平和
和平
평화

MIGRATION

ASIA
11 August 2014

Rest day for migrant workers in Hong Kong; @HSBC Building Central

Asia's wasted migration opportunities

Older, labor-scarce Asian countries like Japan, Korea and Taiwan are wasting migration opportunities from their younger, labor abundant Asian neighbors.

During the recent decades of globalization, Asia's emerging and advanced economies have seen international trade, investment and finance represent ever growing shares in their economies, as have the advanced countries of North America and Europe.

But in contrast to these other regions, Asia has not seen migrants grow as a share of its population -- even though it is the largest regional supplier of migrants to other regions of the world. In other words, Asia has been practicing an unbalanced globalization.

In fact, migrants have accounted for a mere 1.4-1.6% Asia's population over the past twenty years, about half migrants' 3% share of the total world population. In sharp contrast, migrants' share in North America's population has increased from 9.8 per cent in 1990 to 14.2 per cent in 2010, a jump of some 45 per cent. And migrants' share of Europe's population has risen from 6.9 per cent to 9.5 per cent over the same period, an increase of 38 per cent.

The result is that Asia's share of the world migrant stock fell from 14.7% in 2000 to 12.9% in 2010. And yet there are historic demographic transitions taking place in Asia, with different timing and different speeds, that offer great opportunities for the older, labor-scarce Asian countries of Japan, Korea and Taiwan to benefit from increased migration from their younger, labor abundant Asian neighbors like India, Indonesia and the Philippines.

Three population transitions are potentially taking place in Asia.

First, there is the demographic transition due to lower mortality and fertility rates, and the resultant higher life expectancy. There is also an "ageing" of the population as the average age of the population increases, and a rise in the "dependency ratio", as the dependent population of seniors and youth grow as a share of the total population.

Japan, Korea and Taiwan are very advanced along this demographic trajectory. Fertility rates are below replacement, at 1.4, 1.2 and 1.1 respectively. Life expectancy is high at 83, 81 and 79. And the proportions of their populations above the age of 65 are high and rising, at 24%, 11% and 11% respectively. Hong Kong and Singapore are experiencing similar trends.

As a result, Japan's population has already starting falling, and could decline from its present 128 million to 96 million by 2050. And it is just a matter of years before Korea's and Taiwan's populations also begin declining.

Due to a combination of the one child policy, and declining mortality and fertility, China is also experiencing a very rapidly ageing population, which is set to decline too.

India, Indonesia and the Philippines (and some other countries) are having a very different demographic experience. Fertility rates have declined more slowly and are still high at 2.5%, 2.3% and 3.2% respectively. The proportions of their populations above the age of 65 are low, at 5%, 6% and 4% respectively.

Their populations are slated to keep growing, even though they will also age due to declining fertility and mortality rates. India's current population of 1.3 billion, could rise to 1.5 billion by 2025 (exceeding China) and further to 1.7 billion in 2050. Similarly, Indonesia's population could rise from 240 million to 270 million and then to 310 million over the same time period, while that of the Philippines is on a rising path of 96 million, 118 million and 155 million.

In short, Asia is in the midst of great demographic diversity, although all countries are experiencing population ageing.

A second population transition can occur if the labor supply starts to decline, as more people shift out of the working age group into retirement than move out of youth into the working age group. Japan's working age population started declining in 1995, while those of Korea and Taiwan could start declining in the coming years. China's working age population actually began its fall in 2012.

And lastly there can be a third transition, a migration transition, if a country responds to the effects of being an older, labor-scarce country by admitting foreign immigrants. In light of the advanced demographic transitions underway in Japan, Korea, Taiwan, Hong Kong and Singapore, there are compelling reasons for them to open their doors to immigrants. But while Hong Kong and Singapore have opened their doors, Japan, Korea and Taiwan have been more reluctant to do so.

There are also great economic incentives for Asians to migrate. Older, labor-scarce Asian countries are rich and prosperous, with much higher wage rates for even unskilled labor. For example, GDP per capita in Singapore and Japan is over $40,000, while it is above $30,000 in Hong Kong and over $20,000 in Korea. And younger, labor abundant countries are relatively poor. For example, GDP per capita in Indonesia is around $3,000, in the Philippines about $2,000, and in India around $1,500.

So what are the patterns of migration in East Asia?

Japan, Korea and Taiwan have basically open policies towards skilled migrants, but closed doors to other migrants. These economies have not, however, managed to attract large numbers skilled migrants. None of their capitals is a "global city", and they are basically closed, homogeneous societies -- which means that they are not attractive destinations for high-skilled global citizens and their families. Japan's capacity to attract skilled migrants is also constrained by its narrow list of professions classified as skilled, which does not include nurses or care workers.

Thus, most of the immigrants to Japan, Korea and Taiwan are not high-skilled, and large numbers are "undocumented", a consequence of the difficulty obtaining work permits. In all three economies, marriage migration is a growing trend between their men and women from China and South East Asia.

Japan's 2.2 million migrants (1.7% of the population) are made up of the following groups. About 27% of migrants in Japan are Korean, some of whom are descendants of people forcibly moved to Japan during its occupation of Korea in the first half of the 20th century. Chinese migrants now make up 31%. They are either students, "trainees", or wives in arranged "migration marriages". Then there are people Japanese ethnic origin, mainly lower-skilled, coming from Brazil and Peru, who make up 12% of the population. And finally there are about 200,000 Filipinos who are students, "migrant-wives", or "entertainers" for Japan's sex industry. Some of these immigrants have "undocumented status", as they have stayed on after a tourist or other visa has expired.

Korea has about 1 million immigrants, about 2 1/2% of its population. It has recently replaced a trainee scheme with an employment permit system, with limits on stay and settlement. About half of Korea's migrants come China (often ethnically Korean), and much of the rest from South-East Asia. Most are low skilled. Taiwan also has mainly low-skilled workers from Indonesia, the Philippines, Vietnam and Thailand.

Hong Kong and Singapore are following a fundamentally different model. They welcome skilled, professional immigrants and their families to enter and settle. They consider that foreign talent is essential to economic growth and prosperity. In fact, Singapore has been more successful in attracting highly educated immigrants (22% of total) than Hong Kong (11% of total).

They also accept large numbers of less-skilled immigrants, without their families, on a temporary basis, rotating them in and out of the country. Many of these less-skilled immigrants are domestic helpers from the Philippines and Indonesia. The restrictions placed on these immigrants would not be permissable in most OECD countries, notably the extended duration of work permits during which no family reunification is allowed, and the exclusion of permanent residence for long-time foreign workers.

Overall, both Hong Kong and Singapore have immigrant populations which represent about 40% of their total populations (Macao is a similar case with migrants accounting for 55% of its population).

In short, Japan, Korea and Taiwan, as old and labor-scarce economies, have not taken advantage of the "demographic opportunity" of accepting large numbers of migrants from their younger and labor-abundant neighbors -- in contrast to the cases of Hong and Singapore.

What exactly are these wasted migration opportunities?

As shown by the experience of many countries, like the US, UK, Canada, and Australia, as well as Hong Kong and Singapore, skilled and entrepreneurial immigrants can be a important source of economic growth. It has been estimated, for example, that immigrant-founded technology companies in the US generated $52 billion in revenues and created 450,000 jobs between 1995 and 2005.

The cases of Chinese and Indian immigrants have also demonstrated that they can be very important in terms of forging international trade and investment links. And there is reason to believe that this economic boost could be very powerful in old, labor-scarce economies because migrants are typically young in age.

Japan in particular is in desperate need of a boost to its growth after two lost decades. The same could also apply to Korea and China as their societies continue to age rapidly. And a sharp increase in skilled immigrants, together with pro-business deregulation and greater openness to foreign investment could provide a strong boost.

Immigrants can also fill gaps in the labor market which can be acute in old, labor-scarce economies. They can provide necessary services for ageing societies, notably in the health and care sectors. Immigrants can perform many so-called "3-D" (dirty, difficult and dangerous) jobs, including in the agricultural and construction sectors.

And lastly, more open migration can be very important in terms of building a peaceful and prosperous Asian community. With Japan being openly criticized, and even harassed at times, by China and Korea over territorial disputes, acts of economic friendship to its young, labor-rich neighbors can be a good diplomatic investment.

In conclusion, it is regrettable that Japan, Korea and some other Asian countries are wasting many migration opportunities with their labor-rich neighbors. They are too focussed on preventing migrants from entering and settling, and protecting their culture and identity, rather than considering immigration as a potential motor of economic growth and prosperity, and ultimately societal wellbeing.

Author

John West
Executive Director
Asian Century Institute
www.asiancenturyinstitute.com
Tags: asia, migration, demography, demographic dividend

Social share