BEGINNING 2016, professionals from ASEAN countries will have greater mobility to work within the ASEAN Economic Community (AEC).
While experts do not foresee massive displacement of Filipino workers, they warn of a “skills challenge” that needs to be addressed through a strengthened educational system and professional regulation.
The Philippines as labor recipient
The entry of foreign professionalsactually presents advantages for the Philippine labor market, according to Director Dominique Tutay of DOLE’s Bureau of Local Employment. She said foreigners bring new technologies and management systems that would raise professional standards, especially in the education and information technology (IT) sectors. “When entry of foreign nationals is restricted, acquisition of knowledge also becomes limited. To eliminate intellectual inbreeding, we need to attract foreign professors who can teach post-graduate studies. We also noticed that applications for alien employment permits are mostly in IT, since companies claim there is an absence of Filipino specialists,” she said.
Entry of foreign professionals is currently prohibited by Philippine laws without a special permit to practice profession or unless allowed by reciprocity clause. The ASEAN Mutual Recognition
Arrangements (MRAs), however, allow freer movement of professionals by standardizing regulations and procedures for employment.
So far, the ASEAN countries have signed MRAs for seven professions .
Tutay did not totally discount the possible displacement of local workers, but she said there may only be a few affected workers becauseFilipinos are highly competitive.
“Services of foreign professionals are usually needed if their skills are not locally available. If some companies hire them even if there are Filipino talents, this might engender ill feelings and negative reaction from local practitioners,” said Tutay.
The Philippines as labor sender
Experts from the Philippine Institute for Development Studies (PIDS), however, noted that the Philippines is not a labor recipient but a sender of mostly unskilled workers.
“Migration to other countries is not dominated by professionals and our MRAs cover only seven professions,” said PIDS Research Fellow Aniceto Orbeta.
PIDS President Gilberto Llanto said that countries with aging populations, like Thailand, will welcome workers from sending countries, like the Philippines, and this will benefit the latter through remittances.
“But in the future, this can be reversed. With sustained economic growth and strengthened manufacturing and services, Filipino workers may choose to stay in the country,” said Llanto.
‘Skills challenge’ and social protection
With the expected technological and production shifts in regional integration, PIDS Research Fellow Ramonette Serafica said Filipino workers will face a “skills challenge.”
“Across all industries, shortage of applicants with the right competencies is the biggest recruitment challenge by our domestic employers. The policy response should always be to ensure that local workers have the right skills set,” said Serafica.
Tutay agreed, saying that education and training institutions need to revise their curricula to adjust to the labor market demand not only within the country but of the ASEAN.
The labor official cited the following initiatives that will prepare the labor market:
• Skilled Occupational Shortage List (SOSL), a “positive list” of occupations with short supply of local workers and where entry of foreign experts are crucial, as identified by industry and labor groups, and the government;
• Philippine Qualifications Framework (PQF), a national policy that harmonizes the needed qualifications and procedures in employing foreign professionals, in line with the ASEAN Qualifications Reference Framework (AQRF);
• Philippine Services Coalition (PSC), a multisectoral working group revived to develop and implement a strategy for promoting Philippine services in the global markets; and
• Pending legislation that liberalizes the entry of foreign professionals. Even with strengthened educational system and professional regulations, there are still workers who are not equipped for the competitive labor market. “They are easily laid off, bypassed, or trapped in low-paying jobs.
In this respect, social protection schemes will be necessary to temper market aberrations,” Llanto said.
Tutay said safety net programs are already in place for Filipinos affected by the integration. However, Orbeta said that the transferability of social protection from one country to another still has to be discussed in ASEAN.
“Besides transfer of financing, the bigger issue is what is creditable,” said Orbeta, referring to social insurance contributions that can be credited to the worker across the region.
While it is not in the AEC Blueprint, establishing a network of social protection agencies for those affected by regional integration is an action item in the ASEAN Socio-cultural Community (ASSC) Blueprint. A committee currently drafts the instrument that recognizes the obligation of both sending and receiving countries in protecting migrant workers’ rights.
Serafica emphasized that not all benefits are automatic with the integration of labor market in ASEAN. “We should continue to invest in training and education to address the country’s present and future skills challenge,” she said.
The Asean Economic Community
(AEC) envisions the region to become a significant player in global trade by having a single production and market base within the Asean.
This means that firms and individuals can freely transact business across countries within the region without being subjected to too many country rules, procedures, and duties.
Regional economic integration offers opportunities for the Philippine labor market, if the country eliminates restrictions that currently impede the flow of services and goods.
Trade in services
Trade in services is categorized into four modes: (1) cross-border supply, (2) consumption abroad
(3) commercial presence; and (4) temporary movement of people. By the end of 2015, there will be no restrictions for Modes 1 and 2 as stated in the AEC Blueprint. For Mode 3, a maximum of 70 percent foreign (ASEAN) equity participation is allowed in establishing commercial presence within the region.
Free flow of services is expected to increase investments and create more jobs, said Ramonette Serafica, Research Fellow of the Philippine Institute for Development Studies (PIDS). But for ASEAN suppliers to invest in the Philippines, Serafica said we need to improve infrastructure and eliminate further restrictions to strengthen our competitiveness.
Equity limits, agri policies among the remaining issues on free ASEAN trade Filipinos are strongly positioned to benefit from job opportunities of the ASEAN Economic Community (AEC). But the Philippines has to do more in terms of opening up to foreign investors and enabling an environment for fair competition.
Former Socioeconomic Planning Secretary Cielito Habito, who is Chief of Party of the USAID Trade Related Assistance for Development, said that one of the possible reasons why the share of jobless workers in the Philippines is higher compared with other ASEAN countries is because our neighbors are more open to foreign direct investments (FDI).
Habito noted that the Philippines is the only ASEAN country where the constitution enshrines foreign investment restrictions in certain areas, including public utilities, educational institutions, mass media and advertising.
“For example, Johns Hopkins University is already established in Singapore and Malaysia. We could have
‘We could have attracted investments if only Philippines is more open’ Source: United Nations Conference on Trade and Development attracted similar investments if only the Philippines is more open,” said Habito.
From 2001-2010, FDI to the Philippines averaged only at US$1.5 billion annually. While it doubled to US$3.9 billion in 2013, it continues to lag and the gap between the Philippines and those of other ASEAN countries in terms of FDI has widened .