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ASEAN Needs More Skills Mobility to Realize Full Potential

To stay competitive, countries need to attract global talent. To do this, talent must be able to relocate when and where needed. Among other factors, global demographic and economic imbalances further strengthen the case for skills mobility including facilitating the movement of professionals across countries where their skills are needed.

Skills mobility can be facilitated in a systematic way by implementing mutual recognition arrangements (MRAs) with other countries. MRAs recognize foreign professional qualifications, which are not just educational. They also include aptitudes, knowledge and skills, all embodied in the competency level. MRAs can be established in general terms or by profession in line with a country’s needs as well as its skills development strategy.

But in ASEAN, full skills mobility through MRAs under the ASEAN Economic Community (AEC) is still far from complete. Until countries express a stronger commitment to the agreements and provide better ways to implement them, ASEAN’s best and brightest will continue to seek jobs outside the ASEAN region. Notwithstanding the increasing intra-ASEAN skills mobility, ASEAN remains a net exporter of workers—including skilled ones. This trend must be reversed for ASEAN to stop the brain drain, remain globally competitive, and realize the full potential of the AEC.

Three Ways ASEAN Countries can Boost Skills Mobility

A recent joint study by ADB and the Migration Policy Institute shows that countries can encourage skills mobility in three different ways:

  1. Horizontally, through all-inclusive MRAs covering all occupations
  2. Vertically, using narrow MRAs covering only specific sector or occupation
  3. Via umbrella agreements, with a detailed guideline for future MRAs

The horizontal approach is widely adopted in the EU, where people are free to move anywhere, even without a job offer. This approach seems unrealistic for ASEAN and other parts of Asia due to significant disparities in demographic and economic development levels, which are reflected in labor supply and demand.

Some ASEAN countries, like the Philippines, still have a young population, while the population of others, such as Singapore, is already aging. This imbalance creates excess labor supply that cannot move freely across ASEAN countries. Accordingly, vertical MRAs or umbrella agreements are more suited to ASEAN and Asia in general.

These agreements are complex, however. Under vertical MRAs or umbrella agreements, a host country can unilaterally set different complementary measures for various countries in line with their education and training systems. For instance, some countries require different years of working experience to hire foreign nurses.

For the AEC to become a single market and production base, members must facilitate skills mobility.

Uneven Progress

For the AEC to become a single market and production base (one of its main objectives), members must facilitate skills mobility. So far they have signed MRAs for the tourism sector and six regulated occupations (accountancy, architecture, dentistry, engineering, medicine and nursing), but implementation has been very slow and uneven due to lack of clarity over the fine print.

Deepening MRAs to include other professional groups and wider skill levels is also lacking, with no clear agenda on the table. Engineers and architects have moved ahead by creating ASEAN-wide credentials, and accountants will soon follow. Under the scheme approved for these groups, qualified professional members can register their qualifications to be recognized according to their competency levels within ASEAN, but this does not yet mean they can work freely across countries in ASEAN.

Key Lessons

To progress further, there are three key lessons ASEAN can take from MRA implementation worldwide:

  1. Harmonization of training standards is very hard and requires strong commitments and vast resources. Complete standardization of qualifications across countries is a long-term undertaking that cannot be done by the education sector alone. A more realistic approach is for countries to acknowledge their qualification differences and set up complementary measures accordingly. The measures can take different forms such as mentoring, on-the-job training, adding working experience, and so on, to be conducted either at home or in host countries.
  2. Countries need to make a strategic choice between adopting centralized or decentralized MRAs, based on their specific needs. The centralized approach requires more resources, while the decentralized one can be difficult to monitor. For example, the EU’s centralized system is expensive to create and maintain; New Zealand and Australia have an MRA at the local level that is less resource-intensive but can be problematic regarding compliance.
  3. Partial recognition needs clear and relatively simple guidelines for compensatory measures, while umbrella agreements only work when there is strong political will. The disparity in education and training standards within ASEAN makes ASEAN-wide recognition of qualifications practically impossible at the moment. The Asia-Pacific Economic Cooperation Architect Project umbrella agreement only specifies minimum qualification requirements, but relies on reciprocal recognition among participating economies to facilitate skills mobility.

A good way forward for ASEAN would be to implement partial recognition with clear guidelines and compensatory mechanisms. This is in line with the increasing number of skill shortages that have been felt very strongly among the business community. More delays in MRA implementation due to complexities and opaqueness will only do further harm to business and economic growth.

This piece first appeared on the Asian Development Blog.

Guntur Sugiyarto

Principal Economist, Pakistan Resident Mission at the Asian Development Bank

Guntur Sugiyarto is principal economist, Pakistan Resident Mission, at the Asian Development Bank. He has published a significant number of papers on a wide range of development issues. Before joining ADB in 2004, he worked for the universities of Nottingham and Warwick in the UK and the Central Bureau of Statistics in Indonesia.

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