Foreign Workers Welcome, But No Permanent Residents, Please

East Asia’s economic growth has brought in its train large-scale migration of temporary workers from poorer to richer states.

The policies directed towards such migrants have varied from state to state, and these discrepancies have now been highlighted by a recent controversy in Hong Kong – the request by a handful of foreign domestic helpers to be granted permanent residence in Hong Kong. Whatever the outcome of their lawsuit, the request by the work-visa holders for permanent residence could have region-wide implications.

The positive aspects of temporary migration in Asia are well enough known: For the supplying countries, migrants relieve unemployment and provide a remittance stream of foreign exchange which supports consumption. For the receiving countries, such policies provide low-paid workers who do undesirable jobs, enable middle-class wives to work, and hold down manufacturing costs, helping industries remain internationally competitive – all without burdening state education and health budgets. Negatives include the breakup of families in the supplying countries and the creation of a dependency culture among remittance receivers.

There are negative economic and ethical implications for the recipient countries as well. In Hong Kong’s case, there are some 250,000 such temporary workers, mostly from the Philippines and Indonesia, and they constitute 7 percent of the working population. Singapore is even more reliant on this group for construction, manufacturing as well as domestic employment. Work permit holders, mostly those with low skills, are about 29 percent of the working population. Maids alone number about 200,000, or one for every five households. Indonesia is the largest source followed by Philippines and Sri Lanka.

Maids in Singapore are excluded from various protections under the Employment Act with no compulsory rest days, maximum working hours, minimum wage or termination notice, and they have no right to legal aid. Some employers use closed-circuit cameras to monitor their maids. Although violent abuse is vigorously prosecuted when reported, authorities suspect much goes unreported. Last year 2,530 Indonesian maids fled their employers and sought embassy refuge. A suggestion by a government minister that they be given a compulsory rest day was met with a howl of protest in the media. Pay averages about US$3,500 a year – at least according to a case brought by the government against maid agencies for wage fixing. Per capita GDP in Singapore is the equivalent of US$43,000.

Nor is the large-scale temporary migrant phenomenon confined to the highly developed, rich city-states. In Malaysia there are about 1.9 million legal temporary migrants and perhaps another 1 million or more “undocumented workers,” the euphemism for illegal ones. Bangladesh, as well as Indonesia and the Philippines, is a major source for Malaysian plantations, construction sites, restaurants and households. Cases of abuse are frequent with the undocumented workers particularly vulnerable. Thailand relies heavily on Burmese and Cambodians for dirty and dangerous work. As of 2009 there were 1.29 million registered workers, but the actual total could be double that. Of the registered ones, 129,000 were domestic helpers. Migrants have replaced Thais as domestic helpers in many middle-class Bangkok households. Taiwan and Japan have much less reliance on temporary foreign labor; Taiwan employs some 90,000 from the Philippines, mostly in domestic work, but the 350,000 Filipinos in Japan are mostly in entertainment-related industries.

Singapore comes nearest to having a coherent policy for non-temporary migration, mainly focused on skilled and semi-skilled candidates for permanent residence. Despite a history of using wage rises and a strong currency to boost productivity, the city-state has become increasingly reliant on temporary workers. The Philippines tries hardest to offer protection and bans workers from going to some countries. But many recipient countries are reluctant to prosecute abuses.

Hong Kong's permanent immigration is dominated by a long-established quota from the mainland of about 50,000 a year, mostly unskilled mainlanders. The program is administered by the mainland, and Hong Kong’s role is limited to issuing work permits and permanent residence rights to foreigners and renewable two-year contracts for domestic helpers. Malaysia and Thailand have policies on temporary migration, but enforcement is largely ineffective, exposing workers, legal or not, to widespread abuse. Some temporary migrants, mostly Indonesians in Peninsula Malaysia and from the Muslim Filipinos in east Malaysia, have in time become permanent residents.

Implications of this foreign-labor influx are no minor matter. Everywhere these pools of cheap, expendable workers, mostly without families, boost both the per capita gross domestic product of permanent residents. However, ready access to temporary migrants depresses wages for unskilled local workers. As it is now, migrant laborers in Hong Kong do domestic work while locals sweep the streets or are unemployed. Access to cheap domestic help also provides standard-of-living benefits for those who can afford it. Thus, policies allowing temporary workers widen income gaps that even governments admit are a social concern. Hong Kong has the worst income distribution in the developed world, Singapore is not far behind, and inequality in Malaysia and Thailand is approaching Latin American levels. Access to live-in maids, as evidence from Hong Kong and Singapore shows, does little to raise low fertility rates of the more educated classes.

In the case of Malaysia and Thailand, low-cost, expendable foreign labor is a disincentive to investment in productivity, contributing to the nations getting stuck in the low- growth “middle income trap.” As for Indonesia, Philippines, Bangladesh and other supply nations, their provision of cheap labor to neighbors cannot be beneficial if it inhibits the development of their own export industries and regional trade.

Cheap temporary labor, lacking in rights, can have an eroding effect on social ethics in recipient countries. Even in Hong Kong, an administration with a poor record on matters of discrimination, fails to vigorously enforce laws on minimum wage or work conditions. The domestic helpers are relatively fortunate in having access to the courts, but still face anti-migrant invectives. In Singapore, helpers are largely reliant on the goodwill of employers for days off and freedom of movement. In Malaysia, horror stories of mistreatment of maids are frequently reported – and far more often doubtless go unreported.

Demographic changes in East Asia suggest that labor mobility will continue to grow. That makes it imperative that states have coherent, non-racial policies for temporary and permanent migrants which reflect overall economic benefit and the capacity of societies to absorb newcomers. Policies can only be reached and accepted by the public if there are open discussions based on facts and on the recognition that there are human-rights obligations to temporary migrants. Governments that fail to provide all residents with equal legal rights and protections from abuse or surrender to crude anti-migrant scare-mongering are eroding their own social bonds and respect for the law. This cannot be good for stability, which has underwritten the region’s remarkable progress.

(Philip Bowring is a former editor of the Far Eastern Economic Review and one of the founders of Asia Sentinel. This originally appeared in YaleGlobal, the magazine of the Yale University Center for the Study of Globalization.)