irregular. The regular type refers to those migrant workers who go through formal channels in accordance with the MOU between the Thai and Lao governments, that is, through a recruitment agency. This group still typifies the minority of Lao migrant workers in Thailand. According to the Ministry of Labour and Social Welfare of Lao PDR, only 5,400 Lao migrant workers were sent under the MOU, corresponding to around 2.7 per cent of the total number of Lao migrant workers in Thailand in 2007. Conversely, irregular migrant workers are those who gain employment and work in Thailand through informal channels. This group typifies the majority of Lao migrant workers in Thailand. Since 1992, the Government of Thailand has used the registration programme as a tool to enable illegal migrants to work legally in Thailand. The 2004 registration was a breakthrough in that it reflected a new approach for migrant registration. The process required concerted efforts from various government offices, including the ministries of labour, health and interior. Under the new policy, registration became a three-stage process and was opened to employers and migrant workers in all provinces. First, and similar to earlier registration processes, both migrants and employers were required to register and pay a fee. Second, migrant workers were expected to pass a medical exam. Failure of the exam resulted in immediate deportation, while passing the exam provided the migrant worker with a health insurance for the duration of their work permit. With the first two steps accomplished, the migrant was issued a one-year work permit. As a result of the expansion of the registration area, the number of registered migrant workers from Lao PDR increased rapidly and continuously. Table 3.1 presents more details on the number of registered Lao migrant workers in Thailand from 2001 to 2007. Table 3.1 indicates that the growth in the number of registered Lao migrant workers in Thailand increased continuously from 2001 to 2004, after which the number has been in constant decline. This reduction in the number of registered migrant workers does not necessarily accurately reflect the real trend of labour movement from Lao PDR. On the contrary, the trend appears to have increased in the post-2004 period, according to many case studies. This is explained by the fact that migrant workers from Lao PDR continue to use informal channels and means to gain employment

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Table 3.1 Number of Registered Lao Migrant Workers in Thailand, 2001–07 Year

Number of registered persons

2001 2002 2003 2004 2005 2006 2007

1,011(1) 42,085(2) 21,314(1) 99,352(1) 86,058(3) 54,071(3) 22,085(4)

Sources: (1) WB (2006); (2): Chiang Mai University (2003); (3): estimated number based on percentage of GMS migrant workers in total number of registered foreign workers; (4) Thai country study.

in Thailand, and thus avoid the formal migration mechanism (see Box 3.1). The AMC estimated that over 200,000 migrant workers from Lao PDR were living and working in Thailand in 2005. AMC notes that over half the migrant workers in Thailand were not registered due to a variety of factors, primarily the high financial costs and uncertainty of their stay in Thailand. Moreover, the registration process requires cooperation from employers. In fact, the Thai Government migrant worker registration programme does not allow migrant workers to register themselves; Thai employers are required to do this. In practice, the registration will take place only if Thai employers agree to go through the process and are willing to pay the fee. Basically, Lao migrant workers are able to enter Thailand anywhere along the border. However, the majority cross the border and enter Thailand at formal border gates such as the Friendship Bridge, Vangtao, Savannakhet, and Borkeo. They use legal documents such as a passport or border pass. Even so, they often overstay their work permit and continue to work without a valid permit. Figure 3.1 highlights in more detail the main border crossing points used by Lao migrant workers.

2.2 Drivers Three main factors facilitate, influence, and push Lao labour migrants to work in Thailand: (1) shared history and traditional relationship; (2) economic integration; and (3) socio-economic disparities. The historical

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Box 3.1 Informal Channels of Labour Migration The most unsafe way for labour smuggling is through illegal labour recruitment networks. The process involves illegal recruiters on both the Lao and Thai sides. The process is simple, but risky. While the recruiter on the Lao side contacts workers who wish to work in Thailand, the illegal counterpart in Thailand contacts employers who wish to hire illegal migrant workers. Lao workers will then be smuggled to Thailand by the Lao recruiter and handed over to the recruiter on the Thai side, to be delivered to the employers. After the workers are delivered, a fee will be paid to the recruiters by the employers. Workers using this channel of migration are most likely to be financially exploited by being paid low wages, as the employers have to be compensated for the fee paid to the recruiters and for their transportation costs. A similar procedure is used by migrant workers who work and live in Thailand outside of recruitment networks. Job arrangement is done by the migrant workers themselves, provided they follow the information received from their social networks or some illegal recruiters in Thailand. The advancement and increasing role of telecommunication networks make it easy for migrant workers to contact friends or employers to arrange work. Smugglers only provide transportation services from Lao to Thailand in this case. The most popular way for migration without the service of smugglers is through the misuse of border passes and passports. Migrant workers simply follow the official documentation process to acquire a passport or border pass. Then the passport or border pass will be used to cross the border legally without worrying about being arrested by the Thai police. Once they enter Thailand, they overstay and work in Thailand without a work permit. Recently, the use of border passes has been rapidly increasing. Lower costs and the ease with which they can be obtained make the use of border passes more favourable than passports.

relationship and infrastructure development as a result of regional economic integration serve as push factors for labour movement. Meanwhile, socioeconomic disparities, the labour supply deficit in Thailand, and the end of the generalized system of preferences (GSP) for the garment industry in Lao PDR have become “pull” factors for labour migration.

2.2.1 Facilitating Factors 2.2.1.1 Shared history and traditional relationship Lao PDR shares a border of over 1000 km with Thailand that runs from north to south. The populations of the two countries have a long and

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FIGURE 3.1 Main Border Crossing Points Used by Lao Migrant Workers

Source: NERI.

mutually intertwined history, speak a similar language. and have the same religion and traditions. Both countries were once joined as part of a single political entity. Their separation occurred during the nineteenth century as a result of western colonialism. Despite their political separation, the socio-cultural and traditional relationship between the two countries was maintained and has continued to develop. According to a field survey conducted by NERI in 2005, over 30 per cent of Lao people living along the Lao-Thai border still have family members or relatives living across the border in Thailand. This historical and traditional relationship, together with the similarities in language and culture, is one of the most important factors that have facilitated the movement of labour from Lao PDR in recent years. Reports state that these factors have also contributed to the high demand for Lao migrant workers by Thai employers, especially in the household service sector.

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2.2.1.2 Regional economic integration Regional economic integration during the last decade has eased communication and cooperation between Lao PDR and Thailand. Many roads, bridges, and communication networks linking both countries have been built. At the time of the study, there were two Mekong bridges linking transportation networks in both countries; one in Vientiane municipality, and the other in Savannakhet province. There has also been an increase in the number of border gates open to facilitate cross-border movement of goods, vehicles, and people. Thai mobile phone SIM cards are usable along the Lao side of the border and Thai television, radio, newspapers, and magazines are also available. According to the field survey conducted by NERI in 2005, this communication linkage not only influenced business activities, but also movements of labour. Migrant workers use these communication and infrastructure links to contact their families during their stay in Thailand, search for jobs in Thailand while in Lao PDR, or contact friends or employers before they move across the border. These factors make regional economic integration possible, which then facilitates and influences labour movement from Lao PDR to Thailand. With the continuation of regional economic integration and the opendoor policy of Lao PDR, it is expected that labour migration will be more progressively facilitated, supported, and legalized. The GMS can continue to become a more unified development region in which movement of people, for the purpose of employment, intensifies and is better managed. More migrant workers from Vietnam and China will come into Lao PDR and stimulate or influence labour movement from Lao PDR to Thailand.

2.2.2 Pull Factors 2.2.2.1 Socio-economic Disparities The geographical and political separation of Thailand and Lao PDR resulted in very different paths for the two countries, politically, and economically. Lao PDR became a French colony before becoming involved in the Indochina War, together with neighbouring Vietnam and Cambodia. The war damaged the economies of those countries involved for many decades. Meanwhile, during this time, Thailand experienced a period of independence and peace, and the country was able to develop socioeconomically much earlier than its neighbours. This led to an imbalance in terms of socio-economic development between GMS countries. Thailand

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has become a developing country with a per capita income of over US$1,874 and a life expectancy of sixty-eight years for men, and seventyfive for women in 2007. Lao PDR, on the other hand, still belongs to the least developed countries category, with a GDP per capita of US$719 and a life expectancy of fifty-four years for men, and fifty-six for women the same year. Table 3.2 below presents more details on key socio-economic development indicators for Lao PDR and Thailand. The findings of many field surveys support these figures. If national economic growth rates of at least 4 per cent per year in Thailand and 7 per cent in Lao PDR are maintained, the per capita income gap between the two countries will increase to US$1,598 in 2010, US$1,801 in 2015, and US$2,020 in 2020.4 The recent global crisis may have caused Thailand’s economy to contract in 2009 relative to 2008, but a return to positive growth is expected as early as 2010 (IMF 2009). Increasing difference between per capita incomes and, thus, wage levels, will attract more labour from Lao PDR to Thailand. The Lao economy and workforce have significantly depended on the garment industry. For many years, the European Union has facilitated imports of garments and clothes from developing countries via a quotaTable 3.2 Socio-economic Development Indicators for Lao PDR and Thailand, 2007 Indicators

Lao PDR

Thailand

Population Indicators Number of population (million) Population growth rate (2005) Fertility rate (per woman) (2005) Percentage aged 0–14 (2005) Percentage aged 15–64 (2005) Percentage aged 65+ (2005)

5.6 2.2 4.5 39.4 56.7 3.9

65 0.8 1.7 23 70 7

Human Development Indicators Life expectancy at birth (years), male (2005) Life expectancy at birth (years), female (2005) Mortality under age 5 (per 1,000 live births), (2005) Ratio of girls to boys, secondary school Gross domestic production per capita (US$) Human Development Rank 2007

59 63 98 62 719 130

68 75 26 93 2,019 76

Source: NERI, Population and Housing Census 2005.

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based policy. The Lao garment industry has benefited greatly from this policy, which enabled it to become the largest industry in Lao PDR in terms of employment. At the time of the study, almost 30,000 people, corresponding to around one third of the labour force in the non-agriculture sectors, were employed in this industry.5 The quota-based policy ended in 2010, and the UNDP initially expected that over 10,000 people employed in the Lao garment industry would lose their jobs as a result. Therefore, it is expected that the end of the GSP (General System of Preference) will influence the migration of labour from Lao PDR to Thailand. 2.2.2.2 Labour Supply Deficit in Thailand Throughout the past two decades, Thailand has experienced rapid economic growth. Consequently, the demand for labour in Thailand has also increased, but the supply of labour, especially in the low-skilled sector, has not kept pace. This is a result of a number of factors, the most important being: • A relatively low population growth rate. The population growth rate of Thailand has been 0.8 per cent per year while its economic growth rate, at least before the global crisis, has been between 4 and 6 per cent per year. The slow population growth rate alone indicates the potential for a deficit in labour supply in Thailand, regardless of its economic growth rate. • Thailand’s labour export policy. Thailand is also a labour exporting country. Hundreds of thousands of Thai people are living and working in higher-income countries or regions outside the GMS, such as Hong Kong, Taiwan, Singapore, Europe, South Korea, and Brunei. In 2004, it was reported that around 150,000 Thai labourers were living and working in Taiwan, Singapore, Hong Kong, Brunei, and Israel, with the largest proportion working in Taiwan.6 • Higher education standards and human capacity development in Thailand. The consequences of these achievements are that Thai people, having received more professional education and training, shift upwards from unqualified and unskilled occupations to qualified and skilled vocations. Thus, over the past two decades, a decline in unskilled labour supply has transpired in the Thai labour market.

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All these factors have contributed to a deficit in labour supply in the Thai labour market, especially in unskilled labour. The labour supply deficit is an important factor that stimulates labour migration from neighbouring countries to Thailand, including from Lao PDR. The results of a study conducted by the Asian Research Institute for Migrants in 2004 indicated that the Thai economy’s demand for migrant workers from Myanmar, Lao PDR, and Cambodia, had already expanded beyond supply in 2004. The institute reported that in 2004 the Thai economy needed at least 1.6 million migrant workers from Cambodia, Lao PDR, and Myanmar, but there were only 1.3 million such workers in the country at the time.7 This means that the Thai economy needed over 300,000 more workers from GMS countries. The labour supply deficit in Thailand is expected to increase over the next decade due to relatively high economic growth rates, subject to the impact of any more economic crises, and slow population growth rate. The increasing labour supply deficit in Thailand will draw even more labour from Cambodia, Lao PDR, Myanmar, and Vietnam.

2.2.3 Push Factors Lack of income generating opportunities and poverty are considered factors pushing Lao migrant workers to seek higher incomes and a better livelihood in other countries. Over 85 per cent of respondent Lao migrant workers stated that the main reason for their migration to Thailand was economics related, such as higher income potential in Thailand, ingrained local poverty, and lack of employment opportunities in their local village or district, among others.8 Details of reasons for labour migration to Thailand, particularly in the case study area, are discussed in more detail later.

2.3 Migration Management According to the International Labour Organization (ILO), the social and legal status of migrant workers in the GMS is discouraging, especially the status of unskilled, undocumented, and unregistered migrant workers. The ILO states that there are insufficient policies and mechanisms to protect the rights and security of these people. They are often viewed as illegal workers who have violated migration regulations and laws, and work in the destination country without any legal permit. They have very limited

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legal protection and their actions have been held as punishable by law by both the countries they have come from and the countries they go to. In the specific case of the irregular migrant workers in Thailand, their social situation can only be described as highly critical. They do not have access to basic social services, such as health care and medical services. Furthermore, they are not able to negotiate their wage, working conditions, and working hours with their employers. Often, they are viewed as a source of crime and disease by the local population. Reports highlight that due to their lack of rights and legal protection, migrant workers in Thailand are a highrisk group, and are especially vulnerable to being cheated by employees, arrested, punished, and deported by the Thai police, or trafficked for labour purposes (with the risk of sexually transmitted diseases especially prevalent among those forced to work in the sex industry). Women and children are identified as the most vulnerable of migrant workers.9 Obviously, a huge challenge has faced the task of migration management. Over the years, individual and joint efforts by the GMS countries have been undertaken in an attempt to address this challenge.

2.3.1 Role of International Law No country in the GMS has ratified the ILO Migrant Workers Convention, the ILO Migration for Employment Convention, or the UN International Convention on the Protection of the Rights of All Migrant Workers and Members of the their Families. However, almost all of the countries in the region, including Thailand and Lao PDR, are parties to the UN International Convention on Economic, Social and Cultural Rights, and the UN International Convention on the Elimination of All Forms of Racial Discrimination. These conventions require all country members to accept the equality of all people, in terms of rights and obligations. According to the convention, no individual can be discriminated against for their nationality, religion, or race. This absolute equality among people constitutes a basic principle of human rights and humanity. Thus, the convention offers migrant workers rights and protection to some extent. While these conventions should, in principle, be implemented and reflected in national policies and regulations, it does not mean that they will be in practice. In the end, it is the national policies, regulations, and mechanisms, not international conventions, that can enforce the rights and protection of migrant workers.

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2.3.2 Bilateral Management The adoption of the international conventions mentioned above and the effect of the large volume of illegal labour migration has spurred the GMS country governments’ desire to resolve the problem, particularly the Thai Government. As mentioned previously, since 1992, the Thai Government has used the registration of migrant workers as a tool to enable illegal migrants to work legally in Thailand. This unilateral strategy, however, needed to be complemented with a bilateral approach if underground movements were to be contained, and the legal channel for migration was to be utilized more. Between 2002 and 2003, the Thai Government thus signed MOUs with the governments of Lao PDR, Cambodia, and Myanmar. The key specific aims of the MOUs are to help match labour demand with supply, regulate how citizens from those countries can work in Thailand legally, protect the rights of migrants during their journey and work period, and ensure that the workers do not settle permanently in the destination country. Then in March and April 2004, the Thai Government passed two resolutions aimed at setting up a comprehensive system for the management of migrant labour that would integrate the efforts of all relevant government agencies along seven points: (1) organizing a formal system for migrant work application in the countries of origin; (2) ensuring that employers enforce national labour standards for both Thai and migrant workers; (3) intercepting people crossing national borders illegally; (4) arresting all those involved in facilitating illegal migration; (5) repatriating illegal migrants to their countries of origin; (6) publishing and distributing information about the organization and procedures of the labour migration system to workers, employers, and government officials; and (7) following up and assessing the effectiveness and relevance of the system.10 The MOUs set a two-phase approach to regulate labour migration from Cambodia, Lao PDR, and Myanmar. The first phase was to legalize irregular workers in Thailand. This was meant to be temporary. However, because of procedural complexities, difficulties in accounting for all migrant workers, and the continuation of labour migration by irregular means into Thailand, this phase continued at least until 2010, when the Thai Government announced its intention to end the registration rounds for good. The first phase consisted of three steps. First, the migrants and their employers were required to register and pay a fee. Second, migrant workers needed to pass a health examination. As mentioned earlier, failure

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of the examination made the applicant subject to immediate deportation, while passing allowed the migrant to receive a work permit and health insurance for that duration. After registration, officials from Lao PDR and Cambodia also came to Thailand to interview the registered migrants and issue them certificates of identity (CI), which confirmed them as citizens of their respective countries. The CIs formalized the workers’ immigration status in Thailand and allowed them to apply for a two-year work permit. After the expiry of their permits, the migrant workers must return home where they can apply for a new work permit by following the procedures set in the second phase. The second phase aims to develop a system in which recruitment agencies recognized by each government will help match labour demand and supply with respect to the immigration and labour laws of both countries. The agencies compile lists of job vacancies from employers in the destination countries, and match the positions with demands from applicants in their countries. Once applicants satisfy the requirements to obtain a contract, visa, work permit, and health insurance, the companies then arrange the legal process for them to travel and begin working in the destination country; they then follow up on the workers’ conditions in Thailand. After the expiry of their initial two-year work permit, the migrant workers are allowed to apply for a second two-year permit. After that, they are required to return home and wait for three years before applying for another permit. Daily cross-border and seasonal migrant workers living in the provinces bordering Thailand are already allowed to receive passes to work in Thailand without a formal contact. This will continue, with strengthened vigilance against the use of fake passes that some irregular migrants use to enter Thailand. Under the Thai Government’s labour migration management policy, the legal migrant workers should receive the same rights and perform the same obligations as Thai domestic workers. They should receive at least the minimum standard wage in Thailand, and have the same working conditions and access to basic health and social services as domestic Thai workers. In principle, the migrant workers are protected from all forms of cheating, abuse, and mistreatment during their stay in Thailand. All these rights and protections are contingent on the migrant workers fulfilling their obligations under the Thai law and their employment contracts: • Not change their employer during the employment contract period without consent of their employer;

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• Work in accordance with the employment contract (however, in practice, their employers are allowed to change their job specifications; in the instance of a disagreement with such change, the migrant workers have to return home immediately and are required to pay their travel costs and debts to the recruitment company of about US$626 (THB21,000 or LAK6.3 million);11 • Concede the right to organize meetings or demonstrations for better living and working conditions in any circumstances; • Contribute 5 per cent of their monthly wage to a social security fund in accordance with Thai Labour Law; • Contribute 15 per cent of their monthly wage to a repatriation fund (this is, in fact, an incentive for the workers not to stay in Thailand after the expiry of their work permit; it is a scheme for compulsory saving which would be deducted from wages, placed in a fund, and given back to the worker, plus interest, on the expiry of the contract, and the return of the migrant to his or her country of origin); and • Pay income tax in accordance with the taxation laws and regulations of both countries, Lao PDR and Thailand.12

2.3.3 Lao Labour Export Policy In preparation for the signing of the MOU with the Thai Government, and in response to the increased illegal labour emigration of Lao workers to Thailand in general, the Lao Government enacted Decree Number 68/PM on Labour Export on 28 May 2002. The Ministry of Labour and Social Welfare (MLSW) passed Instruction Number 2417/MLSW on Implementing Decree Number 68/PM on 29 July 2002. According to the decree and instruction, the MLSW is to play a central role in labour export management. The MLSW is obligated to draft, administer, and monitor the implementation of policies, regulations, and laws related to labour export management, including those pertaining to the activities of labour recruitment companies. The ministry has the authority to consider applications for licences and issue business licences to labour recruitment companies. Without a business permit from the ministry, it is illegal to operate a labour recruitment company. For security reasons, the decree and instruction require labour export companies to pay an insurance fee equal to the price of a return air ticket from the destination country to Lao PDR for each migrant worker. In the case of a migrant worker going to

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Thailand, the companies must pay around US$150 per worker whom they send. The insurance fee has to be deposited at the Bank of Lao PDR. The Lao Government is allowed to use the fee to repatriate the migrant worker in the case of an emergency.13 The decree and instruction also require the labour export companies to provide information and training to workers before sending them to work abroad. They mandate the companies to monitor and report on the living, working and health conditions of their workers regularly to the MLSW. To cover the cost of administration, the labour export companies are allowed to take a maximum of 15 per cent of the monthly wage of migrant workers. Failure to comply with the requirements just discussed and any other relevant regulation will result in the MLSW issuing a warning to, imposing a fine on, or ordering a temporary or permanent halt to all the activities of, the delinquent recruitment companies. Migrant workers are required to pay income tax in accordance with Lao law. The tax rate paid depends on the sum of the income earned. Migrant workers earning an income between LAK500,000 and LAK1,000,000 (about US$50 and US$100) per month are required to pay income tax equal to 20 per cent of their wage. Those earning over LAK5,000,000 must pay income tax equal to 40 per cent of their wage.14 At the time of the study, nine recruitment companies were established in Lao PDR, three of which were state-owned enterprises. Eight companies had their headquarters in Vientiane municipality and one in Borlikhamxay province. The recruitment companies have their branches and coordination networks in almost all the border provinces with Thailand, such as Savannakhet, Champasak, Khammouang, Xayaburi, and Borkeo. Up to the time of the study, the companies have sent about 5,400 migrant workers, and the majority of those were sent to Thailand.15 This corresponds to about 2.7 per cent of the total number of Lao migrant workers in Thailand. This figure is a significantly small percentage and partly highlights the inefficiency of the policies, regulations, and mechanisms that govern labour migration. Labour export through a recruitment company begins with a formal demand for labour (via an order or request) from companies abroad which the recruitment companies in Lao PDR are to supply. The labour export companies do not actually negotiate the quota or terms of employment of the workers as a labour organization would; they are simply mid-chain companies that agree to supply, as demanded, contract labour to the companies in the destination country, in this case, Thailand. After receiving

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an order from a firm abroad, the recruitment companies announce the job at their headquarters and provincial branches. Decree Number 68/PM on Labour Export allows Lao citizens who are eighteen years or above, live in Lao PDR, and have at least completed primary school, to apply for a job abroad through a recruitment company. The selected persons must obtain the required official documents, including a passport, single- or multiple-entry visa, health certificate, and work permit card. After obtaining the official documents, the selected persons must sign an employment contract directly with the company they will work with abroad, not with the recruitment company in Lao PDR. After completing all the required paperwork, the export company must then present the documents to the MLSW who checks the documents and gives final authorization for the migrant worker to go abroad. As discussed earlier, once in Thailand, the migrant workers are required to pass a health examination, pay for a two-year work permit, contribute five per cent of their wage to a social security fund, and pay income tax in accordance with Thai taxation law. They are also required to pay into a repatriation fund.

3. CASE STUDY METHODOLOGY AND PROFILE 3.1 Methodology For the case study, a household survey was the key means used to collect qualitative and quantitative information. Using a questionnaire, we interviewed a total of 615 households in six villages, each belonging to a different district. Of the six districts, two were located in Xayaburi province in the northern region, two in Savannakhet province in the central region, and two in Champasak province in the southern region of Lao PDR. The sample villages constitute the case study area and an economic system in itself. Through the use of a wide sample range, NERI hoped to get estimates of the economic effects of labour migration which are reflective of the nationwide impact. Of the total interviewed households, 319 were households with migrant workers, and 296 were households without migrant workers. The sample households were randomly selected. A survey of the migrant workers themselves was conducted. In total, 154 Lao migrant workers were interviewed during our fieldwork. However, three were non-responsive, making the effective sample of 151 workers only.

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FGDs were also conducted in each survey village. Each FGD included four types of participants: village authorities, migrant workers, heads of households with migrant workers in Thailand, and heads of households without migrant workers in Thailand. The “Ten Seeds Technique” was used to stimulate discussion.

3.2 Case Study Profile 3.2.1 Geographical Location As mentioned above, the case study area comprises sample villages located in six different districts and three different provinces: Xayaburi, Savannakhet, and Champasak. Figure 3.2 below shows the locations of the sample villages.

FIGURE 3.2 Location of the Case Study Area

Source: Created by NERI.

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As shown on the map, the selected sample villages are widely distributed throughout Lao PDR. Two of the sample villages are located in Xayaburi province. According to the Lao PDR Socio-Economic Development Strategy and Plan, the province belongs to the Northern Development Area and so we are able to say that the two villages are located in the northern part of the country. Another two of the sample villages are located in Savannakhet province, which belongs to the Central Development Area of Lao PDR. The remaining two villages are located in Champasak province in the Southern Development Area of Lao PDR. All of the sample villages are located in areas along the Lao-Thai border, and are less than 90 km from it. It is in this area that cross-border movements to Thailand are most significant and observable. Due to the recent development of infrastructure and communication links with Thailand, large-scale labour movement from the eastern regions of Lao PDR has only just begun and is thus not yet as significant a phenomenon in comparison with the other regions. Therefore, the eastern area has not been considered in the case study.

3.2.2 Infrastructure, Information, and Communication Networks In general, the infrastructure, information, and communication networks in the case study area are relatively well developed by Lao national standards. As mentioned above, the sample villages are located in the areas along the Lao-Thai border, less than 90 km from the border and with year-round access to the border by road. One of the sample villages is located directly at a local border gate, and another one is located 10 km from the nearest border gate. On average, the villages in our case study area are located 34 km from the nearest border gate and have road access in all weather and at any time of the year. Table 3.3 specifies some indicators of the infrastructure, information, and communication links of the study villages. Access to radio and television broadcasts are the main source of general information in the case study area. According to our survey, every household in the area had access to radio and television. Over 77 per cent owned a radio or television. Thai broadcasts are generally more favoured than domestic ones, and Thai newspapers and magazines are also available in many villages. In conclusion, our findings show that the

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Note: † 0 means service is available within the village. Source: Village survey.

Distance from nearest border gate (Km) % of HH having access to a TV and radio % of HH owning a TV or radio Distance from mobile phone service† (Km) % of HH owning at least one mobile phone





Items 9 100 69 0 10

Huaytor 18 100 92 0 65

Namphou

Xayaburi 54 100 93 0 66

0 100 82 0 50

Kadan Naphongtha

Savannakhet 88 100 52 0 23

37 100 87 0 57

Phonthong

Champasak Kangyao

Table 3.3 Infrastructure, Information and Communication Links of Study Villages

34 100 77 0 45

Case study area

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consumption of Thai information and mass media is significantly high in the case study area. The mobile phone is the main communication mode used in the case study area. At the time of the study, all our sample villages had mobile phone network coverage. It was observed as well that Thai SIM cards are also usable in the two sample villages located within 10 km of the border. Our household survey indicates that over 45 per cent of the sample households owned a mobile phone, which is a relatively high figure. According to the study conducted by NERI in 2005, the development of the communication system is one of the most important conditions influencing labour movement to Thailand. Migrant workers usually use mobile phones to communicate with their home villages during their stay in Thailand, and also with employers or friends before leaving home for work in Thailand. In sum, our case study area has relatively good road infrastructure, and information and communication networks linking it with Thailand.

3.2.3 Demography 3.2.3.1 Age Structure and Labour Force At the time of the study, the case study area had a population of 12,875, with slightly under half being female (49.4 per cent). About 67 per cent of the population were of legal working age, that is, between fifteen and sixty years old. Table 3.4 below presents more detail on the age structure of the population in our case study area. The table above suggests that the population of young workers in the case study area will increase continuously and rapidly over the next decade. The table shows that the percentage of the population aged between eleven and fourteen years is significantly higher than the percentage of the population aged between fifty-six and sixty years. Furthermore, the percentage of the population aged between six and ten years is significantly higher than the population aged between fifty-one and fifty-five years. According to the figures in the above table, the population of the labour force will increase gradually from 8,627 people to 9,368 people over the next five years and to 10,002 people within the next ten years. This corresponds to an average growth rate of 1.6 per cent per year. A young population and, therefore, a young labour force is one of the most important factors stimulating labour movement to Thailand.

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Table 3.4 Age Structure of Case Study Population

Age Group Xayaburi Savannakhet Champasak



Total Number

%



65

227 223 213 1,488 99 74 26 129

297 295 285 1,970 131 99 35 171

636 635 630 4,268 284 214 75 371

1,160 1,153 1,128 7,726 514 387 136 671

9 9 9 60 4 3 1 5



Total

2,479

3,283

7,113

12,875

100

Source: Village survey.

3.2.3.2 Education The education level of the population in the case study area is not much different compared with the overall education level of the population of the whole country, but it is significantly lower in comparison to Thailand. Almost 86 per cent of the people aged fifteen years and older in the case study area only completed primary school; 5.7 per cent had an education level lower than primary school. Table 3.5 shows in more detail the education levels of the population in our case study area. Out of the survey sample of 3,700 persons from 615 households, only 25.2 per cent completed primary school. Illiterate people accounted for about 21.8 per cent of the sample. In terms of skill type, almost the entire sample or about 92.4 per cent are considered low-skilled labour with no technical education. Only 1.1 per cent of the sample had passed vocational training. 3.2.3.3 Occupational Structure At the time of the study, the agricultural sector employed about 84 per cent of the labour force in the case study area. Employment in trade, transportation services, industry, and handicraft related vocations accounted for the rest. Table 3.6 presents the occupational structure of the labour force in our case study area in more detail.

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Table 3.5 Education Level of Case Study Population Aged Fifteen Years and Above Education level Xayaburi Savannakhet Champasak



Total pers.

%

Illiterate Not completed primary   school Completed primary school Higher than primary school   education

84

111

241

436

4.6

20 1,557

26 2,063

57 4,470

155

205

444

804

8.6

Total

1,816

2,406

5,212

9,434

100

103 1.1 8,091 85.7

Source: Household survey.

Table 3.6 Occupational Structure of Case Study Area Population Aged between Fifteen and Sixty Years Economic activities Xayaburi Savannakhet Champasak Agriculture, animal husbandry,   and aquaculture Trade Construction Transportation service Hospitality — hotels, guest   houses, and restaurants Industry and handicraft Other Total



Total No

%

1,246 67 8 183

1,991 121 33 11

4,027 357 24 143

7,264 545 65 337

84 6.3 0.8 3.9

5 66 86

0 44 0

24 143 48

29 253 134

0.3 2.9 1.5

1,661

2,200

4,766

8,627 100

Source: Household survey.

Over 1,300 people, corresponding to about 15.7 per cent of the labour force, were working in Thailand during our field survey. This is a significantly high percentage in comparison to the average figure for the whole country. A young age, with relatively low education and the predominant prospect of agriculture-based work are the main characteristics of the population and labour force in our case study area.

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Moreover, of the 3,700 sample population, only 64.5 per cent were working and an additional 1.3 per cent were studying and working at the same time. Students accounted for 17 per cent of the sample. The rest of the samples were people with disbility, or those too young or too old to work.

3.2.4 Economic Status The per capita income in the case study area is estimated to be US$662 per year, which is about 8 per cent lower than the national average (about US$719 in 2007). However, based on the findings from our fieldwork, the percentage of the case study population living under the national poverty line, US$0.38 per person per day, is estimated to be about 24 per cent. Hence, the incidence of poverty in the case study area is significantly lower in comparison with the national level, which was 30.7 per cent in 2003.16 Table 3.7 below presents this information in more detail. It can be tentatively argued that labour migration seems to have had, and continues to have, a positive effect on poverty reduction in the case study area. As is often the case in Lao PDR, the main economic activity in the case study area is agriculture, which includes animal husbandry and aquaculture. The findings of our field survey indicate that the sector contributed about 58 per cent of the total production value in the case study area. This contribution is significantly high in comparison to the national average. Due to remittances from Thailand, the service sector contributed about 37 per cent of total production value. This sector includes trade, transportation, and hospitality services such as hotels, guesthouses, entertainment establishments, and restaurant services.

Table 3.7 Macroeconomic Indicators for Study Villages Items Xayaburi Savannakhet Champasak Per capita income   (US$/year)

Poverty incidence (%)

650

12.9

667

12.1

664

12.5

Case study Lao area PDR 662

12.6

719 27

Source: Estimation by NERI based on the household survey.

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The last important economic sector is manufacturing and handicraft. This sector contributed about 5 per cent of total production value — much lower than the national level. Figure 3.3 shows the proportions of the three sectors in production in the case study area.

3.2.5 Migration Characteristics 3.2.5.1 Rationale and Trend of Labour Movements to Thailand As with the rest of Lao PDR, labour migration from the case study area to Thailand is not a new phenomenon. A large share of the population in the area has family members, relatives, or friends living or working across the border in Thailand. Crossing the border for employment and other income generation activities, or to visit friends and relatives, is a tradition of the population in the case study area. However, as mentioned earlier, a massive flow of labour to Thailand began in the 1990s after the Lao PDR adopted NEM, which led to regional integration and an “open door policy”. Economic needs are the main reason for labour movements from the case study area. About 36 per cent of the active migrant workers who were interviewed during the fieldwork stated that they migrated to Thailand because they can earn a higher income there. Twenty six per FIGURE 3.3 Sectoral Output Proportions in Case Study Area

Source: Estimation by NERI based on the household survey.

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cent mentioned that they went there because of poverty at home, and about 12 per cent stated that it is because they had no job in their local community (see Figure 3.4). The findings above clearly show that economic reasons are the main drivers of labour movements from the case study area to Thailand. As discussed more later, further findings show that migrant workers can earn significantly more in Thailand than in Lao PDR. Our field survey found that over 1,357 people (about 15.7 per cent of the labour force) in the case study area were still working in Thailand during our field survey period. However, the prevalence of labour movements to Thailand differed greatly between the sampled provinces. The prevalence was significantly higher in Xayaburi, estimated to be 30.6 per cent of the labour force. In Champasak, it was only 6.5 per cent. Table 3.8 presents more details on this. The number of migrant workers in Thailand has been continuously and rapidly increasing over the last five years. Our findings from the village surveys indicate that the number of workers migrating to Thailand from the

Figure 4: Reasons for Labour Migration to FIGURE 3.4 Thailand Reasons for Labour Migration to Thailand

Source: Individual migrant survey Source: Individual migrant survey.

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Table 3.8 Prevalence of Labour Movement to Thailand in Case Study Area, 2007 Number of labour force Number of migrant workers Percentage

Xayaburi

Savannakhet

Champasak

Total

1,661 509 30.6

2,200 538 24.5

4,766 310 6.5

8,627 1357 15.7

Source: Village survey.

Table 3.9 Number of Migrant Workers from Case Study Area in Thailand Gender

Xayaburi

Savannakhet

Champasak

Total

2007

2002

2007

2002

2007

2002

2007

2002

Male Female

268 241

125 111

217 321

245 194

96 214

16 34

581 776

386 339

Total

509

236

538

439

310

50

1,357

725

Source: Village survey.

case study area increased from 725 in 2002, to 1,357 in 2007. This corresponds to an average growth rate of about 18 per cent per year. Table 3.9 presents more statistics in this regard. The increasing trend is expected to continue over the next few years, largely because of an increasing population, particularly of young people in the area. The continued development of information and communication systems will also play an important role in stimulating and accelerating this trend.

3.2.6 Migrant Worker Characteristics 3.2.6.1 Sex and Age Our sample comprised 151 Lao migrant workers. According to our survey findings, over half of our sample workers are women (64.9 per cent). The majority come from subsistence-based families. At the time of the study, about 35 per cent of those migrant workers were under twenty-five years old. At such an age, these people should have been attending school to further their education. However, many have moved to Thailand to seek

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employment or other income generation activities instead. The loss of opportunities for further education seems to be the highest social cost for migrant workers themselves, their families, and for Lao PDR. These costs will become more visible in the long term. Table 3.10 presents more details on the age structure of our sample Lao migrant workers in Thailand. 3.2.6.2 Education The education level of Lao migrant workers is relatively low in comparison to the Thai population and labour force. According to the results from our field survey, over two thirds had only completed primary or lower education, while only a tiny minority had completed upper secondary or higher education. Table 3.11 clarifies in more detail the education levels of Table 3.10 Age of Sample Lao Migrant Workers in Thailand

Age group



Male

Female

Total

Number

%

Number

%

Number

%



15 – 19 20 – 24 25 – 44 45 and above

4 9 36 4

21.1 26.5 39.1 66.7

15 25 56 2

78.9 73.5 60.9 33.3

19 34 92 6

100 100 100 100



Total

53

35.1

98

64.9

151

100

Source: Field survey.

Table 3.11 Education Levels of Sample Lao Migrant Workers in Thailand Education



Gender

Total

Percentage

9 15 52 16 6

13 26 72 28 12

8.6 17.2 47.7 18.5 7.9

98

151

100.0

Male

Female

Cannot read or write Not completed Primary Completed Primary Lower secondary Upper secondary

4 11 20 12 6

Total

53

Source: field survey.

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Lao migrant workers in Thailand. Thus, the most prominent characteristics of migrant workers in Thailand are: being from a rural family; living in an area along the Lao-Thai border; being of relatively young age; and having a relatively low level of education. However, it must be noted that the education level of migrant workers from Lao PDR seems to be better than those who remain in the same communities. 3.2.6.3 Employment Destination, Structure, and Status The main destination of Lao migrant workers in Thailand is Bangkok. According to our survey results, over 38 per cent of the respondents were employed there. Another 31 per cent were engaged in other cities located along the Lao-Thai border. Almost 20 per cent of them were engaged in the border provinces. Table 3.12 presents more details on the locations of employment of the sample Lao migrant workers in Thailand. Due to their relatively low education levels and lack of occupational training, most Lao migrant workers are employed as unskilled workers in several specific sectors, examples of which include: domestic service; agriculture related industries; factory work; and construction. Furthermore, reports highlight that their work usually involves heavy lifting and dirty conditions, the type of work Thai people do not want to do. Some of the sample female migrant workers were employed in the services sector, including in restaurants, karaoke bars, and massage parlours, which are places where foreign workers are not officially permitted to work in Thailand. Table 3.13 shows in more detail the occupational structure of the sample Lao migrant workers in Thailand. Table 3.12 Employment Destinations of Sample Lao Migrant Workers in Thailand Place



Gender

Total

Percentage

39 30 18 11

58 47 30 16

38.4 31.1 19.9 10.6

98

151

100.0

Male

Female

Bangkok Other city Bordering province Other rural areas

19 17 12 5

Total

53

Source: Individual migrant survey.

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Table 3.13 Employment Structure of Sample Lao Migrant Workers in Thailand Occupation



Men

Women

Total

Number

%

Number

%

Number

%

Domestic work Agriculture Industry Fishery Construction Hotel, restaurant, and   entertainment Trade Transportation Other

16 11 12 0 22

30.6 20.8 22.6 0.0 41.5

30 13 7 4 32

20.5 13.3 7.1 4.1 32.7

31 24 19 4 54

20.5 15.9 12.6 2.6 35.8

0 3 1 3

0.0 5.7 1.9 5.7

7 4 0 1

7.1 4.1 0.0 1.0

7 7 1 4

4.6 4.6 0.7 2.6

Total

53

100.0

98

100.0

151

100.0

Source: Field survey.

As mentioned earlier, a large number of Lao migrant workers in Thailand are identified as “undocumented”. Hence, they are deemed to be illegal migrant workers. Due to their “illegal” status, they are not able to sign a contract with their employer. About 52 per cent of the sample migrant workers only had a verbal promise to rely on, which is not legally binding. In the case of “contract” violation, these illegal migrant workers are not protected by law nor do they have the right to legal counsel. Table 3.14 shows in more detail the employment status of Lao migrant workers in Thailand. 3.2.6.4 Working Conditions According to a case study conducted by the Chiang Mai University in 2003, the working conditions of migrant workers in Thailand are unfavourable, especially those of undocumented and unregistered migrant workers. The majority of their workplaces lack adequate health and safety standards, and are often dirty and dangerous. In many places, there is no ventilation and so it gets very hot. It was also reported that many employees are not provided with information or equipment to protect them from occupational hazards. For example, migrant workers in the agricultural sector often come into frequent contact with pesticides and harmful chemicals. This could have detrimental effects on their long-term health.17

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Table 3.14 Employment Status of Sample Lao Migrant Workers in Thailand Age group

Men

Women

Total

Number

%

Number

%

Number

%

No contract Verbal permission Written contract Other

20 30 3 0

37.7 56.6 5.7 0.0

48 48 2 0

49.0 49.0 2.0 0.0

68 78 5 0

45.0 51.7 3.3 0.0

Total

53

100.0

98

100.0

151

100.0

Source: Field survey.

The field survey showed that about 22 per cent of the sample migrant workers were not provided with information about the risks of their work, how dangerous the work was, or ways to protect themselves (Table 3.15). Moreover, about 15 per cent of the migrant workers were injured and or sick during their time in Thailand (Table 3.16). As mentioned previously, some migrant women were employed in bars, clubs, karaoke bars, and other entertainment places, and were also without sufficient knowledge or information about sexual health. They often did not know how to protect themselves from the risk of sexually transmitted diseases, which places them in a high-risk category. Also, migrant workers in the fishing industry often had to work months on end at sea without a break. Working hours are often extremely long. Our results from the field survey show that most of the sample Lao migrant workers had to work

Table 3.15 Migrant Workers with Information about Working Conditions Information



Gender

Total

Percentage

9

74

24

118

33

78.1

21.9

53

98

151

100.0

Male

Female

Got information

44

Total

Did not get information Source: Field survey.

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Table 3.16 Migrant Workers Injured or Sick during Working Period Information



Gender Male

Yes

Female

Total

Percentage

No

45

8

14

84

129

22

14.6

Total

53

98

151

100.0

85.4

Source: Field survey.

seven days a week and more than eight hours a day. Table 3.17 presents more details on this. The average working days of the sample Lao migrant workers are estimated at 6.6 days a week, and average working hours at about ten hours a day. According to our FGDs with active migrant workers and returnees during the field survey, the majority of migrant workers in Thailand live in Table 3.17 Working Days and Times Time of working



Male

Female

Total

Percentage

61.2 35.7 3.1 0.0

102 45 4 0

67.5 29.8 2.6 0.0

98

100.0

151

100.0

1.9 43.4 37.7 11.3 5.7

3 30 32 9 24

3.1 30.6 32.7 9.2 24.5

4 53 52 15 27

2.6 35.1 34.4 9.9 17.9

100.0

98

100.0

151

100.0

Number

%

Number

Working days 7 days/week 6 days/week 5 days/week Less than 5 days/week

42 10 1 0

79.2 18.9 1.9 0.0

60 35 3 0

Total

53

100.0

Working times Less than 6 hours/day 6–8 hours/day 9–10 hours/day 11–12 hours/day More than 12 hours/day

1 23 20 6 3

Total

53

%

Source: Field survey.

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accommodation provided by their employers. The style of living quarters depends on the industry in which they are employed. Construction workers usually live on the work site with basic facilities provided; workers in the agricultural sector usually build their own shelters on the land they work on; factory workers typically share accommodation with several other workers close by, or attached to the factory; and domestic workers are usually given small living quarters in the same residence as their employers. Reports show that their accommodation often provides minimal personal space and little privacy. The living quarters are often poorly ventilated and have minimal access to sanitation and hygiene facilities. Migrant workers from Lao PDR typically work in Thailand for short or medium-term periods, with an average duration of 10.2 months. However, over half of the sample migrant workers stayed in Thailand for work for shorter than that. Migrant workers often return to Thailand on multiple occasions. From the survey, it was observed that the number of short-term migrant workers was on the increase. The number of workers going to work in Thailand and coming back in the same year has increased year on year since 1999. This also implies that there is an increasing tendency for workers to visit home once a year. According to the household survey results, 74 per cent of the workers had travelled to Thailand to work once between 1980 and 2007, and 17 per cent had been there to work twice. Five per cent of the surveyed migrants had travelled three to four times, while only one per cent had made five trips. According to the findings of the Thai research team, the actual total duration of their stay in Thailand is estimated to be 4.1 years.18 This means that within the total duration of their stay in Thailand for employment, migrant workers return to visit home many times.

4. ECONOMIC COSTS AND BENEFITS 4.1 Earnings According to our field survey, the average earnings of local workers in our case study area (opportunity cost) were US$12.4 per month (LAK130,000 or THB420) while the average earnings of our sample migrant workers in Thailand were about US$131 (LAK1.31 million). This significant difference is identified by many case studies as the main determinant for labour

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migration from Lao PDR to Thailand. It proves again that economic reasons are the main determinant for labour movements from the case study area to Thailand. Therefore, rural development to create jobs and encourage income generation activities in the country of origin would help to ease labour migration substantially. The earnings of Lao migrant workers in Thailand are relatively low considering their working conditions and extremely long working hours. As mentioned, the sample migrant workers earned about US$131 a month (LAK1.31 million) on average. However, over half of them earned less than the mean value. There was a significant difference between the average earnings of the male and female migrant workers. While the average earnings of men were about US$168 per person per month, that of women were about US$112 per person per month. Based on these figures, men clearly earned more than women. Table 3.18 presents statistics on the earnings of Lao migrant workers. By comparing the estimated minimum wage that Lao migrant workers are supposed to receive in accordance with Thai labour law (US$13619) with the average earning that our sample migrant workers actually received (US$131), it is found that our sample workers earned less than the Thai minimum standard wage by about US$5 per month. This coincides with

Table 3.18 Average Monthly Earnings of Sample Lao Migrant Workers in Thailand

Income/US$ (per person per month)

Male

Female



30 – 60 61 – 90 91 – 120 121 – 150 151 – 180 181 – 210 211 – 240 241 – 270 > 271

59 81 112 136 167 191 224 252 403

11.8 19.6 11.8 13.7 11.8 5.9 9.8 2.0 137

40 83 109 135 166 190 0 242 450



Total

168

100.0

112

Mean % (US$)

Mean % (US$)

Total Mean (US$)

%

17.5 19.6 23.7 20.6 13.4 3.1 0.0 1.0 1.0

45 83 109 135 166 190 224 247 409

15.5 19.6 19.6 18.2 12.8 4.1 3.4 1.4 5.4

100.0

131

100.0

Source: Household survey.

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a case study conducted by the The World Bank in 2006, which indicates that the labour movement from Myanmar, Lao PDR, and Cambodia is an important source of cheap labour for Thailand. This enhances competitiveness and stimulates the growth rate of Thai industries, particularly the export-oriented industries, such as shrimp production, rice production, and the garment industry. Moreover, a study conducted by thhe TDRI found that the removal of all foreign workers would increase the wage in Thailand by around 4 per cent and reduce GDP growth by around 0.5 per cent per year.20 Nevertheless, the findings above do not allow us to conclude that migrant workers were cheated in terms of their wage because many of them received food and accommodation from their employees. They were also still able to save and remit part of their earnings back home to help their family. Lao PDR as a labour-sending country benefits greatly from remittances. More details on savings and remittances, and its effect on local economies, are discussed and analysed in the following sub-section.

4.2 Costs Regular and irregular Lao migrant workers face very different fixed costs, which include the costs borne before starting work, such as documentation costs, travel costs from the domestic country to the place of employment in Thailand, and medical examination costs among others. Based on discussions with labour export recruitment companies during our fieldwork, the formal export process takes about ninety days and costs over US$626 (THB20,000 or LAK6.3 million). This is both a considerably long period of time and a large sum of money. Table 3.19 presents more details on the fixed financial cost of legal labour migration to Thailand. In contrast, irregular workers incur only about US$156 in fixed costs according to our survey results. The majority of Lao migrant workers do not have the money to pay the fixed costs of legal migration or the skills or experience to complete the required documents by themselves. Thus, the recruitment companies often pay the cost and complete the documents for them, and usually charge interest and a fee for this service. Consequently, legal migrant workers typically pay more than is officially required. Legal migrant workers are required to repay their debt four to six months after beginning their job abroad. Apart from the contract they

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Table 3.19 Average Fixed Costs of Legal Labour Migration Items

Cost/US$

In Lao PDR Passport Health examination Thai multiple-entry visa Work permit card for Lao workers abroad Training Travelling Interest and service cost for recruitment company In Thailand Medical check-up Work permit card for 2 years in Thailand

489 42 17.8 156 2.3 15.6 47 208 137 19 118

Total

626

Source: Estimated by NERI.

have to sign upon completing documents on the Lao side, the aspiring migrants also have to sign a contract to repay any debt to the companies after getting a job abroad. In addition, legal migrant workers incur other costs while in Thailand which depend on the wage they earn abroad. Key costs are contribution to a social security fund, which is 5 per cent of their wage, and income tax in accordance with the relevant taxation laws. Other costs are accounted for in Table 3.20 and illustrated in Figure 3.5. According to the findings of the field survey, the average expenditure of our sample Lao migrant workers was about US$69.4 per person per month (LAK694,237). This was equal to about 53 per cent of their monthly earnings. The amount is relatively low because many migrant workers from Lao PDR receive food and accommodation from their employees. As shown in Figure 3.5, the migrant workers spent over half of their earnings on personal consumption (e.g. food, clothing, health care, local transportation, and entertainment) during their stay in Thailand. The result of the survey also shows that the men spent more than the women. While the expenditure of male migrant workers was about US$95 per person per month, that of female workers was about US$56 per person. The biggest share of expenditure was for food, followed by clothing and transportation.

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Table 3.20 Average Monthly Expenditure of Sample Lao Migrant Workers in Thailand Expenditure/US$ (per person per month)

Male

Female

Total

Mean % (US$)

Mean % (US$)

Mean (US$)

%



160

7 32 46 71 90 105 123 154 279

18.9 15.1 15.1 5.7 7.5 9.4 5.7 7.5 15.1

8 25 48 70 91 109 123 156 190

35.7 13.3 8.2 12.2 13.3 8.2 1.0 2.0 6.1

8 27 47 70 91 107 123 155 241

29.8 13.9 10.6 9.9 11.3 8.6 2.6 4.0 9.3



Total

95

100.0

56

100.0

69

100.0

Source: Household survey.

FIGURE 3.5 Monthly Expenditure Patterns of Lao Migrant Workers

Figure 5: Monthly Expenditure Patterns of Lao Migrant Workers

Source: Field Survey

Source: Field survey.

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Over the two-year employment period, regular workers (sent under the MOU) incur a total of about US$1,666 in variable costs, the main ones being food, followed by clothing, footwear, and personal care. Within the same period, irregular workers spent significantly less on the same costs, about US$1,396 in particular.

4.3 Net Benefit Table 3.21 shows that irregular migrants benefit more than regular workers in terms of net earnings. While irregular migrant workers receive on average about US$1,331 for a two-year period, regular workers receive only US$960 over the same period. The findings show that improvements to labour migration management policies, regulations, and mechanisms are needed to reduce irregular labour migration.

5. HOUSEHOLD IMPACT 5.1 Remittance Amount and Channels The results from our field survey show that Lao migrant workers transfer their savings home using several channels, including via an agent’s bank account, by relatives or friends also working in Thailand and who happen to visit home, or migrants take the money back home themselves when they visit (Table 3.22). Generally speaking, saving is the difference between earning and expenditure. It is assumed that all the money saved by the migrant workers is remitted to their families in Lao PDR. Remittance flows affect the Lao economy. At the macro level, there is no official data on remittances available. This is because remittances sent by Lao migrant workers are mostly through informal transfer channels or private transfer networks.21 However, according to the National Human Development Report of 2006, the remittance amount sent to Lao PDR in 2004 was between US$100 million and US$150 million. The latest survey by the ILO in 200722 also revealed that, on average, the remittances sent by Lao migrant workers are about US$64 per month, or around US$192 million yearly. Based on the findings from the field survey, our sample Lao migrant workers saved about US$62 per month (LAK619,256). The money that migrant workers remit back home could be equal to or less than their monthly saving. The sample migrant workers stated that they saved about

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Table 3.21 Average Net Benefit from Labour Migration to Thailand Items



Total cost Total fixed cost/US$/2 years Total variable cost/US$/2year – Income tax (in accordance with   Lao taxation law) – Contribution to social security fund   (5 per cent of total income) – Expenditure on food – Clothing, footwear, and personal care – Leisure and recreation – Communication – Accommodation – Transportation – Medical care – Electronic goods, Mobil – Others Total income/US$/2 year Net benefits/US$/2 year Cost-benefit ratio

Regular migrant worker 2,292 626 1,666 210

Irregular migrant worker 1,552 156(1) 1,396 0

162 710 394 59 131 62 171 37 11 92 3,252(2) 60

0 279 293 167 209 126 126 70 84 42 2,882(3) 1,331

0.4

0.8

Notes: (1) The average travel and documentation cost of irregular migrant workers is estimated to be equal to US$66.4 per person per instance of migrating for employment. According to results from the field survey, irregular migrant workers stay for 10.2 months on average. Therefore, they migrate to Thailand 2.36 times during the two-year period. Based on these findings, the average total travel and documentation cost for the whole period is estimated to be US$156.4. (2) Estimated by using the minimum standard wage guaranteed by MOU and the working hours of irregular migrant workers, i.e. 6.6 days a week, and ten hours a day; with overtime paid at 150 per cent and Sunday work at 200 per cent of minimum wage. (3) The total income of irregular migrant workers is estimated by multiplying the average monthly earning by 22 (months), as one month per year is subtracted because migrant workers typically visit home and thus earn no income during this period, as detailed in our field survey results. Source: Estimated by authors using data from HH surveys.

US$77 per month on average, and remitted about US$47 per month (US$571 or LAK5,714,293 per year). Therefore, the actual monthly remittances per migrant should be between US$47 and US$62. Migrant workers return home to visit once a year, which takes about one month in total. In this month, migrant workers earn no income or savings and cannot remit money home. On this basis, the yearly remittance per

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Table 3.22 Remittance Channels Type of sending



Male Number

Female

Total

%

Number

%

Number

%

4 5

10.5 13.2

7 12

10.9 18.8

11 17

10.8 16.7

Relatives or friends Personally taking it home Family members/relatives   to pick it up Through agents Via Thai Bank to province   nearby Via banking system Post Western Union Others

1 6

2.6 15.8

1 6

1.6 9.4

2 12

2.0 11.8

15 4 3 0 0

39.5 10.5 7.9 0.0 0.0

18 12 8 0 0

28.1 18.8 12.5 0.0 0.0

33 16 11 0 0

32.4 15.7 10.8 0.0 0.0

Total

38

100.0

64

100.0

102

100.0

Source: Field survey.

person is estimated to be US$682 or eleven months worth of savings.23 If about 250,000 Lao migrant workers are working in Thailand and remitting money home, the yearly remittance to Lao PDR can be estimated at about US$171 million. This is comparable with the findings of ILO and other previous studies. The remittances are high and can contribute to economic growth and poverty reduction in the country. However, due to the lack of statistical data and information, especially regarding the exact number of migrant workers, the exact contribution of remittances to national economic growth is not yet precisely known.

5.2 Use of Remittances Before analysing the effects of labour migration on the local economy, it is important to understand how the remittance is used in order to measure its economic effect. Findings from our field survey show that the greatest share of remittances sent by our sample workers was used for constructing or repairing houses (56 per cent) and daily expenditure (25 per cent) such

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as food, clothing, and health care. Figure 3.6 presents more detail on the use of remittances at the household level over the last five years. Results from our village surveys support this finding; over 170 houses in the case study area were constructed or improved with the help of remittances over the last five years. The construction and repair costs are estimated to be over US$960,000.24 About 5 per cent of the remittances were used for agricultural production development, including for buying or increasing land for agricultural use, and purchasing hand tractors. According to the results from our village surveys, over 42 hectares of agricultural land and more than 170 hand tractors were bought using remittances in the last five years. About 5 per cent of total remittances were used to run businesses. Details on the use of remittances clearly show that labour migration affects local economies in a wide variety of ways, especially in terms of the total village income, household income, expenditure/consumption and assets.

FIGURE 3.6 Remittance Use during Last Five Years

Daily expenditure 25%

Others 7%

Constructing or repairing house 56%

Business running 56% Buying transportation equipment 2%

Increasing agriculture production 5%

Source: Household surveys.

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5.3 Comparison of the Welfare of Migrant and Non-Migrant Households This subsection compares the income and expenditure of households with and without migrant workers. The differences are expected to clarify the economic effects of labour migration at the household level. It does not mean that households without migrant workers are not affected by labour movement; just that they are affected less, and in more indirect ways. For example, they can receive work for construction projects which are financed by remittances, or they can sell agricultural products to households receiving remittances from abroad. Table 3.23 presents statistics on the income and expenditure/consumption of both groups. The table above shows that households with migrant workers generally have higher income and expenditure/consumption in comparison to households without migrant workers. Higher figures for income and expenditure/consumption indicate higher economic well-being. In conclusion, we find that households with migrant workers have a better economic status in comparison to households without migrant workers.

6. MAJOR ISSUES The strength of the labour migration management policies and mechanisms is that they provide migrant workers with the same rights and legal protection as Thai domestic workers. However, many weaknesses in the legal migrant labour system have been revealed. These weak points

Table 3.23 Average Income and Expenditure of Households with and without Migrant Workers Indicator





Mean/US$

Household without migrant workers

Household with migrant workers

Income

Expenditure

Income

Expenditure

2,540

1,730

2,740

1,990

Source: Estimated by authors based on findings from household surveys.

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BOX 3.2 Contribution of Remittances to Community Development Another important effect of labour migration on the local economy is the contribution of remittances to community development, that is, creating or repairing communal assets such as buildings, pagodas, schools, and local roads. Table 3.24 below presents our findings from our case study in this regard for the last five years. Table 3.24 Contribution of Remittances to Building or Repairing Communal Assets in Last Five Years Activities Build or repair local road (Km) Build or repair school Build or repair pagoda

Number

Value (US$)

6.6 3 2

4,030 6,000 12,330

Total

22,360

Source: Village surveys.

The table above indicates that migrant workers in our case study area contributed financially to building or repairing 6.6 kms of local roads, three schools, and two pagodas over the last five years. The total financial contribution is estimated to be US$22,360. This figure is quite low relative to the total flows of remittances during the period. There are many reasons for this. The illegal status of migrant persons seems to be one. If they were identified as persons violating migrant labour regulations and laws, and their actions would be punishable by fines. The illegal status of the majority of migrant workers makes the use of migrant workers’ remittances to contribute to communal assets difficult. Remittances ultimately enhance production value. Lao migrant workers, as mentioned previously, can each save and remit about US$62 per month, or US$682 per year on average. Given that there are about 1,357 migrant workers in the case study area, the total remittance flow into said area is estimated to be US$925,400 per year, equivalent to around 11 per cent of the total production value in the case study area. Table 3.25 presents more details on the contribution of remittances to production value. continued on next page

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BOX 3.2 — cont’d Table 3.25 Contribution of Remittances to Total Production Value in Case Study Area Provinces Provinces

Total production Value (US$)

Direct contribution from remittance (US$)

Contribution share of Remittance (%)

Xayaburi Savannakhet Champasak

1,610,400 2,190,100 4,723,000

347,100 366,900 211,400

22 17 5

Total

8,523,500

925,400

11

Source: Estimated by authors based on findings from the field surveys.

However, due to significant differences in the prevalence of labour movement and the economic development status of the study districts and provinces, the contribution of remittances to total production value is relatively diverse among the surveyed areas. The contribution share is estimated to be 22 per cent in Xayaburi, but only 5 per cent in Champasak. One sample village in Champasak province is located in an urban area, which has a relatively high economic development status. In this village, there are a number of alternative economic activities. Thus, the role of labour migration is relatively low in this village. That total remittances contributed 11 per cent of the total production value in the case study area does not mean that total production would automatically be reduced by 11 per cent should all migrant workers return home. In such a scenario, migrant workers could potentially work or engage in some other income generation activity in their local communities, and thus would still earn an income and contribute to the total production value. In this case, the opportunity cost must be added into the production value. Once again, according to the results of our field survey, the average opportunity cost is about US$12 per person per month, or equal to about US$149 per person per year. Table 3.26 below shows the estimated production value in the scenario that all migrant workers return from Thailand.

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Table 3.26 Total Production Value in Case Study Area in the Absence of Labour Movements to Thailand (US$) Province Total Contribution Opportunity Total Changing Production from Cost Production rate Value Remittances Value (no migration) (1) (2) (3) (4)=(1)– (5)=[(4)/(1)– (2)+(3) 1]*100 Xayaburi Savannakhet Champasak

1,610,400 2,190,100 4,723,000

347,100 366,900 211,400

75,700 80,100 46,100

1,339,000 1,903,300 4,557,700

–16.9 –13.1 –3.5

Total

8,523,500

925,400

201,900

7,800,000

–8.5

Source: Estimated by authors based on findings from our field surveys.

The calculations above indicate that the total production value would be reduced by around 8.5 per cent if all migrant workers returned from Thailand. There is also quite a big difference among the surveyed provinces. Xayaburi has the highest prevalence of labour movement and benefits most from the activity. Therefore, in the absence of migration, this province would be most affected. Its total production value would decline by around 16.9 per cent. In Champasak province, the total production value would be reduced by just 3.5 per cent. Among the surveyed provinces, Champasak has the lowest prevalence of labour movement to Thailand and benefits the least from this activity. Therefore, in case of zero labour movement, the province would be the least affected.

are constraints that make the implementation of the related policies and mechanisms generally unsuccessful and inefficient. Brief discussions on the most serious issues follow.

6.1 High Cost and Limited Benefit This factor is a significant hurdle to labour migration management. According to our findings above, the formal process costs migrant workers

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and their employers a lot of money. This higher cost makes the export labour mechanism unattractive to migrant workers and uncompetitive compared with irregular migration Also, the higher wage that has to be paid to regular migrant workers by law attracts employers to hire irregular labour. At least based on our survey results, the net returns from formal migration also turned out to be inferior to the net returns from irregular employment.

6.2 Limited Enforcement Capacities This is another constraint affecting the labour migration management system. Despite receiving training from the Thai Ministry of Finance, Lao PDR still has limited technical capacity to set up an efficient system of information exchange and recruitment. The country simply lacks the human, financial, and technical capacities to perform this task effectively. Currently, Thailand also has limited capacity to manage the border regions and thus the inflow of irregular labour. Furthermore it lacks the capacity to control and prohibit employers hiring cheaper illegal labour to increase their profits and enhance their competitiveness in the market.

6.3 Limited Awareness of the Labour Export Mechanism According to the findings from our field survey, less than 30 per cent know about and understand how to apply for work in Thailand legally, and are aware of the benefits of doing so. Meanwhile, according to a case study conducted by The World Bank in 2006, the majority of employers in Thailand still do not clearly understand the benefits the labour export management system provides them. All of the above weaknesses of the labour migration management policies and mechanisms make implementation difficult and inefficient. The problem of illegal labour migration will continue to exist if the governments of both countries, Thailand and Lao PDR, do not significantly change their management policies.

7. CONCLUSIONS AND RECOMMENDATIONS 7.1 Conclusions Labour migration to Thailand is not a new phenomenon, and evidence of it can be readily found in the historical and traditional relationship

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between the Lao and Thai populations living at the borders. The 1990s, however, saw a massive stream of labour migration to Thailand, stimulated by the “open door” and integration policy implemented at the time, and Thailand’s sustained period of successful socio-economic development. Currently, there is no official figure for the number of Lao migrant workers in Thailand. About 100,000 to 300,000 of them are speculated to be there, only a minority of whom are legal. In any case, their number is expected to continue to increase over the next years. Economic and demographic factors will drive this increase. In response to the stream of irregular labour migration, the governments of both countries, Thailand and Lao PDR, have taken a great interest in solving the problem. They have tried to set up a system of polices, regulations, and mechanisms to regulate and control labour migration. However, due to high associated costs, complex procedures, lack of enforcement capability, and little public awareness, the system has not yet been implemented successfully. Addressing migration issues promises great benefits at both the national and household levels. Remittances directly benefit migrant households. They also affect the economic well-being of local communities as a whole. Households without migrant workers are also able to benefit indirectly from labour migration. To address the problems, we recommend that the Lao Government implement policies that make the formal labour export system cheaper and easier to use by potential migrant workers, even if the full and legal liberalization of labour movement across the border is not yet possible. This can be achieved by reducing the price paid by potential migrant workers going through the formal mechanism, which can be offset by increasing the efficiency and networking capabilities of labour export agencies.

7.2 Recommendations In order to address the issues that have arisen and continue to arise from labour migration — in particular irregular labour migration — and facilitate the management of the labour migrant population and mechanisms better, this chapter proposes the following policy-based recommendations. The recommendations, though general in scope, will, it is hoped, motivate further discussions and analyses of the issues and of the potential means to address them to the benefit of national economic and social interests. Shifts in government policies, coupled with strengthened regulatory enforcement, are recommended. To begin with, the Lao Government,

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in cooperation with the Thai government, should try all means to help formalize the status of all irregular Lao migrant workers. They should encourage these migrant workers to register. This would enable the Lao Government to regulate and manage the migration process and the migrant population itself better, both during their stay in Thailand, and on their return to Lao PDR. Furthermore, by formalizing the irregular labour migrant worker population, the Lao Government could better track and manage the inflow of remittances (which presents the opportunity to levy a tax on migrant workers who earn an income in the upper-income bracket), as well as eliminate the stigma attached to many returning illegal migrant workers. By formalizing the irregular labour migrant population, the government could further generate national income for public expenditure, remittances could be used more for communal assets and business activities in local communities, and the returning labour migrants could better utilize the skills and know-how they acquired while in Thailand on their return to Lao PDR. Meanwhile, in order for the formal labour migration system to succeed, it is essential that the Lao Government and export labour agencies manage the migration process efficiently to ensure the transparency and accountability of the system, and the safety and security of the Lao workers. Not only must the Lao Government ensure that the policies and mechanisms are functioning well on the Lao side, but it must also, via the related ministries and agencies, ensure that the policies and mechanisms are operating in accordance with the agreed laws and regulations on the Thai side. The welfare of the migrant workers is the responsibility of both sending and receiving governments. Bilateral cooperation is critical to the successful implementation of the formal migration mechanism. Thus: • Policies aimed at strengthening the overseeing of labour migration mechanisms are necessary to increase the effectiveness and efficiency of the system and, ultimately, the welfare of the migrant worker population; • A reduction in the costs and an increase in the procedural efficiency of the formal labour migration mechanisms are necessary to help create more incentives for migrant workers to use this channel; and • Better promotion of the system and access to information about migration mechanisms by relevant ministries and departments as well as the labour export agencies are necessary to help create more

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interest and awareness of the labour export mechanisms, associated services, and their benefits. The effectiveness and success of the labour migration mechanisms are paramount to controlling the flow of labour migration, both by irregular means and through formal mechanisms. However, the effects of labour migration in general on Lao PDR must also be considered. As discussed above, the economic benefits of working in Thailand are significantly high. This is evident in the high opportunity cost of not migrating to Thailand for employment. However, the flow of migrants to Thailand for employment is also a drain on the Lao labour force; hence, domestic employers are facing a smaller pool of young workers to draw upon. To ease the rapidly increasing trend of migration for employment to Thailand, there must be incentives for workers to seek employment in Lao PDR. As mentioned above, the main determinant of labour migration is economic based. Until wage levels in Lao PDR approximate those in Thailand, or reach a level where the combined economic and social opportunity cost of seeking employment in Lao PDR outweighs that of migrating to Thailand, it will be difficult to slow the flow of labour. The Lao Government must put in place policies that in the long term will create incentives for those who would potentially migrate for employment to remain in Lao PDR. Such government policies and initiatives may include: • the promotion of new opportunities for employment or establishing businesses (especially in rural areas) via access to business loans and related financing, as well as encouraging institutional support for employment generation and business activities; • establishing more opportunities for capacity building through vocational training programmes in areas such as business administration, trade, tourism, and hospitality; • encouraging returned migrant workers to apply their know-how and skills acquired in Thailand to income generation activities in Lao PDR, and to pass on these skills within their communities; and • encouraging further investment of remittances into businesses by creating favourable business and investment conditions in rural areas and appropriate financial channels so that these funds can be easily directed and utilized (e.g. providing services or inputs to larger companies, in particular in SEZs).

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The implementation of policies that aim towards formalizing the status of all migrant workers in Thailand will assist the Lao Government to track, monitor, and control the migration phenomenon better. However, the focus must remain on polices geared towards improving formal labour migration mechanisms in terms of cost effectiveness and efficiency, for both the agencies and the potential migrant workers, as well as on promoting formal mechanisms through various incentives. Simultaneously, the cost of the loss of workers to the Lao domestic labour supply must remain a consideration.

Notes   1. Unless specified, all references to migration and cross-border movements are those made for the purpose of employment.   2. IOM (2004).   3. We interviewed representatives of the Ministry of Labour and Social Welfare, the Ministry of Security, Ministry of Foreign Affairs, the heads of departments and offices for labour and social welfare, security from our case study area, village authorities, and representatives of NGOs located in the survey area.   4. Based on the authors’ calculations.   5. UNDP & NSC (2006).   6. Huguet (2005).   7. Asian Migrant Centre (2004).   8. Field surveys.   9. Chiang Mai University (2003). 10. Labour migration in GMS. 11. The exchange rate at the time was LAK10,100 to US$1 and THB33.3 to US$1. 12. Lao Taxation Law determinates the taxation rate depending on the amount of income earned, i.e. higher income = higher taxation rate. Persons with an income of less than US$50 per month do not need to pay income tax. Persons earning an income between US$50 and 100 per month are required to pay income tax equal to 20 per cent of the portion which is over US$50. Those with an income between US$101 and 200 per month are required to pay an income tax equal to 25 per cent of the portion which is over US$100. Thus, for example, people with an income of US$150 per month are required to pay income tax equal to US$22.50. This means that for the first US$50, they do not need to pay tax; on the second US$50, they are required to pay a 20 per cent income tax, and on the third US$50, they must pay a 25 per cent income tax. According to Thai taxation law, people earning an income less than US$938

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per annum do not need to pay any income tax. Therefore, because of their low income, the majority of Lao migrant workers do not need to pay income tax in Thailand. 13. MLSW (2002). 14. Lao Taxation Laws, 2004. 15. Based on the interview with the head of committee for Lao-Thai Employment Cooperation, MLSW. 16. National Statistical Centre (2003). 17. Chiang Mai University (2003). 18. Thai working paper presented at dissemination workshop. 19. The estimation is based on Lao migrant workers’ average working week of 6.6 days and ten hours a day, and the minimum standard wage in accordance with Thai labour law, which varies by provinces from THB141 to THB184 per working day, i.e. per eight working hours. Overtime is paid at 150 per cent of the normal rate, and working on Sunday is paid at 200 per cent of normal wages. 20. The World Bank (2006). 21. Chanthavysouk (2006); NERI (2006). 22. The survey covered 200 households in four southern provinces: Khammouane, Savannakhet, Saravan, and Champasack (ILO 2007). 23. This number is estimated by multiplying the average remittance (US$62 per month) by eleven months because Lao migrant workers visit home once a year on average. This takes about one month during which there are no earnings, savings, or remittance. 24. Village surveys.

References Asian Migrant Centre. Asian Migrant Centre Yearbook. Hong Kong: Asian Migrant Centre, 2001. Beesey A. Thailand: Improving the Management of Foreign Workers. Bangkok: ILO Regional Office for Asia and the Pacific, 2006. Bryan, J. Migrant Labour in Thai Agriculture. Bangkok, 2006. Chalongphob, S. “Thai Economic Growth, Emerging Labour Market Problems and Policy Responses”. Paper presented at the ILO/ARTEP Regional Technical Workshop on Labour Market Analysis as a Tool for HRD Planning. Beijing, 29–31 July 1991. Chantavanich, S. Cross-border Migration and HIV Vulnerability in Thai-Myanmar Border, Sangkhlaburi and Ranong. Bangkok: Asian Research Centre for Migration, 2000. ———. Thai Migrant Workers in East and Southeast Asia: The Prospects of Thailand’s

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Migration Policy in the Light of the Regional Economic Recession. Bangkok: Asian Research Centre for Migration, 2001. ———. Report to the World Bank on Labour Migration in Greater Mekong Sub-region. Bangkok: Asian Research Centre for Migration, 2006. Chanthavysouk, K. Export of Labour: A Contribution to Lao Development. Vientiane: UNDP, 2006. Charathrithirong, A. “Profile of Labour Migrants from Myanmar, Cambodia and Lao PDR: Analysis of Population and Housing Census of Thailand”. Paper presented at The World Bank, 2006. Chiang Mai University. Social Challenges in the Greater Mekong Sub-region. Chiang Mai: Chiang Mai University, 2003. Committee for Planning and Investment and United Nations Development Programme. International Trade and Human Development, National Human Development Report. Vientiane: UNDP, 2006. Fallavier, K. “Greater Mekong Sub-region Labour Migration Program: Impacts and Regulation of Labour Migration in GMS”. Unpublished paper of 2005 presented at The World Bank workshop, Bangkok, 24 March 2006. Government of Lao PDR. “Decree Number 68/PM on Labour Export Promotion”, 2002. Huguet, J.W. “International Migration and Development: Opportunity and Challenges for Poverty Reduction”. In Social Development Division, Fifth Asian and Pacific Population Conference: Selected Papers. Bangkok: UNESCAP, 2005. Huguet, J.W. and S. Punpuing. International Migration in Thailand. Bangkok: IOM Regional Office, 2005. ILO. “Migrant Workers Remittances and Their Impact on Local Economic Development”. Survey Report, Vientiane, 2007. IMF. World Economic Outlook: Sustaining the Recovery. Washington, D.C.: IMF, 2009. IOM. World Migration 2003: Managing Migration Challenges and Responses for People on the Move. Geneva: IOM, 2003a. ———. Labour Migration in Asia: Trends, Challenges and Policy Responses in Countries of Origin. Geneva: IOM, 2003b. ———. Labour Migration in the Mekong Region. Bangkok: ILO Regional Office, 2004. Korsieporn, K. Labour Migration and Rights-based Issues in the Greater Mekong Subregion. Bangkok, 2005. Mekong Institute. Expert Meeting on “Labour Migration in the Greater Mekong Sub-region”. Khon Kean, Thailand, 2008. MOLSW. “Instruction Number 2417/MLSW on Implementation of Decree Number 68/PM on Labour Export Promotion”. 2002. NERI. Socio-economic Impacts of Regional Integration. Vientiane: NERI, 2005.

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———. “Reviewing the Poverty Impact of Regional Economic Integration in Lao PDR”. Paper presented at “A Greater Mekong? Poverty, Integration and Development” conference, University of Sydney, 26–27 September 2007. National Statistics Centre (NSC). Lao Expenditure and Consumption Survey III (LECS III). Vientiane: NSC, 2004. ———. Result of the Population and Housing Census 2005. Vientiane: NSC, 2006. ———. Statistical Data: 1975–2005. Vientiane: NSC, 2005. Nopparat, S. Managing Foreign Workers in Thailand. Bangkok, 2002. Phousay, K. “Consequences for Lao Migrant Workers in Thailand and their Families Left Behind in Lao PDR”. Paper presented during the International Conference on Transborder Issues in the Greater Mekong Sub-region, Ubon Ratchathani, Thailand, 30 June to 2 July 2005. Set Aung, W. Regional Policy Formulation Meeting on Migration in GMS: The Time to Turn Irregular into Regular Migrant. Bangkok. Thondieng, S. Lao PDR’s Policy and Management of Labour Migration. 2006. Thongyou, M. Social Network of Laotian Migrant Workers in Thailand. 2005. UN. International Migrant Report 2002. New York: UN, 2002. UNDP & NSC. International Trade and Human Development Lao PDR. Vientiane: UNDP & NSC, 2006. Wickramasekera, P. “Asian Labour Migration: Issues and Challenges in an Era”. International Migration Papers no. 57. Geneva: ILO, 2002.

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4 Economic Costs and Benefits of Labour Migration Case of Thailand Srawooth Paitoonpong, Yongyuth Chalamwong, Chothiga Sukaruji, and Angkana Piamkulwanich

1. Introduction Migration is a global phenomenon and is both beneficial and detrimental to most countries. At the macro level, emigration can reduce unemployment and attract extra income through remittances (income sent home) to home countries, which can in turn contribute to development and help reduce poverty. Additionally, emigrants often return with new ideas and technology. Immigration increases labour supply and occupational mobility while reducing wage-push inflationary pressure. This can lead to more productive uses of capital, increased exports, and greater economic growth. On the other hand, migration can lead to a “brain-drain” as educated and talented individuals take their skills elsewhere. Labour shortages, increased wage costs and reduced economic growth are also problems for countries with high emigration. An increased flow of immigrants into a country places great strain on infrastructure and public services such as housing facilities, schools, and medical services.

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At the micro level, remittances bring great economic benefits to recipient individuals and can improve their well-being. However, the social costs can also be huge for both the migrant and the family left behind. The loneliness and homesickness often experienced by the migrant can lead to deterioration in physical and mental health, exacerbated by the lack of local language skills that can leave migrants feeling isolated. At home, marriages can break down and children are forced to live without their father or mother for long periods of time. Migration also exacerbates problems such as the spread of HIV/AIDS and crime. Despite its obvious impact and importance, there is a lack of information about the costs and benefits of migration in many countries. More research is needed to help formulate new policies on migration and strengthen existing ones. This country study, along with its partner studies in Lao PDR, Cambodia, and Vietnam, aims to help fill this information gap by providing an evaluation and comparison of the benefits and costs of migration in Thailand. It focuses specifically on the economic costs and benefits, but does touch on social issues as well. Its research methodology consists of two main parts: the national analysis and the micro analysis. The national or macro analysis is based mainly on the review of secondary data and extant studies on the costs and benefits of labour migration in Thailand, and it examines emigration and immigration. The micro analysis comprises an emigration case study of Thai workers who worked in Taiwan and an immigration case study of migrant workers from Lao PDR and Cambodia in Thailand. An examination of the economic benefits and costs1 of migration should be useful to the government for labour policymaking, and it should provide guidance for further studies on this and related topics. Section 2 provides a brief background of migration in Thailand, while Section 3 describes the case methodology and profile. Sections 4 and 5 analyse the results of the case studies in relation to the benefits, costs, and household impact of migration. Section 6 very briefly presents the major issues. Conclusions and recommendations are presented in the final section.

2. Background 2.1 History For some time now, Thailand has been receiving migrant workers and seeing many of its citizens emigrate to work in other countries. However, the balance between immigration and emigration has changed over the

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last two decades, thanks to Thailand’s rapid economic growth. From 1970 to 1980, Thailand experienced more worker emigration than immigration, with many Thais leaving Thailand to find work in the Middle East, Taiwan, Brunei, Hong Kong, Singapore, and Japan. By the early 1990s, workers from neighbouring low-income countries migrating to Thailand outnumbered the Thai workers leaving the country. Most of the migrant workers in Thailand are from Myanmar, with smaller numbers from Cambodia, China, Lao PDR, and South Asian countries

2.2 Emigration The main motive for Thai workers seeking jobs abroad is economic: to find a job and/or earn higher income. However, emigration often incurs excessively high recruitment costs and prospective migrants run the risk of being exploited. Thai workers, legal and illegal, were not fully protected under Thailand’s labour laws until the Thai Government enacted the Employment Agency and Jobseekers Protection Act B.E. 2511 (1958). In addition to this act, the government also set up the Overseas Employment Administration Office, which provides free services to job seekers and oversees the operation of private recruitment agencies to prevent exploitation. Representatives from the Thai Government, including many from the Ministry of Labour, are present in those countries with high numbers of Thai migrant workers to help deal with Thai labour affairs abroad. In 2007, there were 161,917 Thai nationals reporting to the Ministry of Labour for work abroad compared with 160,846 in 2006. Out of this total, 86.18 per cent were men. As illustrated in Figure 4.1, the top six destinations for Thai migrant workers in 2007 were Taipei (52,193), Singapore (16,271), South Korea (13,287), Israel (10,903), Japan (8,002), and Qatar (5,762). South Korea has become more open to accepting foreign workers legally and is an increasingly popular destination for Thai workers as a result. South Korea and Thailand have a bilateral agreement which has helped Thai workers penetrate the Korean labour market. South Korea is now an alternative to the popular Chinese Taipei. In 2001, the Ministry of Labour noted that a significant number of Thais from the north-east was working overseas. These provinces included Udon Thani, Nakhon Ratchasima, Khon Kaen, Burirum, Chaiyaphoum, Nong Khai, Sakon Nakhon, Nakhon Phanom and Nong Bualumphu. Table 4.1 presents the number of overseas male and female Thai workers from these provinces.

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Figureby4.1 Thai Workers Overseas Destinations, 2007 Thai Workers Overseas by Destinations, 2007

21%

2%

32%

2% 3% 4%

7%

5%

10%

8%

6%

Taiwan

Singapore

South Korea

Israel

UAE

Japan

Qatar

Brunei

Kuwait

Hong Kong

Others

Source: Overseas Employment Administration Office, Ministry of Labour.

Table 4.1 Overseas Thai Workers from Northeastern Provinces, 2001 Province

Male

Female

Total

Udon Thani Nakhon Ratchasima Khon Kaen Burirum Chaiyaphoum Nong Khai Sakon Nakhon Nakhon Phanom Nong Bualumphu

8,717 6,689 4,645 4,053 3,815 3,419 2,719 2,771 2,225

1,286 1,087 630 606 556 494 384 243 281

10,003 7,776 5,275 4,659 4,371 3,913 3,103 3,014 2,506

Source: Ministry of Labour, Thailand.

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246

Table 4.1 shows that most Thai labourers working abroad in 2001 from the northeast were from Udon Thani, and the fewest were from Nong Bualumphu. The majority of these labourers were men. The trends in emigration from Thailand clearly show that the number of workers deployed annually has increased, as has the sum of remittances received. Table 4.2 presents an overview of these trends.

2.3 Immigration Thailand has transformed from a net emigrant economy to a net immigrant economy over the past decade. The country has received over a million migrant workers fleeing war and poverty from Myanmar, Lao PDR, Vietnam and Cambodia among other reasons, and who have found work as housemaids, fishermen, construction workers and farm labourers in Thailand. In the past, Thailand had no direct policy concerning these migrant workers. The Order of the Revolutionary Council No. 322/1972 provided a framework for the employment of foreigners in order to preserve some occupations for Thai nationals, and this meant that the legal migrant workers in Thailand were skilled and often occupied senior positions. In the years preceding the Asian financial crisis of the 1990s,

Table 4.2 Number of Thai Workers Deployed Overseas and Sum of Remittances Received, 1990–2004 Year

1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Workers deployed (1,000)

Remittances (US$ million)

63.2 202.3 185.4 183.7 175.4 159.6 177.7 165.0 160.8 147.8 148.6

973 1,695 1,806 1,658 1,424 1,460 1,500 1,117 1,481 1,304 1,509

Source: ILO.

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there was an increased demand from the private sector for unskilled labour, particularly in construction and fisheries. The Thai Government had to relax its policies concerning migrant workers as a result, and illegal migrants were allowed to work temporarily. This was permitted under Section 17 of the Immigration Act 1978. The Thai Government has formulated several policies and measures to deal with the problem of irregular migrant workers. Recently efforts have been made to register irregular migrant workers with the Department of Employment and allow them to work in specified occupations. The main authorities in charge of the administration of irregular migrant workers are the Office of Foreign Workers Administration, the Department of Employment, the Ministry of Labour, and the National Committee on Illegal Worker Administration (NCIWA). The NCIWA is largely responsible for determining policies, plans, guidelines and measures for managing irregular migrant workers, and solving the associated short- and longterm problems. The number of regular migrant workers in Thailand fell considerably after 1997, largely because the number of temporary work permits granted under Section 12 of the then prevailing Working of Aliens Act2 was drastically reduced, following the Asian financial crisis. The government’s labour policy became one of replacing migrant workers with Thai nationals. It was only after the 2001 migrant registration round that the number rebounded again. The number of irregular migrant workers has fluctuated, but been generally on the rise. This is because of the difficult socio-economic conditions in Thailand’s three neighbours, Myanmar, Lao PDR, and Cambodia. There are still large numbers of unregistered irregular migrants in Thailand with ample opportunities for work because many of Thailand’s low-skilled jobs remain unfilled. In 1999 there were approximately 102,767 foreigners in Thailand. Just over 50 per cent of these were in Bangkok and the neighbouring provinces because of the high concentration of industry and business in this area. Among them, 49,976 remained as temporary workers. Between 1999 and 2005, the number of foreign workers coming to Thailand increased. According to an estimate by the Ministry of Labour, 1,143,110 foreigners had work permits in 2005 and 63,940 lived in Bangkok. Among these, 14,423 were granted lifelong permits, 9,220 held temporary permits, 23,099 were permitted to stay under the Investment Promotion Act of 1977 and 36,368 received work permits under, again, Section 12 of the then effective

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Working of Aliens Act. There were about 1,773,349 illegal foreign workers in 2005 (see Table 4.3). The demand for migrant workers was 1.88 million workers in 2005 while the government quota was only 1.77 million. However, employers only actually applied for 705,293 work permits. The work permits were extended for another year in 2006 according to the employer quota. There were 78,509 migrant workers from Lao PDR and Cambodia that passed through nationality verification3 and 49,214 received work permits. The total number of legally employed migrant workers was 668,576 million in 2006. In 2007, migrant workers whose permits expired at the end of February and June 2007 became eligible to have their permits extended (see Table 4.4). However, the number of migrant workers whose permits expired at the end of February totalled 208,562, but only 141,289 (67.71 per cent) actually got their permits extended (121,448 from Myanmar, 9,159 from Lao PDR, and 10,332 from Cambodia). Similarly, the number of workers whose permits expired at the end of June totalled 460,014, but only 394,443 (85.07 per cent) had their permits extended (367,834 from Myanmar, 12,140 from Lao PDR, and 14,469 from Cambodia). Migrants travel to Thailand’s border by bus, minibus, and foot and cross by foot, boat, car, or motorcycle. Some cross the border illegally over mountains or rivers where checkpoints are not established, or legally with a temporary border pass. Agents, brokers, and middlemen are often involved. Compared with the other GMS countries, Thailand receives a high number of migrant workers from Cambodia and Lao PDR. In light of this fact, this study examines three aspects that relate directly to the flow of workers from Cambodia and Lao PDR to Thailand: regulations, processes, and social costs.

2.4 Regulations At present, foreigners working in Thailand can be classified into five major groups:4 legal foreign workers under visa and work permit;5 workers of international organizations or agencies; cross-border day workers with a border pass; illegal or undocumented workers (registered and unregistered); legal migrant workers from Cambodia, Lao PDR, or Myanmar sent under the MOU.

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n.a. n.a. 99,656

15,988 52,229 24,567 9,828

57,927 44,685

102,612

2000

Source: Department of Employment, Ministry of Labour.

663,776 563,780 99,996

19,361 49,976 23,637 9,793

Lifelong Temporary Investment promotion (BOI) Section 12

Illegal foreign workers Unregistered Registered

56,637 46,130

102,767

1999

Bangkok Others

Total



43,994 41,594

85,588

2002

968,249 405,722 562,527

14,895 41,305 18,673 17,938 n.a. n.a. 428,468

14,423 42,028 16,569 12,568

By type of permit

55,367 37,444

By region

92,811

2001

Table 4.3 Foreign Workers in Thailand

999,400 711,220 288,780

14,423 51,095 19,328 15,782

49,497 51,131

100,628

2003

1,512,587 n.a. 847,630

14,423 61,395 21,356 24,237

57,224 63,987

121,411

2004

1,773,349 n.a. 705,293

14,423 69,220 23,099 36,368

63,940 79,170

143,110

2005

38.48

17.80

–4.79 5.58 –0.38 24.44

2.04 9.42

5.67

% change 1999–2005

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35,296 686 489 197 1,151 6,112 5,200 912 226 223 248 79 4,766 54 8,948 12,825

Total Fishery   Marine   Inland Fishery related Crop and livestock   Crop   Livestock Rice milling Brick making Ice making Water transportation Construction Mining and quarrying Domestic help Other

141,219 3,042 2,609 433 24,327 18,438 14,965 3,473 831 703 998 311 25,797 177 10,651 55,980

Employee 120,843 2,668 1,693 975 2,752 25,764 23,052 2,712 678 538 644 123 10,498 209 41,052 35,937

Employer 391,365 11,642 8,711 2,931 43,268 80,436 71,294 9,142 3,921 2,463 2,736 657 56,975 837 50,626 137,923

Employee

Work permit expired on 30 June 2007

Note: *under the Provision of Cabinet Resolutions, 19 December 2006. Source: Office of Foreign Workers Administration, Department of Employment, Ministry of Labour, 2007.

Employer

Work permit expired on 28 February 2007

Industry



156,139 3,354 2,182 1,172 3,903 31,876 28,252 3,624 904 761 892 202 15,264 263 50,000 48,762

Employer

Total

Table 4.4 Work Permit Extensions for Illegal Migrant Workers from Myanmar, Lao PDR and Cambodia*

532,584 14,684 11,320 3,364 67,595 98,874 86,259 12,615 4,752 3,166 3,734 968 82,772 1,014 61,277 193,903

Employee

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Regulations regarding these different groups differ. In this study, the regulation of foreign workers has been grouped into four topics, each briefly discussed: (1) the immigration law; (2) the employment of aliens law; (3) irregular migrant worker registration; and (4) the MOU for the employment of workers from Cambodia, Lao PDR, and Myanmar. Migrant workers are also protected by the Labour Protection Act B.E. 2541, the Social Security Act 1990, and the Criminal Code.6 Thai workers working outside Thailand are protected by the Act on Employment Agencies and Job Seeker Protection 1985.

2.4.1 Immigration law Entry into Thailand requires an entry visa in accordance with the 1979 Immigration Act. With few exceptions,7 those people entering without a visa or acting in breach of immigration laws are deemed illegal and may be deported or penalized. Thus, migrant workers who enter without visas or work without permits are liable for deportation. However, Section 17 of the Immigration Act grants the Minister of Interior discretion in applying these rules. This has allowed registered irregular migrant workers exemption from deportation. There is a clear link between immigration laws, national security, and national policy, in that national policies which reflect national security concerns affect the application of the Immigration Act. Thus, the government enjoys leverage over the Immigration Act and the half-open door policy which has been practised in recent years with regard to migrant workers (Muntarbhorn 2005, p. 13). Thailand has two types of visa: a tourist visa and a non-immigrant visa. A tourist visa is issued to applicants wishing to enter Thailand for tourism purposes. The holder of this visa is not allowed to work or conduct business. A non-immigrant visa is required for foreigners who want to stay or work in Thailand. There are several categories for this type of visa: diplomatic visa (D) for those employed by an embassy; business visa (B); mass media visa (M) for accredited business or press representatives; dependent visa (O); expert visa (EX) for those performing skilled or expert work; investor visa (IM)8 for foreigners who set up companies under the Board Of Investment (BOI); study or education visa (ED) for teachers, educational study or observation; official visa (F) for performers of official duties (that is, those duties involving the Thai Government); BOI (IB); missionary work visa (R); scientific research or training visa, or for those

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in Thailand to study at an education institution (RS); sport visa (S) for those participating in an officially recognized sports event; and an others visa (O) which includes dependents and retired persons. For commuters in the areas along the Cambodia and Lao PDR borders, different procedures apply. For example, at the Kalongs Luek gate in Sra Kaeo, the following documents are used in place of official visas: • Passport: A Cambodian passport holder can go anywhere in Thailand and Cambodia. • Border pass: Cambodian border pass holders can work in Sa Kaeo and the nearby provinces. Thais who live in the Aranyaprathet district can obtain a Thai border pass, but can only stay in Cambodia for one day. • Temporary border pass: A Cambodian temporary border pass holder can cross the border to work each day in the Rong Kluea market only. The pass costs THB10 (less than US$1) per entry. There are special temporary passes for cart pushers and traders. Cart pushers are allowed to cross the border up to four times a day (that is, two round trips). Traders are allowed to cross the border twice a day (that is, one round trip). Recently, the Cambodian immigration authority allowed temporary border pass holders to pay the fee weekly rather than daily.

2.4.2 Employment of Aliens Law In 2001, the Working of Aliens Act 1978 was amended to reflect the change in the cost of foreign work permits. It, as amended, was eventually repealed by the Working of Aliens Act 2008. This act reflects Thai policy on migrant workers, regulations, work permit fees and levies for the employment of foreign workers. Generally, a work permit is required for a foreign employee to work in Thailand though the rules may be relaxed for investment purposes (for example, if linked to incentives under the BOI). Foreigners are only allowed to work in activities designated by law by the relevant authorities, currently the Minister of Labour (Muntarbhorn 2005, p. 13). Based on Sections 6 and 7 of the 2008 Working of Aliens Act, the Minister of Labour has the authority to implement the said act and issue regulations and

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prescribe actions, such as those relating to fees and prohibited works, in accordance with the act. The 1999 Foreign Business Act, which abrogates Executive Decree No. 281 (1972), lays down the rules for foreigners wishing to set up a business in Thailand. Section 6 of the Act prohibits a foreigner who has entered the country illegally, in breach of the Immigration Act, from setting up a business in Thailand. This is directly related to unskilled migrant workers who want to set up a business or become self-employed. Some activities are out of bounds, even for those who are in Thailand legally. For example, they are not allowed to be in the business of newspapers, agriculture, animal husbandry, or land transactions. Neither are they allowed to engage in any activities which may impact national security (for example, arms trade and production) or in any activities where Thais are not yet ready to compete (Muntarbhorn 2005, p. 16). According to the Working of Aliens Act 2008, work permits issued under the act are generally valid for a period not exceeding two years from the date of issue. Any renewal of the permit shall be for a period not in excess of two years. In sum, alien employment cannot generally go over a consecutive period of four years. Foreigners working without a valid work permit face a fine of up to THB100,000 (US$3,125) and/or up to five years in jail. Employing a foreigner who does not have a work permit is also punishable by law. Those who do so face a fine of up to THB100,000 (US$3,125) per hired alien. There are several possible explanations for why employers break this law, one of which is tax evasion. Another is that people do not believe that breaking the law in Thailand will result in punishment — an “anything goes in Thailand” attitude. Sometimes the period of employment is very short, around fifteen to thirty days, so employers do not bother with a permit. Some employers avoid obtaining work permits for foreign staff so they can avoid paying them benefits, while others fear that disclosing information about their financial status will attract unwanted attention from the taxman. The law also places limits on the number of foreigners an employer can hire, so the employment of workers over and above this quota is done without a permit. Obtaining work permits can also be a complicated and costly task for employers, though new regulations have led to more flexibility in this process. A one-stop service centre now assists eligible businesses to obtain visas and permits for their foreign staff, and reports suggest it has been living up to

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its name. In the first quarter of 2008, the centre processed 13 per cent more applications than in the same period in 2007 (Bangkok Post, undated).

2.4.3 Registration of Irregular Migrant Workers Previous government policy used registration as a way of trying to police irregular migrant workers. The idea was to bring these workers into the open and thereby make regulation more efficient and help ensure social protection. The first registration occurred in 1992 and employers in ten provinces along the border with Myanmar were permitted to register foreign workers. In 1993 the fishing industry in twenty-two coastal provinces was allowed to hire foreign workers. In 1996 two-year work permits for foreign workers were issued in thirty-nine provinces and seven industries, and later expanded to cover forty-three provinces and eleven industries. To register, a migrant had to pay a THB1,000 (US$31)9 bond, a THB1,000 (US$31) fee and a THB500 (US$16) physical check-up fee. Between 1 September 1996 and 29 November 1996, some 323,123 illegal migrants were registered, of which 88 per cent were Myanmarese, and 293,652 two-year work permits were granted. Almost 80 per cent of the migrants were registered by employers across three sectors: construction (33 per cent), agriculture (28 per cent), and fisheries (18 per cent). Following the Asian financial crisis in 1997 and the subsequent rise in unemployment, the Thai Government tried to push out migrant workers in the hope of increasing the number of jobs available to Thais. In January 1998 the Thai authorities toughened their policy and advocated the removal of 300,000 migrants. They also began to deport many workers. However in August 1998 the Thai authorities relaxed this policy and allowed the re-registration of migrants for another year. This was followed by decisions to allow re-registration in 1999 and 2001. In principle, those who did not register were to be deported. When the government changed in August 2001, a new policy was adopted. This new policy permitted more flexibility in the registration of migrant workers than before. It was a half-open door policy, or in the words of a policymaker an “open-door and closed window” policy. Unlike the previous policy, registered migrant workers were allowed to work anywhere in the country rather than just in a selection of provinces. However the threat of deportation was ever-present for those who failed to register. The policy only applied to workers from Myanmar, Lao PDR, and Cambodia, and was restricted to ten categories. In order to register

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their foreign workers, employers had to pay a fee of THB3,250 (US$102). This was made up of THB1,200 (US$38) for health insurance (services are provided at state hospitals), THB900 (US$28) for the six-month work permit, THB150 (US$5) for a photo ID card, and a THB1,000 (US$31) deposit forfeited if the migrant disappears. Workers could be re-registered after six months, between 24 February and 25 March 2002, by paying a work permit fee of THB900 (US$28) and a health fee of THB300 (US$9). Out of the total cost of THB4,450 (US$139) for twelve months, the work permit fee was THB1,800 (US$56) or 40 per cent of the total fee (Muntarbhorn 2005, p. 5). About 568,000 migrants were registered in 2001 and about 409,000 were re-registered in 2002. Interestingly, there was a decline of over 100,000 in the number of migrants who came out into the open to register between 2001 and 2002 (Martin 2007; Muntarbhorn 2005, p. 5). Although medical benefits were granted to migrant workers who registered, they had no access to the general social security available to Thai workers. There were some teething problems too. For example, the process of completing the necessary stages was very slow. Thailand also lacked a clear work plan on when and how to implement the process effectively. The new policy needed the cooperation of local bodies, such as the local administrative organizations (Or Bor Tor), to assist with surveys and management. The process also depended on cooperation from neighbouring countries and the conditions in the countries of origin. The issuance of travel documents (for example, passports) in those countries is yet to progress from the nascent stage (Muntarbhorn 2005, pp. 6–7). There were at least five key challenges in implementing the new policy in 2005. The first challenge was dealing with the consequences of failing the medical test and the implication of deportation. Migrant workers taking the test fell into four general categories: (1) those in good health who passed the test and were therefore granted a work permit; (2) those who passed the test, but required medical assistance due to health problems such as tuberculosis or syphilis before they could work; (3) those who failed the test because they had one of the following: infectious tuberculosis, severe leprosy, severe elephantitis, severe syphilis, drug addiction, serious alcoholism, or mental illness; and (4) pregnant women. Those who fell into category three faced deportation. It should be noted that workers with HIV/AIDS were not liable for deportation. However, in 2005, the authorities suggested that they would begin deporting pregnant women.

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This caused such an uproar that the authorities withdrew the idea. The second challenge was dealing with the aftermath of the 2005 tsunami. Many migrant workers lost their lives and identification and reclamation of the bodies by relatives was very difficult. Importation documentation was also destroyed, which meant that many migrant workers had to seek new documents. Third, it was often difficult to distinguish between illegal migrant workers and victims of human trafficking. Trafficked people require special treatment, particularly access to temporary care and assistance, and guarantees of safe passage back to their home country. As a result, every unregistered migrant needed to be treated carefully. The fourth challenge was ensuring quality law enforcement in order to avoid the exploitation and abuse of migrant workers. Few exploitation or abuse cases ever reach the courts and the ILO has raised the issue of proper law enforcement on several occasions. This includes the role of labour inspectors who are tasked with monitoring law enforcement activities and investigating the lack of court cases. Lastly, some non-governmental organisations (NGOs) complained that their efforts to protect and assist migrant workers were being jeopardized by threats. This was particularly the case regarding unregistered migrant workers. Law enforcers argued that NGOs assisting illegal immigrants may be liable for sanctions, even if their assistance was based on humanitarian need (Muntarbhorn 2005, pp. 7–8).

2.4.4 MOU An integral part of Thailand’s policy for regulating irregular migrant workers were the MOUs it signed with Myanmar, Lao PDR and Cambodia. These MOUs open the door to a more systematic approach to managing migration, linking supply and demand of migrant workers, and fostering coordination between destination and home countries. The MOU between Lao PDR and Thailand was signed on 18 October 2002. It set up channels of cooperation to send back the names of migrant workers to the country of origin in order to verify their identity and nationality. The conversion of irregular to regular migrant status for the purpose of employment covered only those who were already registered as workers in Thailand. The MOU gave the authorities more control over employment agencies and greater protection to migrant workers. The two countries agreed to assist each other with returning migrant workers whose employment contract had ended or been terminated, and to

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suppress illegal migration and employment. The MOU between Thailand and Cambodia was signed on 31 May 2003. It provided a governmental channel for sending and receiving migrant workers and guaranteeing their basic rights, while emphasizing that they would need to abide by local laws. The safety of workers was ensured and the workers were entitled to send their income home. Employment contracts could be terminated for a variety of reasons, including poor health and HIV/AIDS. The MOU between Thailand and Myanmar was signed on 21 June 2003. Like the others, it established a channel to manage migration and exchange lists of potential migrant workers. The MOU between Thailand and its neighbours essentially recognizes that migrant workers should be managed rather than denied access. Open and safe channels, which deal with the challenges of migration, are recognized as preferable. A system of denial only served to push the problems of migration underground, and, as workers sought clandestine entry into other countries, exploitation and violation flourished. Any fees collected during the application process for jobs abroad provide funds to help administer the process and manage the flow of migrant workers between the GMS countries.

2.5 Process In practice, regulations are not usually followed. According to the law, tourists can come into the country for three months at a time, but are forbidden to work. However, many do. In order to stay in the country longer than three months or maintain employment, many tourists make quarterly “visa runs”. These are short trips to the likes of Vientiane in Lao PDR, or Penang in Malaysia, that allow the tourist to leave Thailand and re-enter on a new tourist visa. People stay in Thailand for many years using this technique. Although this practice is not illegal, working on a tourist visa is. Tourists wishing to work in Thailand need to obtain a non-immigrant business visa either on entry, or once they are in Thailand. It is not uncommon for tourists to overstay their visa and become illegal immigrants. Prior to 2003, the registration policy was ad hoc and reactive, rather than systematic and proactive. There was a move towards a less ad hoc approach with a new Cabinet decision on 19 August 2003 and a related announcement from the Ministry of Labour on 16 September 2003. The result was that those migrants who re-registered would be permitted to

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work for another year until 25 September 2004, with the implication that this was a transition towards a new policy. The undertone was that another tack would be tried after the one-year extension. The new approach would be more open in order to manage, rather than simply reject, the migrant workers. It was worked out with the National Security Council, with the blessing of the prime minister, and was forwarded to the Cabinet for approval at the end of 2003. The new approach was based on a seven-point strategy: manage the employment of migrant workers; set criteria for the employment of migrant workers; prevent migrant workers from being smuggled into the country; suppress, apprehend and prosecute migrant workers smuggled in; eject and deport illegal migrant workers; publicize the management of migration and migrant workers; and monitor results (Muntarbhorn 2005, pp. 6–7). Four key measures were implemented as part of the above strategy: 1. Registration of employers. This was totally new for Thailand as past policies had targeted workers rather than employers. Employers were required to provide details of the type and number of workers they employed, and identify gaps in manpower. 2. Openings for Thai workers. Thai workers were given the opportunity to apply for jobs to fill the manpower gaps identified by employers. The Ministry of Labour pledged to help advertise these jobs. 3. Permission to employ migrant workers. Where there were insufficient Thai applicants to fill the manpower gaps, the committee in charge could permit employers to take on migrant workers instead. Once permitted to employ a migrant worker in place of a Thai national, the employer was required to do so within a year. 4. Employment of migrant workers. Certain procedures, particularly those linked to the various MOUs concluded between Thailand and its neighbours, were brought in once an employer received permission to take on migrant workers. These included the identification of the migrant workers’ nationality, and issuance of documents by the country of origin as evidence of the migrant workers’ status so as to facilitate the issuance of a visa and work permit by Thailand. Where nationality could not be identified, the cases were referred to the Ministry of Interior to verify whether

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they fell into one of the eighteen groups of minorities in Thailand, as listed by the authorities (Muntarbhorn 2005, pp. 6–7). The new approach was adopted following Cabinet decisions on 2 March 2004 and 27 April 2004, and it covered migrant workers from Myanmar, Lao PDR, and Cambodia. There were three key stages to regularize the status of such migrant workers: • Registration of both migrant workers and their employers. Failure to comply with the registration process meant migrant workers faced deportation and their employers faced punishment. • Medical tests. Migrant workers were required to pass a medical test and obtain a medical certificate. Failure to do so meant deportation, while passing the test led to the grant of a work permit as well as medical social welfare parallel to that of the local population. • One year work permit. A work permit was granted for one year. This meant that migrant workers could stay in Thailand until their permit expired, even if they changed or lost their job (Muntarbhorn 2005, p. 7). The registration time initially expired on 1 July 2004, but it was extended until 15 November 2004. It was not strictly enforced, even at the beginning of 2005. By the end of 2004, around 1,284,000 migrant workers from Myanmar, Lao PDR, and Cambodia needed to come forward to register. Some 1,220,000 had come forward to have their photographs and fingerprints taken for the purpose of registration, while some 160,000 had not come forward. These figures do not include the large number of other illegal migrant workers who were in Thailand, who were excluded from official statistics. Various surveys were carried out among employers to analyse the demand for migrant workers. According to information from the Ministry of Labour in early 2005, the demand for workers outstripped the supply available. This, in theory at least, meant more opportunities for migrant workers from Thailand’s neighbours (Muntarbhorn 2005, p. 7). Despite the apparent demand for migrant workers, many remained unregistered. There are a variety of reasons that could explain this reluctance to register. Firstly, some migrant workers may have found the registration fee too high. Others may have changed jobs and thus been

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under the impression that they were not permitted to register for new jobs, since the regularization of their status only applied to the jobs for which they had registered in the past. They may not have felt confident in coming forward to register for new jobs. Another reason could have been that accessing the registration venues and procedures was too difficult (Muntarbhorn 2005, p. 6). Between 2006 and 2007, a number of workers from Lao PDR were brought into Thailand under the Thailand-Lao PDR MOU. However this process has been facing a few implementation problems. The system currently requires consultations at the senior official and/or ministerial level. The temporary employment of workers is undertaken with permission from the authorized agencies in Thailand and Lao PDR. The MOU sets out various terms and conditions for employing a worker from Lao PDR. For example, the employment of a worker cannot exceed two years, but can be extended for another two years. A worker who has completed a fouryear contract must then take a three-year break before the next application can take place. According to the MOU, the country employing the worker must set up and manage a savings fund and every worker employed under MOU is required to contribute 15 per cent of their monthly wages. The savings, plus interest, are then returned to the worker within forty-five days of the termination of employment. Both governments are responsible for ensuring the workers return to their permanent address at the end of their employment abroad. The entry of foreign workers under MOU is also quite costly. For example, agency and management fees in Lao PDR are about THB10,000 (US$313). Once a worker arrives in Thailand, they are liable for an additional THB5,000 (US$156) for a one-year work permit, a THB100 (US$3) application fee, THB600 (US$19) for their medical check up, and the transportation cost from the border to their place of work. Although prospective employers are required to cover these expenses, they are usually covered by the migrant in instalments. Fee collection under each MOU needs to be more realistic and bureaucracy of the application process needs to be reduced. Hefty fees and too much red tape could drive potential applicants underground and fuel illicit channels of migration (Muntarbhorn 2005, p. 10). Of the three MOUs, the most difficult to implement is ThailandMyanmar. This is largely due to the precarious political situation in Myanmar and the ongoing struggle between minority groups and the authorities there. It is unlikely that migrant workers from minority

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communities will come forward to be managed by a regime they disagree with (Muntarbhorn 2005, p. 10).

2.6 Social Costs in Thailand The increased integration of economies and societies around the world is a complex process that affects everyone. The social aspects of crossborder trade are rarely reflected in trade figures despite their significant impact on peoples’ lives, particularly those living in the border areas. Particularly prevalent social problems in Thailand include HIV/AIDS and other contagious diseases; human trafficking, prostitution, and child labour; and inadequate security, and crime. HIV/AIDS has been a long-standing issue for countries in the GMS, which used to be the epicentre of Asia’s HIV/AIDS pandemic. At the end of 2001, 6.6 million people from the Asia Pacific region were living with HIV/AIDS, out of the estimated 40 million people worldwide. Of these nearly one million were from Cambodia, Lao PDR, Thailand and Vietnam (see Table 4.5). Human trafficking is another cross-border issue closely related to transnational migration. Most undocumented illegal migration leaves migrants vulnerable to exploitation and to becoming victims of human trafficking. In the vast majority of human trafficking cases in the Mekong region, it appears that the actual movement of people is voluntary. Voluntary in this sense means that the person has made the decision to travel for work themselves, from a limited range of choices (Marshall 2001, p. 3). Table 4.5 Number of People Living with HIV/AIDS in GMS Countries, 2001 Country Total population Cambodia Lao PDR Thailand Vietnam Total



Estimated number of people living with HIV/AIDS

13,411,000 5,403,000 63,584,000 79,175,000

170,000 1,400 670,000 130,000

160,603,000

971,400

Source: UNAIDS 2002 (quoted in USAID, Bureau for Asia and the Near East, 2003, HIV/AIDS in the Mekong Region).

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There are many other social issues that need attention. They include drug trafficking; illegal logging and timber trafficking; ethnic minorities; monitoring the Mekong River ecosystem; the rural or agricultural economy, way of life and community; stateless children; and social integration.

3. Case Study Methodology and Profile 3.1 Methodology 3.1.1 Scope and Tools This case study looked at both emigration and immigration. Immigration was limited to cross-border migrant workers from the GMS, while emigration only covered Thai contract workers in Taiwan. These restrictions were because of budget constraints and prior agreements made between DAN research institutes. Conceptually, the economic benefits and costs of labour migration can be measured at three levels: individual, household, and the community or national level. The case study on emigration covered three levels: community, household and individual. However, in the case of Lao and Cambodian immigrant workers in Thailand, the field survey was conducted mainly at the individual level due to lack of information concerning the other levels. Only a few selected areas and groups of migrants were also looked at. Some information regarding the community and household levels was simply gathered from cross-country observations. The primary data on the migrant workers from Cambodia and Lao PDR, and Thai workers who had returned from working in Taiwan, are the main data used to measure the total benefits and costs of labour migration. They were collected using several research tools including sample surveys, focus group discussions (FGDs), and key informant interviews (KIIs). The main quantitative data are from household surveys and FGDs, and the KIIs provide supplementary qualitative data. The Thai research team also joined the Cambodian and Lao teams in their field surveys in Cambodia and Lao PDR. 3.1.1.1 Survey The Thai research team conducted a survey in several provinces, selected due to the concentration of migrants’ relatives as well as convenience. They were as follows:

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• Emigration from Thailand to Taiwan (legal workers only): Udornthani. • Immigration into Thailand from Cambodia (undocumented workers: Cholburi and Rayong) • Immigration into Thailand from Cambodia (workers under the MOU): Samutsakorn • Immigration into Thailand from Lao PDR (undocumented workers): Ubonratchathani and Nakornphanom There were no interviews with migrant workers from Lao PDR under MOU due to the lack of cooperation from employers. Following a recommendation from the Office of Foreign Workers Administration and an NGO, Udornthani province was selected for the emigration section because a high number of its inhabitants were working in Taiwan. After selecting the province, the Provincial Office of Labour was contacted, and they recommended the Kudsra and Bann Kao districts as sample areas. The team contacted the Kudsra and Bann Kao Tambon Administration Organisation (TAO) for information on emigration. The TAO was very cooperative and, because of their familiarity with the migrant workers, helped with the interviews. Over the course of the interviews, it was found that most former emigrants were no longer in the area. They had migrated again to work in other provinces or other countries, such as South Korea and Israel. As a result, the random sampling of migrant workers was impossible and only those migrant workers who remained could be interviewed. The village chief and knowledgeable villagers from each district assisted with the interviews for the household survey. However, interviews were conducted during the week and so many of the target migrants were away at work. For the Cambodian immigrants in Thailand, the sample provinces were selected at the convenience of, and cooperation with, an employer (who had been of assistance on a previous project), and several NGOs. Interviewing migrant workers requires sensitivity and tact as most of them are illegal and unwilling to talk to researchers. Additionally, many Cambodian workers did not speak Thai. The knowledge and translation services of the employer and the NGOs were invaluable in overcoming these issues. Furthermore, the residential areas of Cambodian migrant workers were not clearly identified. As a consequence, the village selected for the sample

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was unusable, and the research team visited several randomly selected workplaces instead. This fieldwork was conducted with researchers from the CDRI. For the Lao migrant workers in Thailand, Ubonratchatani was selected via a recommendation from an NGO that works with workers from Lao PDR. Nakornphanom was also included for more samples. The residential areas of Lao workers were also not clearly identified, and the village selected for the sample survey was unusable. The research team visited several randomly selected work places, in tandem with the research team from Lao PDR. For immigration, individual migrant workers were the focus. Both legal and irregular migrant workers from Cambodia were interviewed: 104 Cambodian workers composed of four migrant workers under MOU and 100 irregular migrant workers. Only sixty-one irregular Lao migrant workers were interviewed; no legal Lao workers were interviewed due to the lack of cooperation from employers, as mentioned earlier. Forty Thai workers who had worked in Taiwan were interviewed for the case of emigration. Additionally, thirty migrant households (with relatives in Taiwan) and thirty non-migrant households were interviewed for the sake of comparison. Two forms of questionnaire were used in the household survey: one for the individual migrant workers and one for the households. The questionnaire for the Thai emigrants had additional questions relating to the current occupation of the returned migrant worker and the benefits derived from that occupation. 3.1.1.2 Focus Group Discussions Small groups of villagers were picked by the village head to attend the FGDs. The FGDs were conducted in Thailand and Cambodia. 3.1.1.3 Key Informant Interviews This study conducted KIIs with individuals from several areas connected with migration in Thailand and Cambodia. They included representatives of companies importing labour from Cambodia and Lao PDR under MOU; Thai immigration officers; Cambodian immigration officers; individuals from the Provincial Office of Labour Protection and Welfare of Samutsakorn; the director of the Office of Foreign Workers Administration; the director general of the General Department of Labour in Cambodia; Thai soldiers

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at the border gate; and Cambodian migrant workers who had worked in Thailand.

3.2 Analytical Framework 3.2.1 Individual level Migration is a form of investment in human capital and therefore the concept of life-cycle benefits and costs can be applied. The costs and benefits of investment in human capital should be measured over the lifespan of an individual, according to the human capital investment hypothesis (Becker 1964). Streams of benefits and costs are calculated at their present value and compared to see how the investment in human capital is justified. This concept can be applied to labour migration. It suggests that the calculation of the economic returns from overseas employment must consider the costs and benefits accruing throughout the entire migration cycle. This cycle involves planning, recruitment and preparation, transit, arrival and reception, return and reintegration or repeat migration (see Figure 4.2). The conceptual framework illustrated in Figure 4.2 shows that labour migration is a cyclical process that involves leaving one’s home country, working in a host country, and then returning home again. This conceptual framework also understands that there are many reasons for a person choosing to migrate. Changing demographics, the widening of income differentials, the chance to upgrade skills, escape from political instability or conflict, and infrastructural improvement, are among the contributing factors for migration within and across countries, particularly with regard to the migration of labour. Throughout the migration cycle, benefits and costs connected to an individual’s migration accrue, the extent of which depends on the nature of the individual’s earnings and his or her subsequent spending habits (Figure 4.2). A migrant worker usually has to cover the costs of the job application or brokerage, travel expenses, and the costs of any personal effects required. These are known as fixed costs and occur prior to migration. Costs that occur during the period of migration such as food, shelter, local transportation, and medical care, are known as variable costs. Sometimes a migrant incurs costs after their period of migration, for example, the cost of medical care for injuries sustained abroad or the repayment of loans taken out to cover the migration. Benefits, on the other hand, have a more

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Source: Asian Migrant Centre.

Figure 4.2 The Migration Cycle

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Successful reintegraon

Return and

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limited time span. In general benefits are the earnings from work abroad, or put in another way, the direct benefits. Some benefits are enjoyed after the period of migration, such as commodities gained or any improvements made using the remittance money. These are indirect benefits or spillover effects. This study only looks at direct benefits. The benefits and costs should be measured over the total migration period rather than just sections of it. This is important because answers given by respondents in interviews or surveys usually only refer to the time period up to the point they are questioned. The figures need adjusting to take account of the total migration period, which in turn will ensure that the benefits and costs are compared over the same time period. Therefore, this study calculated the benefits and costs in terms of the total economic benefits and costs, where total means over the whole migration period. The benefits and costs for individuals taken from the project’s survey data were used to calculate the total costs and benefits for individuals. With this in mind, we calculated the benefits and costs as follows: Figure 4.3 Life Cycle of Economic Benefits and Costs of Labour Migration

Source: Constructed by the authors.

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(i) Economic benefits The benefits of migration include the salary or wage, and overtime pay: ∑ B = B1 + B2

(1)

where, B1 = Total or stream of salary or wage B2 = Total or stream of overtime pay. (ii) Economic costs The costs are divided into fixed and variable costs. Fixed Costs: Set costs are unconnected to length of time away. For labour migration the cost structure primarily includes the following: ∑ Cf = Cf1 + Cf 2 + Cf 3 + Cf4 + Cf 5 + Cf6 + Cf 7 + Cf 8 + Cf 9 + Cf10 + Cf11 (2) Where Cf1 to Cf11 denotes: passport or CI or daily/weekly border pass; physical check-up at in the country of origin; physical check-up in the destination country; brokerage fee; transportation; visa; work permit; skill test; training cost; application fee, and others. Variable Costs: ∑ Cv = Cv1 + Cv2 + Cv3 + Cv4 + Cv5 + Cv6 + Cv7 + Cv8 + Cv9 + Cv10

(3)

Where Cv1 to Cv10 denotes: food; medical expenses; accommodation; transportation; leisure and recreation; clothing, footwear, and personal care; remittance transfer fee; communication costs; electrical goods; and others. In addition to these fixed and variable costs, the opportunity and risk cost of being repatriated can also be taken into account if data permit. The benefits and costs listed above may vary between the different types of migrant workers. In the actual calculations, separate estimations were made for: (1) formal Thai workers in Taiwan, (2) undocumented workers from Cambodia into Thailand, (3) legal workers (under MOU) from Cambodia into Thailand, and (4) undocumented workers from Lao PDR

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into Thailand. Undocumented workers from Cambodia and Lao PDR were classified into those crossing the border into Thailand with formal travel documents via checkpoints, and those crossing the border without travel documents outside checkpoints. (iii) Benefit-cost analysis For the analysis, the net benefit of migration should be calculated at the present value, with the following equation:

NPV =

n n C f it Bit Cvit – – ∑ ∑ ∑ t t t t = 1 (1 + r ) t = 1 (1 + r ) t = 1 (1 + r ) n

(4)

However for simplicity, and if r is negligible (that is, r = a very low interest or discount rate), the discount factor may not be needed. The migrants were questioned about their salary income over time, and their fixed and variable costs. They provided information about the benefits and variable costs for two periods: the first time they arrived, or the initial period, and at the time of interview or current period. The study made the simplifying assumption that the migrants’ initial earnings were valid for the first four months of employment, and that during this probation period, a migrant would not be eligible for payment of overtime. Therefore, their initial income would probably be lower than their income following the probation period. The raw data from each migrant are used for the calculation of the total economic benefits of each migrant of each category as follows: Let TSj be the total salary of migrant j S1 = monthly salary for migrant j in the first four months S2 = monthly salary of migrant j after four months Therefore: TSj = (S1 × 4 mths) + (S2 × 44 mths) The remaining period of this migrant’s employment is assumed to be forty-four months for the case of Cambodian legal migrants. The figure is changed according to the category of migrant.

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270

Let k denote the number of migrants in category k. k

The sum of everyone’s salary in category k will be =

∑ TS j =1

j

Then the average salary of each migrant in category k or TS k will k

be =

∑ TS j =1

j

k

By the same token, TOj, the total overtime payment for migrant j, can be calculated as follows: TOj = (O1 × 4 mths) + (O2 × 44 mths) Where O1 = overtime payment for migrant j in the first four months and; O2 = overtime payment of migrant j after four months. Again let k be the number of migrants in category k. The sum of everyone’s overtime payment in category k will k

be =

∑ TO j =1

j

Then, overtime payment of each migrant in category k or TOk will k

be =

∑ TO j =1

j

k

If TBk = total economic benefits for each migrant in category k then; TBk = TSk + TOk

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The total economic costs for each category of migrants can be calculated as follows: Fixed costs Let FCij be the fixed cost of item i of migrant j (fixed cost has eleven items or i = 1 to 11) Let k be the number of migrants in category k. The sum of the fixed cost item i for all migrants in category k will k

be =

∑ FC j =1

ij

Then; the fixed cost item i of a migrant in category k or FC ik will k

be =

∑ FC j =1

ij

k

If TFCk = the total fixed cost for a migrant in category k, TFCk =

11

∑ FC i =1

ik

The fixed cost has eleven items (passport, CI, daily border pass etc.) Variable costs Let TVCij denote the total variable cost of item i of migrant j (the variable cost has ten items). Note that the variable cost has a time dimension or a stream of costs over the period of migration. VC1ij = the monthly variable cost of item i of migrant j in the first four months VC2ij = the monthly variable cost of item i of migrant j after four months

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272 Therefore: TVCij = (VC1ij × 4 mths) + (VC2ij × 44 mths)

The remaining period of this migrant is assumed to be forty-four months, for the case of Cambodian legal migrants. This figure is changed according to the category of the migrant. Let k be the number of migrants in category k. The sum of the variable cost i for everyone in category k will k

be =

∑ TVC j =1

ij

Thus, the variable cost i of each migrant in category k or TVCik will k

∑ TVC be =

j =1

ij

k

If TVCk = the total fixed cost of each migrant in category k. 10

TVCk =

∑ TVC i =1

ik

The variable cost has ten items (e.g. food, medical expenses, accommodation). The length of time a migrant stays in the host country is another important factor to consider when calculating the total benefits and costs of a migration. This study uses a “cohort tracing” approach to calculate how long, on average, migrants from Cambodia and Lao PDR stayed in Thailand. The first official records of migrant registration began in 2004 and these were used to identify the first set of Cambodian and Lao migrants to Thailand (Civil Registration 38/1). These migrants have been given consecutive extensions of their temporary work permits. This

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study assumed, conservatively, that this first group of Cambodian and Lao migrants had already been in Thailand as irregular workers for a year before they were officially registered.10 From the remaining number of migrants and their duration of stay until no-show at registration, the average man-years of migration can be calculated. The estimated average length of migration to Thailand for Cambodia workers is 3.8 years (see Table 4.6), and 4.1 years for Lao workers (see Table 4.7).

Table 4.6 Average Man-Years of Cambodian Migrant Workers as of 2007 Years of stay in Thailand

Number of migrant workers (1)

Share of migrant workers (%) (2)

Man-Years (3) = (1) × no. of years



2 years 3 years 4 years 5 years

36,102 13,710 24,171 61,333

26.68 10.13 17.86 45.33

72,204 41,130 96,684 306,665



Total

135,316

100.00

516,683



Average

3.8

Table 4.7 Average Man-Years of Lao PDR Migrant Workers as of 2007 Years of stay in Thailand

Number of migrant workers (1)

Share of migrant workers (%) (2)

Man-Years (3) = (1) × no. of years



2 years 3 years 4 years 5 years

15,612 16,721 29,677 65,428

12.25 13.12 23.29 51.34

31,224 50,163 118,708 327,140



Total

127,438

100.00

527,235



Average

4.1

Note: Average man-years = (total man-years / number of migrant workers). Source: Calculated by authors using data from the Office of Foreign Workers Administration, Department of Employment.

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Next, the average duration of migration is multiplied by the average economic benefits and costs of that migration over a year (data from the survey), with some adjustments for the probation period. The results are the total benefits and costs of migration from Cambodia and Lao PDR. The benefits and costs of emigration are measured on the same principle, but based largely on actual data. It should be noted that the research team did not try to calculate opportunity costs and the present value of benefits and costs in this study. The inclusion of the two factors may be attempted in the future.

3.2.2 Household and Community Level The benefits and costs at the household and community levels are those that accrue to the households and communities the migrant workers came from. In the case of emigration, they are the benefits and costs that accrued to the labour sending households and communities, which in this case are in Thailand. In the case of immigration, the household and community level economic benefits and costs are those accrued in Cambodia and Lao PDR, whichever is applicable. The benefits at the household and community levels can, in theory, be measured by the value of migrant workers’ remittances. This information was obtained through surveys. Similarly, the costs of migration incurred at the household level can be measured by comparing household income, savings and expenditures, with adjustments made for external shocks. The costs incurred at the community level can be measured by looking at income distribution and employment levels. For emigration, information on the benefits and costs of migration were also obtained through FGDs and KIIs. Participants were community leaders and members of families with migrants. No attempt was made to estimate the total economic benefits and costs at the household and community levels.

3.3 Profile 3.3.1 Thai Migrant Workers in Taiwan Forty Thai workers who had previously worked in Taiwan were interviewed, and out of those, 65 per cent were men, 68 per cent were between thirty and forty-five years old, and 90 per cent were married. The survey showed

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there was a low level of education among the Thai migrants. Although 91 per cent had received some vocational training, most of the vocational training was in agriculture, construction and sewing and had been delivered by family members. Before these workers left for Taiwan, 25 per cent had worked in construction and 25 per cent had worked in non-household personal services. About half of the interviewees had earned between US$78 and US$156 per month before going to Taiwan. On their return, 20 per cent took up jobs in non-household personal services and 10 per cent was unemployed. The survey results show many of the workers are earning less than they did before they migrated. This may be because many of the returned workers are living off their savings whilst they look for suitable jobs. Sixty-eight per cent of returnees have taken up jobs different to those they did before they migrated to Taiwan. Most of the Thai workers interviewed only migrated to Taiwan for work once (68 per cent), and 35 per cent of those interviewed stayed between four and six years on their first trip. For those who migrated more than once, 62 per cent said their last stint was for between one and three years. Earning more money was the main reason for migrating according to 57 per cent of those interviewed. Recruitment agencies were used by 35 per cent of workers for their first trip to Taiwan, and 42.9 per cent used them for their last trip. This was the most popular method for migrating to Taiwan. The majority of migrants managed to get a job in Taiwan through private labour recruitment agents (90 per cent for the first visit and 77 per cent for the last visit). Due to the strict controls in both Thailand and Taiwan, all the workers interviewed travelled on passports. Most interviewees funded their migration by borrowing money (68 per cent for the first visit and 47 per cent for the last visit) rather than via selling assets. In fact, none of the interviewees had sold assets in order to fund their trips. Almost all migrants secured a job in Taiwan before departing for their first visit (97 per cent), and 100 per cent had secured a job before departing for their last visit. The majority of the workers worked in factories or construction.

3.3.2 Cambodian and Lao Migrant Workers in Thailand The case study on migrant workers from Cambodia and Lao PDR used a sample of 104 migrant workers from Cambodia and sixty-one from Lao

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276

PDR, as mentioned earlier. Four of the Cambodian migrant workers entered Thailand legally under a MOU and the rest of them were irregular workers or had entered Thailand illegally. Those who had entered illegally were divided into those who crossed the border with a border pass or relevant travel documents, and those who came in covertly with no documentation. All sixty-one migrants from Lao PDR were undocumented. Over half of the Cambodian workers were men (62 per cent) compared with just 39 per cent of workers from Lao PDR. About 64 per cent of the Cambodian migrants were less than thirty years old with about 33 per cent aged between thirty and forty-five years old. Almost all of the sample migrants from Lao PDR (97 per cent) were younger than thirty years old. More than half (58 per cent) of the Cambodian sample migrants were married compared with migrants from Lao PDR who were mostly single. Both groups of migrants had little education, and 79 per cent of Cambodians and 85 per cent of Laos had no education at all. Before migrating to Thailand, most of the Cambodian migrants had worked on farms (85.6 per cent). Lao migrants came from three main areas; farm workers (28 per cent), unemployed (34 per cent) and students (33 per cent). See Table 4.8. The migrants were asked about the sort of work they did when they first came to Thailand as well as the sort of work they had done on their last trip, if applicable. It was found that forty-three of the 104 Cambodian migrants (41 per cent) had been to Thailand more than once, compared with nineteen of the sixty-one migrants from Lao PDR (31 per cent). The majority of Cambodian migrants (80 per cent) worked on farms and between fourteen and 16 per cent worked in fisheries during both their first and last visits. Most of the Lao migrants (56 per cent) worked in food shops (Table 4.9).

4. Economic Costs and Benefits 4.1 Thai Emigrants in Taiwan 4.1.1 Benefits According to the field survey results, the average total economic benefit per person for Thai migrants to Taiwan was US$16,903. Overtime payment was a significant part of the total economic benefits received by migrants.

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Table 4.8 Migrant Workers by Main Occupation before Migration Main occupation before migration



  1. Cultivation of own farm   2. Working on other’s farm for wages   3. Fisheries   4. Other agriculture related work   5. Manufacturing enterprises   6. Construction   7. Trading   8. Hotels and restaurants   9. Transportation service 10. Personal services to household 11. Personal services to non-household 12. Other sectors 13. Unemployed 14. Student 15. Housewives 16. Others out of labour force Total

Cambodia

Lao PDR

Number Percentage Number Percentage 89 — 1 — 1 1 1 — — — 1 — 7 1 — 2

85.6 — 1.0 — 1.0 1.0 1.0 — — — 1.0 — 6.7 1.0 — 1.9

17 1 — — — 2 — — — — — — 21 20 — —

28.3 1.6 — — — 3.2 — — — — — — 34.4 32.8 — —

104

100.0

61

100.0

Source: TDRI survey.

For some workers, overtime income is even higher than the salary itself (see Figure 4.4). Male migrant workers earned more than female workers. The older the workers were, the more they earned. This can be explained by looking at overtime payment. Male workers earned more or worked more overtime than female workers. The same applies to mature workers. Another explanation might be that the types of jobs male and mature workers are taking are better paid. Single or divorced/deserted/separated workers earned more than married workers, and received larger amounts of overtime payment. Education makes a difference to income as well. Workers who have at least completed compulsory education earned more than those who have

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Table 4.9 Migrant Workers by Occupation when Working in Thailand Occupation



Cambodia

Lao PDR

Number Percentage Number Percentage

First visit   Housemaid   Construction   Agricultural work   Fisheries work   Shop/restaurant staff   Transportation work   Garment factory   Other factory work   Others   Total

— — 81 17 1 — — 5 — 104

— — 77.9 16.3 1.0 — — 4.8 — 100.0

10 — 11 — 34 — — — 6 61

16.4 — 18.0 — 55.7 — — — 9.8 100.0

Last visit   Housemaid   Construction   Agricultural work   Fisheries work   Shop/restaurant staff   Transportation work   Garment factory   Other factory work   Others   Total

— — 35 6 – — — — 2 43

— — 81.4 14.0 — — — — 4.7 100.0

1 — 7 — 10 — — — 1 19

5.3 — 36.8 – 52.6 — — — 5.3 100.0

Source: TDRI survey.

not. However, according to the survey, workers with a primary level of education earned the most, even more than workers who have completed secondary education.

4.1.2 Costs The average total cost per person for Thai workers migrating to Taiwan was US$11,290 (see Figure 4.5). Male workers incurred higher costs than female workers, and the total cost declines as the workers’ age increases. The same applies to level of education. The more educated the worker is,

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Figure 4.4 Average Benefit Per Person of Thai Migrant Worker by Demographic Background Average Benefit Per Person of Thai Migrant Worker by Demographic Background

30,000 25,000 20,000 Overtime

15,000

Salary 10,000

Secondary

Primary

None

Separated

Married

Single

45 and over

30-45

Below 30

Female

Male

0

Total

5,000

Source: TDRI survey.

Figure 4.5 Average Total Cost Per Person of Thai Migrant Worker by Average Total Cost Per Person of Thai Migrant Worker Demographic Background by Demographic Background

14,000 12,000 10,000 8,000

Total Variable Cost

6,000

Total Fixed Cost

4,000

Secondary

Primary

None

Separated

Married

Single

45 and over

30-45

Below 30

Female

Male

0

Total

2,000

Source: TDRI survey.

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the lower the total cost incurred. Married or divorced/deserted/separated workers faced lower total costs than single workers. The fixed costs that a Thai worker migrating to Taiwan may have to pay include their passport fee, fee for a physical check-up in both countries, a brokerage fee in Thailand, transportation costs from Thailand to Taiwan, and the visa fee. Many workers pay a lump sum to an employment agency, which then pays almost all the fees on the workers’ behalf, including their airfare. This means that the most significant cost incurred by the migrant worker is the brokerage fee.11 Even though the Thai state recommends a brokerage fee of between US$1,720 and US$1,875, many workers pay much more than this. In fact, the average brokerage fee paid to recruitment agencies in Thailand is US$3,925 for workers wanting to go to Taiwan (Table 4.12). Referring to the case of the sample Thai migrants, men were charged a higher fee than women and more mature workers paid a lower fee than younger workers. Married workers paid a lower fee than the workers without partner, and workers with a high level of education paid a lower brokerage fee than workers with a low level of education. Everyday necessary expenses for a Thai migrant worker living in Taiwan include food, accommodation, medical expenses, and clothing. Other variable expenses include leisure activities, remittance fees, communication costs, electrical goods, and mobile phones, as well as other miscellaneous expenses. Accommodation and food were the two biggest expenses for the sample Thai migrants in Taiwan. Male workers spent more on food than accommodation, while female workers spent more on accommodation than food. Workers under thirty years old spent about the same amount on food and accommodation. Workers aged thirty to forty-five spent more on food than accommodation, while workers aged over forty-five spent more on accommodation than food. Single workers spent more on food, and workers with no education spent more than any other group on both food and accommodation. Male workers had much lower medical expenses than female workers. Younger workers spent more on medical expenses than more mature workers. Single workers also had higher medical expenses than married or divorced/deserted/separated workers. Workers who have completed secondary level education had the lowest medical expenses compared with those who have just completed primary education or had no education at all.

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Male workers spent more on communication than women, mainly in the form of telephone calls home. Workers under thirty years old spent less on communication expenses than more mature workers. As expected, married workers had the highest communication expenses. Remittance cost was roughly the same across all migrant workers. Miscellaneous expenses, on the other hand, took up quite a large sum of the total variable cost. Some of these expenses were for cigarettes and alcohol, entertainment, and some personal effects. The group that spent the most on these expenses were the married workers.

4.1.3 Net Benefit The total economic gain for the sample Thai workers in Taiwan varied quite a lot by category and migrant characteristic, with only a few groups having earned below average. In contrast, the total economic cost did not significantly differ from one group to another (see Figure 4.6). The average net return was about US$5,613 per person during their term abroad. The group that gained the highest net return comprised the divorced/deserted/separated workers, followed by the workers over forty-five years old. The group that gained the lowest net return were Figure 4.6 Net Return to Migration for Thai Migrant Worker by Demographic Background Net Return to Migration for Thai Migrant Worker by Demographic Background

30,000 25,000 20,000

Total Benefit

15,000

Total Cost Net Return

10,000

Secondary

Primary

None

Separated

Married

Single

45 and over

30-45

Below 30

Female

Male

0

Total

5,000

Source: TDRI survey.

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the workers under thirty years old, followed by the workers with limited education. However, if we assume that a Thai working in Thailand earns the minimum wage of US$6 per day, then that worker would earn a total of US$2,213 per year if 365 days were worked. Even if none of this money is spent, it is still less than the net return for almost every group of Thai workers in Taiwan.

4.2 Cambodian and Lao Migrant Workers in Thailand 4.2.1 Benefits The survey shows that most of the migrant workers earned more after a few months, which presumably coincides with the completion of the four-month probation period. The average starting salary for a legal Cambodian migrant in Thailand was US$167 a month which was higher than the starting salary for irregular migrants from Cambodia and Lao PDR. Salaries remained the same for these migrants due to the nature of the contracts they worked under. New Cambodian legal migrants, like other types of Cambodian migrants, did not receive overtime pay during their first few months (Table 4.10). By using the duration of migration and the averaged survey data with adjustments for the probation period, the estimated total benefits per migrant were obtained. These are listed by item and category in Table 4.11. The total benefit for a legal Cambodian migrant in Thailand under an MOU was an average of US$10,091. This was higher than the US$6,510

Table 4.10 Average Salary and Overtime Payment of Migrant Workers (survey results)

Cambodia

Legal Initial salary Current salary Initial over time Current over time

167 167 — 47

Lao PDR

Irregular (with document)

Irregular (without document)

Irregular (with document)

Irregular (without document)

108 131 — 14

119 132 — 39

66 84 17 46

49 65 — 20

Source: TDRI survey.

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Table 4.11 Estimated Total Economic Benefit per Trip by Item and Category

Cambodia

Item

Legal Irregular worker worker (under (with MOU) document)

Salary or wage Overtime payment Total benefit

8,008 2,083 10,091

5,941 569 6,510

Lao PDR Irregular worker (without document)

Irregular worker (with document)

Irregular worker (without document)

6,072 1,641 7,713

4,047 2,147 6,194

3,109 914 4,023

Source: Estimated by the research team.

earned by the average irregular Cambodian migrant with documentation, and the US$7,713 earned by the average irregular Cambodian migrant without documentation. Cambodian migrants earned more than their Lao counterparts. This difference in earnings may be due, in part, to the employment location of the different nationalities. The surveyed Lao migrants were in north-east Thailand where the wage rate is lower compared with central Thailand, where the surveyed Cambodians were interviewed.

4.2.2 Costs The calculation of fixed costs was straightforward. The raw data from the survey was used to calculate the average fixed cost per migrant for each category (see Table 4.12). The estimated total fixed cost of migration was the same as the raw data from the survey because no time dimension was applied. Unlike the fixed costs, the variable costs have a time dimension because they accrue over the whole duration of the migration. Therefore, the raw data were used to calculate the total variable costs. The raw data on the variable costs are shown in Table 4.13 and the estimated total variable cost per migrant for each category is shown in Table 4.14.

4.2.3 Net Benefit A summary of the total benefits and costs of migration is given in Table 4.15. The net return of migration for a legal migrant is the highest among

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Total fixed cost

747

110 — — — — 10 — 625 — — — 2 — — — — — — — 150

4 5 — 26 — — — — 29 4 — 28 49 4 — — — — —

Irregular (with document)

Legal

Passport Certificate of Identity (CI) Daily border pass Weekly border pass Physical check-up   — Sending country   — Receiving country Brokerage fee   — Sending country   — Receiving country Transportation   — Sending country   — Receiving country Visa Work permit Skill test Training cost Application fee Other

Cambodia



217

— — — — — — — — 83 53 — 25 56 — — — — — —

Irregular (without document)

56

14 — 1 — — — 4 — 15 — — 7 2 — — — — — 13

Irregular (with document)

106

— — — — — — — — 96 — — 6 4 — — — — — —

Irregular (without document)

Lao PDR

Table 4.12 Average Fixed Cost of Migrant Worker by Item and Category (Survey Results in US$)

4,827

36 — — — — 52 59 — 3,925 — — 57 — 625 — — — — 73

Thai (emigrants)

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Notes: (a) For legal workers (under an MOU). Passport fee for the first three years is about US$110 (company importing labour from Cambodia). In practice, the employer and/or agency has to advance the brokerage fee for migrant workers and collect the money from migrants later; Brokerage fee for first two years is THB20,000 (US$625) (company importing labour from Cambodia). For the brokerage fee, brokers from both countries involved will advance fees for migrants but at present Thai brokers must subsidize the Cambodian broker (company importing labour from Cambodia). Physical check-up in host country, transportation cost in host country, visa, work permit, skill test, training cost and application fees might be included in their brokerage fee. According to a Cambodian worker in Battambang, Cambodia does not allow people aged over thirty-five to have a passport for working in Thailand. (b) For irregular workers. To calculate the average fixed cost, we weighted the average fixed cost for each item by the share of f workers who pay for each item in the total number of irregular migrant workers (e.g. the number of male irregular worker who use a passport to total number of male irregular). (c) The main reason why the fixed costs of irregular workers who did not use the proper documents are more than irregular migrants with documents is the brokerage fee. (d) The reason why the fixed cost for Cambodian irregular workers who used documentation is higher than their counterparts from Lao PDR is that documents for migration in Cambodia cost more than in Lao PDR. Most Cambodian migrant workers use a weekly border pass for migration which costs approximately US$22 to US$38, while most of Lao PDR migrants use daily border pass which costs only US$1. Source: TDRI survey.

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Source: TDRI survey.

Initial food Current food Initial medical expense Current medical expense Initial accommodation Current accommodation Initial transportation Current transportation Initial leisure and recreation Current leisure and recreation Initial clothing, footwear and personal care Current clothing, footwear and personal care Initial fee of remittance transfer Current fee of remittance transfer Initial telephone cost Current telephone cost Initial electric goods, mobile phone etc. Current electric goods, mobile phone etc. Other initial expense Other current expense Renewable passport fee Brokerage fee in the last two years

70 70 — — 6 6 — — — 9 12 14 2 5 9 14 19 23 6 11 20 469

23 29 5 5 8 6 9 6 9 11 16 17 12 12 9 11 76 94 — — — —

29 30 1 3 7 7 — 3 18 13 14 18 11 14 9 9 81 98 16 16 — —

18 14 7 6 10 11 6 6 8 10 11 18 5 6 8 10 9 76 — — — —

6 11 4 2 — — — — 4 5 6 9 4 5 7 9 — 78 — — — —

Irregular Irregular Irregular Irregular (with (without (with (without document) document) document) document)

Legal

Lao PDR

Cambodia



Table 4.13 Average Variable Costs of Migrant Workers by Item and Category (Survey Results in US$)

73 71 64 44 66 66 — — 19 24 14 19 4 5 19 21 35 83 22 97 — —

Thai (only legal worker)

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Table 4.14 Estimated Total Variable Costs per Person, US$ Item

Cambodia Legal Irregular worker worker (under (with MOU) document)

Food 3,375 Medical expense — Accommodation 281 Transportation — Leisure and recreation 413 Clothing, footwear,   and personal care 652 Fee of remittance   transfer 230 Communication cost 656 Electric goods,   mobile phone etc.a 42 Other 503 Renewable passport   fee 20 Brokerage fee in the   last two years 469 Total variable cost 6,640

Lao PDR Irregular worker (without document)

Irregular worker (with document)

Irregular worker (without document)

814 238 287 284 435

1,382 156 304 105 559

650 289 533 306 460

518 97 — — 235

793

802

860

412

530 488

609 413

290 489

227 429

99 —

95 719

78 —

78 —

—

—

—

—

— 3,966

— 5,144

— 3,955

— 1,996

Notes: (a) Renewable passport for two years is about US$20 (company importing labour from Cambodia). (b) Brokerage fee for two years is THB15,000 (US$469) (company importing labour from Cambodia). (c) For expenditure on electric goods and mobile phone, we assumed that their lifetime was approximately four years. (d) One reason why the estimated variable cost of a Lao irregular worker who used documentation to migrate is higher than that of an irregular migrant who did not is due to the occupations of the sample group. Irregular workers who did not use documentation are working as housemaids or as restaurant or shop staff, and most of them live with their employers so they do not have to spend money on food, accommodation, and transportation. (e) An important reason why the variable cost of Cambodian migrant workers is higher than that of Lao workers is their occupations. Most Cambodian migrants are agricultural workers so they have to spend money on food and accommodation. Most Lao migrant workers are shop or restaurant staff and live with their employers, who pay for their food and accommodation. Additionally, the provinces in which the Cambodian workers live have a higher cost of living than the province the Lao workers live in. (f) Some variable costs such as clothing, footwear, and food occur no matter whether a worker migrates or not. Ideally, these items should be calculated on the basis of differential costs between the country of origin and the host country. Source: Estimated by the research team.

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Table 4.15 Net Benefit of Migration to Cambodian and Lao Migrant Workers (THB) Item

Cambodia Legal Irregular worker worker (under (with MOU) document)

Total benefit 10,091 Total cost 7,387   — Fixed cost 747   — Variable cost 6,640 Net return to migration 2,704

6,510 4,116 150 3,966 2,394

Lao PDR Irregular worker (without document)

Irregular worker (with document)

Irregular worker (without document)

7,713 5,361 217 5,144 2,352

6,194 4,011 56 3,955 2,183

4,023 2,102 106 1,996 1,922

Note: No survey was conducted on the case of Lao migrant workers under an MOU. Source: Estimated by the research team.

migrants from Cambodia and Lao PDR, in spite of the high costs this group incurred. This is because legal migrants get better pay and more secure jobs, compared to irregular migrants who are subject to lower pay and are at more risk of exploitation.

5. Household Impact 5.1 Households of Thai Migrant Workers in Taiwan All the workers interviewed sent money home during their time in Taiwan, and almost all of them (97 per cent) did so every month. Most workers sent back over US$7,813 in total (see Figure 4.7). The most popular method for sending remittances was wiring money via a bank (45 per cent). Eighty seven per cent said they were better off economically at the household level as a result of their time in Taiwan. None of the workers said they were worse off than before their migration. However, only 24 per cent said they would consider working in Taiwan again. Most workers (40 per cent) said they would go abroad again, but to a different country. Some said they did not want to go abroad again (21 per cent) while the remaining 16 per cent were still unsure about what they were going to do. Most of the migrant households perceived their own economic status as average (93 per cent). Three per cent of non-migrant households described

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Figure 4.7 Amount of Remittance Sent by Migrant Workers Amount of Remittance Migrant Workers Sent Back 3%

3%

3%

6%

40%

31% 14%

Less than 469 3,125 – 4,688

469 – 938 4,688 – 7,813

938 – 1,875 More than 7,813

1,875 – 3,125

Source: TDRI survey.

their economic status as above average, and 3 per cent described it as very poor. The type of house a family lives in can be indicative of their wealth. For example, families living in concrete or brick houses are often considered wealthier than families living in wooden houses with tin roofs. The largest percentage of migrant households occupied concrete or brick houses (40 per cent), while the largest percentage of non-migrant households lived in wooden houses with tin roofs (37 per cent). From this, it can be concluded that migrant households are wealthier than non-migrant households. All migrant households owned the land they live on compared with 90 per cent of non-migrant households. However, 12 per cent of nonmigrant households owned over 30 rais of land compared to 4 per cent of migrant households. This suggested that those households that are very rich tend not to send family members to work abroad. Households with family members working in Taiwan considered the remittances sent home as their main source of income (69 per cent). Other income sources cited were the cultivation of cereal crops, wages from jobs in Thailand and their own non-agricultural enterprises. For households with no family members working abroad, their main source of income was cited as wages from manual labour (22 per cent) and their own non-

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BOX 4.1 Benefits and Costs of Remittances Labour migration has raised several questions and concerns. Economically speaking, migration contributes to the alleviation of poverty. However, not all of the income generated is spent in a way that contributes to the development and well-being of the migrants, their families, or their nations, despite the costs the migrants face in order to work abroad. The benefits derived from remittances as well as the associated costs and challenges can be identified and described at the national/subnational level, and the household/community level (see Tables 4.16 and 4.17). These benefits and costs are explored in more detail in the following sections. Table 4.16 Benefits from Remittances National/Subnational

Household/Community

• Stable foreign exchange flow • • Finance current account • • National savings mobilization for capital formation • • Lower unemployment • • • •

Additional resources for subsistence Opportunity for human resource investment Use as insurance against crop failure or other disaster Investments in small business Funds for return migration or future retirement Funds often lent to other families Spending in local communities

Source: Suki (2006).

Table 4.17 Costs of Remittances National/Subnational • • • • • •

Household/Community

Sudden interruptions • Potential inflationary impacts • Increased demand for imports • Little investment in capital • formation Increased dependency Reduced labour supply

Few options for appropriate investments “Over-investment” in housing Spending on luxury items Mimicry of spending among nonmigrants

Source: Suki (2006).

Remittances bring benefits at both the macro and micro levels. The receipt of remittances is important to developing countries in particular. At the micro level, remittances are an economic lifeline for many families. Money transferred from abroad is a vital source of capital for poor households and a potential vehicle for community

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development. Remittances help many families afford health care, education, and, sometimes, even invest in or start a business. The major goal of Thais who migrate is economic gain, as migration generally means a higher income. Part of the savings from migration is then remitted. IMF shows that remittance inflows to Thailand in 1999 reached US$1,460 million but decreased to US$1,187 million in 2006. Well educated or highly skilled migrants commonly use formal channels to repatriate their earnings, whereas low-skilled workers use both informal and formal methods. Many Thai migrant workers bring their money back in person, some send money back via friends or relatives and some wire the money. Table 4.18 illustrates the most common formal and informal methods used. Table 4.18 Formal and Informal Remittance Channels Formal



• • • •

Informal

Banks (using various products • but most commonly electronic transfers between accounts) Money transfer operators • FOREX or currency bureaus (at times operating their own • service but often as an agent to • a global or regional money transfer operators Post offices (offering their own products and as agents of either postal banks or money transfer operators)

Hundi or Hawala agents as part of an organised network (e.g. shop owners, travel agents) Shop owners, business people (e.g. import-export traders) Individuals doing a favour Personally carrying the remittance or sending it with a family member or friend

Source: The UK Department of International Development (DFID).

Remittances are mainly used for the following: daily needs and expenses, typically known as consumption; medical and health care expenses or education; consumer durables (e.g. stereos, televisions, washing machines); improving or building housing, or buying land or livestock; investment in socio-cultural life (e.g. births, weddings, deaths); loan repayments (often loans to pay the cost of migration); savings; and income or employment generating activities. Remittances also come with costs, which can be felt at the macro and micro levels. At the macro level, emigration is generally associated with a loss of welfare in the countries of origin as educated and talented individuals take their skills abroad: the so-called brain drain. This can be offset if remittances are sufficiently high, but large remittance flows can also lead to currency appreciation and adverse effects on exports. In Thailand, however, this does not seem to be the case. Remittances can also create dependency and remittance channels can be used for laundering money and financing terrorism.

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agricultural enterprises (22 per cent). These results show clearly that all the surveyed households depend heavily on wages to supplement their main income source, regardless of what the source is. Wealth can be measured by looking at levels of consumption, and it is possible to compare the effect of remittances on consumption at the household level. Consumption can be split into food and non-food expenditure. The highest food expense for migrant households fell under “others” (24 per cent), followed by non-alcoholic drinks (14 per cent), and eating out (14 per cent). For non-migrant households the highest food expense was eating out (41 per cent), followed by alcoholic drinks (17 per cent), and rice (11 per cent). Besides food, migrant households spent most on other miscellaneous items (16 per cent), while non-migrant households spent most on fuel (8 per cent). Both groups of interviewees spent about the same amount in total on food. However, migrant households spent a little more on non-food items than non-migrant households. There were about the same number of households with and without debts across both the groups interviewed. As expected, most migrant households had borrowed money to fund the family member’s work abroad (47 per cent). Most non-migrant households borrowed money for agricultural production (29 per cent). Both groups cited government banks as their main source of credit (61 per cent of migrant households and 55 per cent of non-migrant households).

5.2 Households of Cambodian and Lao Migrant Workers in Thailand The positive net return from migration means that migrant workers must save some money to send home. According to the survey, about 70 per cent of Cambodian migrants sent remittances home. An even larger proportion, 89 per cent, of the Lao migrants sent remittances home even though their average earnings were less than the Cambodians. Most Lao migrants (67 per cent) sent remittances every month followed by those who sent them three times a year (15 per cent). In comparison, Cambodian migrants were less predictable in terms of the frequency of sending remittances. About 55 per cent of them did not have a regular schedule (see Figure 4.8).

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Figure 4.8 Frequency of Remittance by Lao and Cambodian Migrant Workers

Others Once a year Twice a year

Laos Cambodia

Three times per year Every month 0

10

20

30

40

50

60

70

Percent of migrant worker

Source: TDRI survey.

Among those who sent remittances home, about one per cent of migrants from each country sent more than US$1,563. About 27 per cent of Cambodian migrants sent home US$313 to US$469, 23 per cent sent US$234 to US$313, and 21 per cent sent US$78 to US$156. Lao migrants seem to be doing better; 51 per cent sent home between US$469 and US$938, and 24 per cent sent between US$78 and US$156 (see Figure 4.9). The majority of Cambodian migrants (69 per cent) sent remittances through private agents compared with the biggest percentage of Lao migrants (50 per cent) who sent their remittances through relatives or friends. About a quarter of Cambodian migrants brought remittances home in person compared with 18 per cent of Lao migrants. About 32 per cent of Lao migrants also used the service of private agents to send remittances (see Figure 4.10). Table 4.19 illustrates the reasons migrants did not send remittances. The majority (67 per cent) of those said it was because they did not have enough money. Ten per cent of Cambodian migrants reasoned that they did not have anyone to support. Forty-four per cent of Lao migrants said

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Figure 4.9 Amount of Remittances Sent by Cambodian and Lao Migrant Workers

More than 1,563 938 - 1,563 469 - 938 313 - 469 Laos

234 - 313

Cambodia

156 - 234 78 – 156 Less than 78 0

10

20

30

40

50

60

Percent of migrant worker

Source: TDRI survey.

they did not have enough money to send remittances, while about 22 per cent said they did not know how to send money back. Almost all Cambodian respondents (97 per cent) said that migration had improved the economic status of their household. However, only 78 per cent of Lao migrants said the same.

6. Major Issues The rise in cross-border migration has highlighted a number of increasingly important issues. The World Bank’s Labour Migration Programme in the GMS has identified three main regional concerns: (1) the lack of knowledge about the contribution of migration to development in the GMS; (2) the lack of a framework to facilitate and regulate legal migration; and (3) the rapid expansion of human trafficking. Several other issues were also raised at a workshop on East Asia Labour Migration organized by the East Asian Development network in Manila on 9 March 2007. These included the role of intraregional labour flows in international trade, the growing

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Source: TDRI survey.

Sent through agent (69.1%)

Cambodia migrant workers

Money wired (1.0%)

Put in HH bank account (1.0%)

Sent through relative/friend (3.1%)

Brought back in person (25.8%)

Figure 4.10 Remittance Methods by Cambodian and Lao Migrant Workers

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Table 4.19 Migrant Workers Who Never Sent Money Home by Reason and Nationality Reason for never sending money back



Cambodia

Lao PDR

Number

Percent

Number

Percent

Did not know how to contact home Were worried about the risk Did not have enough money No one to support No access to services that remit funds Others

3 — 20 3 — 4

10.0 — 66.7 10.0 — 13.3

2 — 4 — 2 1

22.2 — 44.4 — 22.2 11.2

Total

30

100.0

9

100.0

Source: TDRI survey.

Table 4.20 Household Economic Status Before and After Migration to Thailand Household economic status before and after migration Better Same Worse Total

Cambodia

Lao PDR

Number

Percent

Number

Percent

99 2 1

97.0 2.0 1.0

46 13 —

78.0 22.0 —

102

100.0

59

100.0

Source: TDRI survey.

phenomenon of intraregional migration, trends and patterns of labour migration, and the economic and social impacts of labour migration. For Thailand, the major issues regarding immigration include: management and regulation of irregular workers; the monitoring and mitigation of the economic and social impacts of irregular migrant workers (for example, security and crime, contagious diseases); public health costs; human trafficking; labour standards and downward pressure on wages; overdependence on cheap labour and the slowdown in technology production. The major issues regarding emigration from Thailand are primarily the welfare of Thai workers abroad and Thailand’s brain drain.

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7. Conclusion 7.1 Summary Over the last decade, Thailand has transformed from a net emigrant economy to a net immigrant economy, if one takes into account the undocumented workers from its neighbours. The number of Thai emigrant workers has risen but so has the number of irregular foreign workers in Thailand at an even faster pace. Although the Thai Government has formulated several policies to cope with this trend, the situation is beyond control in many respects. Registration of irregular foreign workers has been conducted to allow them to work in specified occupations. However, foreign workers are often cited as a threat to national security and attempts have been made to arrest and send them home. The main motive for both worker movements is an economic one. Better job prospects and higher income serve as key pull factors driving migration. The case study results validated the significant net benefit that accrues to migrant workers and their families. Their key specific findings are as stated below. 1. The total economic benefit per sample Thai migrant worker in Taiwan was US$16,903 while the total economic cost was US$11,290. This figure is made up of US$4,827 worth of fixed costs and US$6,462 worth of variable costs. The average net benefit was US$5,613 per worker. 2. For immigrants from Cambodia, the total economic benefit and cost per sample migrant were estimated to be US$10,091 and US$7,387 respectively for legal migrants, US$6,510 and US$4,116 for irregular migrants with the required documents, and US$7,713 and US$5,361 for irregular migrants without documents. These result in the following net economic returns: US$2,704 for regular Cambodian workers; US$2,394 for the irregular ones with document; and US$2,352 for the irregular ones without document. For immigrants from Lao PDR, the total economic benefit and cost per migrant were estimated to be US$6,194 and US$4,011 respectively for irregular migrants with the required documents, and US$4,023 and US$2,102 for irregular migrants without documents. These result in the following net economic returns: US$2,183 for the irregular ones with document; and US$1,922 for the irregular ones without

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document. Legal immigrants from Cambodia incurred the highest costs and irregular migrants with no documents from Lao PDR incurred the lowest. 3. Forty per cent of the Thai workers who had worked in Taiwan reported sending back remittances of over US$7,812, while about 30 per cent sent between US$3,128 and US$4,688. Seventy per cent of the Cambodian immigrants sent remittances home compared with 89 per cent of Lao immigrants. The biggest percentage of Cambodian migrants (27 per cent) sent back between US$313 and US$469, and 23 per cent sent between US$234 and US$313. The Lao migrants sent back more than the Cambodians; 51 per cent sent between US$469 and US$938, followed by 24 per cent who sent between US$78 and US$156. 4. Most households of Thai emigrant workers perceived their current statuses as better than before the migration, particularly with regard to income and lifestyle. Households with and without migrants spent roughly the same as each other on food, but migrant households spent more on non-food items than non-migrant households.

7.2 Recommendations Based on the findings of this study, we advance a number of recommendations aimed at maximizing the benefits and minimizing the costs connected to the emigration of Thai workers and immigration of GMS workers in Thailand.

7.2.1 Thai emigration The following issues should be addressed: exploitation of prospective emigrants; failures in adhering to the workers’ contracts; insufficient income to support the cost of living in destination countries; high brokerage fees; insufficient labour protection; exploitation by employers; cultural and language problems; and reintegration problems. In order to demonstrate clearly how these issues can be dealt with, our recommendations are separated into pre-departure, during migration, and post-departure.

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7.2.1.1 Pre-departure • Training and orientation should be provided to migrants prior to departure. This would better prepare them for the change in culture, the different language, and would inform them about local legal matters. This training should be at least several weeks or months in length as a one or two-day course would not have much impact. • The state should put tighter controls on brokers and recruitment agencies. The authorities responsible for law enforcement should make sure that brokers and recruitment agencies follow rigorously the laws and regulations. Maximum penalties should be sought for all unscrupulous agents. • Legal advice should be provided to all prospective workers so that they understand fully the terms of their contract and their rights. • Free career advice should be provided by related government agencies and volunteers in order to help prospective migrants make informed decisions about which country to go to. 7.2.1.2 During Migration • Labour protection is a very important issue that should be prioritized. The Ministry of Labour cannot afford to have labour attachÈs in every country with Thai migrant workers because of insufficient human resources. A possible solution would be to cooperate with the government, relevant authorities, and NGOs in the destination countries. • Advice should be given to workers overseas regarding how to manage their finances, for example, what to with their income and savings. 7.2.1.3 Post-migration • Many migrants find reintegration problematic. Most of them have come home with improved skills and more experience. The Ministry of Labour could consider introducing an accreditation programme for this type of work experience, which might help returned migrants find a job in Thailand. • Returned migrants could be used as career advisors for workers looking to migrate. A database to log every returnee and their

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qualifications and background should be developed, and any exiting databases should be strengthened for future use.

7.2.2 Thai Immigration The net economic benefit that accrues to legal immigrant workers from Cambodia was found to be higher than that which accrues to irregular immigrant workers. The net economic benefit received by irregular Lao workers with documents was also found to be higher than that received by irregular Lao workers without documents. These findings point to the need for policies that encourage legal and transparent cross-border migration. More than 70 per cent of workers from Cambodia and Lao PDR were found to have sent some savings home. Almost 70 per cent of Cambodian workers sent this money via agents. The cost of sending remittances via agents incurs the highest cost out of all the money transfer methods, so a better system should be developed. The following measures are also recommended: • The Thai Government needs to set out clear policies and regulations in order to create a benchmark for its efforts to tackle labour migration and its associated problems. The Thai government should work with local authorities and employers to set clear objectives regarding labour migration. The labour needs of Thailand need to be identified in order to avoid either labour shortfalls or excesses, both of which can affect the country’s economy negatively. • The government needs to work with local authorities and employers to increase the number of administrative personnel dealing with migrant workers. This would help improve standards and speed up the handling of illegal migrant cases. This would require more supervisors to deal with such cases. • It is important that Thailand deals with its immigrant workers efficiently, but it is evident that the current system is inconsistent, and that the procedures and processes currently in place are ineffective. To tackle this problem, the government needs to establish committees and supervisors to oversee the development and improvement of concerned national and local bodies. A committee should also be set up to track illegal workers and the employers responsible for them, and to make sure the law is enforced.

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• Information systems need to be developed to ensure that vital information about migrant workers is collated accurately and stored, and is easily accessible for the authorities. This should include a comprehensive database detailing the migrants’ personal information and entry information. Clear deadlines for registering migrants should be set for employers as this will give them a useful timeline and help the authorities chase non-compliant businesses and organizations. Employers should also report to local authorities on a regular basis in order to keep track of migrant workers and deal with cases in a timely fashion. • Labour strategies need to be improved, for example the acquisition of information from employers regarding their labour requirements and knowledge gaps. Information like this is essential for ensuring that Thailand’s overall labour needs are met and the economy sustained. Employers need to be encouraged to provide this information in order to justify the employment of foreign workers. • Laws regarding migrant workers should be clearly established and enforced without bias. When enforcing laws, it is also crucial that those in charge do so responsibly and ethically. Tact should be used when repatriating illegal migrant workers, as it is a sensitive issue both on the human rights and foreign relations front. Strict measures should also be put in place for dealing with expired permits. Local authorities should ensure that migrants are working in the fields they have been requested for. Excess labourers should be transferred to areas that require additional workers, and these cases should be promptly followed up. • It is essential that the Thai Government increases its collaboration with international, national, and local bodies to alleviate the country’s human trafficking problem. One way to do this is by increasing the role of NGOs in dealing with illegal migrants and human trafficking. • It is important that a one-stop service point be set up for migrant workers to make the documentation and registration process more efficient and accessible. This would make it easier for migrant workers to work with the system and thereby avoid an illegal or trafficked entry. A hotline should be set up to help migrant workers exchange information, discuss any problems or issues they have, and ask questions. • Knowledge and skill development should also be a component of hiring migrant workers. Clear indicators should be set to measure

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the performance and progress of the migrant worker, and evaluations of the worker’s performance should be conducted consistently. Additionally, a budget needs to be established to deal with the various health problems that migrant workers face when working in Thailand. • The Thai Government needs to maintain research into the status of migrant workers in Thailand, monitor closely the problems associated with immigration and develop the country’s system for dealing with them. It is important to study those sectors that require labour from Thailand’s neighbours in order to plan for their needs and ensure that technology and machinery are improved, which will reduce the demand for migrants. These studies would also help to determine the viability and potential benefits of relocating particular industries closer to borders in order to reduce the costs of bringing the migrants in. As far as further study is concerned, we recommend the following: • Similar research but covering other destinations, such as countries in the Middle East (Israel), Northeast Asia (South Korea, Hong Kong, China, and Japan) and Southeast Asia (Singapore, Malaysia); • A comparative study of the costs and benefits to Myanmarese migrant workers in Thailand; • A study to uncover the most effective measures to protect migrant workers; • A study to seek ways and means to manage better bilateral (MOU) and multilateral agreements in order to share the benefits of migration fairly; • More studies on the economic benefits and costs as the samples included in this study may be accidental and cannot yet be generalized; • The estimation of net returns using discount rates to find the present values of economic benefits and costs, and taking into account the opportunity costs of migration as it affects the decision making process of the migrants; • Research taking into account the social benefits and costs is encouraged; and

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• Estimation of the economic benefits and costs of legal migration that takes into account varied employment periods and the generally fluid nature of migration, given such incidents of many MOU migrants running away from their employers to avoid paying back the brokerage fee advanced by their employers, thereby complicating the course and streams of benefits and costs.

Notes   1. Costs and benefits from here on refer to the economic, particularly financial, costs and benefits, unless specified otherwise.   2. As discussed later, the government adopted the Alien Employment Act B.E. 2551 (2008), which repealed previous alien employment acts.   3. This is simply confirmation of the workers’ nationalities by the relevant Lao and Cambodian authorities.   4. Excludes those lifetime migrants who entered Thailand before 1972 and received permanent resident status.   5. These are generally skilled workers and professionals employed in professions specified in 1972 by Royal Decree No. 281.   6. There is also the Labour Relations Act 1975 and the State Enterprise Labour Act 2000.   7. For example, passport holders from ASEAN member states can enter Thailand for a defined period without a visa.   8. This is a relatively new category of visa. The BOI controls the issuance of this visa. This visa can carry a residence permit for applicant and immediate family, if a specified amount of capital is brought into Thailand for investment.   9. Calculated at US$1 = THB32. Succeeding conversions to US$ from THB are also based on this rate. 10. This is a conservative assumption. A survey of about 400 migrant workers in Chiang Mai, Tak, and Rayong in 2003 shows that migrants’ duration of stay in Thailand was relatively long, and the majority of migrants had been in Thailand for three years or more. Twenty nine per cent had been in the country for over five years (Hueguet & Punpueng 2005, p. 31). However, these findings do not apply to Cambodians and Laotians, as the sample migrants were mainly Myanmarese. According to statistics from the Department of Employment, the number of migrant workers from Cambodia and Lao PDR in the three provinces under survey was negligible. 11. Most prospective emigrants are not aware of the details of the brokerage fees.

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References Becker, G. Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education. New York: Columbia University Press, 1964. International Monetary Fund (IMF). Balance of Payments Statistics Yearbook 2006. Washington, D.C: IMF, 2006. Martin, P. The Economic Contribution of Migrant Workers to Thailand. Bangkok: ILO Subregional Office for East Asia, 2007. Ministry of Labour. Migrant Workers. Bangkok: The Office of Policy and Strategy, the Office of Permanent Secretary, 2007. Paitoonpong, S. “Thailand’s Cross-border Trade in the Greater Mekong Subregion: Some Issues Never Solved”. TDRI Quarterly Review 21, no. 1, March 2006. ——— and M. Chaksirinont. “A Foreign Worker Levy for Thailand”. TDRI Quarterly Review 22, no. 3, September 2007. Suki, L. “Migrant Remittances and Economic Development”. Lecture at The Earth Institute, Columbia University, 2006. TDRI. A Study of an Effective Demand for and Management of Alien Workers in Agriculture, Fisheries and Related Sectors and Construction Sectors. Bangkok: Department of Employment, Ministry of Labour, 2007a. ———. National Strategies on Labour Migration: Thailand Country Report. Bangkok: ILO Sub-regional Office for East Asia, 2007b. ———. “Reviewing the Poverty Impact of Regional Economic Integration in the Greater Mekong Sub-Region: Thailand Case Study”. Manila: ADB, 2007c. Vitit Muntarbhorn. “The Mekong Challenge: Employment and Protection of Migrant Workers in Thailand: National Laws/Practices versus International Labour Standards?”. Bangkok: ILO, 2005. Warmsingh, S. “Migration Processes and Socio-Economic Impacts Towards Thai Workers”. Second International Workshop on Thai Migrant Workers in South East and East Asia, 18–20 November. Bangkok: Asian Research Centre for Migration, Institute of Asian Studies, Chulalongkorn University, 1999. World Bank. “Labour Migration in the Greater Mekong Sub-region: Synthesis Report Phase I”. Southeast Asia HQ Unit, East Asia and Pacific Region, 2006. Yongyuth Chalamwong. “Thaksinomics, Labour Market and International Migration in Thailand, 2004”. Workshop on International Migration and Labour Markets in Asia, 5–6 February 2004. Tokyo, Japan: Japan Institute for Labour Policy and Training JILPT, 2004. ———. Internal Migration and Security Issues in Thailand. Jakarta: Habibie Centre, 2005.

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5 Economic Costs and Benefits of Labour Migration Case of Vietnam Nguyen Thi Kim Dung and Cu Chi Loi1

1. Introduction There is a popular argument that outbound flows of low-skilled labour can positively impact on a country. First, it can help ease the problem of excessive labour supply in the domestic labour market and reduce the rate of unemployment. Second, labour migration to other countries can enhance skills and professionalism through exposure to more advanced technologies. Third, labour movements can stimulate investment in education and individual human capital in the home country. Finally, it is often argued that for Vietnam, labour migration can help increase the inflow of foreign exchange and remittances. A number of studies that analyse migration patterns along with other aspects of socio-economic development have been carried out in Vietnam.2 Other studies examine the determinants of migration,3 its consequences and other related issues such as fertility,4 social capital,5 the gender gap and livelihoods.6 Additionally there have been a number of discussions

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at the governmental level on the issues of cross-border labour migration and socio-economic development in the GMS.7 However, very little empirical research has so far been conducted on the effects these economic exchanges have on those people who have chosen to migrate from Vietnam to neighbouring countries. Although this study includes an overview of recent patterns and determinants of labour migration to and from Vietnam, its focus is on the impact of labour migration from Vietnam to countries within the GMS. Its main objectives are to provide a solid foundation of knowledge and information on labour movements from Vietnam to the GMS countries, gain insight into the impact of this process on individuals and on Vietnam, and send a warning message to the government and other development actors about the need to refine the policy framework. The research team used desk review and field survey as the two main research methods. For the desk review, existing international and domestic literature, data, and practical experience on labour migration issues were examined. Interviews and direct conversations with major labour market players and actors were also undertaken to obtain critical information and identify key stakeholders for consultation on the subject, and to discuss issues specific to Vietnam and potential areas for further research.8 The aim was to gather information on the formal political view of labour migration generally, and labour movements to and from Vietnam to countries in the GMS specifically. As discussed in more detail later, field surveys were also conducted with different survey formats in three provinces: An Gina, Quang Tri, and Thai Binh. This chapter is structured as follows: Section 2 begins by discussing the history of migration in Vietnam before looking at labour migration patterns. Section 3 describes the case study methodology and profile. Section 4 details the economic benefits and costs, while Section 5 explains the household impact of migration, and Section 6 discusses some major issues. Section 7 summarizes the research results and offers some concluding remarks and policy recommendations for Vietnam.

2. Background 2.1 History of Cross-Border Migration in Vietnam Before doi moi (economic reforms) in Vietnam, labour exports were mainly conducted within labour cooperation frameworks officially agreed

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between the governments involved.9 The main destinations for the first outflows of labour were Eastern Europe and the former Soviet Union. The primary objective of the policy was to prepare the skilful workforce for industrialization in Vietnam, as well as to give jobs to young labourers or to those who could not find jobs at home. Workers were recruited according to quotas specified in bilateral government agreements, and recruitment was based on strict selection criteria.10 The Department of Overseas Labour (DOLAB) reported that, between 1980 and 1990, a total of 277,183 skilled workers and experts were sent to these countries. Among them, 112,338 workers were sent to work in the former Soviet Union, 72,786 to East Germany; 37,659 to Czechoslovakia, and 35,099 to Bulgaria. These migrant workers were well organized, well trained, and were provided with good access to basic public services such as health care and vocational or on-thejob training in the host countries. Additionally, about 7,000 high-skilled experts (mostly agronomists, medical doctors, university professors, and instructors) were working in Africa, while thousands of construction workers migrated to the Middle East. Labour movements to these areas were terminated by the Gulf War and the collapse of the Soviet Union in the early 1990s.11 Since the late 1990s, real activism in promoting labour exports from Vietnam has been renewed. The Vietnamese Government set its official work agenda to boost labour export as a socio-economic activity that contributes to human resource development, job creation, income generation, and that increases the state’s foreign exchange reserve, as well as facilitates economic cooperation between Vietnam and the host country (Politburo 1999). In order to give new impetus to the implementation of this political discourse, a new DOLAB was established as part of the Ministry of Labour, War Invalids and Social Affairs (MOLISA). The main duty of the department was to undertake the state’s governance of labour migration. The Vietnamese Government then started to build up and implement the national strategy on labour service exports. As a result, there were a number of changes in the labour export market. These changes were not limited to the size of labour exports; they affected the geographical distribution and modality of operation as well. The Vietnamese Government no longer plays the role of sole labour supplier to other countries. Instead, more autonomy has been given to recruitment agents and enterprises in exploring new markets, making contact with new foreign partners, and/or seeking direct labour contracts. Strict regulations on remittances, foreign

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exchange earnings, and income taxes imposed on migrant workers have all been abolished. Additionally, the Law on Overseas Contractual Workers and its associated regulations were enacted and actively implemented in Vietnam in 2006, and with this, labour export has been formally institutionalized. The rights and obligations of labour market actors, ranging from government ministries and agencies-in-charge to labour recruitment and placement units to labour migrants themselves, have been more clearly defined. Moreover the new regulatory framework has provided migrants with a number of economic incentive.12 The bulk of direct support and benefits, such as pre-migration training on social and working conditions abroad, foreign language training and enhanced eligibility for the workers to access pre-departure and emergency loans, has been widely applied. To give more active support to temporary labour migrants, the relevant Vietnamese government agencies have been instructed to take responsibility for holding the host countries responsible for the protection of the workers.

2.2 Emigration Patterns Related national documents and previously conducted studies have revealed that there are three main forms of international labour migration in Vietnam. (a) Permanent emigration to foreign countries. This has been mostly to Europe, North America, and Australia, and has encompassed a very large range of people. A significant number have settled in North America since the end of the Vietnam War. A smaller number stayed in Eastern Europe after the collapse of the Soviet bloc and the termination of bilateral labour agreements. (b) Formally organized contract labourers working as temporary workers overseas. This type of migration includes those who go out on short-term labour contracts, often officially concluded between two countries or two or more formally registered companies. Some are highly skilled workers but the majority are low-skilled or semi-skilled labourers. The number emigrating in this manner keeps increasing and is a more standard form of labour exchange, due in part to the opening up of the Vietnamese economy. (c) Cross-border labour migration in Vietnam’s border areas. Most migrants of this type are unorganized, informal, and sometimes

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illegal. Movement from Vietnam to the neighbouring countries13 is generally across the long and highly porous borders. Rapidly increasing economic exchanges between Vietnam and its neighbours, family ties, and geographical proximity are all reported to be causes for this type of labour movement. The first two formal types of labour movement are not typical of that between Vietnam and the other GMS countries, with the exception of Lao PDR. In contrast, the last group of migrants, which includes both those who voluntarily enter a neighbouring country in the hope of getting a higher income, and those who are illegally trafficked, requires some serious attention. The total number of labourers that have formally emigrated from Vietnam for temporary work abroad has increased steadily since the early 1990s, from around 1,000 in 1991 to more than 82,000 in 2007. The trend was interrupted briefly in 1998 due to the Asian financial crisis but speeded up again after 1999 (see Figure 5.1). The number increased sharply in 2003 due to the opening up of the labour market in Malaysia. More than

FIGURE 5.1 Number of Formal Labour Migrants from Vietnam (person)

90000

82593 78855

80000

75000

70000

67447

70594

60000 50000

46122

40000

36168 31500

30000

10150

10000 0

21810

18470

20000 810

1992

3960

1994

12950

12240

1996

1998

7187

2000

2002

2004

2006

Source: DOLAB (2007).

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38,000 Vietnamese workers were granted temporary labour contracts by Malaysian companies that year. A DOLAB report reveals that up to the end of 2007 there were around 420,000 temporary Vietnamese labourers working in more than forty countries and territories around the world. These people come from over fifty rural provinces (out of sixty-four) where underemployment and a surplus of low-skilled labour are major problems (DOLAB 2007). The countries of East and Southeast Asia, particularly Malaysia, Taiwan, the Republic of Korea, and Japan, have become the main destinations for formal labour migrants from Vietnam. Although ranked as the newest labour export market (the first Vietnamese workers entered the Malaysian labour market in April 2002), Malaysia has become one of the most important destinations for temporary Vietnamese workers. At the time of this study, more than 162,000 have been granted work contracts in more than eleven of Malaysia’s states (Table 5.1). These workers are employed mainly in electronic assembly, construction, textile and garment industries, plantations and the services sector. In 2007 Taiwan was the second most popular destination for Vietnamese workers, with about 140,000 or 28.6 per cent of the total number of formal migrants engaged mainly in manufacturing, construction, fisheries, and housework. This was followed by South Korea, with about 45,000 or 14.7 per cent of the total number of formal migrants, and Japan, with around 21,000 or 6.7 per cent of the total number of formal migrants (Figure 5.2). As reported by MOLISA, some African and Middle East countries, such as Table 5.1 Formal Labour Migration from Vietnam by Destination, 2002–07 (person)

Years Total



Main Destination Malaysia

Taiwan

S. Korea

Japan

Others

2002 2003 2004 2005 2006 2007

46,122 75,000 67,447 70,594 78,855 82,593

19,965 38,227 14,567 24,605 37,941 26,704

13,191 29,069 37,144 22,784 14,127 23,640

1,190 4,336 4,779 12,102 10,557 12,178

2,202 2,256 2,752 2,955 5,360 5,517

9,574 1,112 8,205 8,148 10,805 14,545

Total

420,611

162,009

139,955

45,171

21,420

52,434

Source: DOLAB (2007).

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FIGURE 5.2 Share of Formal Labour Migrants by Destination, 2007 (percentage of total)

T aiw an

O th e rs

Ta iw a n Japan S . K orea M alaysia

JP N

M a la ysia

O thers

S. K o re a

Source: DOLAB 2007.

the United Arab Emirates and Qatar, are also important destinations for labour from Vietnam. The main labour requirements of these countries are construction workers and staff for hotels and restaurants. Despite the advocacy for labour export policy and the remarkable improvements in the labour regulatory framework, most of the formal institutional arrangements and efforts by the Vietnamese Government have only targeted the traditional markets outside the GMS. Very little has been done to extend the formal channels of labour movement between Vietnam and its neighbours, except Lao PDR. As a consequence, Vietnamese labourers migrating within the GMS have very limited or no formal options. A significant number of Vietnamese workers have therefore migrated via informal channels. These informal migrant workers head primarily to Cambodia, Lao PDR, Thailand, and, to much lesser extent, Yunnan province of China. The Commission for Overseas Vietnamese estimated, based on very limited information, that, in 2005, there were approximately 90,000 Vietnamese residing permanently in Cambodia (mainly in Kandal, Phnom Penh, and PreyVeng), as many as 20,000 in Lao PDR (concentrated mostly

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in Vientiane, Savanakhet, Champasac, and Khammuon), and about 100,000 in Thailand (Udon Thani, Nong Khai, and Nakhon Panom). Unfortunately, there were no corresponding statistics for temporary labour migrants. A search of DOLAB’s current labour records provided limited information on Vietnamese workers in Lao PDR (Table 5.2). The number of Vietnamese workers arriving in Lao PDR through formal channels increased during the 1990s, but declined in the immediate years after 2002. This sharp reduction was partly because most labour export contracts ceased. Migrant workers are predominantly men and work mainly in plantations, construction, furniture making, restaurants, and retail trade. A large proportion of the workers have a technical background with at least three months of formal technical training. The number of people holding a higher education degree is limited. The above figures do not include the large numbers of unorganized migrants in Lao PDR for temporary work, and are, therefore, underestimates. It is known from a conversation with a DOLAB official that the majority of informal Vietnamese workers arriving in Lao PDR come from the provinces of central Vietnam, for example, Nghe An, Than Thien Hue, and Quang Tri. Unfortunately, there are insufficient data on these migration areas. Some Vietnamese who have migrated to Thailand have settled there permanently and some have even become Thai citizens. However, it is said that some Vietnamese students find paid work after graduation and some go on to become undocumented migrants, overstaying their visa, and/or marrying Thai women (Dang 2006). Table 5.2 Formal Vietnamese Migrants in Lao PDR (person) Years Total Number   of Workers Of which: Female Hold university   diploma With technical   background Low-skilled

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 994

455

733

599 2,448

21

95

70

50

422

440

117

26

107

75

51

0

0

0

0

0

2

0

0

0

0

68

0

0

0

0

0

46

949 45

335 120

733 0

549 783 50 1,597

21 0

0 95

30 40

50 0

242 180

8 386

Source: Annual reports of MOLISA.

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The recent opening up of border trade and other economic transactions between Vietnam and China has provided more opportunities for thousands of Vietnamese to go to China for short-term and unauthorized jobs. Another type of migration between the two countries (mainly between Vietnam and the provinces of Yunnan and Quangxi) is cross-border movement. Cross-border migrants are a small-sized group of mostly undocumented and very poor people. However, these cross-border movements have become increasingly problematic as much of the migration is illegal, and people smuggling for onward movement has become noticeably more frequent (Dang 2006). The same picture can be observed for cross-border migrants from Vietnam to Cambodia. Recently, there have been many positive changes in the political and economic relations between the two countries, emanating in part from the attempts by both sides to improve national stability and manage their populations. However, a number of issues still exist. Many Vietnamese workers have migrated to and stayed in Cambodia as a result of the recent relaxation of border controls and improved transportation routes. Most of them are reportedly engaged in the construction and furniture sector. Female migrants from provinces in the Mekong delta (for example Kien Giang, An Giang, and Soc Trang) and some provinces in the Central Uplands (for example Tay Ninh) leave Vietnam for Cambodia as unorganized migrants. The majority, under the pressure of poverty, are forced to migrate in search of a job while others are victims of human trafficking and mostly engaged in sex work. Since the movement of workers from Vietnam to GMS countries is mainly informal and even illegal, and since little reliable quantitative information is available, there has been almost no proper quantitative analysis of these movements.14 To help fill this gap, this study conducted a small survey whose findings are analysed in detail below.

3. Case Study Methodology and Profile 3.1 Methodology The field survey for this case study was conducted at sites in three provinces: (1) Lao Bao town in Huong Hoa district, Quang Tri province (central Vietnam), which borders provinces in Lao PDR; (2) Chau Doc town in An Phu district, An Giang province (south Vietnam), where workers cross the

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border to Cambodia; and (3) Dong Hung district in Thai Binh province, in the Red River Delta (north Vietnam), from where migrant workers head to other Asian countries (see Figure 5.3).

FIGURE 5.3 Location of Surveyed Areas

Dong Hung district, Thai Binh province

Huong Hoa district, Quang Tri province

Chau Doc & An Phu districts, An Giang province

Source: CDRI (2006).

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The selection of the survey sites was generally based on the outcome of a discussion with officials from MOLISA. These sites were identified by MOLISA as the localities with the highest density of migrant workers. The standard sampling method could not be used due to the lack of a sampling frame, as there were no statistical data on cross-border labour migration available for the surveyed villages. Therefore, the sample was selected using the snowball sampling method. A semi-structured questionnaire was designed to pool basic information on the issues investigated. It was expected that this information would corroborate earlier analyses as well as provide additional insights into the working and living conditions of migrant workers from different regions. The survey interviewed both households with migrants and without migrants for the purpose of comparison. The actual number of surveyed households, with and without cross-border migrant workers, are presented in each case study. Together with field visits to the sites in Vietnam, two trips were made by the research team to Phnom Penh and Vientiane. These trips were made to collect (through direct conversation) additional information from cross-border migrant workers, who worked deep in their host countries’ territory on their ongoing activities, the impact of migration, and future expectations and needs. This was done with the support from DAN research partner institutes.

3.2 Profile of Study Communities 3.2.1 Huong Hoa District, Quang Tri Province Huong Hoa is a mountainous district located to the north of Quang Tri province, covering an area of 117,998 hectares. Its population includes about 60,000 people of the Kinh and Van Kieu ethnic groups living in nineteen communes and the two towns of Khe Sanh and Lao Bao. Most of the land is mountainous but there are some fertile areas suitable for crops such as rice, pepper, coffee, and fruit trees. Although this area is considered very rich in natural and mineral resources, the district remains largely undeveloped, with agriculture and forestry being the main economic activities. Lao Bao town, home of the famous Lao Bao international border gate, is located to the west of Huong Hoa district. It is 18 km from the district centre through which national highway 9 leads to the borders with Savanakhet province in Lao PDR. Most of the land in the district is fertile and suitable

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for growing crops. However, due to the steeply sloped terrain, the area faces the permanent problem of soil erosion in the rainy season. As shown in the town’s Five-Year Socio-Economic Development Plan 2006–10, the population of the town in 2006 comprised 1,708 households and 8,176 people, including 4,235 women (52 per cent). There are three ethnic groups living in the town; the Kinh account for 87.6 per cent of the total population, the Van Kieu represent 9.1 per cent and the remainder are from the Pa Co. There are 4,063 people of working age but only 2,420 (59.6 per cent) have stable or regular jobs. The number of seasonal workers is reported to be around 360. Clearly, unemployment and underemployment are critical issues. Out of the total regular and seasonal employees, 838 (30.1 per cent) are fully engaged in agriculture and forestry, 472 (16.9 per cent) are in industry and 1,470 (53 per cent) are involved in services. A total of 374 (21.9 per cent) households in the town are classed as “hungry and poor families”. Two of the ethnic minority groups, the Van Kieu and Pa Co, account for nearly 46 per cent of all the poor households. This is because of low education levels, the deeply rooted tradition of shifting cultivation, and their lack of access to appropriate production technology. Unfavourable climate and regular natural disasters also contribute. New employment opportunities for the local people, especially for those who lack basic means for production and business development, have been created through the recent implementation of open door policies on cross-border trade, the improvement of economic relations between Vietnam and Lao PDR, and the reopening of the Lao Bao international border gate. The local authority reports that large numbers of local workers have been involved in cross-border trade and other economic activities. The main types of cross-border jobs in the area include: (a) Businesses or trade activities in Lao PDR. These often involve people establishing companies and entering into contracts for purchasing wood in Lao PDR, and conducting wholesale or retail trade of consumer goods in the markets in Lao PDR’s’ inner territory. These require a relatively huge amount of investment capital, which only a few people can afford. (b) Long-term lease of a shop counter in Lao PDR’s frontier markets. This type of activity mainly involves women and very often takes

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place along the border areas where goods supplied from Lao PDR are insufficient, and so competition is low. This activity seems attractive as the price of leasing a counter is reported to be around 50 per cent lower than in Vietnam. (c) Cross-border daily trade exchange, goods handling services and manual transport. The introduction of a pass permit system instead of a visa system in 2003 has made it much easier for local people to cross the border for daily trade activities. The lack of records means there are no accurate numbers for people engaged in this type of work. However, it is observed that this activity mainly involves female workers, who are typically hired to carry consumer goods over the border for a daily wage. Although the work is difficult, the demand for these jobs remains high due to the huge supply of unskilled labour in the area. (d) Long-term jobs in Lao PDR for hired workers. Hired workers include truck drivers and seasonal wood workers, the majority of whom are men. Rubber farms have recently shown a high demand for long-term workers from the region as well. As discovered from the interviews, cross-border jobs help to improve households’ economy, but a big trade-off is required. The absence of women in the households can lead to insufficient attention to children’s schooling, threats of social problems, (for example, drug abuse) and/or physical diseases which have reportedly increased (for example, malaria which is often contracted at the local marketplace).

3.2.2 Chau Doc Town in An Giang Province Chau Doc is the second largest town after Long Xuyen city in An Giang province. It is located near the Vietnam-Cambodia border where the Chau Doc and Hau rivers cross. This area has great potential for tourism because of its many historical and cultural sites, such as the Tay An pagoda, Thoai Ngoc Hau tomb, and the Ba Chua Xu temple. Chau Doc is a gateway to Cambodia, which means there is also potential for the development of cross-border trade. The town’s population is about 110,000 and over 71,000 inhabitants are of working age (more than 64 per cent). Among them, 65.8 per cent are reported to be regularly employed. Most of the remaining population are

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housewives, school pupils, retirees, or seasonal workers. The main types of cross-border activity undertaken by labour migrants from here include: (a) Fishing in the Tonle Sap area in Cambodia, along the border rather than deep in Cambodian territory. Workers engaged in this activity normally leave early in the morning and come back in the afternoon. A total of forty-five households from clusters in Vinh Xuyen, Vinh Tay 2, and Vinh Tay A in Nui Sam precinct are engaged in this activity. These people have to go fishing in Cambodia because they have no land or other means to earn a living. This activity depends heavily on water levels so many of these households suffer from food shortages during the dry season. (b) Trade in fruits and consumer goods from Vietnam to Cambodia, and buying waste materials from further inside Cambodian territory (for example, from Phnom Penh or Takeo) for wholesale in Vietnam. Three households in Cluster 1, Chau Phu A precinct, are engaged in this. There are also daily trade activities such as going to Cambodia to trade in the morning and returning in the afternoon, or working as hired workers, for example, carpenters. (c) Hired labour for the purpose of transporting goods from Cambodia to Vietnam via informal cross-border paths. It is reported that this type of job involves a large number of people, but the work demand is high in the dry season only.

3.2.3 An Phu District in An Giang Province An Phu district is located in the north-west of An Giang province and is divided by the Hau and Chau Doc rivers. The district has a 42-km-long border with Cambodia. Most of the district’s land is alluvial soil and is a highly valued area for growing rice and non-staple crops. The district enjoys a relatively favourable water and road transport network leading to the province’s border gates. This is also the main transport system that connects the district with Chau Doc and other areas in An Giang province. The majority of the district’s workforce is engaged in agricultural production, handicrafts, and small-sized industry, retail trade, and services. A smaller part of the workforce is faced with unemployment due to a lack of both of skills and arable land. This explains why some of them have to seek employment opportunities in cross-border activities. The main types of such activities include:

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(1) Farming on leased land in Cambodia. This type of job often involves those Vietnamese households that returned from Cambodia in the 1970s, or local families with a large number of children. There are about 400 households from the Khanh Binh commune and Long Binh on paddy farms in Cambodia. To enter the country, these farm workers have to pay a fee to the local Cambodian authorities. The average size of a leased farm is between one and six hectares, and the average price is VND10 million per ha per year. (2) Cross-border retail trade in consumer goods (for example, fabric or tropical fruits) or production materials (for example, steel, construction materials or fertilizer). For this type of activity, the workers go deep into Cambodian territory, sometimes even to Phnom Penh. (3) Hired construction workers. Dozens of people from Long Binh work along the Vietnam-Cambodia border due to an increased demand for construction workers in the Cambodian border areas. Although engagement in these activities can help workers earn a living in the immediate sense, it has been reported by local people that very often the workers face uncertainty from the Cambodian side. This uncertainty comes from the possibility of sudden policy changes, constantly increasing land-lease rates, and informal fees. Furthermore, many of these households suffered during the border war and the memories of wartime prevent them from staying for long in Cambodia. As a result, they cannot take good care of their paddy fields and financial losses are unavoidable.

3.2.4 Dong Hung District of Thai Binh Province Dong Hung district is located in the centre of Thai Binh province in the Red River Delta. Dong Hung town is at the crossroads of national highways 10 and 39, which provide the locality with very favourable transport conditions for economic development and exchange in the region. The total land area in the district is around 19,848.3 ha, including 14,637 ha of arable agricultural land. Dong Hung is well irrigated by the Trap Ly and Loud rivers. Despite this agricultural advantage, the district is incapable of keeping its young labourers employed in the agricultural sector. A large number of people of working age have chosen to become workers in industry or the services sector. For example, since 2005, vocational training and labour

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export have created new job opportunities for dozens of young labourers in Hong Chau commune in Dong Hung district. Many of them have migrated to Malaysia to work in wood production, textiles, medical instrument production, and electronics. As the majority of these workers have good vocational skills, they can earn a relatively high income, between VND10 and VND12 million per month. Local people calculated that the income earned in Malaysia is equivalent to the income earned from growing rice on 270 ha of land each year, even after deducting production costs. In Dong Tan commune, where most of the survey was conducted, crossborder migration began in the early 1990s. The number of workers from the commune who have migrated overseas gradually increased from 200 in 2003 and 2004, to 280 in 2006 and 264 in 2007. As stated by the local authority, cross-border migration has had a remarkable impact on the lives of local people, not only through increased income, but also by providing local youth with an opportunity to work in a more professional, industrialized environment. It is noticeable, however, that the rapidly increasing tendency in the locality towards migration has also shown its negative side. Being cheated by labour brokerage companies and contract abuse are threats often encountered by rural workers. Other challenges include the differences in language, culture, and living and working styles.

3.3 Profile of Migrant Workers from Quang Tri and An Giang Provinces 3.3.1 General Characteristics The survey sample included 207 migrant households and 106 non-migrant households. Most of the surveyed cross-border migrant workers were from rural or mountainous areas where living standards are very low. As revealed in the interviews, a large number of these workers travelled with no passport or without completing formal cross-border procedures. Therefore, in most cases, they were classified as informal or illegal migrant workers. Among the surveyed workers, 47 per cent were migrants in Lao PDR, and the rest were migrants in Cambodia. Most of the migrants were men (61 per cent). The average age of the migrant workers was 40 for both men and women. As expected, the education levels of this category of workers were not very high. The results of the survey showed that 8 per cent had not finished primary school, 21 per cent never went to primary

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school, 44  per cent were certified as having completed secondary school, and 35 per cent were educated to high school level. Workers from Vietnam who go to Lao PDR and Cambodia can generally be divided into two groups: those that cross the border to work every couple of days, but remain nearby (near-border group), and those who cross the border and sometimes travel great distances into their host countries’ territories (far-border group). Forty eight per cent of the sample migrants were near-border migrants and the rest were far-border migrants. The current cross-border administrative formalities for near-border migrant workers are relatively loose. In order to cross the border checkpoint, workers need to show their ID card. This type of worker crosses the border frequently and many of them befriend the local border patrols as a result. Therefore, the production of ID is often not required, and almost no costs are incurred by the near-border workers. Most farborder migrant workers do not complete cross-border procedures either. In our sample, only about 20 per cent of those travelling deep into Lao PDR and Cambodia held a passport and used it when crossing the border. The reason for this is not that the passport application procedure is too complicated or costly, but rather that people often prefer travelling in an informal way, which negates the need to spend time applying for passports and visas. On the other hand, going deep into Lao or Cambodian territory is not easy, and in order to reach their destination, workers have to contact brokers who have good connections with the local police. Besides the transportation cost, each of these informal migrant workers has to pay the broker around US$15 to US$20 to be “protected” while travelling. Some workers travel informally without a broker’s guarantee, but they are then exposed to the risk of being caught by the police. In most cases, after being caught, the workers have to pay a “penalty” in order to get released.

3.3.2 Job Distribution In practice, cross-border migrant workers are engaged in many different types of jobs including trade, domestic service, hired work and construction. In our sample the biggest group of migrant workers were those engaged in trade activities (about 30 per cent). The second biggest group were those who worked in the agricultural sector (about 16.9 per cent). The next biggest groups were hired workers (11.6 per cent) and fishermen (about 10.6 per cent). The rest undertook a range of miscellaneous jobs (Table 5.3).

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Table 5.3 Migrant Workers from Quang Tri and An Giang Provinces by Occupation and Location

Number Near- border

Percent

Far- border Total

Near- border

Farborder

Total

Fishermen Farmers Construction workers Small traders Hired workers Transportation workers Factory workers Self-employed workers Others in Lao PDR in Cambodia

2 24 0 28 19 2 0 3 22 28 72

20 11 6 35 5 3 2 2 23 71 36

22 35 6 63 24 5 2 5 45 99 108

2.0 24.2 0.0 28.3 19.2 2.0 0.0 3.0 22.2 28.3 72.7

18.5 10.2 5.6 32.4 4.6 2.8 1.9 1.9 21.3 65.7 33.3

10.6 16.9 2.9 30.4 11.6 2.4 1.0 2.4 21.7 47.8 52.2

Total

99

108

207

100.0

100.0

100.0

Source: Survey data.

Very often, small traders are self-employed. Most of them work in open rural market places and trade in both agricultural and manufacturing products. Out of the sixty-three small traders surveyed, less than half were near-border migrants who traded at the frontier markets. For example, at the Lao Bao international checkpoint, a large number of Vietnamese traders set up their retail counters in Lao territory, about five km from the border. Most of these small traders go to market during the day and return to Vietnam in the afternoon or evening. Migrants engaged in agriculture and fisheries in Cambodia are mainly from An Giang province. Among the thirty-five surveyed migrant farmers, twenty-four were near-border workers, and eleven were far-border workers. Many of the agricultural migrant workers were either self-employed or tenant farmers. Often, these farmers lease a piece of land to cultivate different kinds of crops (for example, rice, maize, beans). The main reason for going to Cambodia is land shortage at home due to urbanization or land use ineligibility because of the land reallocation campaign. Among the fishermen, there were few near-border migrants. Most of them go deep into Cambodian territory to catch or process fish. As the survey revealed, the flow of far-border migrant fishermen from Vietnam

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to Cambodia has declined significantly due to the reduction in fish stocks in the Mekong River and the Tonle Sap basin. The term “hired worker” also includes all those who have paid work in informal enterprises. These jobs range from furniture making and construction to serving in small restaurants. People in this group can work as near-border or far-border migrant workers. Often, workers in manufacturing enterprises have to move far into their host countries, even up to the capital cities of Phnom Penh or Vientiane. The category of jobs classified in the survey as “others” accounts for a rather large share (21 per cent) and mostly covers workers in the personal services sector, such as hairdressers, salon manicurists, and motorbike repairers. Migrant workers in the Cambodian frontier casinos are also included in this category.

3.4 Profile of Migrant Workers from Dong Hung District, Thai Binh Province 3.4.1 General Characteristics The case study on cross-border migrant workers from Thai Binh province included a sample of 198 households, of which 148 were migrant households. Most of the migrant workers in the sample had moved to Asian countries to work for between one and three years. Out of all the surveyed workers, 100 were in Taiwan, three were in Hong Kong, forty-three were in Malaysia, and two were in South Korea.15 There were 114 women and thirty-four men, and most of the workers were between thirty and forty years old. More than 80 per cent had graduated from lower secondary school and among them 18 per cent had reached an upper secondary school level. The rest just had primary education. Before leaving the country, most of the sample migrant workers were engaged in agriculture. Ninety-two per cent of the workers were directly involved in agricultural production and only 8 per cent were engaged in non-agricultural sectors, for example as traders, and industrial and handicraft workers.

3.4.2 Job Distribution Migrant workers from Thai Binh province generally work in non-agricultural sectors in their destination countries. Out of the workers surveyed, 64 per cent were housekeepers, 31 per cent were factory workers, and the rest

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were nurses or handicraft workers. The largest portion of migrant workers from the surveyed areas emigrated to Taiwan and the majority of them were involved in domestic work. Domestic workers were also found in other countries such as Hong Kong but the numbers were much smaller. Those workers migrating to South Korea and Malaysia mostly worked in the manufacturing sector (Table 5.4). The working conditions in the countries the migrants went to were reported to be hard. For example, the average working day was 11.4 hours long, but this figure varied between jobs: for housekeepers it was 14.7 hours; for handicraft workers, 12.6 hours; for factory workers, 11.1 hours; and for care sitters, 10.25 hours. The workers were contractually bound to work at least eight hours a day, but many of them were willing to work overtime for extra pay.

4. Economic Costs and Benefits 4.1 Theoretical Framework for Cost-Benefit Estimation The decision to migrate can be considered an investment decision. Thus, in this analysis, a simple investment framework has been applied to estimate Table 5.4 Migrant Workers from Dong Hung District, Thai Binh Province by Occupation and Destination

Taiwan

Hong Kong

Malaysia

South Korea

Total

(number) Handicrafts Factory worker Care sitter Housekeeper Total

1 5 3 91

0 0 0 3

2 39 2 2 0 0

100

3

43

2

3 46 5 94 148

(percentage) Handicrafts Factory worker Care sitter Housekeeper

0.7 3.4 2.0 61.5

0.0 0.0 0.0 2.0

1.4 26.4 1.4 0.0

0.0 1.4 0.0 0.0

2.0 31.1 3.4 63.5

Total

67.6

2.0

29.1

1.4

100.0

Source: Survey data.

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the net benefit resulting from this decision. The implication is that the net benefit of migration can be calculated by deducting the estimated total costs from the estimated total benefits. For the purposes of estimation, the costs are identified to include: (1) fixed costs such as costs for travelling, obtaining a passport and visa, registration and the brokerage fee; and (2) variable costs which are mainly living expenses. In our estimation, the total benefits for a migrant worker are their wages. The framework can be expressed as follows: ΣNi = ΣBi – (ΣCvi + ΣCfi) – ΣWi

(1)

Where Ni is net benefit of person i Bi is total benefit of person i and is the wage earned by person i Cvi is variable cost of person i Chi is fixed cost of person i Wi is the opportunity cost or wage rate at home of person i

4.2 Net Economic Returns for Migrants from Quang Tri and An Giang Provinces 4.2.1 Earnings In general, the monthly earnings of sample migrant workers were not high, around US$100 on average (Table 5.5). However, earnings differed by sector and location. For near-border migrants, the lowest income group were engaged in goods transportation and were hired workers. As expected, the highest earners were the traders. On average, these workers earned 30 per cent more than the workers from other groups. The groups of migrants that worked close to the border areas in Cambodia earned less than their counterparts working in Lao PDR. For the far-border migrant group, the factory workers had the highest monthly earnings of an average of US$166 per month. The next highest earning group were the small traders who earned an average of US$153 per month. Similar to the near-border migrants, farmers and fishermen did not belong to the lowest-income group, but they earned less than the average rate. The lowest-income earners were those in the “other” job category who earned about 80 per cent of the average rate. Far-border

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Table 5.5 Average Monthly Income of Migrant Workers from Quang Tri and An Giang Provinces Occupation of migrant workers

Near-border

Far-border

(000 VND)

(US$)

(000 VND)

(US$)

Ratio (2/1)

Fishermen Farmers Construction workers Small traders Hired workers Transportation workers Factory workers Self-employed workers Other jobs In Lao PDR In Cambodia

1,200.0 1,222.9 — 1,907.1 913.2 875.0 — 900.0 1,673.6 1,776.8 1,298.9

72.3 73.7 — 114.9 55.0 53.1 — 54.2 100.8 107.0 78.2

1,595.0 1,254.5 1,728.3 2,534.3 1,450.0 2,166.7 2,750.0 1,500.0 1,193.0 1,,865.6 1,722.2

96.1 75.6 104.1 152.7 87.3 130.5 165.7 90.4 71.9 112.4 103.7

1.33 1.03 — 1.33 1.59 2.46 — 1.67 0.71 1.05 1.33

Total

1,432.7

86.3

1,817.4

109.5

1.27

Note: Conversion to US$ is based on the exchange rate, US$1 = VND16.6. This exchange rate is also the basis for successive conversions. Source: Survey data.

migrant workers in Lao PDR earned about 40 per cent more than the workers in Cambodia. It is noticeable that the earnings of near-border migrants were much less than those of the far-border workers in many sectors, except those in “other” jobs.16 The biggest differences were found among transport workers; farborder workers earned about 1.5 times more than near-border workers. Far-border self-employed and hired workers also earned about 50 per cent more than their near-border counterparts. There are a few explanations for these differences, but the main reason is that particular segments of the labour market require specific skills and work experience.

4.2.2 Costs To calculate the fixed costs, the workers were questioned specifically on the amount they spent on each item, for example, their passport or pass permit from the local authority, the work permit from the destination

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country, and the registration fee. In some cases, this fixed cost did not matter; near-border migrant workers, for example, spent nearly nothing on fixed costs. In other cases, this fixed cost was important; for example, the fishermen or tenant farmers might have paid a fee for leasing surface water, or fishing permits. In order to calculate the monthly costs of those who travel far from the borders, the fixed cost was divided by the number of months the migrants spent in their host country, and this was then added to the monthly cost of living. While the fixed costs for near-border migrant workers were often too small to be included, the fixed costs for far-border migrants were high enough to be counted (about VND 370,000 or US$29 per person) (Table 5.6).

Table 5.6 Average Fixed Costs of Migration for Far-border Migrant Workers from Quang Tri and An Giang Provinces* Passport Permit at origin Departure procedure Arrival procedure Permit at destination Health care check Registration at destination

Frequency (%)**

Cost (US$)

19.5 11.4 15.5 11.3 4.0 2.86 5.7

12.1 0.0 0.9 4.9 9.0 0.3 2.0

Note: * If the workers prefer to travel without a passport or use the brokerage service, they have to pay an additional amount of US$15 to US$20. ** Ratio of people using permit/ service over the total. Source: Survey data.

Concerning variable costs, we did not ask during the survey how much people spent for each item specifically, for example, on housing, food, travelling, and communication costs. Rather, they were asked how much they spent each month on living expenses and this figure was then taken as the variable cost of migration. Survey results show that self-employed workers and farmers had the highest expenditures as a percentage of their total earnings, which were the lowest among all the migrant worker groups. Construction and hired workers spent the least (Table 5.7).

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1,444.6

207

Source: Survey data.

Total

87.6

94.5 74.7 104.7 136.7 62.1 93.9 166.7 69.1 86.5 111.5 87.3 69.4 934.7

1,060.0 860.3 806.7 1,298.9 484.8 800.0 1,500.0 96.0 877.5 1,031.0 934.7 1,014.3

1,559.1 1,232.9 1,728.3 2,255.6 1,025.0 1,550.0 2,750.0 1,140.0 1,428.0 1,840.5 1,444.6 1,145.5

22 35 6 63 24 5 2 5 45 99 108 75

by occupations Fishermen Farmers Construction workers Small traders Hired workers Transportation workers Factory workers Self-employed workers Other jobs in Lao PDR in Cambodia Those with negative net benefit 56.6

64.2 52.1 48.9 78.7 29.4 48.5 90.9 58.2 53.2 62.5 56.6 61.5

US$

000 VND

000 VND

US$

Average monthly variable cost

Average monthly earning

Observations

259.4

96.2 2.1 388.5 473.6 147.1 381.6 716.0 -280.0 109.0 288.2 150.0 –297.0

000 VND

15.7

5.8 0.1 23.5 28.7 8.9 23.1 43.4 –17.0 6.6 17.5 9.1 –18.0

US$

Average monthly benefit

Table 5.7 Average Net Benefit to Informal Migrant Workers from Quang Tri and An Giang Provinces

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The opportunity cost of labour, or the wages that migrant workers would earn at home, was based on the average earnings of a labourer in the surveyed region. Non-migrant households were asked a set of questions about their income in 2006 in order to obtain the data. The average earnings of a worker from a non-migrant household were estimated by dividing the total earnings of the household by the number of labourers (persons aged between thirteen and sixty-five). The average earnings of a labourer from a non-migrant household were taken as the opportunity cost of labour for migrant workers. The results of the calculation show that the average opportunity cost of labour was VND334,000 or US$20.2 at the An Giang surveyed sites, and VND454,000 or US$27.5 in Quang Tri province.

4.2.3 Net Benefit As previously mentioned, the main motivation for emigrating for work is the chance of earning extra money. As demonstrated in Table 5.7, informal migrant workers earned an average of about US$90 per month and spent only around 60 per cent of this on living expenses. Migrant workers were able to save an average of US$16 per month after all the costs have been subtracted. Many of the surveyed workers received a net benefit, with the exception of self-employed workers. However, just because the average turned out to be a net benefit does not mean that the gain was distributed evenly across all migrant workers. The fishermen, tenant farmers, and self-employed workers had the lowest net benefit, while the factory workers, traders, and construction workers had the highest. It merits pointing out as well that the average net benefit was nearly equivalent to the opportunity cost. Moreover, seventy-five out of the 207 surveyed migrant workers (36 per cent) had negative net benefit. Among them, 68 per cent were working in Cambodia and 32 per cent in Lao PDR. This also implies that the migrant workers may end up earning less than they would at home. A financial loss from migration can be attributed to poor information and unstable working environments, as well as to other things. It is clear that migrant workers often have to take great risks, often within the uncertainty of the informal sector, as well as confront the challenges of living in impoverished and remote rural areas.

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BOX 5.1 Decent Work Deficit Experienced by Vietnamese Migrant Workers in Lao PDR and Cambodia It is important to mention that though the majority of migrant workers gain financially from migration, they are vulnerable to social costs. The worst of these for migrant workers who work far from home are the poor conditions they find themselves living in. The observations from the team’s field visit to Lao PDR and Cambodia reveal that the living and working conditions for migrant workers are extraordinarily poor, with all sanitation and environment indicators below the average norms and standards. Dirty living spaces with no or insufficient access to electricity and drinking water were observed in the majority of furniture enterprises in Phnom Penh. Additionally, about 30 per cent of migrant workers have to live in their workshops. Among the workers living in guest houses, 50 per cent claimed that their rooms do not have an inside toilet, 25 per cent claimed that clean drinking water is not available, and 27 per cent said there is no electricity or that the electricity supply is unstable. The migrant workers are often subject to high security risks as, very often, they are hunted down by local authorities. The interviews conducted in Phnom Penh revealed a number of cases of locals attacking migrant workers. Source: Information collected from field visits by the research team in Phnom Penh and Vientiane, November 2007.

4.3 Net Economic Returns for Migrants from Dong Hung District, Thai Binh Province 4.3.1 Earnings The average monthly income, including salary and overtime pay, of migrant workers in this survey was about US$359 in total. Housekeepers were the highest paid group, receiving US$418 per month, and factory workers were second with US$361 per month. Care-sitters received an average of US$246 per month followed by the handicraft workers at US$183 per month (Table 5.8). By country, the highest earners were workers in South Korea with an average earning of US$875 per month. Migrant workers received US$428 in Taiwan, US$316 in Hong Kong and US$289 in Malaysia.

4.3.2 Costs The framework for estimating the economic costs and benefits is generally the same as the framework applied to the case study involving Vietnamese

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Table 5.8 Average Monthly Earnings of Migrant Workers from Dong Hung District, Thai Binh Province (US$) Types of Job

Total

Handicraft worker Factory worker Care-sitter Housekeeper

183.3 361.9 246.0 418.3

Total

358.7

Source: Survey data.

migrant workers in Lao PDR and Cambodia. The difference is that the fixed costs incurred by the migrant workers in the non-GMS countries are much higher and therefore more prohibitive. These costs include a pre-departure deposit, the brokerage fee (which includes the passport and visa fees), a training fee (for example, language or working skills), and the airfare. Data from the survey showed that each person had to pay a total of around US$1,469 on average. However, these initial costs varied a great deal depending on the destination country. The sample survey showed that the initial cost of going to Taiwan was US$1,557, US$929 to Hong Kong, US$1,209 to Malaysia, and US$3,712 to South Korea (Table 5.9). These amounts are very high compared with the low income levels of the migrant households. Additionally, because most migrant workers do not possess good or relevant working skills, almost all of them have to take a preparatory training course before their departure. On average the duration of these courses is about three months. The courses are organized by the tourism or labour brokerage companies and the cost is covered by the workers, and about US$33 per person on average. In order to have enough money to cover the initial costs, migrant workers have to find financial sources, including their own savings, revenue from selling crops, and borrowing from banks, relatives, or friends (Figure 5.4). The interest rates that migrants have to pay vary from 0.6 per cent per month from the state-run Poverty Alleviation Fund to about 1.1 per cent from informal credit sources. As prescribed by the government, about 40 per cent of the initial costs should be paid by workers before or during their stay abroad, and 60 per cent can be paid on their return home. The

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Table 5.9 Average Fixed Costs for Migrant Workers from Dong Hung District, Thai Binh Province (US$) By country Taiwan Hong Kong Malaysia South Korea

1,557.6 929.3 1,209.6 3,712.1

By item Brokerage fee Deposit Air ticket Training Others Total

427.9 724.2 194.5 32.7 89.9 1,469.2

Source: Survey data.

FIGURE 5.4 Financial Sources for Funding Initial Costs of Migration

B orrowing from inform al c redit fund, 1%

B orrowing from poverty fund, 42%

S elling c rops , 1% B orrowing from relatives , 39%

B orrowing from bank s , 17%

Source: Survey data.

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survey showed that about 60 per cent of borrowers paid off their loans while working abroad, and 40 per cent fully paid off their loans once they had returned home. The opportunity costs for migrant workers are estimated in the same way as those for informal cross-border migration to Lao PDR and Cambodia. Specifically, the average earnings of a labourer from nonmigrant households in the same area are taken as the opportunity cost for the migrant workers. This cost for a labourer in the surveyed Dong Hung area was estimated at VND675,000 or around US$43 per month.

4.3.3 Net Benefit As seen in Table 5.10, most sample migrant workers gained a positive net benefit from working abroad. On average, after deducting all the costs, migrant workers earned about US$8,993 for the whole period of their Table 5.10 Average Net Benefit to Migrant Workers from Dong Hung District, Thai Binh Province by Destination Country (US$) Net Benefit Taiwan Total Monthly

11,126.8 311.1

Hong Kong Total Monthly

7,423.4 206.2

Malaysia Total Monthly

3,713.5 135.2

South Korea Total Monthly

10,459.9 383.1

Grand Total Total Monthly

8,993.4 261.4

Note: Total net benefit refers to the net benefit over the whole period of the migrants’ stay abroad. Source: Survey data.

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stay abroad, or US$261 net benefit per month. The net benefit earned by migrant workers was quite large compared with the domestic yearly income (about US$350) that a typical Vietnamese worker earns in rural areas. The total and monthly net benefits gained by the workers varied from country to country. Workers in Taiwan had the highest total benefit (US$1,127), followed by South Korea (US$10,495), Hong Kong (US$7,423), and Malaysia (US$3,713). The differences in the total net economic benefit earned by migrant workers are attributed to differences in monthly earning rates and the total time spent in the host country. In terms of monthly net benefit, the workers that earned the highest amount were those in South Korea (US$383), followed by those in Taiwan (US$311), Hong Kong (US$206), and Malaysia (US$135). The survey indicated only two cases of migrant workers from Dong Hung with negative net benefit (1.4 per cent). The total and monthly net benefits also varied between jobs. Housekeepers had the highest monthly net benefit at US$308, followed by factory workers with US$189, care sitters with US$119, and handicraft workers with US$77 (Table 5.11).

Table 5.11 Average Net Benefit to Migrant Workers from Dong Hung District, Thai Binh Province by Occupation (US$) Net Benefit Handicraft worker Total Monthly

2,938.6 77.1

Factory Worker Total Monthly

5,517.5 189.4

Care Sitter Total Monthly

3,878.4 119.3

Housekeeper Total Monthly Grand Total Total Monthly

11,080.5 308.6 8,993.4 261.4

Source: Survey data.

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BOX 5.2 The Economic Costs and Benefits of Vietnamese Emigration to Non-GMS Countries Based on Other Sources From the individual’s perspective, workers choose to migrate when the expected economic benefits to them or to their families outweigh the costs of moving. The results of the migration survey conducted by the Vietnamese Government in 2004 revealed that an anticipated economic benefit was cited by 69 per cent of the respondents as the primary reason for migration, while other issues such as education (4.5 per cent) and family changes (20 per cent) played a much smaller role. Recent official records from MOLISA have indicated that, on average, a Vietnamese migrant worker can earn around US$150 to US$200 a month in Malaysia, US$300 to US$500 in Taiwan, US$450 to US$1,000 in South Korea, and US$1,000 to US$1,500 in Japan (Table 5.12). These comparatively high salaries are one of the most important factors pushing workers to seek jobs in the said countries. Educated or highly skilled migrants can earn more than these average amounts. Table 5.12 Average Income Earned by Vietnamese Migrant Workers in Non-GMS Countries Based on Government Data Destination country Type of job



Monthly average income (US$)

Malaysia

– Electronic assembling – Construction – Textile & garment manufacturing – Services

150 to 200

Taiwan

– Industrial – Construction – Fishery – House work – Nurse

300 to 500

S. Korea

– Industrial – Agricultural – Fishing and fish processing

450 to 1,000

Japan

– Electronic assembling – Fishing and fish processing

1,000 to 1,500

UAE

– Construction – Electronic assembling – Hotel and restaurant

Qatar

– Construction

400 to 1,000 300 to 700

Source: DOLAB, MOLISA (2007).

continued on next page

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The financial cost for workers emigrating from Vietnam to non-GMS countries is likewise comprised of a variety of fixed and variable costs. The government of Vietnam has implemented a number of policies to help reduce the economic costs of migration, from pre-departure to arrival. Apart from extending ëcheap and easy’ loans, the government also strictly regulates some types of fixed costs. For example there are limits on the broker’s charge, visa and passport fees, and health check-up costs. Recently the Inter-ministerial Circular No- 16/2007-TTLT-BLDTBXH-BTC on “Brokers’ Service Charge” was enacted with the aim of implementing the ceiling on the cost charged by labour export brokers and recruitment agents. The Circular stated that the charge cannot exceed one month’s average salary of the migrant worker. Table 5.13 Average Cost Incurred by Vietnamese Migrant Workers in Non-GMS Countries Based on Data from Private Agencies Malaysia Taiwan South Japan Korea

Middle Eastern Countries*

Remarks

Fixed costs** US$1,500 US$ 3,000 US$699*** US$2,000 US$1500 – Payable to labour    to    to supply company in US$2,000 US$2,000 Vietnam US$450 US$10,000 – Payable to the host for insurance to US$15,000 country and income as a deposit tax to prevent workers from “running away” Variable costs**** US$50 US$100 to US$100 US$100 to US$150 – per month US$150 per month US$150 per per month per month month –

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Spent by the workers themselves; In some countries such as Japan and South Korea, some workers are provided with freeof-charge gas and kitchen appliances

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Notes: *These include the United Arab Emirates, Oman, and Qatar. **In many cases, this amount includes expenses for airfare, airport tax, broker’s fee, transport to and from airports, language training and job orientation, passport, visa, and medical check-up. ***Applicable to the workers sent to South Korea within the Employment Permit System (EPS) formally agreed upon between the governments of Vietnam and South Korea. ****This amount mainly includes monthly expenses on food, local transport and accommodation. Sources: Collected from labour supply companies, LOG and LATUCO, in Hanoi, May 2008.

Table 5.13 illustrates some of the financial costs formally reported by labour supply companies in Hanoi. However, it is often stipulated that due to the existence of some undocumented expenses, the actual costs borne by workers applying for a job abroad are much higher. For example, it was reported by a representative of the Vietnam General Confederation of Labour that the actual cost of going to work in South Korea was estimated to be more than 10 times higher than was indicated in formal agreements.17 At the same time it was generally agreed that the benefits from formal migration outweigh the costs. This argument is supported by the fact that many workers are still willing to migrate while being fully aware of the costs they will have to bear in the near future.

5. Household Impact 5.1 Household Impact in Quang Tri and An Giang Provinces Generally speaking, households with a member working in Lao PDR or Cambodia have a higher income than those households who do not. In 2006, the average income per person in non-migrant households was VND3,287.7 (US$198) compared to VND5,298.7 (US$319) for migrant households. This may lead to the assumption that migrant households are much better off than non-migrant households because of the additional income from a household member working abroad. The research team took ownership of durable assets as one indicator of wealth, and used that to identify whether migrant households were wealthier than their non-migrant counterparts. The survey results in Table 5.14 show that none of the non-migrant households owned an automobile while sixteen households with migrant workers owned at least one car. Very often, this vehicle was used by households as a means of production (for transport) rather than for daily consumption. Similar patterns can be observed by looking at the ownership

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Table 5.14 Durable Assets Owned by Migrant and Non-Migrant Households (HHs) Percentage of owning Number households Asset Non-migrant HHs Migrant HHs Non-migrant HHs Migrant HHs Automobile Tractor Motorbike Bicycle Colour TV B&W TV Computer Desk phone Mobile phone Refrigerator Air conditioner

0 1 49 46 57 4 6 35 33 17 4

16 3 123 81 139 3 17 81 106 63 5

0.0 0.9 46.2 43.4 53.8 3.8 5.7 33.0 31.1 16.0 3.8

7.7 1.4 59.4 39.1 67.1 1.4 8.2 39.1 51.2 30.4 2.4

Number of HHs

106

207

—

—

Source: Survey data.

of other durable assets. The proportion of migrant households owning durable assets was much higher than that of non- migrant households. This does not imply, however, that these households have escaped poverty because they own more durable assets. The same field survey revealed that many of the migrant households do not have other durable assets that can be considered as basic nowadays. For example, Table 5.14 shows that 61 per cent of migrant households do not have a landline, 33 per cent do not have a colour television, and 40 per cent do not own a motorbike. More than that, the number of migrant households in poverty is still very high. In answer to the survey question, about 7 per cent of migrant households claimed to be very poor, and 12 per cent poor.

5.2 Household Impact in Dong Hung District, Thai Binh Province Even though migrant workers face significant economic and social costs, having a better job or higher income drives them to manage the costs and deal with the risks. In the areas that were surveyed, emigrating for work is also motivated by scarcity of agricultural land. On average, 300

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to 400 square meters of land are allocated per person in the Dong Hung district. This land can generate a yearly income of approximately US$400. The chance of earning a year’s local salary in one month abroad is very attractive to many in the region. It is widely recognized by the local authorities that housing is the most important indicator of improved living standards. Thus, the state of housing was chosen as an indicator of household welfare. The results of the survey show that migrant households generally owned better quality houses than non-migrant households. More specifically, 44 per cent of migrant households owned a very good quality house (i.e. a good building with a number of expensive living facilities such as inside toilet, separate bedrooms, living room and kitchen), 37 per cent owned a good quality house (though with no inside toilet or kitchen), and 18 per cent owned a poor quality house. The results for non-migrant households showed that 31 per cent live in a good quality house, 41 per cent in a fairly good house, and 28 per cent in a poor quality house. In support of these findings, the results of the living standards self-assessment show that migrant households generally had a higher standard of living than non-migrant households. As illustrated in Table 5.15, the ratio of wealthy, almost poor, and poor households were higher for non-migrant households. Meanwhile, for migrant households, the ratio of rich households was much higher (Table 5.15). It is reported that remittances sent home by migrant workers are an important source of income for their families. Usually the remittances are used first to pay back the debt incurred before the migrant’s departure,

Table 5.15 Household Self-assessment on Living Standards (%) Very poor Poor Almost poor Wealthy* Rich ** Total

Migrant HHs

Non-migrant HHs

0.0 0.0 31.6 40.1 28.3

0.0 2.0 44.0 46.0 8.0

100.0

100.0

Notes: * Wealthy households are those that start having some savings ** Rich households are those that have savings and valuable assets. Source: Survey data.

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and second, for other purposes. About 70 per cent of returned migrant workers indicated that a large part of their remittance was used for housing and buying durable goods. There is a prevailing criticism that spending on housing and durable goods is not a good use of remittances. In the surveyed village in Thai Binh province, however, spending on these items was considered a development investment. Good housing and living conditions were said to be direct ways for improving people’s health, education and cultural life. In turn, this can help increase labour productivity. Fifty per cent of returned migrant workers chose to bank their money in saving accounts and a much smaller number, 17 per cent, invest in a business. How cross-border migration affects what the workers and their families do once the migration period is over is less clear. After returning home, the majority of the sample migrant workers went back to working in the agricultural sector; very few of them had set up a new business or been successful in finding a job outside the agricultural sector. Hired workers showed the greatest change in occupation, with over 16 per cent of returned migrant workers classed as non-agricultural employees (see Table 5.16). However, there was little change in the other job types. This implies that migration does not necessarily lead to a career advancement once the worker has returned. The fact that most returned migrant workers remain employed in the agricultural or other low-skill sectors indicate that the new skills they gained through work abroad are wasted. Along with the economic benefits, migrant households also bear a number of different costs. Among the respondents, only 6 per cent thought Table 5.16 Job Distribution Before and After Migration Agriculture Agriculture and industry Industry Trade and service Hired workers Other jobs Total

Before Migration

Current

92.00 1.99 0.66 1.32 1.32 2.71

74.20 1.32 0.00 3.31 16.56 4.64

100.00

100.00

Source: Survey data.

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that their work abroad has had a positive impact on their children’s education, while the other 94 per cent felt it has had a negative impact. The survey revealed that when family members, mothers or fathers, emigrate for work, their children have to spend more time doing housework and therefore have less time for studying. In many cases, the children of migrant workers are left without parental supervision. Thirty-two per cent of the respondents reported that they had to borrow money for initial migration arrangements beforehand which left their family with a large debt. Very often, servicing this debt creates difficulties for other family members, at least, during the first few years. Household impact can also be differentiated according to the status of the household’s migrant member. Although the initial costs for informal migrants are not as high as those for formal migrants, their earnings are correspondingly low. In a number of cases, the earnings of these people barely cover the costs of their own subsistence. This explains why the remittances from this type of migrant only have a very small positive effect at home. More seriously, 36 per cent of respondent informal migrants reported that migration has had a negative economic effect which, along with their obvious social insecurity, serves as an implicit indicator of their high level of vulnerability. By contrast, formal or organized migrant workers from Vietnam often go to wealthier countries, in this case to South Korea, Taiwan, and Hong Kong. Although they still face the difficulty of paying much higher initial costs, these migrant workers enjoy much better pay and working conditions in the countries they emigrate to. As a result, their net economic benefit is commonly recognized to be higher. In turn, this significantly helps to improve their families’ living conditions. While there is a prevailing argument that labour migration improves workers’ skills, very little evidence was found in the surveyed areas that these skills help in finding new jobs once the migrants return. The majority of the returned migrants surveyed had either returned to the agricultural sector, or had found work in other low-skilled sectors.

6. Major Issues 6.1 Low Participation by the Poor Although it appears that the aims of spurring economic growth and increasing people’s welfare by migration and protecting migrant workers’

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BOX 5.3 Aggregate Remittance Inflows to Vietnam and Their Broader Impact At the national level, the annual value of remittances from formal Vietnamese migrant workers between 2000 and 2006 was reported by MOLISA to be approximately US$1.5 billion (Table 5.17). At the same time, The World Bank estimations indicated that remittances and compensation received from official Vietnamese workers increased from US$2 billion in 2000 to US$2.7 billion in 2003 (WB 2006). Both sources recorded an increase in foreign exchange generated by labour exports. At first glance, this contribution seems to be modest in absolute terms compared with the earnings from other exports, but for Vietnam it is very important. To put it in perspective, this amount is equivalent to the total value of rice exports, a major export product of Vietnam, and represents a major part of foreign exchange earnings by many of the country’s poor. It is also important to note that due to high remittance fees and limited access to the banking system, labour remittances to Vietnam are mostly channelled using informal mechanisms. The actual amounts are estimated to be much greater than have been officially recorded. Table 5.17 Formal Workers’ Remittances against Total Export Earnings Years



2000 2001 2002 2003 2004 2005 2006

Total Exports

Exports of goods and services

Remittance from labour migrants

Total Total Total Percentage of Percentage of amount amount amount total exports total exports (US$ billion) (US$ billion) (US$ billion) 15.733 16.429 18.156 21.649 28.053 33.873 41.305

14.438 15.029 16.706 20.149 26.503 32.223 39.605

92.05 91.48 92.01 93.07 94.47 95.13 95.88

1.25 1.4  1.45 1.5  1.55 1.65 1.7 

7.95 8.52 7.99 6.93 5.53 4.87 4.12

Source: DOLAB, Ministry of Trade website.

Moreover, while the value of remittances from formal migrant workers are more or less accurately kept in official records, the amounts earned by informal workers, including those migrating to GMS countries, remain largely unknown. At the household level, there is a general consensus that remittances from labour exports account for a significant part of total household income. A lack

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of reliable statistics at the macroeconomic level prevents us from accurately calculating the percentage of households in Vietnam that receive remittances from their migrant members or relatives. However remittances have increased the income of nearly all migrant households. This observation was confirmed by the results of the previously conducted survey in the Thai My commune, which showed that remittances from migrant workers accounted for over 20 per cent of the total income of local households (Vu Quoc Huy et al. 2003). Moreover, remittance money is considered to be a very important tool in eliminating hunger and reducing poverty. Specifically, the income from working abroad has contributed to a substantial reduction in the number of poor households. The percentage of households going hungry dipped from 35 per cent before the Labour Export Programme to 0 per cent in 2003. Approximately 40 per cent of the remittance receiving households even have savings after repaying the loans borrowed before the workers’ departure. Unfortunately in Vietnam, very little knowledge exists on how remittances from workers abroad are used. The national surveys on migration and on living standards have failed to differentiate between remittances and other sources of income and transfers. Additionally, remittances from migrant workers are often combined with income generated from other farm and non-farm activities at home. Therefore, it is not easy to accurately assess the impact of each financial source on the wider community. However, anecdotal evidence has shown that remittance money is used mainly to satisfy basic needs such as food consumption, building or repairing houses, medical treatment, and repayment of debts. The rest is spent on investment in income-generating activities. Indeed, there are many stories circulated by the mass media and word of mouth about successful migrants whose remittance payments have been used as an income or for investment by other members of their households. The results of a small-scale survey in Phu My showed that housing improvements supported by migrant remittances directly contributed to an increased demand for construction workers in the village. This in turn created employment for half of the male population and generated a primary income source for many households in the village (Vu Quoc Huy et al. 2003). Women constitute an increasing share of international labour migrants. Having migrated abroad for employment, female workers have become major income earners for their families. This, together with the experience obtained from travelling, living and working abroad, has helped them gain self-confidence and respect from other family members. In this regard, migration positively contributes to the improvement of women’s social status and autonomy.

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BOX 5.4 How Remittances Changed the Face of a Fishing Village in Nghe An Province Over the last fifteen years, Conga Gian commune (Nghi Xuan district, Nghe An province) has transformed from a very poor and remote fishing village into one of the richest localities in the province. As reported by the government official from the village, the “miracle” has come about mainly because of remittances sent by local labourers who have migrated to work abroad. Out of a total of 13,000 village inhabitants, over 6,000 have migrated to work overseas at least once. In 2007, the total sum of remittances sent by the migrant workers was more than VND60 billion or approximately US$4.2 million. Hoang Duc Thanh, a former poor fisherman of the village who is now one of several “billionaires” in Vietnamese dong, happily smiles in his huge, beautifully decorated house which was built with the money remitted by his emigrated children. Hoang says his family is unique. On average, a migrant worker from his village can save and send back around US$1,000 per month. The money is mainly used for daily consumption and building houses, improvement of internal village infrastructure (village roads, bridges), investment (setting up a new business, restaurants, small shops), and education or health services for their children. Source: VietnamNet (2008).

rights are being achieved, promoting the participation of the poor in migration activities remains constrained. While it is officially reported by the government that most of the provinces in Vietnam see some labour migration, very few poor people from remote, rural localities have access to emigration opportunities. According to a report by MOLISA, until very recently, the working poor in economically disadvantaged provinces such as Yen Bai, Hoa Binh, Bac Kan in the North Region, Gia Lai, Dac Lac in the Central Uplands, and provinces in Mekong River Delta, have been entirely excluded from the labour export market. Bac Kan, one of the poorest provinces, only saw its first outflow of 200 workers to temporary jobs in Malaysia in 2003 (MOLISA 2003). At the household level, the picture is far from bright.18 Given the fact that the struggle against rural poverty is one of the primary objectives of the Vietnamese Government’s labour export programmes, the neglect it has shown towards access of the rural poor to overseas labour markets appears to be unacceptable. There are various reasons leading to the low participation rate of the poor. First is financial difficulty. Given the low

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income level of a large proportion of the population in Vietnam (typically less than US$600 per year), the amount required to cover all pre-departure and training costs is too high for most people. Although the government’s programme of financial support began in 2002, poor people may have rather limited access to such support because the actual implementation of the programme often faces technical and procedural bottlenecks. Education and training requirements prevent members of poor households from taking advantage of overseas employment opportunities, as do low skill levels and poor foreign language proficiency. For Vietnamese workers in Taiwan, MOLISA reports that up to 25 per cent of broken employment contracts are due to insufficient working skills or low language proficiency. Health conditions are also an issue for the poor wishing to participate in the international labour market. Poor and low-income households are more likely to suffer from health problems. The survey results have revealed that the main reason for workers breaking their contracts are pre-existing health problems rather than strenuous working conditions or physical tension.

6.2 Contract Violation by Migrant Workers A number of meetings with representatives from companies in Hanoi that send workers overseas revealed that that their biggest challenge is migrant worker desertion.19 The workers who are under contract generally take other freelance jobs without proper justification or warning to their employer. This issue is said to be extremely serious in Japan, South Korea, and Taiwan. It is reported that, on average, the desertion rate, expressed as the proportion of deserters in relation to the total number of Vietnamese migrant workers, is between 27 and 30 per cent in Japan, 20 and 25 per cent in South Korea and 9 and 12 per cent in Taiwan (Dang 2007). This undesirable phenomenon is explained, in most cases, by the underpayment of contractual workers. However, it is also widely recognized among stakeholders that this malpractice is a consequence of a number of other factors and policy issues that require further study and examination.

6.3 Problems of Reintegration and Resettlement for Returned Migrant Workers As discussed earlier, the positive effects of enhanced skills and knowledge obtained while working abroad were not as evident as expected. On

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the government’s side, the lack of a sound official programme for the resettlement of returned labour migrants has often been acknowledged as a crucial policy problem. The survey results have shown that a major proportion of workers who were farmers before leaving for temporary employment overseas cannot find a suitable non-farm job once they return. Therefore, they go back to farm work. In the Thai My commune, of the 40 per cent who were working as farmers before departure for overseas jobs, 32 per cent were employed on farms when they returned. Moreover, some of them had no job at all. Given the low ratio of skilled labour in Vietnam today (around 30 per cent), this directly implies an unreasonable waste of skilled and well-trained people.

6.4 Workers’ Lack of Access to Market Information There were a number of cases in which poor people became victims of unreliable or even fake information on the quality of jobs overseas and living conditions. In practice, poor people, especially those from mountainous and remote areas of the countryside, often have very limited access to proper sources of information and public communication. As a consequence, they can easily become victims of illegal recruiters who intentionally mislead them with promises of easy earnings and a prosperous life abroad. Furthermore, illegal recruitment and bogus information, in parallel with the dearth of support in the recipient countries, often lead to violations in working conditions and contract abuse. Some violations have already been disclosed, for example, in South Korea and Taiwan where contract workers unilaterally broke their labour contracts and escaped to look for illegal jobs instead. Other violations are less obvious and take the form of overwork, poor working conditions, low payment and physical exploitation by employers. In 2005, DOLAB reported that forty-three cases of contract violation had been recorded. This increased to 117 cases in 2006, of which fifty-eight were by illegal recruiters. Records from the Hanoi Municipal Police show that, from early 2006 to mid 2007, there were seventy-one cases of recruiters cheating and manipulating labour export regulations. Around 2,118 victims were involved at a cost of more than VND53 billion (approximately US$350,000).20 These practices have contributed to increased hardship for both the poor migrants and their families. Broken dreams cost them time and resources and, in many cases, lead them further into debt.

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6.5 Informal and Illegal Labour Migration to Countries in the GMS While the reasons for migrating for work are practically the same for every migrant, the way of leaving varies greatly between different groups heading for countries within and outside the GMS. Interestingly, while the majority of migrants heading for countries in East Asia, Europe, or further do so through formal channels, most of the labour migration from Vietnam to the GMS countries is through informal channels as pointed out earlier. The outflow of migrants from Vietnam seeking better employment opportunities in Cambodia, Lao PDR, and Thailand has undeniably increased. The delay in formalizing these labour movements means it is an ever more expensive and unsafe enterprise for workers, particularly those from poor rural areas.

7. Conclusions and Recommendations 7.1 Findings 7.1.1 Intensification of Vietnamese Labour Migration Even though Vietnam entered the Asian and international labour markets relatively late, it has witnessed a huge increase in trans-boundary labour migration, and these international movements are affecting more and more people. Formal migration flows are mainly to traditional labour markets in and outside East Asia. Up to 400,000 people have already emigrated in this way. However, new labour markets in Southeast Asia and other areas have recently opened up, providing prospective migrant workers with new destinations. Still, the number of workers migrating informally or illegally has been estimated to be many times higher. Migration from Vietnam to other countries in the GMS has recently accelerated in response to higher income opportunities and increased labour demand. However, most labour movement in this region have been via informal and sometimes illegal channels. The main ways that workers informally migrate abroad include posing as tourists, under the guise of visiting family, through marriage, or simply crossing borders at unauthorized points. The main destinations of these workers are Cambodia and Lao PDR, and, to a lesser extent, Thailand and the southern provinces of China. Many of the migrant labourers rely on personal connections,

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family networks, and/or employment brokers in order to cross the borders. Informal labour migrants are often unaware of the legislation and culture of the countries they migrate to, and consequently they are vulnerable to violation, arrest, or deportation.

7.1.2 Common Financial Benefits of Formal Labour Migration The main reason that people migrate abroad is for a higher salary, and the subsequent savings and remittances that can be sent home to improve the welfare of their families. Our empirical study indicates that the impact of cross-border migration on household welfare is varied. Remittances from formal migrants in high-income countries clearly help to improve their households’ welfare. It is therefore no surprise that over 60 per cent of returned migrants from these destinations said they would migrate again given the opportunity. It is appropriate to mention, however, that formal migration is found to have very little direct impact on poor households, as very often these households or individuals cannot afford the costs of formal migration. The impact of informal labour migration on the welfare of households is very different as suggested by the results of our empirical research. Informal migrant workers tend to head for low-income countries and a significant number of them end up making a loss. The result is that a remarkable number of migrant households still live in poverty. This explains why some other authors argue that cross-border migration does not have a direct impact on poverty. It is crucial to note that informal migrants are very vulnerable: 36 per cent of the surveyed informal migrants made a financial loss from their time abroad, which means that migration can potentially lead to deeper poverty.

7.1.3 Social Costs The case studies show that migrant workers are exposed to many different hardships and social costs. It is hard to find even formal migrant workers that just work eight hours a day, five days a week; most of them have to work over ten hours a day. The base salaries of formal migrant workers are substantially lower than those of local workers; therefore, they are forced to work overtime just to compensate for the higher living costs.

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The picture is much more severe for informal migrants, who have to work in far less advanced working and social environments. Both formal and informal migrant workers are faced with social costs, but generally the costs are more visible for informal labour migrants. In addition to common costs associated with an absent mother or father, informal migrants often have to cope with drug abuse and physical diseases caused by substandard living and working conditions. For many of them, cross-border migration is seen as a short-term economic activity, just to earn some extra money. Very few, if any, focus on enhancing their skills or finding more effective ways to use their income. The current regulatory and policy framework supports temporary overseas workers and provides them with rights to basic social services. However, in practice, the majority of them do not have adequate access to these services because of the fear of deportation and the lack of available services in the host countries (for example, schooling for their children, health care for them and their family members). Additionally, migrant labourers generally do not contribute to a pension scheme or provident fund.

7.1.4 Opening the Door to Labour Inflows So far, in the international labour market, Vietnam has been a net exporter of labour. Many restrictions have been imposed on labour inflows to protect the country’s domestic labour market. However, this practice can no longer continue. The accelerated process of market integration means that sooner or later Vietnam will have to open its doors to labour inflows from other countries, and the restrictions on international labour flows into Vietnam will have to be removed. However, with only 30 per cent of the workforce classed as skilled, and with an equally low labour productivity, Vietnam appears unready to face the challenge.

7.2 Recommendations As seen, labour export can create gains and positive effects but it also comes with many challenges and threats to workers, especially the poor. It is therefore crucial to identify precisely what can be done to extend the positive and mitigate the negative impacts of labour migration, especially with the use of government interventions. Given the specific conditions

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of Vietnam’s labour export market and policy framework, it is proposed that various measures should be taken soon.

7.2.1 Maximizing the Economic Benefits • Much more decisive efforts should be made to maximize the savings and remittances and their positive impacts. First of all, it should be ensured that Vietnam’s financial institutions encourage the maximum inflow of remittances. New mechanisms or channels should be established for migrant workers to remit their earnings home. For example, it is highly recommended that the state bank provides guidance for the establishment of overseas branches, or expansion of its cooperation with foreign banks, to allow migrant workers to maintain accounts abroad and remit their savings easily. • No significant direct impact of migration was observed by this study on domestic labour employment, and remittances were largely used for everyday expenses. Therefore, it is appropriate to suggest that policies promoting investment should be designed to alter patterns of remittance use. • In addition to the pre-departure training or orientation programmes, more support should be given to migrant workers on how to manage their incomes and savings better. This is particularly important for poor and low-skilled workers. • Legal, language and cultural advice as well as job counselling should be provided to workers to help them understand their terms of contract, rights and obligations better. This will also enhance their awareness of the potential benefits and costs of migrating.

7.2.2 Reducing the Economic and Social Costs First and foremost, the Government of Vietnam must think about how to integrate labour export better into the overall national socio-economic development strategy. The government also needs to develop more effective measures to ensure the quality of working conditions abroad, and to protect the vulnerable against exploitation and abuse. Specifically, the government should: • Help people reduce the fixed costs of migration by facilitating dialogue with the authorities in host countries, and formalizing

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and reducing the costs that poor migrant workers have to pay once abroad. This is especially important for migrant workers in the agricultural and fisheries sectors, which attract high lease fees for land cultivation or fishing rights. Enhance the eligibility and ability to participate in labour export activities of the poor. Make all necessary regulatory changes to ensure the full protection of migrant workers in the development process; secure their access to social services in more efficient, equitable, and financially sustainable ways; improve the access of migrants to banking services; and reduce job application and income remittance costs. Conduct a strategic review of recruitment agents and enterprises, and their compliance with migrant workers’ rights; put stricter controls on brokers and recruitment agencies; prosecute and bring an end to traffickers and recruitment agencies and enterprises violating the laws and regulations, or apply the maximum penalty to all unscrupulous agents. Migration-related information (for example, job opportunities, destinations, registration procedures, access to social services) should be made available at the grass roots level so that local people have enough information to make informed decisions. In many cases, this could help them avoid the problem of information asymmetry or even fake labour market information. The establishment of information points in areas with high emigration rates could be a good option.

7.2.3 Developing a Programme or Policy for the Reintegration of Returned Workers • One of the most critical problems facing labour migrants is the difficulty of reintegration when they return home. At the same time, most migrants come home with better skills accumulated during their time abroad. Therefore, aside from ensuring decent employment for returned migrant workers generally, the Vietnamese Government should promote the fact that the income and knowledge gained by the migrant workers can be effectively and safely invested at home. Given the rapid improvement of the domestic business environment brought about by the implementation of the newly enacted Law on Business and Law on Investment, specific measures for investment opportunities for remittances should be established. Apart from the

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incentives provided to all other investors, more preferential treatment (for example, tax exemption/ reduction, or higher dividends for investments in foreign currencies from migrant workers) should be considered an option. • Vietnam should learn lessons from their labour-exporting neighbours on how to take advantage of the skilled migrant workers when they return home. Introducing some programmes to record returned migrant workers’ qualifications and work experience would facilitate them in finding suitable jobs at home, and should be considered. • Nghe An province has been a good example of how the local community can come together to help returned workers settle back into their local economic and social lives. Lessons from experiences and practices such as this should soon be drawn on, documented, and disseminated to other stakeholders for potential replication. • The concerned government agencies (for example, DOLAB and GSO) and NGOs should work together to improve the collection of information on returned migrant workers for future use. This would involve working out a better sampling methodology and framework to capture the necessary information.

7.2.4 Encouraging Active Involvement of Stakeholders Labour management practices have revealed that meaningful results from the national labour market strategy could only be achieved with complementary action by all the stakeholders from different sectors and levels. In some localities where coordination at both the vertical and horizontal levels has been properly applied, the number of labour migrants has increased, migrant workers have had good contract jobs and abided by labour regulations, and very few serious cases of contract violation have been noticed. This encouraging performance is because in those localities parties such as enterprises, unions, other mass organizations, and NGOs, have actively addressed migration issues alongside the efforts made by the authorities. In Thai My, for example, local authorities and recruitment agencies have both helped to improve the situation of migrant workers. The local authority has maintained strict control of recruiters and middlemen so that the recruitment fee, travel and training costs are billed at a realistic level. The recruitment enterprises have taken the lead in providing accurate, timely, and appropriate information to potential migrants on the costs,

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their likely wages, and working conditions in their destination countries. Unfortunately, these effective domestic practices have not been properly studied, nor have lessons been learned from other countries with high emigration (for example, the Philippines and Thailand) on how to cope with migration related problems. Clearly, there is a pressing need to create more space for policy discussion and consultation. This would help the government understand more precisely the expectations and behaviour of migrant workers, perform its task based on such better understanding, and provide positive incentives and support. Other parties and stakeholders could then provide well formulated corrective actions.

7.2.5 Active Collaboration with Other GMS Governments on Labour Migration Most of the GMS governments have a shared interest in understanding the role of migration in national development better and how it can be facilitated. As a country that exports labour services, Vietnam should be more proactive in bringing in initiatives to accelerate collaboration among GMS governments on labour exchanges within the region. • Vietnam needs greater cooperation with the other GMS countries in order to understand the situation of its nationals working in the region better, and measure the extent, determinants and structure of Vietnamese emigration more accurately. A proper analysis of the social and economic impact of these movements is needed. A better understanding and more accurate measurement of migration would help Vietnam as a labour exporter to document the number of workers emigrating properly, and then to establish a permanent system to manage the migration process. • At the macroeconomic policy level, the Vietnamese Government needs to take measures to increase trans-boundary cooperation and bring it up to the levels already reached with its traditional partners. Bilateral agreements and proactive implementation of MOUs could be a potential strategy. • Another possible area for collaboration within the GMS is the collection of more reliable evidence on and analysis of the economic benefits brought in by migrants. This may include filling data and

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information gaps on labour movements, especially on informal labour flows. These activities may help secure social services for migrants and their families. • As there are many common issues affecting Vietnam and the other GMS countries, a more effective framework specifying minimum procedures, labour codes, labour rights and standards for regional cooperation should soon be brought in to deal with exploitative practices. • Building capacity to develop, enforce and implement new national and subregional policies relating to subregional labour exchange could be a good direction for collaboration in the future. • Sufficient attention should be paid to issues of labour protection. As the Vietnamese Government cannot afford to have a representative in every country hosting Vietnamese workers, the best way to ensure labour protection is to accelerate cooperation with governments and other non-governmental organizations in the host countries.

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Appendix A Labour Immigration Trends in Vietnam Until recently, the Government of Vietnam had maintained strong policy restrictions on labour inflows to lower the levels of immigration. According to government Decree No-105/2003/ND-CP dated 17 September 2003, firms in Vietnam could recruit foreign workers up to 3 per cent of the total work force, with maximum of fifty foreigners per firm. Another requirement was that immigrant labourers were to be highly skilled and professional. Recruitment of skilled foreign workers could only be done where there was a real demand for certain technical tasks that could not be effectively undertaken by Vietnamese workers. The lack of official data prevents painting a comprehensive picture of the current trends of labour inflows to Vietnam. However the 2007 reports collected by MOLISA from the thirty-eight provincial Departments of Labour, War Invalids and Social Affairs (DOLISA), and the management boards of over twenty industrial parks and export zones, allow us to estimate that there are around 34,000 foreigners working in Vietnam. When this is compared with 12,602 in 2004, and 21,117 in 2005, the number appears to be rapidly increasing. Over 50 per cent of these immigrant workers have come from Japan, South Korea, and China. European citizens ranked as the second largest group at 14 per cent. Generally, international workers in Vietnam are highly educated specialists or highly skilled labourers. It is reported that among them, managers or workers at managerial level account for more than a third of technical staff (41 per cent). More than 46 per cent of them hold higher education certificates. In order to meet the membership requirements of the World Trade Organization, the Vietnamese Government adopted new regulations on the Recruitment and Management of Foreign Labour in Vietnam.21 These new regulations extend the array of enterprises or organizations eligible to recruit foreign workers, allow intracorporate labour movements as a form of foreign employment, and allow foreign recruitment for the implementation of economic contracts, trade, finance, banking, insurance agreements, agreements on scientific and technological, cultural, and sport exchanges, and service delivery and service marketing contracts. More importantly, the 3-per cent limit on foreign recruitment was removed. Instead, 20 per cent of the total number of executives, managers, and highly skilled specialists must be recruited from within Vietnam by all enterprises

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or businesses operating in Vietnam. At the same time, the new regulations stipulate that each enterprise with international investment can recruit a minimum of three non-Vietnamese workers for the positions of executive director, director, and chief specialist. The implementation of Resolution No. 34/ND-CP is considered a big step towards opening up the labour market so that highly skilled labour can enter Vietnam.

Notes   1. This study was conducted by the research team co-led by Nguyen Thi Kim Dung and Cu Chi Loi.   2. See, for example, Guest (1998), Djamba et al. (1999), Goldstein et al. (2001), GSO & UNFPA (2005), and Dang (2005).   3. See, for example, Trinh (1998), Dang & Le (2001), Dang et al. (1997; 2006).   4. See White et al. (2000).   5. See Dang (1998).   6. See Dang & Le (2001).   7. For example, the Vietnamese Government is greatly concerned with reducing illegal migration and providing access to health, education, and social protection to legalized migrants. Through the November 2004 Coordinated Mekong Ministerial Initiative on Trafficking, the government has agreed to take common steps to reduce human trafficking.   8. These actors included government officials, labour recruitment and placement officers, and researchers. In particular a number of meetings and contacts were made with representatives from DOLAB, MOLISA, the General Statistics Office (GSO), the Vietnam General Confederation of Labour, and other thematic-related agencies in Hanoi.   9. Decision No-46-CP dated 1 January 1980 by the Vietnamese Government was the first step on sending Vietnam’s technical workers to the former socialist bloc countries such as Eastern Germany, Bulgaria, Czechoslovakia, and the Soviet Union. 10. Vietnam concluded bilateral agreements on cooperation of labour with the Democratic Republic of Germany on 4 April 1980, with Bulgaria on 3 October 1980, with Czechoslovakia on 11 November 1980, and with the Soviet Union on 2 April 2 1981. 11. DOLAB (2007). 12. For example: The state-owned Bank for Agriculture and Rural Development was instructed by the Government of Vietnam to provide a preferential loan of 20 million Vietnamese Dong (VND) or more to each worker going to work abroad with no requirement for collateral or at a very low interest rate. 13. A reverse labour movement from other GMS countries to Vietnam has been less evident so far.

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14. Labour immigration trends to Vietnam are briefly discussed in Appendix A. 15. Initially, the sample included some migrant workers in Brunei. However the quality of the data from these observations was not very good. It was therefore decided not to include them in the sample. 16. Test for monthly income significant difference between nearby and far-away migration groups

Group Obs Mean Std. Err. Std. Dev. [95 per cent

Conf. Interval]

Nearby 100 1432.7 75.95371 759.5371 1281.991 1583.409 Far-away 107 1817.383 93.81446 970.4243 1631.387 2003.379 combined 207 1631.546 62.12637 893.8428 1509.061 1754.031   diff –384.6832 121.6962 –624.6197 –144.7466   diff = mean(1) – mean(2) t = –3.1610 Ho: diff = 0 degrees of freedom = 205   Ha: diff < 0 Ha: diff != 0 Ha: diff > 0 Pr(T < t) = 0.0009 Pr(|T| > |t|) = 0.0018 Pr(T > t) = 0.9991 17. For instance, it has been pointed out that in order to go to work in South Korea, a Vietnamese worker has to pay in total a lump sum of US$1,000 to US$8,000, while the charge specified by the government’s regulations was US$654 only (Vietnam Net 2008). 18. For example, while Thai My commune is reported by many stakeholders to be one of the best cases of involving and organizing poor people to participate in labour exports, the results of the survey reveal that the majority (79 per cent) of the labour force came from households with mid or high living standards and the poor households accounted for only 6 per cent of migrant workers. 19. This was raised, for instance, in a meeting with Nguyen Hong Nam, director of LATUCO, an international labour supply company. 20. For more details, see the website of LOD Human Resource Development Cooperation, at . 21. The regulations were officially promulgated by Resolution No. 34/ND-CP, dated 25 March 2008.

References Dang, N.A. “Vial Tro Cua Mang Luoi Xa Hoi Trong Qua Trinh Di Cu” (The Role of Social Networks in the Process of Migration). In Chinh Sack Di Dan o Chau A (Migration Policy in Asia). Do Van Hoa: Agricultural Publishing House, 1998. ——— and B.D. Le. “Women’s Migration and Urban Integration in the Context of Doi Moi Economic Renovations”. In Migration in Vietnam — Theoretical

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Approaches and Evidence from a Survey. Transport Communication Publishing House, 2001. ———. “Trans-border Migration in the Greater Mekong Sub-region: Vietnam Country Report”. Paper presented at the Mekong Institute Foundation Regional Policy Formation Meeting. Khon Kaen: Thailand, 6–8 February 2006. ———. “Labour Export from Vietnam: Issues of Policy and Practice”. Paper for presentation at the 8th International Conference on Asia Pacific Migration Research Network, Fuzhou, China, 25–29 May 2007. Duc Tung. “Labour Export: Performance and Issues”. Labour and Social Affairs Review, no. 228-229 (December 2003): 13–14. Goldstein, S., Y. Djamba, and A. Goldstein. “Migration and Occupation Change during Periods of Economic Transition”. In Migration in Vietnam-Theoretical Approaches and Evidence From a Survey, Transport Communication Publishing House; also Asia-Pacific Migration Journal 9, no. 1, pp. 65–92. Government of Vietnam. Resolution No. 81/ND-CP on Temporary Overseas Employment”, 17 July 2003. Governor of the State Bank of Vietnam. Decision No. 1380/2002/QD-NHNN on Providing Credit Support to Temporary Overseas Workers”. 16 February 2002. GSO & UNFPA. Vietnam Migration Survey 2004: Major Findings. Hanoi: Statistical Publishing House, 2005. Guest, P. The Dynamics of Internal Migration in Vietnam. Hanoi: UNDP, 1998. MOLISA. Report on Labour Export and Commencement of Implementation of the Decision No. 81/ND-CP on Temporary Overseas Employment”. 17 July 2003. Nguyen, T.K.D. “Making Markets Work Better for the Poor: Labour Exports in Vietnam”. Discussion paper submitted to the ADB-supported MMW4P Programme, Hanoi, April 2004. Skeldon, R. “Migration and Migration Policy in Asia: A Synthesis of Selected Cases”. Paper for regional conference on Migration, Development and Pro-poor Policy Choices. Dhaka, Bangladesh, June 2003. Vu Quoc Huy et al. Trade in Services — Movement of Natural Persons and Human Development (Country Case Study of Vietnam). UNPD Asia Pacific Regional Initiative on Trade, Economic Governance and Human Development and UNTACD/UNDP Global Programme on Globalisation, Liberalisation and Sustainable Human Development. Hanoi, July 2003. Working Group on Contemporary Forms of Slavery, UN Commission on Human Rights. Forced Labour and Exploitation Of Indonesian Migrant Workers. 28th session. Geneva, 16–17 June 2003. World Bank. Labour Migration in the Greater Mekong Sub-region. Synthesis report: Phase 1, July 2006.

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6 Migrants of the Mekong Lessons Hossein Jalilian and Glenda Reyes

1. Introduction International labour migration can be characterized in three ways — as human aspiration, tradition, and necessity. For some people, working overseas where the environment is different and/or where their service is considered necessary is a dream; better earnings may be a goal, but failure to get that does not make them vulnerable. For other people, international labour mobility is a tradition. It is a long established practice for families with cross-border ties and intermingled with other reasons for cross-border movements such as visiting friends, attending social functions and doing favours for relatives. For a great number of people however, international labour migration is a need. It is the only viable solution to realize their basic human right to a decent life and certain freedoms. It is the only panacea to economic and human rights deprivation. GMS worker movements to Thailand typify all three characterizations of international labour mobility but, as can be gleaned in the previous chapters, more so the latter two. Economic reasons have traditionally been considered the dominant explanations for labour mobility. While this book focuses on the economic

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wins and losses from international labour emigration, it recognizes at the very outset the equal standing of non-economic motivations for migration, especially in light of the nature of Myanmarese emigration. There is no single configuration of interests among the migrants. The extent to which net monetary returns are central to a foreign worker can be partially gauged by looking at whether his or her movement is a human aspiration, tradition or need as described above. For the first type of movement, the satisfaction of other wants such as simply the desire to experience something different, or contribute to the development of another country, may count more than the desire for more money. For the second type, doing work across the border may be considered part and parcel of the effort to preserve kinship ties or cultural networks, and not simply as a means to earn a fast buck. For the third type, if the need is largely to overcome economic poverty as in the cases presented in the country chapters, then the financial wins and losses from migration are of central consideration. This provides answers to the perplexing question of why GMS migrants in Thailand can cope with degrading work conditions. If the need is equally or more about escaping severe rights suppression and direct threats to life, then net economic returns may assume secondary importance. This provides answers to the perplexing question of why some movements to Thailand continue even when the net economic returns are uncertain or even potentially negative. Hence, the first key overarching lesson to be mentioned is a repeat of what was emphasized in the first chapter. To think that labour migration particularly in the GMS, is only mainly economic in nature is to assume mistakenly that the issues of importance are only mainly economic and that the solutions to the problems are only mainly economic. Because of human aspiration, tradition, or need, international labour migration is virtually inevitable. From this emerge the basic conundrums of how to contain such movements that are virtually driven by human nature and what rights labour migrants are entitled to. The second overarching lesson to be mentioned here is also a repeat of a finding made in the first chapter, namely that aggressive migration containment policies and punitive measures only tend to push labour movements underground. As for the issue on migrant rights, the principle of non-discrimination has generally benefited regular labour migrants (though even in this case not completely), but its application has so far been elusive for irregular foreign workers despite the progressive nature of relevant international laws, as discussed in the earlier chapters. In the scenario where international

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labour migration is a human need, meaning, that the basic human rights of a person are suppressed in his or her country of origin, and that a very suppressive environment, along with poverty constraint, prohibits one from migrating through legal means, what policy balance can be struck in understanding such human need and the risks associated with it? The third major lesson again harps on the previously mentioned argument that most migrants, regular and irregular, are not criminals, and are entitled to the rights stipulated in the international laws dealing with migration. This understanding benefits destination countries just as much as it benefits sending countries, seeing how international migration and migrant productivity have become vital assets to the former. Contemporary globalization, as tackled in the first chapter, has increased the opportunities for labour mobility, while at the same time heightening its risks. Greater economic integration, more exposure to global developments, and lower transportation, communication and therefore, migration costs have intensified human aspiration and the need to migrate. Economic inequalities and security threats have also been magnified by contemporary globalization. The current spate of globalization has also led to the stronger fusion of migration, security, and crisis management policies. This stronger fusion seems to have resulted in more challenges than opportunities for migrants. The fourth overarching lesson is that as international migration intensifies with contemporary globalization, so do the challenges; how to create and exploit the opportunities of the challenging environment is the conundrum to address. This final chapter fleshes out the overarching lessons mentioned above by specifying a number of key challenges and advancing relevant recommendations in Section 2 below. Some of the problems and recommendations to be mentioned echo those raised in the previous chapters. Section 3 concludes.

2. Challenges and Solutions As mentioned in the first chapter, the number of international migrants in the GMS is expected to increase from 0.61 to 1.67 million between 1990 and 2010. About two-thirds of the migrants are in Thailand; most of them are irregular. In 2005, more than 90 per cent of the foreign workers in Thailand were irregular, registered and unregistered. Subject to the impact of crises, both the expected higher economic growth and ageing population of

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Thailand — therefore the labour market gaps — are projected to increase the demand for foreign workers. The Thai economy contracted in 2009, but is projected to grow again at pre-crisis levels by 2010 (IMF 2010). As for the pull factors, the impact of Cyclone Nargis, the 2010 elections, and the deals made by the government with some small ethnic minority groups in Myanmar, have elicited some change, but nothing fundamental. The Cambodian economy suffered a serious setback due to the recent global meltdown but it is already on the road to recovery though growth will be at a much slower pace compared with the pre-crisis period. The growth of the Lao economy was unfazed by the crisis. What all these imply is that the core-periphery model of intra-GMS migration introduced in the first chapter is expected to hold, at least up to the immediate future. The development divide, the lack of fundamental change in Myanmar’s economic and political situation, and the demographic trends in Thailand, are expected to reinforce both the demand for and supply of GMS migrants. These reinforcing factors will be helped by the planned increase in GMS integration in terms of hard and soft infrastructure linkages. With this impending growth in migration intensity, the challenges that have confronted GMS migration management are expected to intensify and deepen likewise. This chapter cannot possibly catalogue all the challenges and potential solutions. What follows are brief discussions of some key challenges and policy recommendations which echo some of the problems and solutions cited in earlier chapters. Note that such challenges and problems are intertwined. The separate headings and accounts below are simply to facilitate discussion. In reality, an effective migration policy is comprehensive and inclusive in the sense that it appreciates the issue linkages involved.

2.1 Data Scarcity and Irregularities As broached in the earlier chapters, there is a dearth of data on GMS migrants. This situation is not unique to the GMS and the problem is centuries-old. That the problem is worse in relation to irregular migrants is hardly surprising since by its very nature, irregular migration is highly difficult to track. Put simply, it is hard to count those that do not want to be counted. The uncertain status of irregular migrants can also easily lead to classification errors; some of them are mistakenly classified as stateless persons or members of indigenous groups.1 Where data on them

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are available, access to such data has also proven difficult. Statistics on trafficked migrants are even more scant, given the criminal nature of the means by which they enter the destination country. Profiles of irregular migrants in Thailand have been largely based on data gathered during registration rounds and thus cannot be said to be representative of the irregular migrant population in the country (Sciortino 2009). Even less quantitative information is known about migrant worker dependants who are also in hiding, having not been granted official recognition. The fragmented nature of migration-related data is also attributable to the lack of coordination among, and piecemeal execution of data collection by government agencies and other non-government institutions engaged in migrant monitoring. Obviously, the lack of human and physical resources of said entities has hampered data collection efforts. Most of the time, migrant monitoring is just one of the myriad of tasks dealt with by the GMS government bodies concerned. On the other hand, nongovernment initiatives are, in reality, dependent on donor fund availability; budget constraints and occasional tension with the government has limited the reach and comprehensiveness of NGO efforts. Given problematic data on migrant numbers and profiles, statistics on other related variables such as, remittance, income, and expenditure pattern, and health and education access, are unsurprisingly also scarce and unrepresentative. Furthermore, differences in data collection methodologies, definitions, scopes, and reporting standards have hindered comparison and compilation into a centralized database of whatever national data on labour emigrants and immigrants are available.2 The lack of formal bilateral and subregional information sharing mechanisms, not to mention technological and human capacities, has also held back progress in cross-country data gathering and undermined the spirit of coordination provided in the bilateral MOUs. Obviously migration research, policymaking, management and dialogue suffer greatly from the scarcity and inaccuracy of migrationrelated statistics. To fill in the most basic data gaps, five short-term, low-cost measures have been proposed and can be followed by the GMS countries as part of their individual and group efforts. What is especially appealing about this five-step strategy is that it can be undertaken within existing national legal and administrative frameworks. Hence, it does not depend on standard harmonization that has proven to be politically sensitive and would take a long time to attain. Advanced by the Centre for Global Development (CGD), these steps are as follows: inclusion of

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three basic questions in population censuses (on country of citizenship, country of birth, and country of previous residence); compilation, release, and exploitation of existing administrative data (for example, data on visas, work permits, consular registers, apprehended irregular migrants); compilation and centralization of labour force survey results; provision of access to anonymous microdata (for example, basic demographic data on individual migrants); and inclusion of “migration modules” (consisting of very few questions) in existing household surveys (CGD 2009). Given the prevalence of informal cross-border movements among the GMS countries, bilateral and regional collaborative efforts are undoubtedly paramount to any strategy meant to improve migration data. Collaborative data gathering and information sharing must be executed at both the formal (track 1) and informal levels (track 2). Track 1 efforts can be undertaken within the framework set out in bilateral MOUs and the GMS Programme. Based on the way they are worded, the MOUs between Thailand on the one hand, and the GMS-3 on the other, do have provisions on information exchange. However, not only do these provisions limit the exchange on illegal migration, they say little about the institutional framework and procedure by which this work is to be done.3 This will have to be changed if the task is to be taken seriously. Meanwhile, the human resource development thrust of the GMS Programme has, until recently, given priority attention to health issues at the expense of other pressing challenges such as those presented by migration. The Programme’s Strategic Framework and Action Plan for Human Resource Development emphasizes the need for harmonization of regulations and procedures, mutual recognition of professional skills, and improvement in migrant access to health and education (ADB 2009). These measures are longer term, however, and because of their sensitive and rigorous nature, regional efforts may in the end be limited to policy reviews and recommendations. Two areas in which the programme can actually make concrete and immediate progress relate to its target of establishing labour market information systems and strengthening the statistical capacity of national statistical offices. These measures would greatly benefit from the adoption of the five steps mentioned above. With the increasing decentralization of migration management, capacity building at the subnational level should not lag behind. Efforts at track 2 can well complement track 1 actions. At the informal level, non-governmental organizations and international institutions are the driving force. Known organizations that are engaged

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in migrant monitoring include CARAM, the Mekong Migration Network, the Asian Migrant Centre, and the Migrant Forum in Asia. These must be supported on the financial front. Collaborative research undertakings, such as those done under the DAN partnership, are also of crucial importance and must be sustained.

2.2 Greater Cohesiveness and Integration into National and Subregional Plans of Migration Policies Migration policies remain crude, inconsistent and /or not well integrated into national plans as pointed out in the first chapter. In the case of Thailand, its key national economic and social development plan misses the necessary linkage between its target of economic restructuring and higher competitiveness on the one hand and the role of migrant workers in fulfilling this target on the other. Ministerial policies have been noted to be at odds with one another, with contradictions resulting from differences in agenda. Because of the implications of illegal immigration for national security, Thailand’s Ministry of Interior appears amenable to a more tolerant migrant registration policy in order to entice irregular migrants to come forward. The country’s Ministry of Labour has been veering towards just the opposite, that is, tougher registration and work permit issuance policies (Rukumnuaykit 2009). Cambodian and Lao migration management, as described earlier, remain at the infancy stage. Migration is barely mentioned in Cambodia’s five-year socio-economic plan. The bilateral MOUs with Thailand have been the primary anchor for the two countries’ migration management, in relegation of the majority of migrant workers from said countries who are irregular and who shun the registration rounds in Thailand. Vietnam, by contrast, is known for its aggressive labour export strategy beginning in the 1980s and, with this, its relatively developed labour export institutional and legal frameworks. In 2006, it enacted the Law on Overseas Vietnamese Workers which, as mentioned in the Vietnam chapter, formally institutionalized labour export. However, the country’s current five-year national socio-economic development plan lacks consideration of the fact that migration is a cycle. The link between migration and long-term development strategies is also weak (Dang 2008). The obvious imperative in relation to this challenge is to enhance the incorporation of migration into national development blueprints. With the

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multitude of pressing tasks confronting the GMS economies however, this is easier said than done. The role of “champions” and donors are central in realizing this objective. Pressure from select people from the legislative and executive arms of the government who have clout could well help in increasing the attention given to international migration. Of course, pressure coming from the outside, particularly from NGOs with work relating to migration, should complement this. Given that overarching development plans are done in consultation with donors (or even drafted by their hired consultants), the influence of donors in assigning a greater role for migration in development strategies counts. The imperative, however, does not stop at incorporation; of equal, if not greater, importance is rightly determining and reflecting in the plans the linkages between international migration and development. This determination depends on a pluralistic understanding of international labour mobility. As explained in the previous chapters, the relationship between migration and development is not straightforward. The integration of migration in national strategies appears to have been made in consideration mainly of the short-term gains. As far as labour export is concerned, migration has been assigned importance primarily because of its contribution to employment creation and the remittances that result from it. As a consequence of the rather short-sighted view of the gains and losses ensuing from labour emigration, more focus has been devoted to sending migrant workers out and not so much on migrant protection and return. It must be noted that, as pinpointed in previous chapters, labour export itself represents just the beginning stage of the migration cycle. Furthermore, labour export’s impact on macroeconomic development and poverty reduction is conditioned by such factors as its effect on human capital formation, the brain drain, Dutch disease, remittance use, diaspora links, and others. As far as labour import is concerned, the direct economic contribution of foreign workers has been the chief basis for its reflection in national plans, but even this has been undercut by security considerations. Again, to appreciate the greater function that labour immigration could play in development requires an understanding of the relationship between the two, including the indirect economic contributions of guest workers and how the protection of migrants’ rights can boost their productivity, significantly needed in sectors suffering from labour market gaps. Once a clearer, bigger role for labour migration is defined in national plans, micro policies and regulations can then aligned. Migration is also weakly integrated in subregional plans. As mentioned above, migration hardly figured in the human resource development

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component of the GMS Programme until recently. This may have been a reflection of the situation at the national level, but subregional efforts can take the lead in more progressive migration policymaking in several aspects. These include standard and contract harmonization, but concrete progress is perhaps more achievable in the area of human capacity building and creation of GMS labour market information systems. Greater integration of migration policies in GMS plans also necessarily means that the linkages between such policies and others, not least those on infrastructure and communication networks, must be taken into account, given the crosscutting impacts of strategies in other policy areas.

2.3 Low Participation of the Poor, Minimization of Financial Costs There is a baffling paradox involving emigration from the poorest countries. Following the notion that development differentials spur migration, it is expected that the poorest nations would have emigration rates that are higher than those of better-off countries. However, this has not been necessarily the case. Emigration from upper-low and lower-middle income countries has generally occurred in greater numbers. The so-called Migration Hump Theory (Box 6.1) explains the paradox of how poorest countries experience less emigration by referring to the poverty constraint on international mobility. Applying this at the micro level, poorest individuals and households are noted as less able to engage in migration activities due to the same poverty constraint. Going overseas is an expensive venture that these individuals and groups are hard pressed to afford. This reality prevents the poor from resorting to migration as an alternative livelihood strategy, and compromises the aim of maximizing the poverty impact of international migration. The poverty constraint, at the minimum, refers to the inability to pay for the financial costs of migration. These costs, as shown in the previous chapters, are much higher for regular migration relative to irregular migration. Two long-advanced remedies to this problem are improving the poor’s access to credit, and reducing the fixed costs of migration. In transitional economies, formal and informal credit markets coexist with each other. In poor rural areas, the demand for and supply of informal credit are greater. A well-known reason for this is that informal lenders are able to overcome more the problem of asymmetric information. This

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Box 6.1 The Migration Hump: Nexus between Migration and Development There is a paradox in the emigration rates of poorest countries — they have been lower than those of the upper-lower and lower-middle income countries, overall. Why has this been the case? A natural corollary of the thesis that economic differentials mainly drive migration is that countries at the underside of economic development, hence have been suffering from the widest economic disparities, must have a greater exodus of migrants. Apparently then, the experience of poorest countries raises doubt about the existence of a unilinear, unidirectional relationship between migration and development, based purely on the tenets of neoclassical economic theory and ignoring time effects. The migration hump theory seeks Figure 6.1: Net Migration Rates of Select to shed light on the foundations of Southeast Asian Countries, Number of this paradox. In simplest terms, it Migrants per 1,000 Population posits that migration rises steeply at the early stages of development as economic restructuring takes place, wealth increases and enables people to overcome the poverty constraint on emigration (that is, their inability to finance the associated investment and bear the associated risks); it then gradually falls at the later stages of development as economic differentials decline. The trajectory of migration therefore follows a J-curve or an inverted U-curve. This theory Source: IOM Online Country Profiles. is said to have been corroborated by past and contemporary migration trends. Countries such as Spain, Ireland, Greece, and Malaysia appeared to have come past the hump as they evolved into net labour importers. Interestingly, the experience of Argentina also tentatively lends proof to the flipside of the trend, that is, the deterioration in development and resurgence of differentials shall transform a net immigration country into a net emigration one. Based on the theory’s precepts, development in sending countries may be the only real solution to stopping unwanted migration.4 Household-level findings, including those of the GMS country chapters included here, give strong support at least to the theoretical proposition that poverty impedes people’s movement from the poorest countries. The evidence for the entire migration hump theory is far from solid, however. Contemporary globalisation, which has considerably brought down the costs of transportation and communication, especially cross-border,

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poses a challenge to the tenets of the theory. Data unavailability precludes checking if the case of GMS migration, which is mostly cross-border, corroborates this trend. Data on net migration (immigration minus emigration) show that overall, emigration is stronger than immigration in the GMS-3 and Vietnam, all considered low-income countries, compared with the cases of Thailand, the Philippines, and Indonesia, all classified as lower-middle income countries (Figure 6.1).5 The characteristics of emigration from the poorest countries, say in Sub-Saharan Africa, also inform us that the linkage between development and migration is far from simple.

problem explains the collateral requirement, which cannot be met by many of the poor households, and credit rationing by formal lending institutions. The informal creditors’ greater knowledge of borrowers due to kinship, patronage, and other social ties, as well as the other contractual agreements that they can arrange with their clients enable them to address the problems of moral hazard and adverse selection better and extend credit more quickly and on more flexible terms, though generally at a higher interest. Due to their direct and indirect ties with informal lenders, rural borrowers trust them more. While this is not the place to focus on this topic, it does merit slight elaboration to substantiate the recommendation. Informal financing has proven efficient, but only in limited geographical areas and on limited low-volume loan services; this at least justifies the importance of extending the reach of formal credit markets in rural areas. However, stamping on informal credit will only further restrict the credit access of the poor, not that it can be done as experience has shown. Government financial support programmes help, but — dependent as they are on budget and aid availability — are not sustainable. Also, they have tended to benefit the richer households more. One alternative strategy is to forge and/or strengthen the links between the formal and informal credit markets. A three-tiered approach has been proposed to actualize this. The first phase consists of formal bank lending to semi-formal lenders (that is, non-bank financial institutions, such as savings and loan companies, credit unions). The second phase consists of semi-formal institutions lending to informal creditors (for example, credit cooperatives, savings and credit associations). The final phase consists of these informal agents lending to the end users (ECA 2002). Two other strategies are the adoption by the formal credit institutions of microfinance characteristics, and the formalization of non-

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institutional creditors; however, these strategies are unlikely to achieve significant success. Institutionalized creditors will lose their competitive advantage if they delve more into microfinance while there are too many, not to mention small-time, informal lenders out there, making formalization unviable and unworthy. Reducing the fixed costs of migration is a recommendation raised in all the previous chapters. Since there are fixed costs incurred in both sending and receiving countries and broker fees represent the biggest cost, this mission would entail collaborative effort. On charges from the government side, passport and visa fees are the key costs. What is problematic is the lack of transparency as to how these fees are arrived at and where they end up. Such information would help in detecting how the costs could be trimmed down without preventing full cost recovery. It is also needed as a basis for cost studies that could and should be made. Generally, streamlining the process, which could cut official execution costs, and eliminating hidden charges, would do much in reducing the costs not only of passports, but also of other alternative travel documents. The utility and practicality of this strategy are validated by the finding that passport costs are positively associated with poor governance, as represented especially by the quality of democracy (McKenzie 2005). The chapter on Cambodia, considered to be a country with poor governance, raises strong objections to how passport costs in the country are driven up by informal payments. The Cambodian government approved a much lower charge for aspiring migrant workers but this is tied up with a very long processing period. Hence, many opt for the quicker process which costs about US$150. This is approximately 25 per cent of the per capita income in 2007 and way above the discovered median passport cost of US$39 in other countries.6 Simplification of the process would also cut down the processing time, the documentation requirements, and the transportation costs. This would be welcome news for the many aspiring migrants from the provinces who have to travel the long distance to the capital several times to process their applications. The setting up of one-stop-service or single windows in more areas with high migrant intensity and with representatives from the embassies of destination countries would also considerably help achieve this end. One development that needs to be mentioned because of how it has driven up migration costs is the increasingly popular use of biometric passports (e-passports) and visas (e-visas). The key intention behind

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adopting biometric identification is to simplify the process and enhance national security. The issue goes farther than this, however, given the technological implications for the security of passport holders, citizens’ right to travel and privacy, and the affordability of passports. Again, the Cambodia chapter notes that the introduction of e-passports in the country raised the passport cost by about US$20. It is not clear whether or not some testing of the various technologies available, which affects the remittance cost,7 and assessment of the impact on processing time, has been done. Once again, there is also a lack of transparency with reference to the costing structure or the relevant contract biddings. How to bring down broker fees is discussed in the following subsection. The poverty constraint on migration does not singularly pertain to the poor’s financial ability to cover migration costs, however. As rightly argued in the Vietnam chapter, the poor’s lower level of education and lack of foreign language proficiency, together with their weaker health status, hinder them from fulfilling migration requirements. Moves such as increasing vocational training opportunities for the poorer groups would help address these deficiencies, but their resolution ultimately rests on country health and education strategies that are beyond the scope of this chapter. Hard-pressed by poverty constraints to resort to using migration as an alternative livelihood strategy, the poor are pushed further into the poverty trap.

2.4 Regulation of Recruitment Companies, Increasing Formal Migration The private recruitment industry is multilayered. In terms of legal standing, it is run by legal, quasi-legal and illegal recruiters. In terms of structure and administration, the players can be categorized as formal/institutional, quasi-informal/quasi-institutional, and informal/non-institutional brokers. Formal and legal recruitment bodies largely refer to those that are officially registered and have a licence. The quasi-legal, quasi-informal, and informal players include the subcontractors or the subagents typically hired by the established recruitment agencies and the family members, relatives, and other social contacts who help broker the migration of people within their social group. They also include the smugglers who, by definition, recruit and transport migrants illegally, but with the migrants’ consent. Illegal recruiters mainly refer to the traffickers who, by definition, are different

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from smugglers in that they coerce people into migration and towards a state of exploitation. With globalization demanding and making a broader search for highly mobile workers possible, private agents have assumed an ever increasing role in both internal and external recruitment. The important role that private agents play in enabling international migration, thus helping households to rise above poverty and countries to incur benefits in the process, certainly warrants support of the industry’s development. They can address the problem of asymmetric information better, smooth and facilitate the application process, and help match job demand and supply. However, as criticized in the previous chapters, the fees they charge can be so high as to be prohibitive and, especially, but not limited to the case of illegal recruitment, they have been associated with fraud, abuse, and other migrant rights violations. The GMS countries can continue to learn from the experience of major sending and destination countries such as the Philippines, which has one of the most sophisticated regulatory frameworks, as well as from guidelines such as those set by the ILO. The clandestine nature of trafficking and smuggling makes it extremely difficult to clamp down on such activities, not that this strategy has proven to be all good, given that clampdowns have only forced migrants to go further underground and use riskier means to migrate. Formal recruitment will have to be made more affordable and speedier to increase its appeal to migrants. In accordance with international practice, ceilings on broker fees were imposed in the GMS countries. However the regulation should not be as simple as this. Fees must be differentiated according to the job being applied for. Because of the relatively young recruitment industries in Cambodia and Lao PDR, the Philippine policy banning the charging of placement fees for some job types (for example, domestic service) cannot yet be afforded. Regardless, the fees levied for lower-paying jobs must also be lower than the charges for other occupations. Another important thing to stress is that not only must the charge on migrant workers be carefully monitored, the charge on employers must also be the subject of regulation (Agunias 2009). The centrality of this point is obvious in light of the fact, as raised in the previous chapters, that the cost of intra-GMS migration is often borne by the employers or the recruitment agencies, but only to be later deducted from the migrant workers’ salaries. If stopping employers or agencies from recouping the expenses will significantly affect the competitiveness of the

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GMS workers, relative to workers from other states, then written statements about the deductions and the consent of the workers to such deductions must be required, as mentioned in the ILO-recommended guidelines (ILO 2008a). Regulation must also require transparency on cost structuring, not least to increase competition among the recruitment agencies and enable the formulation of sound and workable decisions regarding fee caps. A regulation that balances the interest of the private recruitment industry and migrant workers carefully sets the financial requirements for registration and licence acquisition. Notably, the Cambodia chapter raises the problem of what it considered as too high a deposit requirement (the terms of use and reimbursement of which are vague) for interested brokers in the country. The Philippine case is a good model as to what the financial prerequisites to licensing should be. However, required payments should depend on the maturity of the industry and the emigrant profile of the country in question. Currently, the Philippine Government requires a minimum capital, registration fees, bank deposit, and surety bond which, excluding the registration fees, totals at least PHP3.1 million (about US$67,400).8 The Government of Cambodia, whose emigration stock is undoubtedly much smaller than that of the Philippines and the majority of whom are in nearby Thailand, requires a deposit of US$100,000. The escrow account and the bond should be earmarked to cover any claims arising from violation of licensing conditions, employment contracts, and other relevant legal claims. Two interesting systems to adopt are the establishment of in-house processing facilities in qualified agencies, subject to regular audit of the use of such facilities in the Philippines and the demerit points system in Singapore. For the latter system, a recruitment agency that violates any of the relevant rules and regulations will earn demerit points; a total of twelve demerit points at any time results in inclusion in a surveillance list; any more violation will result in the revocation of the licence (Migrant Forum in Asia 2009). Compliance with regulations must also be sought from the subagents used by the recruitment agencies. Along with the agents or employees directly hired by the agencies, their names and employment must be officially reported. Another popular recommendation to prevent fraud and abuse by brokers is the standardization of employment contracts. Obviously, the ideal situation is for model employment contracts to be models that are legally enforceable, and where the adoption of which is not simply left to the choice of the agencies. Legally required minimum conditions

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should include provisions on minimum basic and overtime pay, regular working hours, leave benefits, worker compensation, emergency medical care, valid grounds for termination and a dispute settlement mechanism (ILO 2007). Protection of basic migrant rights once in the destination countries is exceptionally difficult given that it entails persuading foreign governments to submit to the laws and regulations granting such rights and align employer activity in their countries with such laws and regulations. Apart from authorizing only employment agreements based on the model contract, another ingenious way of helping to ensure employer respect for migrant rights is through assigning to recruitment agencies with the role of “co-employer”. The Philippine Government has done this by enforcing the concept of joint liability, that is, in case of employment contract violation by the employer, the migrant worker can seek redress from his or her recruiting agency (Agunias 2009). Educating migrants about the recruitment process and cost, employment terms, their basic legal rights, and the overall working environment and culture in their destination countries is also one sure-fire weapon against migrant abuse. Pre-departure training and information dissemination, which should be shared responsibilities of the government, recruitment agencies and non-governmental organizations, comprise vital components of migrant education. Borrowing from the experience of the Philippines and Sri Lanka,9 predeployment training must be mandatory. Training or attendance certificates must be a prerequisite to emigration clearance. While this training must entail common elements, it should also be differentiated according to work sector, region of destination, and even the literacy level of the trainees. Training for more vulnerable work groups, such as domestic workers and entertainers, and certain key markets can be undertaken by the government, while non-occupation specific training should be assigned to other providers, recruiters and NGOs alike, who should have passed government accreditation beforehand. Given the resource constraints on all parties, this burden sharing is critical. Training modules to be used should have been approved beforehand by a committee consisting of representatives from different stakeholder groups. It should be ensured that these modules are followed and delivered well by the providers. The affordability of pre-departure training is unquestionably important. Government-run training courses ought to be free, but private providers may be allowed to charge a capped amount. In the Philippines, the fee is capped at PHP100 (US$2.2) per trainee. One feature of interest

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from pre-deployment training in Sri Lanka and the Philippines is how the migrant households, the spouses of migrant workers in particular, are invited to participate in separate training as well. As predeployment training programmes in the GMS become more established, they should permanently integrate this feature. Borrowing from the experience of Sri Lanka and the Philippines,10 information campaigns at the grass roots level that are conducted in both sending and receiving countries promise good results. Face-to-face interventions and radio programmes are deemed more effective than television shows and online broadcasts, though these too are used, given the limited access of poorer groups to such media. Abroad, the engagement of not only embassies/consulates, but also diaspora associations and resource centres has proven to be most helpful in ensuring that migrant education continues in the course of their employment. By its very nature, illegal recruitment eludes government regulation. Containing it requires the twin tasks of making formal recruitment more affordable and strengthening surveillance, border control, arrests, and prosecution. The setting up of easily accessible complaint mechanisms for aspiring and actual migrants would allow quick identification and apprehension of illegal brokers. NGO and government representatives could jointly handle these complaint mechanisms. By doing so, the process would better earn the trust of the migrants in its objectivity.

2.5 Improving Registration The Thai Government has officially announced that the registration round which ended in February 2010 is the last. Appeals have been made for a change in this decision. It is hoped that registrations, at least for the benefit of the remaining migrants in Thailand who are unregistered and/or without work permits, might still be conducted. Special registration schemes in border provinces must also continue. Increasing the reach of registration depends significantly on employer cooperation. Migrant education about the registration and nationality verification process largely depends on the information given to them or withheld by their employers. The dissemination of information, which should be translated into the migrants’ languages and presented in an easily understandable way, can only reach the end-beneficiaries with active participation of employers. On top of this, many foreign workers rely on their employers to advance the associated

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costs, as mentioned in the previous chapters. The enforcement of the law, which prohibits the employment of aliens without work permit, must be strengthened; doing this involves the administration of carrots just as much as sticks. The sticks include making not only errant employers, but also the law enforcers who accept bribes in exchange for non-arrest of said employers, liable under the law. The carrots include affordable registration and maybe even special processing facilities and migrant training for big firms with high migrant dependency. Special discounted fees and increased quotas could also be granted to consistently compliant employers. Another improvement that must be done is bridging registration policies with realities on the ground. The portability of work permits, in terms of locality of employment, employers, and jobs, is central to this strategy. Deciding on the degree of portability entails weighing its pros and cons. Tying a worker to a single employer increases his or her vulnerability to abuse, while confining a migrant to a single locality prevents worker rotation. These raise the need for portability. However, absolute portability works as a disincentive for employers to hire migrant workers, knowing that they can just as easily lose them. It could also defeat the objective of a better fit between the supply of and demand for migrants. A workable measure, therefore, would be to allow portability of work permits within a defined job category and after a certain period of time, perhaps just about enough for employers to recoup some of the costs arising from alien employment (Ruhs 2005). Another outstanding policy at odds with the situation on the ground is the limitation of employment duration to an initial two years and then another two years, subject to payment of renewal costs. Many migrant workers in Thailand have intended to stay longer than four years, with their dependants even, and have been willing to risk the change in their status to irregular rather than return home. In light of this, lengthening the validity of work permits must be considered. Pushing this further, it is best to accept, rather than deny, that some settlement, including of migrant children and spouses, is unavoidable (Martin 2009) and even beneficial. The benefit can be exploited by carefully planning the integration of at least regular migrant children into Thai society and the economy. With the naturalization of migrant children not allowed in Thailand, the possibility of broadening residence opportunities must be pondered on (Sciortino 2009). A huge issue that cannot evade attention pertains to the status of irregular Myanmarese workers in Thailand. For fear of being arrested and

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persecuted when they return to their homeland, many of these workers have shunned the nationality verification process. There is certainly no easy solution to this problem which is highly politicized and concerns affairs of a sovereign that happens to be a reclusive and totalitarian state. As argued, the root cause of the Myanmarese emigration problem is Myanmar itself (Hall 2010). The Thai Government and human rights activists, however, should maintain their watchful eye and pressure on the Myanmarese Government to keep true to its earlier pronouncement that the national verification process will involve “no tax, no search, no arrest” (IOM 2010a).11 Reports to the contrary must drive the Thai Government to reopen the negotiations on where the verification can take place. A trilateral commission consisting of Myanmarese, Thai, and third-party representatives must be created and mandated to collect reports and evidence of violations of the policy. The establishment of information and complaint centres on the Thai side of the border will also help considerably in information dissemination efforts, hearing out and addressing alleged breaches of the policy, and collecting evidence that the trilateral commission can make use of. Already, there have been scattered reports of returning migrants having been arrested and incarcerated. Another untoward development that sprang out of the execution of the verification process has been the proliferation of unregulated brokers that prey on desperate migrant workers. Exorbitant fees have reportedly been charged, with anecdotes revealing payments as high as 10,000 to 12,000 baht (US$294 to US$353) (Fry 2009).12 With the thirteen-step process being so complex and with no clear-cut detailed information at hand, Myanmarese migrant workers have been left with little choice but to utilize broker services. Myanmar’s Government must be pressured into imposing fee caps and subjecting brokers to licensing requirements and other relevant regulation. Earlier arrangements providing for a ceiling of THB5,000 on fees (IOM 2010a) must be revisited and advanced. As aptly stressed in the first chapter, Myanmarese emigration has economic and non-economic undercurrents. Following this, the solution to irregular Myanmarese worker movements has economic and non-economic angles. Barriers to the nationality verification process are really less about the financial cost and more about fear for the security of the migrants and their families, many of whom are from Myanmarese ethnic groups with a history of revolting against, or being persecuted by the ruling junta. The politicization of the nationality verification process is evident in the fact that it explicitly excludes Myanmarese Muslims.

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2.6 Maximizing the Benefits from Remittances Remittances have direct beneficial impact at the household level, as discussed in the earlier chapters. To capitalize fully on this benefit and ensure that remittances likewise become a powerful force for macroeconomic development, a wide array of interventions, both government- and privateled, have been proposed, comprising a rich bank of strategy possibilities that the GMS economies could consider and duplicate or customize to fit their circumstances. As revealed in the previous chapters, the remittance behaviour specifically of GMS-3 migrants in Thailand mirrors the behaviour of migrants from other developing countries. The majority of remittances are sent through informal channels and used for consumptive purposes. The financial sector in the GMS-3 countries is also underdeveloped and the money transfer industry, uncompetitive. These and other commonalities stress the wisdom and practicality of the GMS economies learning from international experience and the recommendations crafted for developing countries as a whole and on a case-by-case basis. Two things need to be mentioned before anything else. First, poor remittance data have definitely burdened strategy formulation. Initiatives that have been targeting this problem must carry on. Second, taxation of remittances must be avoided as it would only jack up the costs of formal transfers and heighten the appeal of informal transmission channels. This measure, originally meant to exercise more control over remittance use, proved unsuccessful and was eventually abandoned in countries such as Sri Lanka and India (Agunias 2006).13 Formalization of remittance transfers is definitely the right policy objective; however, simply clamping down on the informal remittance industry without having laid the ingredients for successful formalization can only stifle remittance flows and increase the risks and costs for irregular migrant remitters. Formalization is a cause of remittance cost reduction, as well as its effect. For many of the poor migrant households, remittances sent through the formal channels also serve as their entry point to the formal financial sector and their array of financial products. They are thus instrumental to deepening formal financial intermediation, specifically at the lower segment of the market. Formal remittances also lead to greater savings and investment. Unlike informal remittances that are transacted on a cash-to-cash basis (or in kind) and, therefore, most likely to be consumed, formal remittances can end up as deposits and therefore

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lend themselves for more profitable investment elsewhere (Ambrosius et al. 2008; Ratha 2007). From the security perspective as well, this having gained prominence with the 9/11 attack in the United States, and the enforcement of anti-money laundering and counterterrorism financing regulations, formal remittances can be subject to greater scrutiny and are thus safer, so to speak. Formalization of remittances is a function of three tasks, namely lowering costs, increasing access, and offering “migrantfriendly” financial services. These tasks can in turn be achieved by greater “bancarization” and competition in the money transfer business. The remittance market is run by bank and non-bank players operating at the first mile, intermediary and last mile stages of the remittance transaction (Suki 2007). It has been traditionally dominated by money transfer operators such as Western Union. Increasing competition in the industry requires engaging more banks and non-bank players and forging linkages among them and the money transfer companies. Bancarization can significantly contribute to remittance cost reduction. Because of their dominant access to payment and settlement infrastructure, greater international presence, and right to undertake large foreign exchange transactions, banks are capable of offering remittance services at a lower cost. Allowing or increasing the presence of banks from sending countries in receiving countries is a huge, but very helpful step. Remittance companies must be encouraged to tap more banks as remittance agents. This must be complemented by the replication of interbank collaborations that have been seen such as that between Cambodia’s ACLEDA bank and Thai banks (Deleen & Vasuprasat 2010). Inviting in non-bank players other than money transfer operators such as microfinance institutions, credit unions and cooperatives, savings associations, and postal offices, is also a much-needed measure that must be based on the understanding that there are significant differences between the banking and remittance industries. For instance, banks target high networth citizens and long-term high-value financial services; a large volume of remittances of modest amounts are sent by low net-worth citizens, and represents one-time activities. What this implies is that the remittance licence must be distinct from a banking licence (Ratha & Riedberg 2005). Non-bank players interested in entering the remittance market must not be required to get a full-fledged banking licence. Such a condition is a strong barrier to entry. Licensing requirements, such as those relating to capital and bonding, must be relaxed14 and, even before this can done, regulations barring non-banks from undertaking foreign exchange transactions and

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accessing payment and settlement systems, obviously need revision. Lao PDR must rethink its existing ban on foreign currency issuance by private financial institutions (Deleen & Vasuprasat 2010). Encouraging entry of non-bank players, which often have greater presence in the rural areas or the last mile than banks, is also an effective measure to enhance access to formal transmission channels. Post offices, which not only have nationwide presence, but also are more known and therefore likely better trusted by rural people, stand to become effective remittance providers. Increasing partnerships among bank and non-bank players is another ingenious strategy that exploits the strengths of the different remittance providers. For example, at the first mile and intermediary stages, banks in the origin and destination countries can coordinate the remittance through interaccount transfers; then, at the last mile, the banks in the sending country can coordinate with non-bank agents and networks for the remittance payments to rural residents. If non-bank players are to match remittance companies and banks in performance, they, however, will need assistance in acquiring the necessary technology and management expertise on top of benefiting from the regulatory changes mentioned earlier. Donor technical and financial assistance in this case are needed. Another popular recommendation to increase migrant access to the formal remittance market is the acceptance of ID cards as documentation for opening bank accounts and or simply sending remittances through banks. The Mexican consulates in the United States are known for their practice of issuing ID cards called “matrÍcula consular” to Mexican immigrants. A significant number of banks in the United States accept these cards as an identification document (Ambrosius et al. 2008). This practice has not been without controversy as it does not discriminate between regular and irregular immigrants. Going back to the argument presented in the first chapter, however, most irregular migrants are not criminals. Significant formalization of remittances would not materialize if the right to remit is strictly conditioned on legal status. Migrant workers in Thailand have been allowed to open bank accounts with access to the ATM and the Visa payment system, but subject to presentation of their work permits or official identification letter issued by the Thai Department of Local Administration (Deleen & Vasuprasat 2010). Increasing competition in the remittance industry additionally entails commanding greater transparency in pricing. Even in high-volume remittance corridors, there has been scarce comparative information on remittance prices. There is even less

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information on how the fees and foreign exchange spreads, the two main components of remittance costs, are set. Getting this comparative pricing information should be one aspect of the GMS collaboration on establishing information systems. Capturing more of the remittances in the underground market also requires luring informal remitters with user-friendly services. Technological progress has made this task more feasible and, indeed, the use of such innovative products as duplicate cards (cards with the same account numbers) and money transfer by mobile phone has quickly become very popular. WING, which was launched in Cambodia in 2009, offers mobile banking services, including internal money transfer by mobile phone (Firpo 2009). Such initiatives are hoped to progress to allow transfer of international remittances. To attract more informal remitters, remittances can also be considered as the basis in credit rating or as loan collateral. Investments financed by remittances can also be channelled to such projects with high and direct impact on the migrant clientele, such as migrant housing.

2.7 Migrant Return and Diaspora Links One of the notable findings common to all the country surveys is that many migrant returnees land the same job they had before, chiefly agricultural. This is a waste of the improved and new skills acquired by the migrant workers while overseas. Migrant contributions upon return, which come in the form of human, financial and social capital (Ammassari & Black 2001), have been mainly attributed to high-skilled migrants. The benefits from diaspora links have also been chiefly considered with high-skilled workers in mind. However, these gains also arise from low-skilled migrant return and diaspora networking. Albeit relatively smaller, such gains can have greater impact at the micro level. What this suggests is that policy interventions must not neglect the potential of low-skilled return and diaspora links. Also of note is that for an increasing number of migrants, the migration cycle does not end at the point of return; in other words, return is not intended to be permanent. Brain circulation has come to be a popular dynamic, but recurring migration has been a more common practice among the low-skilled. Policy interventions must take into account this fluid nature of labour migration. With the end of the irregular migrant registration round in Thailand, forced returns have also become a more

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daunting challenge for the GMS-3 countries, not least because of the sheer number of irregular migrants facing the threat of deportation. The GMS-3 governments must always be prepared to face the eventuality of mass migrant deportation and their reintegration into their societies. Returns that are voluntary in nature are, for obvious reasons, preferable to forced returns. From a human rights perspective, the decision to return rests on individual free will, not on state decree. Voluntary return imbibes this prerogative of the individual. Additionally, there is greater confidence that the other rights of returnees, such as safe passage back to the home country, are respected in the event of voluntary return. From a pragmatic point of view, the process is also less costly, less administratively cumbersome, and avoids that rift between sending and receiving countries that forced returns evoke. Voluntary returns also suggest that the returnees are more or less prepared, mentally and or financially, to go home. This being the case, they are more likely to reintegrate successfully, not to mention contribute positively to community and national development. Due to all these positive connotations of voluntary return, they must be openly encouraged and facilitated where possible. Assisted Voluntary Return and Reintegration (AVRR) programmes have gained currency over the years. The key agenda behind these programmes seems to have been to make potential forced returns into voluntary returns. Hence, they have tended to focus on vulnerable groups, such as trafficked women, unaccompanied minors, migrants from ethnic minorities, and rejected asylum seekers. While targeted AVRRs are called for by the desire to attain the most results out of scarce resources, and given the sensitivities involved, it is important to take note that some elements of AVRRs are likewise desperately needed by such groups as low-skilled migrant returnees, spontaneous or otherwise. While AVRRs are also specific in their aim of facilitating voluntary returns to countries of origin, they must be seen as integral to the whole migration management strategy and a collective responsibility of sending, transit, and receiving countries. As mentioned earlier, return in many cases ends up as temporary. Globalization has made circular migration, comprising a series of departures and returns, more possible and easier. Born out of this is a more mobile diaspora who have come to trace their bearing and even sense of loyalty to both their home and host countries. One distinguished lesson from old and existing policies on return migration and diaspora relations that the GMS governments must take

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into account is that punitive or forcible measures do not work (Barber et al. 2005; Newland & Agunias 2007). Punishments such as in the threat of arrest, detention, and deportation together with compulsory regulations, such as mandatory salary contributions to a repatriation fund, so far comprise the core of Thailand’s return migration policy. To its credit, the Thai Government has allowed the temporary stay of registered irregular migrants, but these registered migrants are not free of the deportation threat, nor do they represent the majority of unauthorized migrants in the country. It must be remembered that, for a certain price, traffickers and smugglers are more than willing to shoulder the government responsibility of facilitating migrant returns. Migrant exposure to further abuse is not in the interest of either the host or the receiving countries, from either the economic, political, or human rights perspective. Another lesson is that being prepared and proactive is the only way sending countries can handle and exploit the benefits from return migration and diaspora relations. At the moment, the GMS-3 countries are far from being ready to absorb migrant returns, voluntary or forced, from Thailand. They are also passive in relation to diaspora networking. Carefully designed interventions with the support of other stakeholders, are what these underdeveloped countries need to be able to contain the costs of migrant return at least, and benefit from diaspora links. AVRR programmes and diaspora management must be customized to correspond to the circumstances of the countries and region in question. Best practices, nonetheless, show that they must include the provision of the following: information, financial incentives and non-financial incentives.15 As to what should be obvious right now, information dissemination is critical to addressing many of the challenges relating to worker mobility. With return being part of the migration cycle, information about return opportunities must be included in the information imparted to migrant workers before their departure, in the course of their overseas employment, and on their return. It cannot be emphasized enough that this information must be in the migrants’ languages. NGOs, embassies, or consular offices and migrant communities are important partners in relation to this mission. Dissemination activities can take the form of informal counselling, the establishment of outreach centres in communities with high migrant intensity, provision of information on return options in pre-departure training, virtual networking, and the conducting of “look and see” visits by migrant representatives. These activities need not result

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in additional pressure on resources; they can simply be incorporated into the information dissemination component of other migration initiatives. Meanwhile, financial and non-financial incentives must have three specific underlying aims at the minimum, namely, to help secure employment for the returning migrants, tap their potential to drive investment, trade, technological transfer, and knowledge building, and ease their and their dependants’ reintegration into the society. Financial incentives may include transportation allowance, pocket money, small grants for business start-ups or expansion, health care, housing and educational financial assistance, and subsidized credit. Non-financial incentives may include in-kind emergency assistance in the form of food, clothing and shelter, logistical support such as travel escort and guide in document processing, job placement, service referrals, health care services, vocational and language training, and enrolment of migrant children in local schools. Other incentives are represented by three Ps — portability, preferential access, and other premia. The first category mainly concerns the portability of social welfare benefits and savings accumulated by the migrants while working overseas. The guarantee that these benefits and savings, which can amount to a significant sum, can be reimbursed to the migrant workers at the end of their contract is a major inducer of migrant return. Only an estimated 1 per cent of the immigrants in Asia and Africa are said to benefit from social welfare portability that is guaranteed in bilateral agreements (Holzmann et al. 2005). For those of unregistered irregular status, the majority of the GMS-3 migrant workers in Thailand do not even have access to social protection. For the regular workers, there is really no legal and institutional framework governing the exportability of their social security contributions and health care benefits. In relation to the required savings fund contributions (though this is yet to be implemented as of the time this chapter was being written), the underlying MOUs do provide for their transferability to the home countries. However, procedural bottlenecks and corruption are anticipated to impede the satisfactory implementation of this provision. The missing legal basis for, and implementation of, social welfare portability is a serious problem that bilateral negotiations should look into as they result in a big loss for poor migrant workers and the source countries. The second of the three Ps refers to preferential access to special visas, work permits, and working contracts. The issuance of multi-annual and multi-entry visas, portable work permits and flexible employment contracts allows migrant workers to meet their commitments,

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professional and personal, in both sending and destination countries. While these incentives have been mostly offered to high-skilled migrants, they could be just as fruitful if applied to the case of low-skilled foreign workers. Flexible arrangements between Canada, on the one hand, and Mexico and Caribbean countries on the other, and also between farmer unions in Spain and Morocco, Colombia, and Romania, allow the hiring of agricultural workers for short periods, but on a renewable basis (Newland & Agunias 2007). Thailand’s new alien employment act, as well as some provincial cross-border agreements, fortunately allows flexible hiring of seasonal workers. Given Thailand’s structural demand for low-skilled migrant labour, not only in its border provinces, more flexible employment contracts must be adopted. The bilateral MOUs can be amended to reflect circular migration schemes. To reiterate, the government must grant foreign workers the right to switch employers after a certain time period. The third P stands for other premia, including departure premia, salary increases, return airfares, matching dollars for returned savings, duty free imports, loosening of foreign exchange controls and business licensing requirements, preferential interest rates on savings, research funding, and counterpart funds from home country governments for approved business initiatives. Once again, most of these incentives are proffered to attract high-skilled migrant return, but they can be just as useful and have as significant an impact when applied to low-skilled migrant workers. Irregular foreign workers in Thailand constantly face the threat of arrest, detention, and deportation. This is true not only for unregistered workers but also for those with ID cards and work permits (Mekong Migration Network & Asian Migrant Centre 2008). Forced returns, therefore, are a massive challenge that, despite their long history, GMS source countries remain ill equipped to handle. As already mentioned, with the announced termination of the periodic registration rounds, this challenge has become even bigger than it already was. The human rights aspect of forced returns is dealt with in the succeeding section; what will be stressed herein is that, ultimately, resolving the issues that fuel irregular migration is the key disincentive to forced returns. Likewise, improved economic and political situation in the source countries is the definitive stimulus for voluntary returns. Whatever the combination of incentives and penalties, it would be difficult to clinch return if the origin country’s overall milieu remains bleak and/or repressive. Even if a return does happen, chances are it is not sustainable.16 Only by sealing off the economic differentials as discussed at

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length in the first chapter and the non-economic deficits plaguing sending countries, can sustainable returns be realized. The task of tapping the benefits in migrant return and diaspora relation does not come cheap. In view of this, burden sharing among the countries of origin, transit, and destination is critical to see the mission through. Obviously, the role of NGOs in information dissemination, in particular, and that of the private sector in creating economic opportunities for migrant returnees, are central. Currently, there are also existing initiatives under the purview of international institutions in which the GMS governments would be wise to join or increase their participation. Key initiatives are the IOM’s AVRR17 and the United Nation’s TOKTEN (Transfer of Knowledge through Expatriate Nationals).18

2.8 Legal Migrant Rights Protection The confluence of migration, security, and crisis management policies has made the task of legal migrant right protection more testing; in no way, however, must it have altered the principle that human rights are universal and inalienable, meaning that they are inherent in all human beings, regardless of their nationality, immigration status, and other criteria. It is the duty of the state to uphold fundamental rights and freedoms. This is not contradictory to its duty to manage its borders. There seems to be an ill founded fear that ensuring the basic human rights of migrant workers diminishes control over migration and therefore the effectiveness of migration management policies. Just the opposite, the two are rather compatible with each other. In fact, migrant rights protection is integral to having sound migration management, from both the economic and political standpoints. The relationship between the two should be bound simply by the rule that in all stages of migration management, the basic human rights of migrant workers should be respected. A migrant worker, secure about his or her legal rights, is more likely to be productive, keen to pay taxes and other obligations, able to coexist peacefully with nationals, and willing and capable of abiding by the laws of the source and destination countries. Human rights deficits are chief factors that have forced people out of their home countries to work in strange lands. It is therefore a great pity that many of them end up confronting the same or even worse human rights deficits once in the destination countries (see Box 6.2). Migrant workers

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Box 6.2 Remittances for What? Some Non-economic Risks of International Labour Migration Traversing the world of work is full of non-economic risks, some of which cannot perhaps be directly expressed in monetary terms but are, all the same of equal, if not greater, importance as those costs and benefits that one can easily put a price tag on. These risks exist in all stages of the migration cycle, from pre-departure to return, and can result in human rights abuse, physical and mental deterioration, alienation, social exclusion, terrorism, and death among other things. They are most serious for irregular migrants, low-skilled women, and underage workers. At the phase of planning and entry to destination countries, the risks are especially high when such entry is accomplished by means of trafficking or smuggling. Trafficked persons perhaps have higher vulnerability given that their recruitment and transport are achieved by coercive or deceptive means; smuggled persons, on the other hand, have in theory consented to their illegal entry to receiving countries. Regardless of whether they are trafficked or smuggled, the line between the two being often thin, the non-economic costs of migration may in the end also be equally serious for both types of migrants. Because of its criminal nature, the exact magnitude of the problem is not and cannot probably be known. An ILO estimation placed the minimum number of trafficked persons at any given moment at 2.4 million and the resulting illegal profits at a high of US$32 billion (ILO 2008b; Wyler et al. 2009). Thailand, of course, has been identified as a major country of origin, destination, and transit, for trafficked persons mostly subjected to either forced labour or sexual exploitation (US Department of State 2009). On average, roughly 360 trafficked foreigners were officially identified in Thailand per year between 2003 and 2007 (UNODC 2009). However, a ballpark calculation placed the total number of trafficked persons from the GMS at one point at 157,000 (Huguet & Ramangkura 2007). The health risks facing trafficked and smuggled persons are well known to be grave as these people are transported by clandestine and dangerous means. The risks of detection as well as physical abuse, sexual exploitation, and fraud by smugglers and traffickers, are cause enough for the migrants’ mental and physical stress. Once in the destination countries, stigmatization, nostalgia and alienation from family members are three key emotional problems experienced by foreign workers and strain their physical health. Difficulties in integrating into the host society due to such factors as the language barrier, culture shock, and xenophobia are also real enough to cause serious mental stress, social exclusion, and forced returns. Perhaps an even more important cost of overseas employment, however, is separation from family members and other loved ones which, anecdotally, is proven to have resulted in the alienation of children and family break-up. This is one high price of working abroad for which continued on next page

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Box 6.2 — cont’d remittances, no matter how big, may not be able to compensate for. Furthermore, international migrants have high potential as both victims and agents of the spread of communicable diseases such as HIV. The GMS-5 is the hub of the HIV/AIDS epidemic in Southeast Asia. It accounted for 77 per cent of the estimated 1.6 million people with HIV in Southeast Asia in 2007 (UNAIDS 2008). What compounds the risk of migrants contracting the disease is the limited access particularly of irregular migrants to health care. In Thailand for instance, it has been estimated that only about 68 per cent of the registered migrants have full documentation and therefore can avail themselves to the benefits under the country’s national heath scheme (IOM 2008a). Including undocumented workers, the size of migrant community without entitlement to health care is therefore huge. This is a problem that has long demanded prompt attention. Ensuring the health of migrant workers does not only benefit the workers themselves or the sending countries. It also promises significant benefits for the destination countries as good health has been directly linked with higher labour productivity. Meanwhile, the 9/11 terrorist attack in the United States riveted attention to a deadly non-economic risk associated with opening up sovereign borders to migrants. While ideological and political in nature, the threat of terrorism from migrants certainly comes with a high economic cost. It has become a consideration that is as equally important as the economic costs and benefits in the design of migration policies. At the same time, it planted immigration as a key field of concern in security planning.

who are irregular, female, minors, trafficked, smuggled and employed in low-skilled sectors not covered by national labour laws (for example, domestic workers) have been the most vulnerable and are mostly trapped in a cycle of inhumane treatment. Breaking this cycle entails grounding migration policies and practices on international legal standards for migrant rights protection. This undertaking is a collective responsibility of sending and receiving countries, employers and migrants, government and nongovernment entities, and domestic and international players. As implied in the first chapter, the divergence of national policies in the GMS from international standards exists both in principle and implementation. Existing human rights instruments most key and directly related to migrant worker protection are the so-called eight fundamental ILO Conventions (that is, numbers 87, 98, 29, 105, 100, 111, 138, and 102) and the conventions and protocols comprising the so-called International Charter of Migration (that is, the UN Convention on the Protection of the

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Rights of All Migrant Workers and Members of Their Families or simply the International Migration Convention, ILO Conventions Nos. 97 and 143, and the Protocols against the Trafficking and Smuggling of Migrants) (Taran & Geronimi 2003). As can be gleaned in Table 6.1, the ratification record of the GMS countries with reference to the eight fundamental ILO Conventions is only modest. With reference to the International Migrant Charter, it is miserably low. Myanmar has only ratified two of the basic ILO Conventions, a huge disappointment given that not only does it account for the overwhelming majority of the irregular workers in Thailand, but that the circumstances underpinning such migration are also relatively more complicated and disconcerting. Not any of the GMS countries has ratified the International Migration Convention. Thailand has not ratified the core ILO conventions on freedom of association and bargaining (87 and 98), wages (95), or any of the instruments comprising the International Migration Charter, including the protocols against migrant trafficking and smuggling. With Thailand being the hub of GMS labour migration, this is, without doubt, a troubling state of affairs. Clearly, a first order of business for GMS governments is to move towards ratifying or acceding to those instruments that they have not yet ratified or acceded to. International organizations, ILO and IOM, offer technical assistance to those interested in ratification or accession. GMS countries should make use of such support, or secure funding for the purpose of accomplishing a legislative profile that would identify the deviations from international legal standards that need to be reconciled. A comprehensive ratification guide has also been published for informative reference (International Steering Committee 2009). Non-ratification and non-accession, however, are not valid excuses for failing to adopt minimum international legal standards on migrant labour rights. Table 6.1 shows that, with the exception of Myanmar, the GMS countries are state parties to most of the basic UN Conventions, including those on civil and political rights, economic, social, and political rights, and the elimination of all forms of discrimination. Enshrined in these treaties are the principles of equality and non-discrimination. If not to ratify these basic human rights agreements, Myanmar could be pressured to reflect their intent and purpose in national legislations. While the adoption of the MOUs on labour cooperation has been widely commended, the GMS parties must reconsider turning these MOUs into legally binding documents. Before discussing the divergences in practice, it must be noted first that definitional issues burden the task of migrant rights protection

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UN CONVENTIONS AND PROTOCOLS

Unratified

Sources: UNHCHR Treaty Body Database; UN Treaty Series Database.

Note: *supplementing the UN Convention against Transnational Organized Crime.

Vietnam

Thailand

Myanmar

Lao PDR

Cambodia

Country International International Convention International Convention Convention Covenant on Covenant on on the Convention Against on the Economic, Civil and Elimination on the Torture and Rights of Social and Political of All Elimination Other Cruel the Child Cultural Rights Forms of of All Forms Inhuman or Rights Discrimination of Racial Degrading against Discrimination Treatment or Women Punishment

Ratified

International Protocol to Protocol Migration Prevent, against the Convention Suppress Smuggling on the and Punish of Migrants Protection of Trafficking in by Land, the Rights of Persons, Sea and all Migrant Especially Air* Workers and Women Members of and their Families Children*

TABLE 6.1 Ratification Status of Key International Human Rights Instruments by GMS Country

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Source: ILOLEX.

Vietnam

Thailand

Myanmar

Lao PDR

Cambodia



Elimination of Abolition of Migration for Wages discrimination in child labour employment respect of employment and occupation

Social security rights

Conv. 87 Conv. 98 Conv. 29 Conv. 105 Conv. 100 Conv. 111 Conv. 138 Conv. 182 Conv. 97 Conv. 143 Conv. 95 Conv. 157

Freedom of Elimination of association and forced and Country collective compulsory bargaining labour

ILO CONVENTIONS

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and thus must be addressed. The ambiguity in some migrant status must be diminished as it has implications for the type and extent of protection to which the concerned migrants are entitled. For definitional clarifications, the GMS governments can refer to existing international human rights instruments. What has been emphatically argued is that most migrants are not criminals. The various spaces of illegality and fluidity of migrant status, discussed in the first chapter, must be taken into account. As a matter of practice, vulnerability to grave abuse is felt not only by unregistered irregular migrants in Thailand, but also the irregular migrants with registration and work permits and the regular workers. This universal vulnerability can be traced to specific grounds, two being the non-portability of work permits, and the illegal withholding of documents. A must be said once again that migrant workers should be allowed to switch employers after a certain period of time. Those with employers who are abusive or have violated other laws must be allowed to change employers without needing to seek the assistance of the errant employer in the procedure. Also, work permits should not be directly issued to employers, and the legal prohibition against confiscation of work and travel documents must be strictly enforced. The requirement that migrant workers should carry identification cards all the time must be made flexible, given the common knowledge that many employers withhold them. Failure to follow this requirement must by no means result in immediate arrest, detention, and deportation. Three basic freedoms that migrant workers in Thailand have been mainly deprived of are the freedoms of movement, association, and assembly. Draconian provincial decrees that unjustly restrict such basic liberties must be repealed. Provisions under the new alien employment law that permits law enforcement officials, even without court-issued warrants, to raid locations with suspected migrants and arrest those migrants, must be altered. Migrant workers must be allowed to join and establish unions and other associations to enhance their leverage in negotiating employment terms and conditions, raising grievances, and protecting their traditional practices and identities. The randomness of arrests has also been a huge issue, with some having occurred during celebrations of traditional holidays and religious ceremonies. This problem must be addressed as it instils fear of gathering and observing traditional and religious practices. In addition, it is very important to keep labour inspection and law enforcement separate from immigration inspection and law enforcement.

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The role of labour inspectors is to uphold labour standards, not catch illegal immigrants (IOM 2010b; International Council on Human Rights Policy 2010). In Thailand, labour protection has been seriously compromised by pre-emptive or simultaneous enforcement of immigration laws. This predicament has been facilitated by the fact that migrant workers in the country can easily lose their legal status on dismissal from work. There have been actual cases where foreign workers have lodged complaints with labour protection offices only to find themselves fired by the employers soon afterwards and arrested by immigration officials (Mekong Migration Network & Asian Migrant Centre 2008). Because of this practice, labour complaints cannot be reasonably expected to progress. The current one-week grace period granted to terminated migrant workers must be extended to at least sixty days (Human Rights Watch 2010) as it is obviously not enough for them to find new employment, change their work permits, collect unpaid wages and other benefits, and seek redress for their complaints. Expedited deportation, without consideration of pending labour cases, must be disallowed. Labour inspection must also be undertaken in sectors not traditionally covered by labour laws, such as domestic service, agriculture, and the informal economy. Whistleblower protection under the law is also critical to assuage the fear of complaining against abusive employers. Access to due process is a long-established right of any person. Immigration or employment status does not alter this right. Migrant workers, regular or irregular, must be able to raise their grievances before an administrative and judicial body, or any other complaint mechanism, free of fear from retribution and threat of expulsion. Alien workers in Thailand have lodged complaints at labour protection offices and pursued cases in the courts; however, immigration enforcement has undermined the process. Deportation must be delayed for migrant workers who are subject to deportation, but also happen to be parties to pending litigation cases. Otherwise, expelled migrant workers must be granted the recourse to see through their labour complaints in their home countries. Problems such as the lack of language interpreters and knowledge of the due process must also be addressed as they effectively bar migrant workers from resorting to the legal process to uphold their rights (Taran & Geronimi 2003). A measure that can significantly assist migrant workers pursuing legal remedies is the establishment of a Migrant Welfare Fund (MWF). This fund can be used to finance the legal defence of such workers. It can

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also be used to finance migrant emergency repatriation, life and health insurance, and capacity building. As far as is known, Thailand has created such a fund for its overseas workers (Ruiz & Agunias 2008), but not the other GMS countries. It is common knowledge that a plethora of human rights violations occurs during migrant arrests, detention, and deportation. Procedural discrepancies and scarce information leave migrants in the dark as to what their minimum rights are and when to cry foul. Apart from those previously mentioned, other suspect activities that occur include arrests at nightime, extortion and bribery, intrusive body searches, confiscation of personal belongings, detention for indefinite periods of time and in locations of poor conditions, unsafe transportation, joint confinement of men and women, and sexual and physical abuse (Mekong Migration Network & Asian Migrant Centre 2008). These activities must be halted and their perpetrators penalized. Mass deportations should be avoided, given the reality of mixed migration flows especially for the Myanmarese. This practice risks breaching the principle of non-refoulement, which protects refugees and, asylum seekers in particular from being returned to their countries of origin where they might be subject to human rights abuse.19 As recommended above, expedited deportations must be stopped because they deprive deportees of the opportunity to challenge their expulsion, seek legal redress for their grievances, and collect unpaid wages and benefits. As regards detention, non-custodial alternatives could be considered, including, inter alia, supervised release, release on bail, and directed residence (International Council on Human Rights Policy 2010). On top of the retributions, xenophobia, and abuse they face in host countries, irregular migrant workers also confront the possibility of sanctions once back in their countries of origin. The application of such punitive measures must be reconsidered. There is consensus that migrant rights protection must be sensitive to gender and age given the special circumstances facing migrant women and children. Ensuring family unity is a right well grounded in international human rights law and must be respected in national migration policies. Temporary and circular migration schemes which force family separation, must be rethought. Moreover, migrant children cannot be stateless. Their birth must be registered to realize their right to a nationality and access to education, health care, and social protection (Global Migration Group 2008; International Council on Human Rights Policy 2010). The Thai

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Government must continue the registration programme it initiated in late 2009 for migrant children (Kyaw Kha 2009). The list of migrant rights violations and recommended remedies discussed above is far from being exhaustive. It is at least generally known that the range of challenges to migrant rights protection, which results from the uncertain status of migrants, and even the conscious policies to repress the human right to move, is far and wide. A rights-based approach to migration governance can well tackle these challenges, noting carefully that this approach is not at odds with the economic and security objectives of migration management.

2.9 GMS Economic Development Following the line of reasoning in the Migration Hump Theory, we find that economic development of the GMS in the end can address many of the migration issues in the subregion. Detailed exploration of such a broad topic as GMS development is beyond the scope of this chapter; however, some key points of relevance will be mentioned herein. First, regional economic integration plans must take into consideration their migration impact. Second, from the standpoint of the sending countries, GMS economic development is an important solution to its migration-related problems inasmuch as it can result in the reduction of the development divide, and the associated economic differentials between them and their more developed neighbour. Third, from the standpoint of the receiving country, GMS development is similarly an important remedy to its migration headaches as it can stem the tide of irregular migration, while increasing the flows of regular migrants. Fourth, sub-regional economic development is a solution, but not a guaranteed and complete one. There is the danger that rather than bridging the development divide among the GMS countries, it can widen it more. As repetitively emphasized, there is certainly more to migration than economics. The characteristics of intra-GMS labour migration such as human tradition and non-economic need will continue to drive it even when macroeconomic gaps have been sealed off. GMS economic integration plans, specifically those under the ADB’s GMS Programme, have primarily concentrated on improving physical infrastructure links and trade facilitation. Strengthening these “hardware” and “software” linkages has been intended to facilitate the building of

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three major economic corridors in the subregion, namely the North-South Economic Corridor, the East-West Economic Corridor, and the Southern Economic Corridor. In time, six more economic corridors were envisioned to be built.20 The end goal is to make these corridors hubs of investment, production and trade. Quality hardware and software linkages are expected to greatly ease and increase the flow of goods, services and people within the sub-region. The nexus between and among cross-border infrastructure, trade facilitation, trade, investment, and growth has been proven to be positive and self-reinforcing.21 Indeed, the fruits of the GMS Programme since its launch in 1992 have already been visible, with sharp increases in intraGMS trade and investment.22 On the Southern Corridor, improvements in the welfare of the residents, and their access to education and health care were reported. The local tourism sector has benefited especially. On the East-West Corridor, the number of passenger buses increased by 160 per cent between 2000 and 2005. The GMS transport infrastructure and trade facilitation strategy is expected to result in transport cost reductions averaging 45 per cent and time savings of between 25 and 50 per cent. Considering the impact of the three major economic corridors and the cross-border transfer agreement among the GMS countries, one estimate is that the GDP of Cambodia can grow by 2 per cent, of Lao PDR by 60 per cent, of Myanmar by 3 per cent, of Thailand by 24 per cent and of Vietnam by 8 per cent. Estimation based on a 45 per cent-reduction in transport costs and 25 per cent-reduction in trade costs placed the output increase at 7 per cent for Cambodia, 6 per cent for Lao PDR, 4 per cent for Myanmar, 0.9 per cent for Thailand and 3 per cent for Vietnam (Stone & Strutt 2009). One outstanding impact of the GMS economic cooperation that has been observed is the increase in cross-border labour migration. A preliminary poverty assessment uncovered how cross-border interventions resulted in a lot of informal work opportunities along and across the borders, in turn triggering a flurry of labour migrant activity. This was a welcome development for poor households and the local and provincial economies concerned insofar as it fattened incomes and attracted more businesses. However, not all the consequences of the increased migration are good. Along with it are magnified risks of human trafficking and smuggling, spread of infectious diseases, prostitution, drug trade and use, and resource depletion (Social Development Direct 2007). Another feared impact of

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GMS regional integration is that it could lead to a bigger development divide within the subregion. The differences in political and economic circumstances could lead and, in fact, have led, to varying degrees of progress in fulfilling commitments under the GMS Programme. Structural problems experienced by the poorer country members could limit the gains accruing to them (Fujimura 2006). Hence, GMS economic development can have two opposing effects on the nature of labour migration. On the one hand, it can increase regular migration by attenuating the poverty constraint, or the inability to finance formal movements. On the other, it can increase irregular migration by widening economic differentials. To prevent the undesired polarizing impact of regional economic integration, several measures can be undertaken, including improved synchronization of project implementation, more capacity building and technical assistance for worse-off countries, donor “subsidies” to shoulder expenditures that poorer countries cannot afford, and compensation and concessional loans from those countries that will benefit more from the programmes, to those countries that will gain less (Fujimura 2006).

3. Conclusions The tide of intra-GMS labour migration is not expected to abate. Economic and non-economic deficits in the subregion will continue to fuel crossborder worker movements. National and regional economic development may attenuate the poverty constraint on migration; however, this will not be true for all, given the expected inequitable distribution of gains nor will it be adequate to quell the human rights deficiencies driving outward mobility. Because of its economic and non-economic underpinnings, labour migration in the GMS can only be managed effectively and sustainably using comprehensive and inclusive strategies. The shortsightedness of the perception that labour migration is mainly an economic event must be cast off, lest it results in policies that will always fall short of meeting realities on the ground. Migration governance is a collective mission. Its success rests on a good amount of cooperation, understanding, goodwill, and burden sharing, among the countries of origin, transit, and destination, among the government, the private sector, donors, and NGOs, and among domestic and international players. Its effectiveness rests on an administration of both carrots and sticks. As human aspiration, tradition, and need,

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people’s movements cannot be hindered by any combination of punitive measures. Penalizing the right to move has only heightened the problems involved. Data are an ever valuable resource and information is a source of empowerment. The limitations in both need to be addressed; otherwise, the growth of migration research, policymaking, and dialogue will always be restrained and migrant vulnerability will ever be present. Mainstreaming migration into overarching development plans must rest on an understanding of the heterogeneous elements and conflicting impacts of migration. Migration is a cycle; hence, the benefits emanating from it are not limited to employment creation and remittances, and its associated costs are not limited to those incurred at the micro level. There is also no automaticity in the positive links between migration, development, and poverty reduction. Misunderstanding such a nexus would lead one to think that migration management is an easy job when it is definitely not. The relationship between migration and poverty reduction is undermined by the fact that poor households are actually hard-pressed to afford migration, especially by formal means. The relationship between remittances and development is conditioned by remittance use and the extent of its macroeconomic costs. The benefits from migrant return and diaspora links can only be met with certain conditions present, not least, a good deal of preparation to absorb voluntary and forced returns, and a proactive engagement with diaspora members. Regional integration can end up widening instead of bridging the development divide. This chapter detailed some solutions to maximize the benefits and minimize the costs of labour migration. To summarize however, achieving such needs collective hardwork grounded on a pluralistic understanding of international labour mobility. Regardless of the net returns however, migrant right protection must be ensured. The fact that the subject rights are of migrants does not change their characteristic as universal and inalienable. Besides, having migrant workers feel secure about their rights, works for, not against, receiving and sending countries alike. A lot of lessons have resulted from the long history of intra-GMS labour migration, from the experiences of established sending and receiving countries in other parts of the world, and from the successes and failures experienced by individuals and institutions alike while monitoring and caring for migrant workers. Lessons alone are of no use, however. The migrants of the Mekong will benefit well and greatly if and when these lessons are learned and reflected in action.

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Notes   1. Given their ethnic origins, Myanmarese immigrants in Thailand are amenable to being classified as such (Sciortino 2009).   2. Even the UN database on migrant stocks has been undermined by such problems in comparability of country statistics (Ratha & Shaw 2007).   3. See Sections 21 of the MOUs.   4. As explained in Massey (1988), Hatton & Williamson (2002) and de Haas (2005a, 2005b). The migration hump theory was formally conceived and advanced as the anatomy of migration in Martin & Taylor (1996). As explained in de Haas (2005b), it, however, reflects ideas popularized by Zelinksy (1971) and Skeldon (1997) who considered migration from a spatio-temporal development perspective and linked migration directly not only to demographic pressures, but also development itself.   5. Based on WB classification as of July 2009.   6. The study by McKenzie (2005) covering 127 countries (including Thailand, Vietnam, and Lao PDR) showed a median passport cost of US$38.60.   7. See, for instance, Ezovski (2005) for more on this.   8. Based on an exchange rate of US$1=PHP46. Succeeding PHP conversions to US dollars are based on this rate. See the Philippine Overseas Employment Agency (POEA) Rules and Regulations on the Recruitment and Employment of Land-based Overseas Workers.   9. As recounted in Siddiqui, Rashid, and Zeitlyn (2008). 10. Ibid. 11. This caption in the Myanmar language is printed on the front flap of the leaflet describing the nationality verification process (Fry 2009). 12. Based on the exchange rate of US$1=THB34. 13. As of 2003, only five countries — Colombia, Ecuador, Peru, Poland, and Georgia — were taxing remittances. 14. Reporting, anti-money laundering and counter-terrorism financing requirements must be the same, however, for bank and non-bank remittance providers (Ratha & Reidberg 2005). 15. See IOM (2008b) for a comprehensive account of these best practices. IOM’s webpage on return migration also provides a recommended framework on return migration policy and specific guidelines on facilitating voluntary and forced returns. See http://www.iom.int/jahia/Jahia/about-migration/ managing-migration/managing-migration-return-migration/cache/offon ce;jsessionid=9D56EDB4F061B7D1EBBE8CAEE468DE52.worker02/cache/ offonce/. 16. See Development Research Centre (2005) for more on sustainable return. 17. See the IOM’s webpage on AVRR .

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18. See the UN’s webpage on TOKTEN . 19. See UN High Commissioner for Refugees (1997) for more on the principle of non-refoulement. 20. These six economic corridors are the Northern, Eastern, Central, Northeastern, Northwestern, and the Southern Coastal Corridors (Stone & Strutt 2009). 21. For a good conceptual framework and account of empirical findings on this, see Fujimura (2006), Fujimura & Edmonds (2006), Fujimura (2004). Note, however, that the automaticity of the said positive relationship has been questioned. There are other intervening variables or “missing links” that need to be considered, one of which is the state of governance. See, for instance, Bafoil & Ruiwen (2010). 22. Thailand’s imports from Lao PDR, Myanmar, and Cambodia rose by an annual compound rate of almost 10 per cent between 2000 and 2005. Combined net FDI from the GMS economies to Cambodia, Lao PDR, Myanmar, Thailand, and Vietnam rose by about 60 per cent between 2000 and 2002 (Menon 2005).

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de Haas, H. Morocco’s Migration Transition: Trends, Determinants and Future Scenarios. Geneva: GCIM, 2005a. ———. “International Migration, Remittances and Development: Myths and Facts”. Third World Quarterly 26, no. 8 (2005b): 1269–84. Deleen, L. & P. Vasuprasat. Migrant Workers’ Remittances from Thailand to Cambodia, Lao PDR and Myanmar (Synthesis Report on Survey Findings in Three Countries and Good Practices). Bangkok: ILO Regional Office for Asia and the Pacific, 2010. Development Research Centre on Migration. Globalisation and Poverty (2005), Defining, Measuring and Influencing Sustainable Return. Briefing no. 3. Brighton: Development Research Centre on Migration, Globalisation and Poverty, 2005. Economic Commission on Africa (ECA). “Financing Small and Micro Enterprises in Africa”. Paper presented during the Interregional Conference on Financing for Development, Mexico City, 14–15 January 2002. Ezovski. Biometric Passports: Policy for International and Domestic Deployment. Washington, D.C.: Washington Internships for Students of Engineering, 2005. Firpo, J. “Mobile Banking Takes WING in Cambodia”. 2009. Available at (accessed 22 July 2010). Fry, E. “Cheating the System”. The Bangkok Post, 18 October 2009. Available at (accessed 20 July). Fujimura, M. Cross-Border Transport Infrastructure, Regional Integration and Development. ADB Institute discussion paper no. 16. Tokyo: ADB Institute, 2004. ———. “Cross-border Transport Infrastructure, Regional Integration, and Development: Implications for the Greater Mekong Subregion”. Journal of GMS Development Studies 3, no. 2 (2006): 48–62. ——— and C. Edmonds. Impact of Cross-Border Transport Infrastructure on Trade and Investment in GMS. ADBI discussion paper no. 48. Tokyo: ADB Institute, 2006. Global Migration Group. International Migration and Human Rights. New York: Global Migration Group, 2008. Hall, A. “Nationality Verification of Burmese Migrants: A Meaningful Debate”, 2009. Available at