On Labor Mobility Policy

The author is coordinator and member of the management collective of Action for Economic Reforms, a policy research and advocacy NGO focused on macroeconomic policy and governance issues.

The biggest obstacle to obtaining the maximum benefits from labor
migration is the restrictive policy regime of the highly developed
countries on labor inflow. Dani Rodrik, a Professor at the Kennedy
School of Government in Harvard University, has likewise criticized the
asymmetry in the adoption of global rules. The rich countries and the
multilateral institutions they control have heavily favored the
liberalization of trade and capital flows. But they have remained
silent on the liberalization of labor flows.

The reduction of barriers to labor migration or the further relaxation
of labor migration rules also reduces the transaction costs of overseas
workers. No longer will applicants be desperate to rely on fixers and
unscrupulous recruiters to get overseas jobs. The number of
undocumented or TNT (tago-ng-tago) workers will likewise decline.

Furthermore, the easing of barriers creates positive conditions for
alleviating some of the social problems faced by overseas workers. The
liberalization of the international movement of people will facilitate
the visits or temporary residence of family members in the host
country. It will also accelerate the recognition of rights and
enhancement of benefits of overseas workers, enabling them to have
longer leaves or vacations, thus giving them the opportunity to spend
more time with their loved ones or visit their homeland without fear of
being denied re-entry to the host country.

Of course, the design of the policy and rules governing the easing of
labor mobility—at the global level and at the level of the home
countries and host countries—is crucial. The policy makers must pay
attention to putting in place innovative systems, including the
incentive and disincentive arrangements, to see to it that labor
mobility will benefit everyone—the workers, the employers, the home
country and the host country.

A particular challenge is to set up the mechanisms for the OFWs and
their remittances to contribute to the home country’s goal of
sustaining growth and attaining social development. The key question is
how to encourage or attract the OFWs to return to their homeland,
bringing with them spillover benefits such as new knowledge, new
techniques, and a modern, progressive culture. If appropriate steps are
not taken, the situation could well reach that point in which the
continued outflow of workers without the prospect of their eventual
return—that is, the draining of human resources—would be harmful to
growth and development.

Rodrik has outlined some of these innovative measures. Examples that
are relevant to the Philippines include: 1) the increased allocation by
host governments of temporary work permits for both skilled and
unskilled workers, equivalent to a tolerable percentage of their
workforce; 2) the rotation of temporary contracts to distribute the
income gains to a larger number of workers, and 3) a forced saving
scheme under the individual account of the worker in which the saved
earnings, including interest payments, will be released to the worker
upon her return to the home country. The forced savings will serve not
only as resources for the reintegration of the returning worker but
also as an enlargement of the resources that the domestic economy can
mobilize for productive investments.

Arguably, the best incentive for the OFWs to return is for the
Philippines to make an economic turnaround –having high levels of
investments and job-creating growth. South Korea’s experience is an
example; it had significant labor outflows, but the turning point of
sustained growth gave way to reverse migration.

The objective of reducing the barriers to labor flows and the
enhancement of labor mobility is not a pipe dream. The problem is
mainly political, but the political constraints can be changed. The
constituencies for labor mobility advocacy in the rich countries exist
though difficult to identify at the start. In the first place, a market
for labor migrants in these countries obviously exists. And in the
particular case of Filipinos, the steady increase in the number of
those who have become permanent residents or citizens in the rich
countries has enhanced their political clout.

It is high time the Philippine government took the lead in championing
labor mobility. And it is also high time that Philippine NGOs
emphasized the enormous potential benefits from a well-crafted policy
on labor mobility. At the same time, towards obtaining the best outcome
for the Filipino people, especially the poor, we all have to reaffirm
the central task of having a country-specific strategy that will spur
and sustain investments and growth.

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