Abstract
Background
As the starting point of the journey of migrant workers, the recruitment process has a domino effect on their subsequent experiences and can define whether the migration project will be beneficial or deleterious for migrants. Private recruitment agencies (PRAs) are key stakeholders in temporary labor migration in Asia, mediating between aspiring migrant workers and employers in regional and international labor markets. The fees charged by PRAs for their services have become an issue of concern because of the excessive costs borne by migrants. Exorbitant costs put migrants at a disadvantage, rendering them vulnerable to indebtedness, even while they are still in their home countries. Migrants who encounter appalling conditions in the destination countries may be constrained from seeking redress for fear of losing their jobs and sinking further into indebtedness. The protection and development implications of recruitment processes have advanced the issue of recruitment reforms on the international agenda.
As an alternative to fee-charging PRAs, government-to-government (G2G) arrangements between origin and destination countries are proposed as an option. G2G was the mode of recruitment of the guest worker program in western Europe from the 1950s to the early 1970s. The migration regime that developed in the Gulf Cooperation Council (GCC) countries from the 1970s veered away from the G2G scheme, relying on PRAs for worker recruitment and designing a scheme aimed at keeping labor migration temporary. The use of PRAs also became standard practice in destination countries that later emerged in East and Southeast Asia. How do G2G arrangements compare with PRA-to-PRA or P2P?
This study sought to provide an evidence-based comparison of the G2G and P2P arrangements, assessing their outcomes on three aspects: labor migration governance, cooperation between origin and destination countries, and worker protection. The study focused on two migration corridors that represent these two types of recruitment processes: the Philippines–Republic of Korea (hereafter Korea) migration corridor, which is governed by Korea’s G2G agreement with origin countries (under the Employment Permit System or EPS), and the Philippines–Taiwan migration corridor, where the recruitment of migrant workers is mostly through PRAs. Supported by The Korea Foundation, the study was coordinated and implemented by the Scalabrini Migration Center, in partnership with the Migration and Research Training Centre in Korea and the Taiwan Action Research Association in Taiwan. Data collection was carried out between April and October 2018. All three countries conducted a review of migration policies and data, collected primary data through key informant interviews, focus group discussions and group interviews with key stakeholders, and carried out a survey of migrants prior to their departure (in the Philippines) and onsite (Korea and Taiwan).
Policy contexts
All three countries have developed institutional frameworks to govern temporary labor migration.
As an origin country, the Philippines’ comprehensive legal and institutional framework addresses all phases of labor migration, offering programs and services to migrants before migration, while migrants are onsite and upon their return to the country.
There are three modalities for the legal recruitment and deployment of overseas Filipino workers (OFWs): through PRAs, through the Philippine Overseas Employment Administration’s (POEA’s) Government Placement Branch (GPB) for G2G agreements and as name hires or direct hires, i.e., OFWs who find employment without the assistance or involvement of PRAs or GPB. 1 Of the three modalities, 9 in 10 new hires deployed every year are recruited by PRAs. Licensed PRAs number 1,266, which consist of 866 agencies recruiting and placing land-based workers and 400 manning agencies attending to sea-based workers. The PRAs must comply with various requirements to be allowed to operate.
Except for household service workers, the Philippines allows PRAs to charge recruitment or placement fees from applicants, capped at the equivalent of one-month salary. Despite the cap (or no placement fees for household service workers), overcharging is common. As part of regulating the migration industry in the Philippines, the local PRAs are held accountable under the joint and solidary liability (JSL) for all claims and liabilities that arise in the implementation of the contract. PRAs are also required to provide insurance for the workers they recruit. The JSL and mandatory insurance provide basic protection to agency-hires.
Both Taiwan and Korea were emigration countries before they transitioned into countries of immigration in the mid- to late-1980s. They had to bring in foreign workers to fill labor shortages. In the early years, both experienced high levels of irregular migration and thereafter established a system to bring in foreign workers. In 1992, Taiwan passed the Employment Service Act, the country’s first comprehensive law to legalize and regulate the hiring of blue-collar foreign workers. Since then, Taiwan sourced foreign workers from Southeast Asian countries (initially, Indonesia, Malaysia, the Philippines and Thailand, adding Vietnam later).
Korea initially followed Japan’s trainee program, admitting trainees rather than workers, to address labor shortages in Korea’s industries. As in Japan, the trainee program bred irregular migration and abuse and exploitation of trainee-workers throughout the 1990s. Korea eventually acknowledged its need for foreign workers with the enactment of the EPS in 2003. The EPS is based on a G2G agreement with origin countries, currently numbering 16. Korea partners and cooperates with the government in origin countries to handle the testing, recruitment and preparation of workers, thereby removing the participation of PRAs. Upon arrival in Korea, migrant workers receive orientation before they are sent to their workplaces. Migrant workers receive the same treatment as Korean workers. Should they encounter problems, they can seek assistance from Support Centers for Foreign Workers, including assistance to transfer employers, if needed. The EPS is also unique in including programs and services to facilitate the return and reintegration of migrant workers to their home countries. The EPS was awarded first-place by the United Nations Public Service Awards in the category of combating public service corruption in Asia and the Pacific.
Taiwan adopted the scheme of other Asian destination countries, relying mostly on PRAs for the recruitment and management of foreign workers. Similar to Singapore, Taiwan levied employers of foreign workers, charging them a Foreign Workers Employment Stability Fee for every hired foreign worker. In addition, Taiwan imposed a single-entry and cap on the maximum length of employment, from an initial two years to the present cap of twelve years for all foreign workers and fourteen years for foreign caregivers. Compared with other Asian destinations, the salaries offered by Taiwan are higher (though lower compared to Korea), which makes it attractive to aspiring migrant workers. Then and now, high placement and brokers’ service fees burden foreign workers in Taiwan. Both the Philippines and Taiwan had made the fees charged in the Philippines and Taiwan transparent. As an alternative to PRAs, in 1999, the Special Hiring Program for Taiwan (SHPT) was signed between the Manila Economic and Cultural Office (MECO) and the Taipei Economic and Cultural Office (TECO) to formalize the hiring of OFWs without the participation of PRAs in the Philippines and manpower agencies or brokers in Taiwan. In 2015, the International Direct E-recruitment System (IDES), which is under the POEA and Service Center-Workforce Development Agency of Taiwan with the participation of MECO and TECO, was introduced. The majority of workers are still hired with the involvement of PRAs on both sides. Despite these alternatives, PRA-mediated recruitments dominate the hiring process.
Highlights from the study
Labor migration governance
Volume-wise, OFW migration to Taiwan has traditionally been larger than labor migration to Korea. Prior to 2004, the legal deployment of Filipinos to Korea was outnumbered by the number of Filipinos who migrated to and stayed in Korea under unauthorized circumstances. From 2004, when the EPS was in place, the numbers continued to be small because Korea has to allocate the total number of workers to 16 partner countries.
Between 2004 and 2018, a total of 59,166 EPS workers had gone to Korea. Between 2014 and 2016, on average, more than 62,000 OFWs (both new hires and rehires) were deployed to Taiwan every year, making Taiwan one of the top 10 OFW destinations. Presently, the Philippines ranks third (after Indonesia and Vietnam) as a source country of foreign workers in Taiwan.
As a destination country, entry to Korea is more restrictive (applicants must pass the language and skills tests; fewer workers are admitted) compared to Taiwan.
The G2G agreement with Korea covers all phases of migration, with both governments cooperating to promote the protection of workers. Compared to the Philippines’ G2G agreements with other countries (Saudi Arabia, as part of the Japan-Philippines Economic Partnership Agreement with Japan, triple win with Germany), the EPS with Korea is wide-ranging.
In the P2P arrangement, the Philippine and Taiwanese governments mostly play the role of regulating the private sector players. Despite governments’ efforts to regulate placement fees and brokers’ service fees, the enforcement of allowable fees remains weak, leaving OFWs paying hefty fees that erode their earnings. The brokers’ fees are especially burdensome for migrant workers because they do not see brokers as providing services or assistance.
By not involving PRAs, the G2G with Korea effectively frees applicants from paying placement fees. However, other application-related costs can be substantial, e.g., enrollment in Korean language school, transportation and other costs while waiting for deployment. EPS hopefuls are banking on the high income they will receive in Korea to be able to recoup their pre-migration expenses in a short period of time.
Irregular migration was very significant in both Korea and Taiwan. Presently, irregular migration has declined but not completely eliminated. Taiwan metes a penalty of NTD10,000 to runaways and overstayers; other countries impose jail terms and/or lashing in addition to fines.
Both Korea and Taiwan maintain a policy of no permanent residence for migrant workers in less skilled occupations. However, both countries have been extending the period of employment of legal migrant workers. In EPS, “sincere workers” (i.e., workers who did not change employers) can return to Korea; as mentioned Taiwan has a record of lengthening the period of employment of migrant workers.
An interesting contrast between Korea and Taiwan is the discussion on the possibility of permanent residence for foreign workers in Taiwan. The Taiwanese participants in this study considered this possibility in light of Taiwan’s demographic realities—declining growth rate and the ageing of the population.
Coordination between the Philippines and destination countries
Both migration corridors started several decades ago, and thus, the discussions between these countries are no longer confined to entry issues but now encompass worker protection and even return and reintegration in the case of the Philippines–Korea migration corridor.
The coordination between the Philippines and Korea is defined by the terms of the bilateral agreement between the two countries. The presence of HRD Korea-EPS Center in the Philippines helps in efficiently responding to issues and problems.
Key informants hold a positive view of the coordination between the Philippines and Taiwan. Filipino key informants do not consider Taiwan’s lack of international recognition as a problem in engaging with Taiwan concerning labor migration. The two governments have biannual bilateral meetings and they have created a technical working group which addresses operational and minor issues. According to Philippine government officials based in Taiwan, they have cordial relations with Taiwan authorities.
Worker protection
Philippine government officials interviewed in this study consider Korea and Taiwan as good destinations for OFWs because both offer high salaries and protective environments. These are also backed by welfare-related data. For example, POEA data on requests for repatriation assistance for the years 2016–2018 were lowest for East Asia compared to other regions. In East Asia, there were more requests for repatriation assistance sought for OFWs in Taiwan than those (non-EPS workers) in Korea. Data on disciplinary action cases filed between January 2012 and December 2018 indicate fewer cases in Korea than Taiwan (212 versus 280). In Korea, most of the cases were disciplinary actions against workers (92 percent), while in Taiwan it was divided between cases filed against workers (42.5 percent) and employers (57.5 percent).
In Taiwan, stakeholders generally see improvements in how foreign workers are treated in society; the issue of brokers’ fees, however, remains unshakeable. NGO key informants in Taiwan generally see the need for more reforms to promote the protection of migrant workers. Those working as domestic workers, caregivers and fishermen (particularly those on distant water fishing vessels) continue to encounter problems with wages, days off and safety.
Key stakeholders in the Philippines are not fully convinced that G2G is more protective of workers than P2P. G2G may incur lower financial costs for migrant workers, but it is also lacking in two basic protections. For one, there is no joint and solidary liability in G2G whereas in P2P, when workers encounter problems, the POEA can run after the PRA in the Philippines. For another, G2G hires are not provided with mandatory insurance. In fact, G2G hires have coverage. Sec. 131 of the 2016 Rules and Regulations states that for G2G hires, “the Administration shall, through relevant guidelines, establish and administer a Foreign Employer’s Guarantee Fund (FEGF) which shall be answerable for the overseas Filipino workers’ monetary claims arising from breach of contractual obligations. The same must be included in bilateral agreements on government-to-government hiring.” However, not much has been heard about the use of the FEFG to cover G2G hires who encountered problems.
For EPS workers, the clearest benefit is the high income in Korea (USD1,400/month), which is about twice as much as the monthly income of OFWs in Taiwan (NTD23,100 in 2019 or USD747; NTD17,850 for foreign caregivers and domestic workers or USD577).
Based on workers’ ratings of the level of protection in Korea and Taiwan on a five-point scale (with five as highest), EPS workers rated the level of worker protection in Korea with a mean rating 4.01 (SD=0.996) compared with a mean rating of 3.71 (SD = 1.092) by OFWs in Taiwan.
Discussion and conclusion
In comparing the EPS and P2P, the study found pros and cons of these recruitment modalities as viewed by different stakeholders.
The bilateral agreement under EPS does entail more government-to-government cooperation than the mostly P2P arrangement of OFW labor migration to Taiwan. The G2G cooperation seems more evident in the pre-migration stage, particularly in the management of the language and skills tests. Overall, however, the bilateral cooperation is largely defined by Korea’s concerns and interests.
In the cooperation with Korea, it would be worthwhile to explore how to improve bilateral cooperation in the area of return and reintegration.
In terms of worker protection, the EPS provides coverage for workers for most phases of migration. At pre-departure, the clearest advantage for applicants is the waiver of the placement fee. EPS workers also look forward to higher earnings and better protection in Korea.
Both modalities present different advantages and disadvantages for workers. EPS aspirants also have substantial pre-migration expenses; fewer qualified applicants are eventually selected; women applicants are less likely to be selected by employers; and the long period from application to actual deployment presents opportunity costs. Taiwan OFWs who apply through PRAs pay a placement fee to local PRAs and brokers’ service fees in Taiwan, which present a disadvantage to workers. Although workers consider salary deductions facilitative, the interest rates are high, as they later find out. However, their chances of getting employment are higher and the maximum length of employment is longer.
Concerning the needs of industries and employers, a G2G arrangement may not be responsive and efficient in meeting the need for large numbers of workers in industries. PRAs may be necessary to meet large-scale labor needs, but recruitment costs borne by employers and workers have to be defined.
In Taiwan, the brokers’ service fees paid by migrant workers over a three-year period total NTD 60,000 or USD 1,940. If they renew after the third year, migrant workers will continue to pay brokers NTD 1,500 every month. Since employers pass on or outsource personnel matters to brokers, these costs should be borne by employers rather than migrant workers.
For household or individual employers of caregivers and domestic workers, some Filipino participants (excluding workers) have expressed concerns that non-PRA hiring may disadvantage these workers because of the removal of JSL and mandatory insurance. Some participants also propose to reclassify caregivers into skilled workers to reflect the nature of their work and to enable them to receive higher earnings.
The findings also suggest specific areas for improvement for the different countries. For the Philippines, it needs to find ways to fill the protection gaps for G2G hires; for Taiwan, it needs to simplify the process of recruitment and to promote and offer incentives to encourage more employers to avail of direct hiring; and for Korea, the return and reintegration of EPS workers to their home countries would require further discussions with origin countries.
Neither the G2G or the P2P equally and satisfactorily meets the needs of governments, employers and workers. Governments and other stakeholders, thus, will continue to face the challenge of governing transnational labor markets that does not sacrifice the protection of transnational workers.
Footnotes
Declaration of conflicting interests
The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this paper.
Funding
This research was funded by The Korea Foundation.