Getting migration to work effectively for Vietnam

VietNamNet Bridge 24/05/2008 (GMT+7) - What do you do when you’ve got 1.6 million people scrambling for jobs each year, a fifth of all rural workers working below their full-employment capacity, and an economy which, despite growing at an impressive clip of around 8 per cent per year, is unable to absorb them all?

One option to address the issue is to export working-aged people to countries where labour is scarce. It’s an idea the government has taken on board and is pushing as a panacea for Vietnam’s massive job-creation needs.

“In the next 10 and 15 years, labour exports [will be] an important strategy to job creation,” National Assembly member Dang Nhu Loi told delegates at a meeting of regional parliamentarians in Seoul last August.

Private companies have been allowed to export labour since 1999, before which the industry was state-controlled and directed at former Soviet block countries. Estimates now suggest that over 150 companies are involved in labour export.

Early migrants travelled to factories in Japan and South Korea. Later, markets opened in Taiwan and Southeast Asia where high demand for factory and domestic staff was met by low-wage Vietnamese labour.

More recently, markets in the Middle East, Europe and Australia have provided opportunities in sectors like construction and shipping, adding to the list of possible overseas jobs. Vietnam hopes to have one million short-term contract workers overseas by 2010, up from roughly 500,000 now.

In its 2006-2010 five-year plan, it set an annual target of 100,000 people/year, and this looks doable: Kuwait alone has said its demand for Vietnamese workers might reach ‘millions,’ while Qatar and Saudi Arabia have suggested they could absorb up to 100,000 in coming years, the Foreign Affairs Ministry’s Dinh Xuan Luu told VietNamNet online newspaper last year.

In 2005, the most recent year for which figures are available, the government believes that around $1.6 billion was repatriated by people working overseas on contracts arranged by labour export companies.

These remittances, so the theory goes, increase the earning power of family members back home and create spending ripples which reverberate through the local economy. New spending leads to new investment which requires labour and leads to job creation. For the poorest families, remittances can mean the difference between food shortage and security.

In a 2007 study, ‘Changing Transitions to Adulthood in Vietnam’s Remote Northern Uplands,’ the Population Council, Bussarawan Teerawichitchainan and her co-authors recorded the impact of a job in Taiwan on the life of a young Nung minority woman from Thai Nguyen province.

The woman worked as a domestic helper and, after a year spent paying off the debts she had incurred preparing her trip, she was able to send home most of her monthly salary. On her return to Vietnam after two-and-a-half years in Taiwan she bought a truck: “Now…[her] main income comes from transporting agricultural products to market. [She] hires villagers to grow rice” and is no longer dependent on the land for her family’s survival, the report noted.

This virtuous cycle - in which overseas work brings home income that can raise a family’s living standards while also contributing to others via new employment - is one the government is keen to develop.

But while many labour migrants, as well as the communities from which they hail, are benefiting from the freedom to seek work overseas, others are falling prey to abuse and the confusion of finding themselves knee deep in debt where they had expected to swimming in profits.

Printing money for the poor…

The multiplier effect of remitted earnings on Vietnam’s poorer communities matters hugely. In its 2006-2010 plan the government targeted a reduction in poverty to 10-11 per cent in 2010 from 24 per cent in 2004. It sees labour migration as one way to reach that goal.

In the plan, the government notes that a key solution to the problem of excess labour is to “expand labour export markets and create opportunities for labourers to participate in [these] markets.”

Academic research supports up the government’s policy choice.

Last year, in the Journal of Agricultural Economics, Alan de Brauw and Tomoko Harigaya used data from the Vietnam Living Standards Survey to show that most of the per capita expenditure growth - the amount by which individual spending rises each year - in families which received remittances could be “attributed to migration.”

And in a 2005 study for the UN’s Population Fund, Dang Nguyen Anh found that “remittances directly increase the household income of [receiving] families…in many cases [by] over 50 per cent.”

He added, too, that remittances can be “less volatile than other financial inflows” offering sustainable income to families in rural areas whose lives are “significantly improved by migrant remittances.”

Most such families live in the countryside where underemployment is rife and new job opportunities hard to create, so labour export offers an effective and targeted way to raise the earning potential of those most in need.

The experience of working overseas can also broaden a worker’s skills base and equip him or her with the money and confidence to invest in a better life once their contract expires and the worker returns home.

“They do benefit,” said Sinapan Samydorai, convener of the Taskforce on ASEAN Migrant Workers in Singapore.

…But making them pay for the privilege

But the picture is not as rosy as it looks, and a growing litany of horror stories from overseas is forcing the government to tighten controls on this rapidly developing industry. Last month, in recognition of the need for more control, it held a national consultation on the promotion and protection of migrants.

Recruiters from labour exporting companies focus much of their effort on the rural poor: people who, while most in need of the income migration could provide, are also relatively uneducated and provide easy fodder for unscrupulous middlemen.

People desperate to find a better life beyond their village may mortgage valuable assets like land or buffalos to pay an arrangement fee or travel expenses leading to a job that proves less lucrative than promised.

In its report, the Population Council found families who had taken out bank loans or sold and mortgaged land or animals to pay the fees necessary to send someone overseas, only to discover that the likely returns would not cover their debts.

“My sister applied to work in Malaysia. My family spent VND3-4 million for her to prepare for her trip…[and] planned to borrow VND20 million from the bank to pay for the air ticket and commission fees,” the report quoted one interviewee as saying. “Just before we borrowed the money, my sister…learned that [her net salary] would most likely not [be] enough…to send home to pay the debts.”

This family wrote off its initial investment and was able to avoid further debt. Others are less fortunate, discovering only on arrival in a foreign country and deep in debt that their earnings are too low to pay off debts owed to labour exporters, cover their living expenses, and still have money left over to remit to their families.

Their woes are being exacerbated by unethical hiring in some receiving countries, where Vietnamese workers arrive to find the terms of their contract have been changed: working hours increased, salaries reduced, or terms of employment changed in other ways.

Supervisors employed by labour export companies to monitor activities do little to improve working conditions because “it’s their job to prevent the workers from leaving the company” that has employed them, according to the ASEAN Taskforce’s Samydorai.

If a worker does leave his or her employer, a fee must be paid to the exporting company. The worker’s passport may be withheld until the fee is paid, he added. Recently, such problems have been particularly severe in Malaysia where, according to Malaysian government figures, almost 89,000 Vietnamese workers arrived to work in 2006 (the most recent year for which figures are available).

In an effort to improve monitoring of the way foreign workers are treated, the Malaysian authorities have signed memoranda of understanding with several countries, including Vietnam. It is also reviewing immigration policies.

But abuses continue, in Malaysia and in other countries.

With little union support or legal protection in receiving countries, desertion rates among Vietnamese workers who are mistreated have sky-rocketed in recent years.

In 2005, desertion rates in Taiwan were so high that the Taiwanese authorities imposed a temporary freeze on hiring Vietnamese workers while it negotiated a new labour standard contract with the Vietnamese government.

In Japan, some companies hold back the bulk of workers’ salaries until they have completed their full contract in order to prevent desertion: a practice that severely penalises workers who must send back monthly remittances or repay debt incurred when finding overseas work.

On returning to Vietnam, not all workers enjoy the benefits reaped by the Nung woman identified by the Population Council and her family.

Most have worked in low-skilled jobs overseas and are ill-equipped to launch their own enterprises, especially those who hail from poor areas where few obvious opportunities exist.

Another problem is a lack of business infrastructure, notes Samydorai: “They lack access to credit, marketing and many of the other services needed to build a business,” he said.

Others return to families who have tired of waiting for an increasingly estranged wage earner or are unable to connect with the person who’s been influenced by years spent in a different culture. “Many have trouble reintegrating’ and may sign up for more overseas work rather than attempt to reconnect with an alien community,” Samydorai noted.

For those who never leave, money remitted by migrant workers can raise the cost of living in their home community and deepen their daily struggle for survival instead of lessening it as the government hopes.

In search of a solution

A number of initiatives are underway to strengthen migration’s positive effects while lessening the pain it can cause to families and communities whose expectations are not met.

Better pre-migration training, language and cultural preparation are being pushed by the government to ensure that workers are prepared for their destination, and efforts are in place to maximise the financial benefits that can be reaped from the process.

Hanoi also wants to increase the export of skilled labour to keep Vietnam competitive in an increasingly cut-throat industry, although upgrading the skills levels among migrant labourers could lessen the policy’s impact on poverty alleviation by cutting the number or poor and relatively uneducated people able to travel.

March’s National Consultation came up with a series of additional suggestions: the government should improve monitoring of labour export companies, create one-stop-shops through which potential migrants can access information and apply for jobs, provide Vietnamese-language translations of overseas contracts and other documents, provide legal aid to workers while they are outside Vietnam, and improve monitoring of conditions in receiving countries. Some of these things are under consideration.

But according to Samydorai, the most critical issue is implementation of existing rules, not the creation of new ones. He notes that Vietnam has signed several international agreements on migrant labour protection but is failing to enforce them. “They need to start to implement their ILO, UN Convention’ and other promises,” he said.