JANUARY 2025 Migration: Leveraging Human Capital in the East Asia and Pacific Region A Companion Piece to the World Development Report 2023: Migrants, Refugees, and Society P180848 Social Protection & Jobs [Type here] [Type here] [Type here] © 2025 The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved. This work is a product of The World Bank. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. 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Migration: Leveraging Human Capital in the East Asia and Pacific Region. © World Bank.” Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. ii Migration: Leveraging Human Capital in the East Asia and Pacific Region A Companion Piece to the World Development Report 2023: Migrants, Refugees, and Society Social Protection and Jobs East Asia and Pacific The World Bank iii Contents Contents iv Acknowledgments ix Abbreviations xi Overview 1 Chapter 1. How is EAP migration unique compared to other regions? 8 Net immigration in the EAP region is growing rapidly 8 The types of migration and nature of migrants are diversifying 11 Mobility of high-skilled workers within the region has become less dynamic 13 Irregular migration persists 15 Spotlight 1.1. Internal Migration within China and Return of the Chinese Diaspora to China 17 Chapter 2. Demographic and skills differences drive migration in EAP 21 Limited job availability at home pushes people to move abroad 21 Box 2.1. Workers from Pacific Island Countries find formal employment opportunities in Australia and New Zealand 22 Wage premiums incentivize workers to migrate 23 The cost of migration is a formidable barrier for the poor 24 Workers go where there are good job opportunities 25 Aging populations and declining birth rates are fueling migration within the region 26 Technological change, migration policies, and other factors influence migration 27 Spotlight 2.1. Climate Change, Natural Disasters, and Migration in the East Asia and Pacific Region 29 Spotlight 2.2. Conflict-driven Migration in the East Asia and Pacific Region—The Case of Myanmar Refugees in Malaysia 31 Chapter 3. How does migration influence human capital development and reallocation? 33 Effects in origin countries 33 The impacts of migration on human capital: brain drain and brain gain 33 Box 3.1. Illustration of labor market effects from migration and resulting remittances 34 Box 3.2. The benefits of circular migration on human capital 36 Remittances contribute to human capital development 37 Remittances support macroeconomic stability 37 Much can be gained by reducing remittance costs 39 The impacts of migration and remittances on employment are varied 40 The impacts of migration and remittances on wages are complex 41 Effects in destination countries 41 Immigration typically expands the stock of skills in destination countries 43 Immigration can fill labor shortages in the short term 44 The net effects of migration on employment and wages in destination countries tend to be positive, but migration does not benefit all 45 Migration increases female labor force participation 46 Mismatches between qualifications and jobs reduce the benefits of migration 47 Chapter 4. How do migration policies expand gains from migration? 49 Migration policies reflect diverse and sometimes conflicting interests and objectives 49 iv How do migration policies expand net gains along the migration cycle? 51 Pre-migration: Skills development for better employment 51 Entry: Destination countries’ unilateral formulation on how many can enter, guided by labor needs 52 Box 4.1. Bilateral labor arrangements are a key tool to shape migration governance 53 Box 4.2. Restrictiveness of high- and low-skilled migration schemes 54 Protecting migrants during migration journey 55 Box 4.3. Protecting migrants during recruitment and in the destination country 56 Integration in host societies: Migration policy as a long-term development strategy 56 Return and reintegration in origin countries: Testing various policies to improve utilization of human capital 57 Spotlight 4.1. Turning Brain Drain into Brain Gain—Global Skill Partnerships 59 Chapter 5. Policy recommendations 62 Box 5.1. Migration, combined with other policies, is the best remedy to boost economic growth in an aging society like Japan 62 Strategies for origin countries 64 Box 5.2. International good practices governing migration systems 65 Strategies for destination countries with aging populations 68 Areas for bilateral and regional collaboration and international organizations 70 References 72 Appendix 1. Categorizations of countries in EAP 91 Appendix 2. Migration systems in EAP 92 Appendix 3. The EAP Migration Policy Database 105 Appendix 4. Policy scenarios using the adapted Global Integrated Monetary and Fiscal Model 111 Appendix 5. Major origin and destination economies in EAP 121 Appendix 6. Country pages 122 v Figures Overview Figure 0.1. Migration within the EAP region has expanded, except in some corridors .................................................2 Figure 0.2. Low- and high-skilled migration in EAP has increased .................................................................................2 Figure 0.3. Wage differences for the same occupation within the region are striking .................................................2 Figure 0.4. Many EAP countries are undergoing a transition from aging to aged and super-aged status ....................3 Figure 0.5. The restrictiveness of migration policies varies by skill level ......................................................................6 Chapter 1 Figure 1.1. Major destination countries are also those that are aging. .........................................................................9 Figure 1.2. Major origin countries are relatively young. ...............................................................................................9 Figure 1.3. Countries with slow population growth are also more likely to have higher shares of immigrants ...........9 Figure 1.4. Migration has resumed following mobility restrictions imposed during the COVID-19 pandemic .............9 Figure 1.5. Net immigration into EAP has been increasing over time ...........................................................................9 Figure 1.6. Most migration in EAP occurs within the region .......................................................................................10 Figure 1.7. Female migration has been increasing in EAP ...........................................................................................13 Figure 1.8. Migrants are typically younger in low- and middle-income EAP countries ...............................................13 Figure 1.9. Both low- and high-skilled migration in EAP have increased .....................................................................13 Figure 1.10. Low-skilled migration continues to make up most of the migration .......................................................13 Figure 1.11. EAP high-skilled workers go to non-EAP countries, while low-skilled workers move within EAP ...........14 Figure 1.12. China has been the main contributor to the growth of student migrants from EAP ..............................14 Figure 1.13. More than half of all student migrants from EAP are from China ...........................................................14 Figure 1.14. Changes in public perceptions on “Not wanting immigrants as neighbors” by age group .....................16 Figure S1.1.1. The number of rural-urban migrant workers in China expanded remarkably until the early 2000s ....17 Figure S1.1.2. Annual net emigration flows from China, 1978–2024 ..........................................................................19 Chapter 2 Figure 2.1. Lower-income EAP countries have higher unemployment and much higher rates of inactive youth ......22 Figure 2.2. Migrating from low- to higher-income countries can increase wages significantly ..................................23 Figure 2.3. Migration costs vary considerably across different modes of recruitment and corridors ........................24 Figure 2.4. Labor Shortage in Australia........................................................................................................................26 Figure 2.5. Thai firms’ demand for foreign workers became acute as they recovered from the COVID -19 pandemic ...........................................................................................................................................................................26 Figure 2.6. Top 5 skills sought after by online jobs ......................................................................................................28 Figure S2.1.1. Some EAP countries are highly vulnerable to natural disasters ...........................................................29 Figure S2.1.2. Climate change affects migration through income and habitability.....................................................30 Figure S2.2.1. Total refugees and asylum seekers from Myanmar and other countries in select EAP host countries, 2023 ...................................................................................................................................................................31 Figure S2.2.2. Refugees from Myanmar have very low labor force participation rates in Malaysia, especially women ...........................................................................................................................................................................32 Figure S2.2.3. Most refugees from Myanmar work in low-level jobs ..........................................................................32 Chapter 3 Figure 3.1. The complex impacts of migration on the labor force, remittances, employment, and wages ................34 Figure 3.2. The effects of migration and remittances on human capital and competitiveness ..................................34 Figure 3.3. Brain drain or brain gain? ..........................................................................................................................35 Figure 3.4. Emigration from and remittance inflows to EAP by destination ...............................................................38 Figure 3.5. Top 15 remittance-receiving countries in EAP...........................................................................................38 Figure 3.6. Impact of migration on GDP in origin country, scenario calibrations ........................................................38 Figure 3.7. Remittance costs varies widely across EAP countries (Q3 in 2023) ...........................................................39 Figure 3.8. A probability to become an employer rises as remittances rise (in migrant households in the Philippines) (y=percent, x=monthly remittances in US$) ......................................................................................................40 Figure 3.9. Effects of immigration on a rapidly aging economy: Various scenarios ....................................................42 Figure 3.10. The migrant share of the tertiary-educated population/workforce varies considerably in East Asia and Pacific .................................................................................................................................................................43 Figure 3.11. Singapore’s active management of flows of foreign workers has allowed it to expand the workforce quickly during economic booms and contract it during recessions ...................................................................44 Figure 3.12. Change in the number of native Malaysians employed due to 1 additional migrant .............................45 Figure 3.13. Effect on wages of a 1% increase in labor force equivalent increase in immigrants ...............................45 Figure 3.14. Share of migrants and female labor force participation in East Asia and Pacific ....................................46 Figure 3.15. The overqualification rate among immigrants differs by origin countries in East Asia and Pacific .........48 Figure B3.1.1. The complex impacts of migration on the labor force, remittances, employment, and wages ...........34 Figure B3.1.2. The effects of migration and remittances on human capital and competitiveness .............................34 Chapter 4 Figure 4.1. The number of immigrants into Japan has increased across all skill levels ...............................................52 Figure 4.2. The quotas for immigrants into Korea have increased ..............................................................................52 Figure 4.3. High-skilled migration schemes in EAP are typically subject to less restrictive measures ........................55 Figure 4.4. The Philippines provides comprehensive and targeted reintegration service for returnees ....................58 Figure B4.2.1. High-skilled migration schemes in EAP are typically subject to less restrictive measures ...................55 Chapter 5 Figure B5.1.1. Migration is the most effective policy to deal with aging in Japan, but a combination of policies, including migration, work even better ...............................................................................................................62 Appendix Figure D.1. Better use of resources available ............................................................................................................113 Figure D.2. Migration scenarios illustrating the housing effect.................................................................................114 Figure D.3. Population projections conditional on net migration .............................................................................115 Figure D.4. Migration scenarios and the effect of remittances on the origin country (the Philippines) ...................116 Figure D.5. Migration scenarios and the effect of Japan retirees temporarily moving to the Philippines ................117 Figure D.6. Japan’s high rates of return on foreign direct investment (across industries) ........................................118 Figure D.7. Illustrative FDI scenario ...........................................................................................................................118 Figure D.8. Illustrative technology scenario ..............................................................................................................119 vii Maps Chapter 2 Map 2.1. Aging population and working-age population needs .................................................................................27 Tables Chapter 4 Table S4.1.1: Various types of skill partnerships have been adopted in East Asia and Pacific ....................................61 Chapter 5 Table 5.1: Policy recommendations to enhance net gains from migration .................................................................64 Appendix Table A - 1: Destination, origin, and Pacific Island countries .......................................................................................91 Table A - 2: Aging and labor abundant countries ........................................................................................................91 Table A - 3: Low-skilled labor migration systems ........................................................................................................92 Table A - 4: High-skilled labor migration systems ........................................................................................................96 Table A - 5: Migration systems governing out-migration in origin countries ..............................................................99 Table A - 6: The types of migrants, objectives, and types of migration used to classify migration schemes ............105 Table A - 7: Dimensions of migration policy included in the database......................................................................105 Table A - 8: List of countries and migration schemes included in the database .......................................................107 Table A - 9: Major EAP origin countries by EAP destination countries (Share in the total immigrants, %) ...............121 Table A - 10: Major destination countries by EAP origin countries (Share of emigration in destination, %) ...........121 viii Acknowledgments This East Asia and Pacific Migration Report was prepared by a World Bank team lead by Matthew Dornan and Soonhwa Yi. Overall guidance was provided by Aaditya Mattoo, Chief Economist for East Asia and Pacific (EAP), Alberto Rodriguez, EAP Regional Director for Human Development, and Yasser El-Gammal, Practice Manager for EAP Social Protection and Jobs. The team also appreciate support extended by Lalita Moorty, EAP Regional Director for Equitable Growth, Finance, and Institutions. The Report was sponsored by the EAP Region Vice Presidency and the EAP Chief Economist office. The core author team comprised Zainab Binti Ali Ahmad, Ivan Crouzel, Dung Doan, Matthew Dornan, Ryan Edwards, Yashodhan Ghorpade, Daniel Halim, Yang Huang, Haykaz Igityan, Alyssa Farha Binti Jasmin, Asya Kostanyan, Douglas Michael Laxton, Jared Laxton, Hiroshi Maeda, Lolita Moorena, Amanina Abdur Rahman, Limon Bade Rodriguez, Mrittika Shamsuddin, and Soonhwa Yi. Fang Ling Cheng, Pimon Iamsripong, and Jinny Leong Jing Ling worked on formatting the report. Ruzita Binti Ahmad, Pimon Iamsripong, and Minh Thi Hoang Trinh worked with the team and managed the administrative aspect of the report. The team benefitted from the guidance and insights of the report’s Advisory Committee, comprising Pablo Acosta, Laurent Bossavie, Nazmul Chaudhury, Quy-Toan Do, David Gould, Caglar Ozden, and Mauro Testaverde. The team also appreciate peer reviewers of the report, including Pablo Acosta, S. Amer Ahmed, Quy-Toan Do, Wael Mansour, and Mauro Testaverde. The report benefited from comments and insights from the Bank’s EAP Chief Economist office, including Omar Arias, Alessandro Barattieri, Ana Maria Boudet, Daisuke Fukuzawa, Ergys Islamaj, Hillary Johnson, Aakash Mohpal, and Ezequiel Molina. Valuable inputs and guidance were provided by Geetanjali Chopra, Masud Mozammel, and Aiden Glendinning from the Bank’s EAP External and Corporate Relations. We appreciate inputs from Pyone Myat Thu from the Chulalongkorn University, Thailand, and her post-graduate students, Thang Kop Cin and Ei Yi Yin Phyu. The team appreciate the guidance and suggestions received during consultations with country management units in the East Asia and Pacific (EAP) region of the World Bank, including Tara Beteille, Kevin Chua, Andrea Coppola, Ndiame Diop, Kim Edwards, Jun Ge, Bernard Harborne, Christophe Lemiere, Yusha Li, Maria Ana Lugo, Elitza Mileva, Zafer Mustafaoglu, Habib Rab, Achim Schmillen, Ulrich Schmitt, Mariam Sherman, Gonzalo Varela, Thomas Walker, Kathleen A. Whimp, Judy Yang, and Fabrizio Zarcone. EAP Social Protection and Jobs colleagues provided comments and support in the process of preparing the report, including Paula Maria Cerutti, Kenichi Chavez, Yoonyoung Cho, Anastasiya Denisova, Duan Doan, Ning Fu, Sara Giannozzi, Sandor Karacsony, Anjani Kirana, Ilsa Meidina, Natalia Millan, Nga Thi Nguyen, Mongolmaa Norjinlkham, Robert Palacios, Kenia Parsons, Maniphet Phengsavatdy, Laarni Revilla, Ruth Rodriguez, Abla Safir, Manuel Salazar, Vicenzo Vinci, and Dewen Wang. Valuable guidance was received during consultations with other stakeholders, including Yosuke Kobayashi, Masato Koinuma, Kiyoko Saito, Atsuki Sakamoto, Junji Yasuma, and Hiroshi Yokoyama from the Japan International Cooperation Agency; Byun Chul Kim and Insoo Seo from the Korea Ministry of Justice; Hyo Jeong Lim and Hyuntae Mun from HDR Korea; Jessica Pan from the National University of Singapore; Walter Theseira from the Singapore University of Social Science; William Gois from Migrant Forum in Asia; Nilim Baruah and Anna Engblom from International Labour Organization (ILO) Asia and Pacific; Geraldine Ansart, Geertrui Lanneau, Vivian Liang, and Maximilian Pottler from International Organization for Migration (IOM) Asia and Pacific; Laura Macini and Pia Oberoi from OHCHR Asia Pacific; ix Basudeb Guha-Khasnobis and Wouter Thiebou from United Nations Development Programme (UNDP) Myanmar; and Jenna Holliday from the United Kingdom Foreign and Commonwealth Development Office (UK FCDO). The team benefited from various consultations and inputs from officials from Cambodia Ministry of Labour and Vocational Training, and Cambodia Immigration; Indonesia Ministry of Manpower and Indonesia BP2MI; Lao PDR Ministry of Labour and Social Welfare; Malaysia Ministry of Human Resources; Papua New Guinea Labour Mobility Unit; the Philippines Department of Migrant Workers, and the Philippines National Economic and Development Authority; Solomon Islands Ministry of Commerce, Industry, Labour and Immigration; Thailand Ministry of Labor, and Thailand Immigration; Timor-Leste Secretariat of State for Vocational Training and Employment; , and Vanuatu Ministry of Interior. Moreover, the team benefited from comments and suggestions from participants of the EAP Migration Core Course and Conference held on June 10–12, 2024, in Bangkok Thailand, which brought together some 100 participants comprising senior officials of governments in EAP as well as Bhutan and Nigeria, along with representatives from civil society, the private sector, international organizations, and academics. x Abbreviations APTC Australia Pacific Training Coalition ASEAN Association of Southeast Asian Nations BLA bilateral labor agreement COVID- 19 Coronavirus Disease 2019 EAP East Asia and Pacific ECA Europe and Central Asia EPS Employment Permit System (Republic of Korea) FDI foreign direct investment GCC Gulf Cooperation Council GDP gross domestic product GSP Global Skill Partnership HICs high-income countries ICT information and communications technology ILO International Labour Organization IOM International Organization for Migration LICs low-income countries MENA Middle East and North Africa MICs middle-income countries MOU Memorandum of Understanding MRA mutual recognition agreement NEET not in employment, education, or training OECD Organisation for Economic Co-operation and Development PALM Pacific Australia Labour Mobility PDR People's Democratic Republic PIC Pacific Island Countries SAR South Asia region SAR Special Administrative Region SSA Sub-Saharan Africa SSW Specified Skilled Worker (Japan) TESDA Technical Education and Skills Development Authority (the Philippines) TITP Technical Intern Training Program TVET technical and vocational education and training UN United Nations UN DESA United Nations Department of Economic and Social Affairs UNDP United Nations Development Programme UNHCR United Nations High Commissioner for Refugees WDR World Development Report xi Currencies A$ Australian dollar RM Malaysian ringgit US$ United States dollar xii Overview Migration in the East Asia and Pacific (EAP) region is growing in importance, shaped both by workers seeking opportunities abroad and by governments implementing policies to meet skills needs and stimulate economic growth. Most migrants in the region are economic migrants, voluntarily moving abroad in pursuit of opportunities. The region’s diversity, encompassing varying income levels, demographic structures, and types and amounts of human capital formation, is a driver of migration within the region (intraregional migration), especially for low- skilled workers. Rapidly aging populations in the region are accelerating this movement, with traditionally closed but aging countries like Japan and Korea increasingly easing visa restrictions and expanding labor migration quotas to address labor shortages. Origin countries are responding to this demand by creating official channels for their workers to pursue opportunities abroad. Such economic migration offers benefits for migrants and the countries involved, though challenges remain such as irregular migration and weak labor protections in destination countries. Governments also continue to grapple with the distributional impacts of migration and their political consequences, both in origin and destination countries. These opportunities and challenges underscore the need for policies that enhance the net gains of migration, and foster policy coordination and partnerships between origin and destination countries. Migration in the EAP region is on the rise Migration within the EAP region has expanded rapidly with immigrants more than doubling to 27.3 million and emigrants nearly tripling to 40.8 million between 1990 and 2020. Intraregional migration accounts for 68.6 percent of immigration into the region and is especially prevalent among low- and middle-income countries (LICs, MICs) (Figure 0.1). Low-skilled migration is the most common form of migration (Figure 0.2), but high-skilled migration and female migration are also expanding (see appendix C for a description of the World Development Report 2023 Migration Database). While most economic migration in EAP is temporary, high-income countries (HICs) like Japan and the Republic of Korea1 are creating pathways to permanent residency. By 2022, the number of permanent residents in Korea rose nearly tenfold since the reform of its immigration policies in 20082 (see appendix A for classifications of EAP countries as LICs, MICs, and HICs; appendix B for descriptions of EAP countries’ migration systems; and appendix E for country characteristics). The EAP region is a natural migration hub given its regional integration and diverse economic, demographic, and human capital characteristics. It has some of the most rapidly aging countries in the world, such as Japan and Korea, as well as countries with a significant young population, like Papua New Guinea (PNG), Lao PDR, and the Philippines, where job creation has been slow and informal employment is prevalent (see Chapter 2).3 These demographic and economic disparities drive significant intra-regional migration, as demonstrated by a strong link between GDP per capita and out-migration—over 90 percent of low-skilled migrants in Thailand and Malaysia come from neighboring LICs. Wage differentials also fuel labor mobility: Indonesian manufacturing workers can earn 7 times more in Singapore; 11 times in Hong Kong, SAR China; and 14 times in Korea (Figure 0.3). At the same time, irregular migration is a significant issue in EAP , particularly in destinations like Thailand and Malaysia, where many low-skilled migrants enter or stay without legal authorization. Factors contributing to irregular migration include misalignment of migration policies with labor demand, lengthy migration processes, and the high cost of regular migration, which make informal migration channels more attractive despite long-term disadvantages like lower wages and lack of social protection. Restrictive policies, exploitative work conditions, and 1 Hereafter, the Republic of Korea is referred to as Korea. 2 Korean Government (2024). 3 ILO (2024). 1 difficulties in changing employers also drive workers into irregular status (see Chapter 1). Effective reforms, like those that have formed part of Korea's Employment Permit System and which promote better governance, transparency, and social protections, have shown promise in reducing irregular migration and improving public perceptions of immigrants. However, challenges remain, with limited cooperation between origin and destination countries often complicating efforts to address irregular migration flows and improve labor protection. Figure 0.1. Migration within the EAP region has Figure 0.2. Low- and high-skilled migration in EAP has expanded, except in some corridors increased 12 12 Lao PDR in Number of immigrants Solomon in Thailand 10 Percent of Immigrants in 2020 10 Cambodia in Australia NZ in Thailand Australia 8 (millions) 8 Timor-Leste Malaysia in in Indonesia 6 Singapore Nauru in Kiribati in Myanmar in Kiribati 4 6 NZ Samoa in NZ Thailand Tonga in NZ 2 Fiji in NZ PNG in NZ Fiji in 4 Timor-Leste 0 Australia in Australia China in Korea, Rep. 2000 2010 2020 2000 2010 2020 2 Nauru in Hong Kong in Japan EAP (HICs) EAP (LICs and MICs) Australia SAR, China 0 High-skilled Low-skilled 0 2 4 6 8 10 12 Percent of immigrants in 1990 Sources: UN DESA (United Nations Department of Economic Sources: World Bank, World Development Report 2023 and Social Affairs) and World Bank, World Development Migration Database. Report 2023 Migration Database. Note: EAP = East Asia and Pacific; HICs = high-income Note: EAP = East Asia and Pacific; NZ = New Zealand; PNG = countries; LICs = low-income countries; MICs = middle- Papua New Guinea. income countries. Figure 0.3. Wage differences for the same occupation within the region are striking 5,000 Monthly wages (constant US$) 4,000 3,000 2,000 1,000 0 PHL SGP KOR AUS IDN PHL SGP HKG KOR AUS IDN PHL SGP KOR JPN AUS IDN SGP KOR HKG AUS PHL KOR AUS IDN SGP KOR AUS Computing Manufacturing workers Nurses Salespersons Secondary Truck drivers professionals education teachers Sources: World Bank staff calculations based on Occupational Wages around the World (OWW) Database. Note: Data are for the most recent year available, either 2006 or 2008. AUS = Australia; HKG = Hong Kong SAR, China; IDN = Indonesia; KOR = Republic of Korea; PHL = the Philippines; SGP = Singapore. Labor migration is a priority for rapidly aging countries in EAP Demographic changes will likely continue to drive migration in the EAP in coming decades, given their implications for labor markets (Figure 0.4). Aging countries like Korea, where about 40 percent of the population is expected to be elderly by 2050, will increasingly face a shrinking labor force and growing old-age dependency 2 ratios, the effects of which technological change is likely to only partially mitigate (Figure 0.4). Meanwhile, countries like the Philippines, PNG, and Solomon Islands are projected to see growing youth populations (ages 15- 24) until 2050 (Figure 0.4). These labor supply and demand differences will impact labor market dynamics and wages, driving migration in the process. Figure 0.4. Many EAP countries are undergoing a transition from aging to aged and super-aged status a. 2023 b. 2050 50 50 15-24 65+ 15-24 65+ Share of population (%) Share of population (%) 40 40 30 30 20 20 10 10 0 0 Source: UN DESA (United Nations Department of Economic and Social Affairs), medium fertility variant. Economic modelling undertaken for this report illustrates that migration can potentially benefit both origin and destination countries in coming decades, particularly when involving the movement of labor from surplus to deficit countries. The report’s new purpose-built macroeconomic model shows how a moderate increase in migration to a rapidly aging country like Japan could slow GDP decline, boost labor force participation, and expand the tax base (see appendix D for details on the macroeconomic model and assumptions). More low-skilled migration could also slow relative wage increases in the non-tradable sector, thereby preventing a loss of overall productivity in the economy by keeping resources in the (more productive) tradable sector. Origin countries in turn could benefit from GDP growth driven by resulting remittances, regardless of the skill composition of migrants. While illustrative, the model highlights that migration can benefit both origin and destination countries with different labor and capital stocks. Labor migration contributes to higher incomes and human capital development, but not all benefit As discussed extensively in the World Development Report 2023 (World Bank 2023), migration generates large income gains, and resulting remittances support livelihoods, reduce poverty and build human capital in migrant households and communities. Migrating allows workers to earn significantly higher incomes. Elementary job workers, such as laborers and helpers, can potentially earn over ten times more in Australia than in some PICs, twice as much in Thailand than in Myanmar; and 3.4 times more in Malaysia than in Indonesia. Higher-skilled workers can see even greater earnings - Filipino nurses and doctors earn 12.8 times more in the United States and Vietnamese skilled workers earning 16.5 times more. Resulting remittances provide stable foreign exchange in the origin country, supporting household consumption, boosting investment in education and health care. In Cambodia, international remittances have increased total daily per capita consumption by 12 percent to 14 percent, reducing poverty by 5 percentage points to 6 percentage points.4 In Viet Nam, remittances increase schooling, reduce child labor, and increase children’s grade completion.5 But high remittance costs reduce these 4 Roth and Tiberti (2017). 5 Binci and Giannelli (2016) and Nguyen and Nguyen (2015) 3 benefits. Some corridors in the EAP region, especially in the Pacific, continue to face stubbornly high remittance costs, due to limited competition and regulatory and compliance costs, among other factors. The impact of migration on human capital varies across countries. In destination countries, migrant workers often fill labor gaps and shortages, enhancing the economy’s human capital, although they may also create competition with native workers (as discussed below). In origin countries, migration can lead to brain drain, especially in small Pacific Island Countries (PICs), and in critical sectors like healthcare. The impact of brain drain depends on the context. However, evidence from EAP suggests that migration can also result in “brain gain” by increasing spending on education and healthcare through remittances and incentivising higher education and skill development, as seen in the Philippines and Fiji (see Chapter 3). The scale of such impacts depends on factors such as flexibility of education systems and time horizons in question. At the same time, common mismatches between skills obtained in origin countries and jobs in destination countries can lead to brain waste. Despite the net economic benefits of migration, these are not equally distributed. In destination countries, while high-skilled workers may see a small positive effect on wages, low-skilled workers whose skills are similar to those of migrants can potentially face unemployment and reduced wages (see chapter 3). The labor market effects of migration vary: for instance, migrants in caregiving services for children and the elderly can allow native women more time to work, thereby boosting female labor force participation, but may also compete with native or existing migrant women who are employed in such work. Migrants working in low-skilled occupations that natives are unwilling to take (such as construction and low-skilled services) can complement native workers and help them to specialize, yet they can also substitute for native or existing migrant workers, impacting labor market outcomes. Although these distributional impacts are generally less pronounced in HICs in EAP, partly because inflows of low-skilled workers are targeted at vacancies not filled by existing workforce, concerns remain, especially in MICs like Malaysia which host large numbers of foreign workers. These can influence public support for migration, making it essential to address potential negative impacts through coordinated migration policies. In origin countries, not all directly benefit from migration. Labor outflows can ease pressures on unemployment and may increase wages for workers with similar skills. But the wage impact and distributional consequences of migration depend on who migrates. In the Philippines, emigration during the 2000s led to a rise in real wages in the manufacturing sector.6 In Myanmar, high emigration rates from Mon State to Thailand increased wages of unskilled agricultural workers, with evidence that this in turn prompted farmers to adopt cost-savings technologies, improving labor productivity and leading to skills upgrading.7 By the same token, out-migration also has the potential to lead to labor and skills shortages in the short-term, especially in areas or in sectors with high migration. This effect is exacerbated where internal migration within the country is limited, making it hard to fill such shortages, and where education systems are inflexible to changes in labor market demand. The poorest in origin countries may lack access to migration opportunities due to burdensome migration costs. Many workers from low-income households lack financial resources to cover migration expenses such as recruitment agency fees, medical clearance, and travel costs. Workers from EAP countries tend to incur less burdensome costs than their counterparts from South Asian countries, but some low-skilled workers nonetheless incur costs equivalent to several months of earnings in their destination countries (see chapter 2). This financial barrier prevents the poorest from accessing overseas opportunities, worsening economic inequality and can also lead to irregular migration.8 6 World Bank (2006) 7 Filipski, Thome, and Davis (2020) 8 While there is no universally accepted definition, irregular migration in this report refers to crossing international borders without legal authorizations or staying in a host or transit country without valid legal status. 4 Not all migrants gain from migration, and weak social protection for migrant workers can leave them in precarious situations. Some migrants, especially low-skilled ones, are underpaid, with employers making unreasonable and often illegal deductions from wages or ignoring minimum wage agreements.9 Restrictions on changing employers can further exacerbate the vulnerability of migrant workers. Female migrants can be particularly at risk of gender-based violence. Irregular migrants generally face poorer conditions due to their exclusion from formal labor and social protection, highlighting the importance of ensuring that there are regular channels in place where labor markets are in need of migrant workers. Policy reforms are urgent to harness the benefits of migration Migration outcomes are shaped by policies that determine who migrates (including who can/cannot migrate); where they migrate to; and the conditions linked to such migration (for example, job matching, employment rights and duration of migration). These policies are the product of compromises between the conflicting interests and perceptions of various actors (including the general public), and in turn, of different policy objectives, including national security and economic objectives.10 Globally, disaffected groups who are (or are perceived to be) adversely affected by migration in many cases have a significant influence on migration policy. Managing these impacts, and supporting those who do not benefit from migration, is important. In many EAP countries, migration policies increasingly focus on economic objectives, including addressing labor market needs – notwithstanding the disaffection with migration that is seen in other parts of the world. This is most evident in countries that are aging and in need of migrants, such as Japan and Korea, which have increased their migrant worker intake and introduced more pathways to permanent residence.11 Many origin countries also support or even promote migration with the goal of advancing economic development or alleviating poverty, or both. Viet Nam, for example, has provided loans and other support for migration; Cambodia aims to upskill workers who migrate overseas, as part of its efforts to increase remittances; and many Pacific Island governments have established labor-sending units to facilitate international labor mobility. The Philippines stands out globally for having one of the most developed and comprehensive systems for supporting and protecting migrants. A mapping of migration pathways in EAP undertaken as part of this report shows that low-skilled migrants face more restrictions than high-skilled migrants – though this is changing in some EAP HICs (Figure 0.5). High-skilled migration schemes, aside from skills qualifications, tend to have fewer restrictive measures, with 5 to 11 measures related to entry, stay, and welfare conditions, compared to 11 to 16 for low-skilled migrants. Beyond entry barriers like labor market tests, high-skilled schemes are more likely to offer permissive residency conditions and pathways to permanent residency or citizenship. But the situation is not static, with EAP countries that face significant demographic pressures reducing their restrictions on low-skilled migration and creating pathways from low- to higher-skilled migration channels – signaling a greater focus on the economics of migration. Another key difference between high- and low-skilled migration pathways in the EAP region is their regulation. High-skilled migration schemes are typically implemented unilaterally by destination countries, whereas low- skilled pathways are commonly governed by Memorandums of Understanding (MOUs) between the governments of origin and destination countries. The latter approach increasingly aims to protect vulnerable low-skilled migrant workers: the Philippines and Indonesia, for instance, have agreements with the Malaysian government regarding a minimum wage and other terms of employment.12 But the impact of such measures ultimately depends on the extent of implementation by signatories of MOUs. 9 Alffram et al. (2023). 10 Australian Government (2023a); Testaverde et al. (2017). 11 Yamaguchi (2024); OECD (2023). 12 ILO (2019). 5 Figure 0.5. The restrictiveness of migration policies varies by skill level a. High-skilled migration schemes b. Low-skilled migration schemes 14 18 Number of measures Number of measures 12 16 MYS HKG PNGSGP 14 10 AUS JPN SGP AUS 12 NZL NZL THA KOR 8 HKG 10 VNM KOR MYS CHN 8 6 THA JPN 6 4 4 2 2 0 0 0 2 4 6 0 2 4 6 Unemployment rate (%) Unemployment rate (%) Source: World Bank, original research for this publication, based on original database on migration policies in East Asia and Pacific (EAP). Note: AUS = Australia; CHN = China; HKG = Hong Kong SAR, China; JPN = Japan; KOR = Korea, Rep.; MYS = Malaysia; NZL = New Zealand; SGP = Singapore; THA = Thailand; VNM = Viet Nam. Bilateral and regional collaboration on migration governance could be further enhanced. When done well, collaboration between countries has an important role to play in improving migration outcomes. Priorities include: • Establish skill partnerships to enhance human capital for both origin and destination countries. Through such partnerships, destination countries invest in education and training in origin countries. These arrangements ensure that migrant workers have skills/qualifications in demand (and in short supply) in destination labor markets, leading to a better “match,” while easing the fiscal burden of training in origin countries—a common concern. • Strengthen the availability of migration data, especially on migration costs to reduce irregular migration, contributing to evidence-based migration policies and reducing recruitment fees, with cooperation between origin and destination countries serving as an important complement to the unilateral measures discussed next. • Foster social protection for migrants, including pension portability (allowing migrant workers to transfer pension benefits between countries), which would also reduce migration costs. Governments, in both origin and destination countries can also take measures unilaterally to enhance migration outcomes, especially for low-skilled migrant workers. Such measures include: Destination countries • Align migration systems with labor demand, ensuring a multi-stakeholder process. This includes regular assessments of labor market trends and needs to identity skill shortages and sectoral demands, which inform migration quotas and policy frameworks. Policies should incentivize migrants to upskill. In parallel, countries should improve recognition of skills and qualifications obtained abroad to reduce brain waste. • Manage the distributional impacts of migration for the native population. Priorities include supporting reskilling and upskilling programs that enable those whose employment is adversely affected by migration to move into new roles; and ensuring adequate social protection is in place. Such measures are important for both economic and equity reasons and also for ensuring a political consensus around migration policy. • Improve integration services for migrant workers, especially tailored integration programs for marginalized low-skilled migrants. These focus on language training, job placement, and cultural 6 orientation to facilitate their smooth entry into the society. Support programs should also create pathways for migrants to access social services and legal protections. Origin countries • Integrate skills development in migration policies by establishing programs that enhance the employability of aspiring migrants, ensuring their skills match labor market needs in both origin and destination countries. Partnerships with educational institutions and employers are key to provide training that align with international job market requirements. Countries can encourage households to invest in education by providing matching grants and creating competitive environments to reduce remittance fees. • Enhance transparency in labor migration by leveraging technology for job matching and simplifying migration governance structures. Countries should strengthen the enforcement of regulations on recruitment, addressing weak implementation and exploitative recruitment practices through informal channels. • Improve migrant protection and reintegration for returned workers by implementing comprehensive support systems, including pre-departure training, grievance mechanisms, and legal assistance. For effective reintegration, public employment service, vocational training, and financial support are essential, especially low-skilled returnees or those returnees from failed migration. The Philippines, for example, provides counseling, job search assistance, business development loans, skills training, and support for distressed returnees. National, bilateral, and region policies such as these are essential in creating a more efficient and equitable migration system. By expanding regular pathways and facilitating better matches for migrants, these policies not only improve the welfare of migrants but also enhance efficiency in resource allocation both within and between countries. This in turn allows for better management of migration flows and reduces the strain on services for migrants and returnees. Furthermore, by addressing potential economic challenges, such policies ensure that migration acts as a catalyst for regional economic development, fostering skills transfers, innovation, and growth. With effective implementation, these policies can transform migration into a driver of economic growth and poverty reduction, benefiting both migrants and origin and destination countries. 7 Chapter 1. How is EAP migration unique compared to other regions? Key message: The East Asia and Pacific (EAP) region is a growing migration hub, consistent with existing regional integration in trade and investment. Economic migration within the region has been expanding, as workers tap into diverse economic opportunities in the region, shaped by demographic, income, and human capital differences between countries. But irregular migration persists in some corridors. Sub-messages: 1. While migration primarily flows from low-income countries (LICs) and middle-income countries (MICs) to high-income countries (HICs) in EAP, there has been a notable rise in migration between LICs and MICs, as well as from HICs to MICs and LICs. 2. Most migrants originating from EAP are low-skilled, but high-skilled migration is growing faster than low- skilled migration. 3. Migration among females and older individuals has risen, reshaping the demographic profile of migrants. Net immigration in the EAP region is growing rapidly Migration in the EAP region has surged, reversing the temporary decline during the COVID-19 pandemic (Figure 1.4). Between 1990 and 2020, immigrants in the region more than doubled to 27.3 million13, while emigrants nearly tripled, to 40.8 million, outpacing global migration growth. Thus, the region’s share of global migration increased from 5.4 percent in 1990 to 7.2 percent in 2020. Yet, EAP’s immigration rate remained lower (1.1 percent) than the global rate (2.3 percent) in 2020. Migration patterns in EAP vary significantly by country. Singapore, Brunei Darussalam, and Australia are primarily destination countries, with immigration rates of 38.4 percent, 25.6 percent, and 11 percent, respectively (Figure 1). Indonesia and the Philippines are major sources of emigrants (Figure 1.2). Countries like Malaysia and Thailand see large numbers of both immigrants and emigrants. These patterns are not static. Notably, Japan and Korea are becoming immigration countries due to changes in its migration policies aimed at addressing rapid aging and declining population growth (Figure 1.3). Emigration from the Philippines, which is traditionally a net emigration country, has been gradually slowing ( Figure 1.5). Net immigration into EAP has increased, while the number (or stock) of emigrants still exceeds the number of immigrants. Korea, for instance, turned to a net immigration country in recent years (Figure 1.5.). Since 2019, immigration has risen significantly relative to emigration. This shift is partly due to sustained immigration into traditional net immigration countries such as Australia, New Zealand, and Singapore. Pacific Island Countries (PICs), on the other hand, remain net emigration countries. The Marshall Islands, Tonga, and Samoa have very high emigration rates of 65.4 percent, 58.1 percent, and 53.1 percent, respectively, reflecting the lack of employment prospects in these countries and preferential access to labor markets in Australia, New Zealand, and the United States (see chapter 2 and box 2.1 on PIC workers’ access to seasonal jobs in Australia and New Zealand). 13 Based on the number of the foreign-born population (those born in countries other than their current country of residence). 8 Figure 1.1. Major destination countries are also Figure 1.2. Major origin countries are relatively those that are aging. young. 12 20 4 40 Number of emigrants (millions) Number of immigrants (millions) Share of population (%) Share of population (%) 10 3 30 15 8 2 20 6 10 1 10 4 0 0 5 Korea, Rep. China Malaysia Australia Indonesia Japan Singapore Hong Kong SAR, China New Zealand Thailand 2 0 0 Viet Nam Indonesia Malaysia Lao PDR China Philippines Myanmar Korea, Rep. Thailand Cambodia Number of immigrants Share of population (%) (right axis) Number of emigrants Share of population (%) (right axis) Source: World Bank, World Development Report 2023 Source: World Bank, World Development Report 2023 Migration Database. Migration Database. Note: The number of immigrants is based on the number of Note: The number of emigrants is based on the number of foreign nationals. “Share of population” refers to the the foreign-born population. “Share of population” refers number of immigrants as a share of the population. to the number of emigrants as a share of the population. Figure 1.3. Countries with slow population growth Figure 1.4. Migration has resumed following are more likely to have higher shares of immigrants mobility restrictions imposed during COVID-19 70 800 2.5 Share of immigrants in 2020 (%) and New Zealand (thousands) Myanmar in Thailand (millions) Migrant arrivals into Australia 60 Number of workers from 2.0 50 600 40 1.5 400 30 1.0 20 200 0.5 10 0 0 0.0 0 50 100 150 200 2018 2019 2020 2021 2022 2023 Growth in working-age population between 2020 and Australia New Zealand Thailand 2040 (%) Sources: World Bank, World Development Report 2023 Sources: Australian Bureau of Statistics; Statistics New Migration Database; United Nations World Population Zealand; Department of Employment (DOE) Thailand. Prospects 2022. Note: The number of migrant arrivals in Australia and New Note: EAP = East Asia and Pacific. Zealand is for the year ending in June of every year. Figure 1.5. Net immigration into EAP has been increasing over time 500,000 Net immigration flows 0 -500,000 -1,000,000 -1,500,000 2000 2005 2010 2015 2017 2019 2020 2022 Korea, Rep. Philippines 9 Sources: Statistics Korea and original calculations for this publication based on United Nations Department of Economic and Social Affairs (UN DESA) Migrant Stock data. Note: Net immigration flows for the Philippines in 2000 reflect the increase in net immigration between 1995 and 2000. For the other years, they reflect the increase in net immigration between the periods shown in the figure —for example, between 2000 and 2005, 2005 and 2010, and so on. EAP = East Asia and Pacific. Figure 1.6. Most migration in EAP occurs within the region Source: World Bank, World Development Report 2023 Migration Database, https://www.worldbank.org/en/publication/wdr2023/data. Note: World regions: EAP = East Asia and Pacific, ECA = Europe and Central Asia; GCC = Gulf Cooperation Council; LAC = Latin America and the Caribbean; MENA = Middle East and North Africa; NOAM = North America; SAR = South Asia; SSA = Sub- Saharan Africa. Income groups: HICs = high-income countries; LICs and MICs = low- and middle-income countries. Intraregional migration is particularly significant in EAP, with 12.7 million immigrants (some 68.6 percent of total immigration) coming from within the region in 2020.14 While lower than levels observed in ECA and SSA, migration within EAP shows diverse patterns. Migration from LICs and MICs is nearly evenly split between EAP’s HICs and other LICs/MICs (Figure 1.6). Between 1990 and 2020, migration between EAP LICs and MICs rose from 1.8 million to 6.3 million, while migration from HICs to LICs/ MICs quadrupled, albeit from a low base.15 These intraregional trends reflect differences in income, demographics and skills between origin and destination countries 16 , which along with migration policies, shape migration decisions (see chapter 4). Imbalances in employment prospects and wages between origin and destination countries motivate people to seek economic opportunities overseas. These imbalances are often exacerbated by differences in living costs and in economic growth. The EAP region exemplifies this, having both highly developed and less developed economies, with GDP per capita ranging from US$82,808 in Singapore to US$1,149 in Myanmar in 2022 in current US dollars (World Development Indicators). Proximity plays a significant role in shaping migration patterns, with many migrants traveling short distances. For instance, 96 percent of immigrants in Thailand are from neighbouring Myanmar, Lao PDR, and Cambodia. 17 Similarly, 36 percent of immigrants in Malaysia are from Indonesia, and 45 percent of immigrants in Singapore are from Malaysia. Australia and New Zealand are the main destination countries for migrants from PICs. Filipinos are 14 These statistics use foreign nationals to capture immigrants and the foreign-born population to capture emigrants. 15 Based on the foreign-born population. 16 Shrestha (2023) 17 Based on the foreign-born population. 10 a notable exception in the region, often engaging in long-distance labor migration, particularly to the United States, Canada, and Saudi Arabia. China contributes significantly to migration both within the region and around the world. In 2020, there were 10.7 million emigrants from China and 1 million immigrants in China.18 This constitutes 26.2 percent of the total global emigration from EAP and 3.7 percent of the total global immigration into EAP. Significantly, more than half of the total immigrants from EAP LICs and MICs to EAP HICs are from China, while immigration into China represents 56.4 percent of the total immigration from EAP HICs to EAP LICs and MICs. The top five destinations for Chinese emigrants are Hong Kong, SAR China; the United States; Canada; the Republic of Korea; and Japan. Aligning with migration patterns, intraregional trade and investment highlight strong regional integration. Between 2000 and 2020, nearly half of EAP countries’ imports came from within the region, with exports to EAP countries even higher. During 2018 – 2022, over two-thirds of foreign direct investment (FDI) inflows into Indonesia, the Philippines, Thailand, and Viet Nam originated from the Association of Southeast Asian Nations (ASEAN), China, Japan, and Korea, while Malaysia saw the share at 35.8 percent. Such patterns underscore the importance of intraregional trade and investment for these countries. The types of migration and nature of migrants are diversifying Since 2000, the number of female migrants in EAP has risen sharply, particularly in HICs where they outnumber males (Figure 1.7). By 2020, China was the largest source, with 2.7 million female migrants, mainly in Hong Kong SAR, China. Other major source countries include Myanmar, Indonesia, Malaysia, and the Philippines, with migrants moving to countries with higher incomes like Thailand, Malaysia, Singapore, and Australia. Many female migrants from the Philippines and Indonesia work as domestic workers.19 Thailand, Viet Nam, and Cambodia see more male emigrants. In EAP, migrants in LICs and MICs are generally younger, with about 36.7 percent of working-aged migrants aged between 20 and 29 years old in 2020, compared to 22.7 percent in HICs (Figure 1.8). 20 Migrants in EAP are also typically younger than the overall population, in contrast to the global trend where migrants are generally older. The older cohort of migrants may reflect migration schemes aimed at attracting high-skilled individuals for innovation and economic growth (see chapter 4). Low-skilled migration remains the dominant form of migration in the region, though high-skilled migration has grown rapidly in recent years (Figure 1.9 and Figure 1.10). In 2020, EAP had 17.3 million low-skilled immigrants,21 up from 13 million in 2010. According to World Bank-International Labour Organization (ILO) surveys, nearly 90 percent of Myanmar and Cambodian migrants in Thailand had only primary education or less. However, the number of high-skilled (tertiary educated) immigrants in EAP has surged, from 3.2 million in 2010 to 7.5 million in 2020, reducing the share of low-skilled migrants in the total immigration from 80 percent to 70 percent. This shift highlights rising global competition for talent to drive innovation and development (see chapter 4). 18 Based on the foreign-born population. 19 In 2020, 72.6 percent of women emigrating from the Philippines were employed as domestic cleaners and helpers or domestic housekeepers, according to the the Philippine Overseas Employment Administration. Similarly, more than half of women emigrating from Indonesia work as domestic workers or caregivers (OECD 2022). In 2023, about 60 percent of the deployed temporary labor migrants were women in both Indonesia and the Philippines (ADBI, OECD, and ILO 2024). 20 Based on the foreign-born population. 21 Defined as those without a tertiary education. 11 Most migrants are employed, working mainly in agriculture, construction, manufacturing, and care-services. In Malaysia, for example, more than 80 percent of migrants participate in the labor force22. In Australia, the labor force participation rate of recent migrants was 72.4 percent in August 2021, with higher labor force participation rates and lower unemployment rates among the more educated23. Migration is not solely economic; natural disasters and climate change are also drivers. In EAP, about 10 million people live in highly climate-vulnerable areas 24, with Pacific Island populations potentially at risk from sea level rise and coastal erosion25. Although most climate-related migration has been short-distance and internal (within national borders), this pattern may change26 (see chapter 2 and spotlight 2.1 on climate and natural disaster- driven migration). Temporary labor migration is prevalent in EAP, with 65 of 72 EAP migration schemes this report analyzed 27 being temporary. Australia has historically focused on permanent migration, but now hosts more than 1.8 million temporary migrants in its labor market. 28 In Singapore, temporary low-skilled migrants account for about 70 percent of the total foreign workforce in 2021.29 Nearly 90 percent of Indonesians admitted to Korea in 2020 were on Korea’s temporary labor migration program.30 Seasonal labor migration is expanding to fill seasonal labor demand in targeted sectors – for example in horticulture and viticulture in Australia and New Zealand. 31 Korea recently implemented a seasonal labor migration scheme, with the number of participating regional entities rising from 21 to 104 between 2017 and 2022.32 Thailand is exploring the possibility of expanding the scope of its border passes which allow employers in border provinces to hire migrants from Myanmar and Cambodia for a short period.33 At the same time, EAP HICs like Japan, Korea, and, to some extent, Australia are increasingly introducing pathways to permanent residency as a strategy to manage labor market challenges (see chapter 4). Economic growth in origin countries boosts return migration. Although data on return migration are limited, studies of Taiwan, China; India; and Korea suggest that high-skilled emigration often occurs due to the limited opportunities in origin economies34 Key factors that encourage return or engagement of high-skilled migrants with their origin economies include economic opportunities (especially in developing technology sectors); good governance (including the rule of law, property rights, and transparent government); and a mature scientific community.35 Return migration in Korea rose from under 200,000 in 2012 to almost 500,000 in 2022.36 22 DOSM (2024) 23 Australian Government (2023b) 24 IDMC (2023) 25 IPCC (2023) 26 World Bank (2023) 27 World Bank EAP Migration Policy Database. See appendix C. 45 migration regimes allow visa (or work permit) extensions or renewals, often with a maximum duration, 10 allow extensions or renewals with conditions, and 10 do not allow for extensions or renewals. 28 Australian Government (2023a) 29 Pan and Theseira (2023) 30 OECD (2022) 31 Doan et al. (2023) 32 Korean Government (2024) 33 Alffram and al. (2023) 34 Shin and Moon (2018) 35 Shin and Moon (2018) 36 Korean Government (2024) 12 Mobility of high-skilled workers within the region has become less dynamic High-skilled EAP migrants primarily move to the United States (6.8 million in 2020) and Canada (1.5 million) (Figure 1.11, a), while Australia is a key destination within the region (1.2 million), particularly from PICs and Southeast Asia. In contrast, low-skilled migrants tend to stay within the region, with Thailand, Malaysia, and Hong Kong SAR, China as the main destinations, hosting 3 million, 1.7 million, and 1.5 million, respectively in 2020 (Figure 1.11, b). Figure 1.7. Female migration has been increasing in Figure 1.8. Migrants are typically younger in low- EAP and middle-income EAP countries 10 2020 Number of immigrants (millions) (LICs/MICs) 8 EAP 2010 6 2000 4 2020 EAP (HICs) 2 2010 0 2000 2000 2010 2020 2000 2010 2020 0 20 40 60 80 100 EAP (HICs) EAP (LICs and MICs) Share of migrants (%) Female Male 15-19 20-29 30-39 40-49 50-59 60-64 Source: World Bank, World Development Report 2023 Source: UN DESA (United Nations Department of Economic Migration Database. and Social Affairs). Figure 1.9. Both low- and high-skilled migration in Figure 1.10. Low-skilled migration continues to EAP have increased make up most of the migration 12 100 Number of immigrants Share of immigrants (%) 10 80 8 (millions) 60 6 4 40 2 20 0 0 2000 2010 2020 2000 2010 2020 2000 2010 2020 2000 2010 2020 EAP (HICs) EAP (LICs and MICs) EAP (HICs) EAP (LICs and MICs) High-skilled Low-skilled High-skilled Low-skilled Source: World Bank, World Development Report 2023 Source: World Bank, World Development Report 2023 Migration Database. Migration Database. Note: EAP = East Asia and Pacific. HICs = high-income countries; LICs/MICs = low- and middle-income countries; LICs = low- income countries; MICs = middle-income countries. 13 Figure 1.11. EAP high-skilled workers go to non-EAP countries, while low-skilled workers move within EAP a. High-skilled workers b. Low-skilled workers 6 6 Number of tertiary educated migrants from EAP (millions) Number of non-tertiary educated 5 5 4 4 immigrants (millions) 3 3 2 2 1 1 0 0 Destination country Destination country Source: World Bank, World Development Report 2023 Migration Database. Note: Green bars refer to East Asia and Pacific (EAP) countries. Student migration for tertiary education from EAP to prominent OECD destinations expanded markedly between 2013 and 2020 (Figure 1.12), reaching 1.3 million students before declining to 1.2 million in 2021 due to the COVID- 19 pandemic. Chinese students comprised two thirds of this total, followed by Viet Nam (118,000) and Korea (73,000). The United States is the main destination, while Australia, Japan, and Korea are key regional destinations37 (Figure 1). EAP students represent 48 percent of all international students in the seven major host countries, which include Canada, New Zealand, and the United Kingdom.38 Student migration often leads to high-skilled emigration. Between 2018 and 2022, Japan granted 149,000 employment visas to former students, while Australia issued 63,786 Temporary Graduate visas for work in 2021– 22 and awarded nearly half of its permanent visas to former student migrants during the same period. Australia offers extended stay periods for higher-educated students, up to six years for doctoral graduates.39 Figure 1.12. China has been the main contributor to Figure 1.13. More than half of all student migrants the growth of student migrants from EAP from EAP are from China 150 500,000 Other EAP China Index of the number of 400,000 Number of international 140 student migrants 300,000 students from EAP (2013=100) 130 200,000 100,000 120 0 110 100 2013 2014 2015 2016 2017 2018 2019 2020 2021 Other EAP China Destination country Source: OECD Education at a Glance Database 2023. Source: OECD Education at a Glance Database 2023. Note: The destination countries are Australia, Canada, Japan, Note: Data are for 2021. EAP = East Asia and Pacific. the Republic of Korea, New Zealand, the United Kingdom, and the United States. EAP = East Asia and Pacific. 37 OECD (2023b) 38 OECD (2023c) 39 Australian Government (2023c) 14 This pathway benefits both students and destination countries by providing career opportunities, addressing labor shortages40, mitigating qualification mismatch41, and supporting innovation and economic growth, particularly pertinent to aging societies with labor shortages.42 Student migrants also boost the economy through tuition fees and living expenses. In Australia, higher-education service export amounted to A$24.1 billion in 2022–23, making it the third largest export earner (after coal and iron ore exports).43 Student migration can benefit origin countries. In China, student migration has been associated with higher levels of innovation and trade.44 Migration policies play a crucial role in determining the attractiveness of destination countries for international students. Stricter regulations can deter prospective students, while favorable policies can enhance a country’s appeal. In 2024, Australia tightened student migration policies by increasing savings requirements and English proficiency standards, limiting Temporary Graduate visa durations and extensions, and imposing stricter requirements for education providers.45 Favorable policies on tuition, part-time work during studies, and post- graduation employment in Japan and Korea could further enhance their attractiveness as student migration destinations.46 Irregular migration persists Irregular migration, involving individuals who are not legally authorized to enter or stay in a country, is a notable issue in EAP.47 Irregular migrants include illegal entrants, visa overstayers, and those working without proper documentation.48 The magnitude of irregular migration is difficult to measure but it is a major policy concern in key destinations like Thailand and Malaysia. In Thailand, only about 34 percent of low-skilled migrants have used official channels which have been in place for over a decade.49 Between 2020 and 2022, Thailand regularized about 2.2 million migrant workers.50 In Malaysia, 38.6 percent to 46.5 percent of low-skilled migrants were estimated to be irregular between 2017 and 2018.51 Irregular migrants tend to be low-skilled and employed. In Malaysia and Thailand, they tend to work in the agriculture, domestic work, and hospitality and food services sectors, while regular migrants are more likely to work in the (typically more formal) manufacturing and construction sectors.52 Financial constraints and complex migration processes contribute to irregular migration. Myanmar migrants use lower-cost informal channels to migrate to Thailand, despite the higher earnings potential of regular migration (ILO 2020; Testaverde, Edmund, and Vasudeva 2020; World Bank, forthcoming). Migration from Lao PDR to Thailand through a regular channel can take an average of four months, resulting in significant income loss during that period.53 Moreover, confusing and frequently changing regulations on stay and work permits complicate the process of hiring regular workers, making hiring of irregular migrants more affordable.54 Irregular migration may 40 OECD (2023a) 41 Dietz et al. (2015); Hawthorne (2018); Treuren, Manoharan, and Vishnu (2021) 42 Kerr (2020) 43 Australia Government, Department of Education (2024) 44 Gu and Li (2023); Khan and Bin (2022) 45 Australian Government (2023a) 46 OECD (2023a). A recent favorable program in Japan includes Program for Employment of International Students. 47 World Bank (2023) 48 Cho et al. (2018); World Bank (2020) 49 Engblom (2024) 50 OHCHR (2023) 51 Ahmad, Simler, and Yi (2020) 52 Harkins, Lindgren, and Suravoranon (2017) 53 ILO (2023) 54 IOM, B+HR Asia, and UNDP (2022) 15 be a cheaper option to cross borders, but it becomes more expensive over time, as irregular migrants tend to receive lower wages and lack access to social protection.55 Restrictive migration policies and ineffective grievance redress mechanisms can also contribute to irregular migration. Many irregular migrants in Malaysia enter through legal pathways but can become irregular due to the inability to change employers.56 As widely reported, poor living conditions, wage issues, and lack of safety can cause workers to leave employers, rendering them irregular. The cost and complex process to maintain regular status can also push workers to work without legal documentation.57 Irregular migration reflects policy shortcomings in both origin and destination countries, highlighting the need for reforms. Effective measures to reduce irregular migration can be seen in Korea’s Employment Permit System (EPS), which includes fee-free public job matching service, stronger social protection, better governance of migration policies, increasing information dissemination and transparency in migration process, incentives for timely return, and allowing employer changes58 (see chapter 4). The expansion of regular migration can make Figure 1.14. Changes in public perceptions on “Not public perception more favorable toward wanting immigrants as neighbors” by age group immigrants. According to World Value Surveys, the percentage of Korean respondents “not Republic of Korea wanting immigrants as neighbors” dropped to about 20 percent across different age groups 15-24 25-34 35-44 80 45-54 55-64 65+ from the 1980s to the 2020s (Figure 1.14). On the other hand, in Malaysia, nearly half of the 60 respondents expressed a reluctance to have Percent migrants as neighbors, reflecting ongoing issues 40 with irregular migration. 20 In sum, migration has increased dramatically in 0 the EAP region in recent years, primarily within 2 3 4 5 6 7 the region. Aging populations and labor shortages Survey wave have driven migration, especially in traditionally Source: World Bank, original calculations for this publication “closed” societies like Japan and Korea, which based on World Value Surveys. have seen sharp increases. Most migration in EAP Note: 1= wave 1 conducted during 1981–84; 2 = wave 2, 1990– is low-skilled, but high-skilled migration is growing 94; 3 = wave 3, 1995–98; 4 = wave 4, 1999–2004; 5 = wave 5, faster, reflecting rising global competition for 2005–09; 6 = wave 6, 2010–14; 7= 2017–22. talent to drive innovation and development. Female migration is expanding especially from MICs to HICs. Irregular migration continues to be prominent in the region, owing to the burdensome cost, duration, and complexity of regular migration processes—challenges that stress the need for policy reforms in both origin and destination countries. 55 World Bank (forthcoming) 56 A change of employer within the same sector is allowed in cases where the employer’s company shuts down, becomes bankrupt, is merged with another company, or company ownership and/or status change. In all cases, migrants must seek and obtain approval for a change of employer from the Ministry of Home Affairs Malaysia (IOM 2023). 57 IOM (2023) 58 Cho et al. (2018) 16 Spotlight 1.1. Internal Migration within China and Return of the Chinese Diaspora to China China's labor market has been transformed significantly over the last four decades, evolving from limited labor mobility to a more market-based system. This shift has been a key driver of China's economic growth. Given China's large population and economy, its experience with labor mobility provides valuable insights for fostering a more interconnected, integrated, and prosperous East Asia and Pacific (EAP) region. This spotlight examines both successful and unsuccessful aspects of internal migration in China and explores insights from China’s attempt to facilitate the return of its diaspora. Internal migration Over the past four decades, China’s internal migration has massively expanded. Before the mid-1980s, labor mobility between rural and urban areas in China was limited. This started to change in response to increasing demand in the service and industry sectors in selected urban areas. After the mid-1990s, China’s economic growth accelerated, and migrants from rural to urban areas (rural-urban migrants) supplied the necessary labor for the country’s labor-intensive, export-oriented economy. The number of migrant workers nearly tripled in 1990s, from 21.6 million in 1990 to 78.8 million in 2000 (Figure S1.1.1). The migrant worker population continued to rise in the decades that followed, reaching 174.3 million in 2019, and remaining broadly stable during the COVID-19 pandemic. The key mechanism to regulate internal migration in China is the residential registration ( hukou) system, Figure S1.1.1. The number of rural-urban migrant introduced in the 1950s to link individuals with specific workers in China expanded remarkably until the residential locations. Citizens’ social benefits—such as early 2000s housing, education, and public services—are tied to the location where they register. In the 1980s, the 200 174.3 171.9 government established a temporary residence permit workers stock (million) system, eliminating the mobility restrictions. However, Rural-urban migrant 140.4 150 the lack of comprehensive entitlement reform has 100 meant that hukou continues to hinder equal social 78.8 service provision.59 In recent years, small and medium 50 cities have been gradually easing restrictions to close 21.6 social benefits gaps and relax restrictions to convert 0 hukou status. But a reform led by the central 1990 2000 2008 2019 2022 government to create a clear framework for providing Sources: World Bank, original calculations for this services to new residents has not yet been publication based on decennial population censuses implemented. (1990 and 2000) and National Monitoring Survey Report for Rural Migrant Workers (2008–2022). Policy reforms to build more efficient cities and expand Note: Workers with rural hukou leave their villages/towns social services to all people including migrants have for work for more than six months. been initiated, but more needs to be done, especially in large cities. A major reform—the National New-Type Urbanization Plan 2014–2020—was introduced in 2013. It included granting migrants full rights, allowing migrant children access to public education, and equalizing social benefits for migrants and locals through measures such as a renewed resident permit system and easier hukou conversion in smaller cities while restricting conversion in megacities. Local governments were given the flexibility to design their own systems of granting social benefits, but many of them used the policy space to develop policies 59 World Bank and DRC (2014) 17 to attract highly educated migrants.60 Data show that the government met the policy target of converting 100 million urban hukou by 2020, but faster migration growth has further widened the social benefits gap in cities, and these reforms excluded most migrant workers in large cities.61 Internal labor migration and remittances have improved household well-being in rural areas in general. In theory, migration can both decrease household income due to labor loss and increase it through remittances sent by migrants. Empirical evidence from China shows that, on average, the latter effect dominates, resulting in a positive net effect on rural household earnings. 62 Remittances help reduce poverty and inequality, given that poorer households facing land shortages are more likely to migrate. The poorest of the poor benefit disproportionately from internal remittances, unlike international remittances. 63 Remittances supplement income in rural households, leading to increased consumption and a decline in regional inequality.64 Nonetheless, the absence of parents due to migration can have impair their children’s human capital development and the well-being of the family members who stay behind. Approximately two-thirds of China’s rural migrants are separated from their families, and 69 million rural children under 17 grow up without one or both of their parents.65 Evidence drawn from the Rural-Urban Migration in China survey data indicates that remittances reduce the share of education expenditures—as possibly favoring investment in assets that enhance the quality of life in the short term—which can potentially hinder human capital development in rural areas. 66 However, other research using the nationally representative China General Social Survey data suggests that the absence of adult household members negatively affects high school attendance for left-behind children in rural areas, particularly for girls, but remittances partially offset this loss.67 Looking beyond the contemporaneous impacts, research also shows that the cumulative exposure to parental migration can be bigger. 68 Moreover, existing research consistently finds that parental out-migration has an unambiguously negative impact on children’s mental health, behavioral issues, and delinquency.69 There is evidence that the negative mental health implications of migration on the partners and elderly who stay behind are not insignificant.70 As regional disparities narrow, people are shifting their preferences for living and work from bigger cities to smaller cities. While the coastal and eastern cities remain the major destinations, motivated by higher wages and better economic opportunities71, recent migration trends suggest that migrants are considering more diversified choices and factors, especially high-skilled labor. Surveys indicate that college graduates have observed that smaller cities offer greater quality of life due to lower housing prices and improved job opportunities. Departures from bigger cities like Beijing have been attributed to factors such as high housing costs, traffic congestion, air pollution, and work-related stress. 72 To tap into high-skilled talents for economic development, localities in different regions have introduced various “Talent Programs.” These programs, which started in the 2010s, have boosted local innovation, as measured by the number of patents.73 They have also had multiplier effects through their impacts on social networks.74 60 Chan (2021) 61 Chan (2019); (2021) 62 Giles and Mu (2024) 63 Pan and Sun (2023); Zhu and Luo (2008) 64 Démurger and Wang (2016); Snyder and Chern (2009) 65 UNICEF (2018) 66 Démurger and Wang (2016) 67 Hu (2012) 68 Meng and Yamauchi (2017) 69 Giles and Mu (2024) 70 Jin (2016); Li et al. (2020); Scheffel and Zhang (2019); Yi, Lee, and Kim (2014) 71 Giles and Mu (2024) 72 Wang et al. (2016) 73 Zhong et al. (2021) 74 Chen, Jin, and Yue (2024) 18 Over the past four decades, internal migration in China has been critical for economic development and improving household well-being, particularly benefiting poorer households and reducing inequality. Although the flows were tightly managed through the hukou system, this system has played an important role in managing the country’s spatial transformation and mitigating issues arising from rapid urbanization, such as urban poverty, unemployment, and squalor.75 However, further reform of the hukou system is needed to ensure equal public service provision for migrant families. To help migrants and their families integrate into urban societies and avoid issues associated with those who stay behind, cities must go beyond tapping into highly skilled labor and increase spending on public service provision, including through reforms in tax and intergovernmental transfer policies. Return of the diaspora After years of outflows, China has started to see return of diaspora, including students. Annual net emigration peaked in the early 1990s and started to drop at the onset of the global financial crisis (Figure S1.1.2). The stock of Chinese emigrants amounted to 10.7 million, accounting for 4.2 percent of global emigration in 2020, while the number of foreigners in China’s mainland reached about 1 million in 2020. As discussed in chapter 1, the number of international students from China has rapidly expanded, making China the largest source of student migration in EAP; since the onset of the COVID-19 pandemic, the number of overseas Chinese students returning home has increased sharply 76 , representing a pattern of Figure S1.1.2. Annual net emigration flows from China, circular mobility. 1978–2024 1992 Southern tour 1,000 WTO Accession The return of the diaspora could help mitigate the 900 effect of an aging population and declining birth 800 Thousands of emigrants rates. The working-age population in China began 700 Global Financial Crisis 600 COVID-19 to decline in 2014. As widely reported, the total 500 pandemic population started to shrink in 2022 (see, for 400 example 77 ). The old-age dependency ratio 300 increased to about 22 percent in 2020 and is 200 projected to rise to 51 percent in 2050, according 100 to UN World Population Prospects data, although 0 its impact on potential growth could be mitigated 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023 for some time following the rapid increase in Source: United Nations World Population Prospects Database human capital. 2022. Note: Net migration is defined as the number of emigrants minus China’s immigration policies have developed the number of immigrants. The numbers for 2022–24 are rapidly to attract skilled workers, targeting projected based on past international migration estimates, overseas Chinese and foreign talent alike.78 Since assuming the recent migration trend will continue in countries the early 2000s, numerous initiatives and policies with stable migration levels and considering each country’s were introduced, 79 followed by regulatory policy stance on future international migration flows. WTO = refinements such simplifying processes and World Trade Organization. lowering the requirements for permanent residency in 2016.80 In addition, they established a three-tiered, points-based system for work permits (Class A, B, 75 World Bank and DRC (2014) 76 China Daily (2024) 77 China Daily (2023) 78 Miao and Wang (2017) 79 These include, for instance, the 2002–2005 National Program for Qualified Personnel Development, and the 2024 Measures for the Administration of Examination and Approval of Foreigners’ Permanent Residence in China, among others. 80 Its permanent resident system, which attracts affluent and high-skilled foreign workers, was very restrictive and showed limited results, adding up to only about 10,000 ten-year residence permits during 2004–16 (China daily, 2018). 19 and C). 81 In 2018, the creation of the National Immigration Administration marked a key step in modernizing immigration management and enhancing its global competition to attract talent. To encourage the return of overseas Chinese talent, the government implemented incentive programs at the national level. For instance, China’s Thousand Talents Program (TTP) in 2008 offers generous grants for research work, tax exemptions, housing subsidies, and other support to returning migrants, based on educational and professional criteria.82 In 2010, the Young TTP was launched, targeting young scholars in science, technology, engineering, and mathematics (STEM) fields. While less successful in attracting top-level foreign-educated Chinese researchers compared to TTP, the Young TTP has still drawn high caliber scientists whose research productivity has often surpassed their peers who remained abroad.83 Provincial and city governments have also made concerted efforts to attract the return of overseas Chinese talent. For instance, Zhejiang province initiated the Seagull Plan, targeting leading academics and top-notch information technology (IT) and pharmaceutical research and development talent. Fujian province’s talent residence permit encourages the return of high-end overseas Chinese professional talent. Shanghai’s Ten Thousand Overseas Returnee Cluster Project attracted 20,000 overseas returnees.84 By February 2009, China had established more than 110 overseas entrepreneurship incubation centers.85 Empirical evidence shows that the subnational-level overseas talent programs have enhanced research and innovation, product quality, and export volume, and have helped diversify trading destinations.86 Yet, China’s immigration policies are nascent in addressing structural issues in the labor markets, especially in the lower-skilled segment. As China moves closer to the technological frontier, the demand for high-skilled international talent will further increase. Reservation wages of many young Chinese, now increasingly university- educated, exceed those offered in factories or in the service sector, even though the youth unemployment rate is hovering around 15 percent. For example, more than 40 percent of high-tech manufacturing and energy and chemical companies, and as many as 83 percent of automobile manufacturing, machinery and equipment, and consumer goods manufacturing companies face varying degrees of skill mismatches and shortages.87 Therefore, migration policies to support needs for low-skilled labor and to facilitate returns of migrants may warrant further assessment and consideration, while policy makers must navigate various political economy implications. In sum, China’s migration offers valuable lessons for other EAP countries. Relaxing internal labor mobility constraints in response to labor market demand can improve resource allocation, economic efficiency, and household well-being. Its phased relaxation of the hukou system helped manage labor shifts in a large scale and mitigate social issues. China’s international migration policies underscore that countries adapt migration policies to meet the need for low-skilled foreign labor, while creating conducive environments for the return of skilled migrants. The negative impact on families left behind by internal migrants highlights the need for targeted social protection policies. 81 Class A targets high-skill talent, like Nobel Laureates, top scientists, and executives, with simplified application procedures. Class B focuses on professionals with a bachelor’s degree and two years of working experience at minimum, representing most approved applicants. Class C includes individuals with less education and work experience, but obtaining these permits is challenging, as the government prioritizes attracting top-tier (Class A) talents. 82 Miao and Wang (2017) 83 Shi, Liu, and Wang (2023) 84 Miao and Wang (2017) 85 Zhao and Zhu (2017) 86 Wei and Yuan (2018); Wei and Zhou (2022) 87 CIIC (2022 survey) 20 Chapter 2. Demographic and skills differences drive migration in EAP Key message: The drivers of migration in EAP are multidimensional and often interlinked. Imbalances in employment opportunities, exacerbated by demographic shifts, are the main forces shaping patterns of economic mobility in the region. Sub-messages: 1. Imbalances in employment prospects and wages between origin and destination countries drive economic migration—such as limited job opportunities in origin countries and labor shortages in destination countries. 2. Demographic imbalances will further contribute to intraregional migration in the coming decades by further widening gaps in labor demand and supply, both overall and in some specific sectors like case services. A youth bulge will increase competition for job opportunities in some countries, while in others, aging populations and declining birth rates will increase labor demand. 3. Other factors also matter. Migration policies, technological advances, political instability, environmental challenges, diaspora networks, migration costs, language barriers, geographical distance, and regional economic cooperation (including FDI) influence migration routes and the profile of migrants—shaping migration outcomes (see chapter 3). Economic theory suggests that potential migrants compare their households’ expected welfare and corresponding costs, choosing the option that optimizes their economic, social, physical, and psychological well-being (World Bank 2023a). Yet, reaching their intended destination and successfully integrating into the host economy depends on a range of economic and noneconomic factors, as well as policies designed to either facilitate or limit their movement. This chapter discusses how various factors influence people’s decision to move, how they migrate, and where they migrate to. The impacts of migration-related policies on migration outcomes will be explored in depth in chapter 4. Limited job availability at home pushes people to move abroad Migration is increasing as workers seek quality jobs abroad. Limited formal job opportunities in lower-income EAP countries push many, particularly low-skilled workers, to seek alternatives overseas, often in more developed countries (see box 2.1 on Pacific workers). These countries face higher unemployment, especially among youth (15–24 years old) (Figure 2.1, a), and a significant portion of inactive youth who are not in employment, education, or training (Figure 2.1, b). Informal employment remains widespread, with rates of 85.7 percent in Myanmar, 70 percent in Cambodia88, 67 percent in Vanuatu, over 50 percent in Thailand89, and 40 percent of wage earners in Fiji.90 The World Bank–International Labour Organization (ILO) surveys of migrants from Myanmar, Cambodia and Lao PDR in Thailand in 2024 reveal that about 40 percent of respondents were farmers in their countries of origin before migrating. Limited domestic job opportunities affect certain groups disproportionately. In Indonesia, in 2022 only half of women are employed, with only 39 percent in paid work, compared to 74 percent in Malaysia and a 55 percent average across EAP, according to estimates by the International Labour Organization. This, coupled with high poverty levels, drives Indonesian women to migrate.91 In Korea, highly educated youth struggle to find jobs due 88 ILO (2024) 89 Paweenawat (2023) 90 World Bank (forthcoming) 91 Halim et al. (2019) 21 to a mismatch between skills and available jobs.92 To address this, government agencies, like Human Resource Development Service (HRD) Korea and Korea Trade-Investment Promotion Agency, have promoted overseas employment by hosting job fairs and skill acquisition events since the mid-2000s, assisting emigration of 4,800 high-skilled workers in 2016 alone.93 Figure 2.1. Lower-income EAP countries have higher unemployment and much higher rates of inactive youth a. Youth unemployment rate (percent) b. Youth NEET rate (percent) 30 80 70 25 60 20 50 15 40 30 10 20 5 10 0 0 Myanmar Indonesia Tonga Philippines Vanuatu Thailand Tuvalu Malaysia Australia Cambodia Viet Nam Timor-Leste Palau Japan Mongolia Lao PDR Kiribati Samoa Marshall Islands Fiji New Zealand Hong Kong SAR, China Myanmar Vanuatu Tonga Thailand Indonesia China Tuvalu Korea Philippines Cambodia Malaysia Australia Timore-Leste Viet Nam Japan Lao PDR Samoa Kiribati Mongolia Fiji New Zealand Palau Marshall Islands Hong Kong SAR, China Lower-middle Upper-middle High Lower-middle Upper-middle High Source: World Development Indicators, World Bank. Note: Youth are 15 to 24 years old. EAP = East Asia and Pacific; NEET = not in employment, education, or training. Box 2.1. Workers from Pacific Island Countries find formal employment opportunities in Australia and New Zealand Facing limited job opportunities at home, many workers from Pacific Island Countries (PICs) have found jobs through labor mobility schemes in Australia and New Zealand. New Zealand’s Recognised Seasonal Employer (RSE) scheme and the low- skilled stream of Australia’s Pacific Australia Labour Mobility (PALM) scheme, formerly the Seasonal Worker Programme (SWP), engage Pacific Islanders in low-skilled agriculture jobs under short-term contracts of seven to eleven months. The PALM scheme also includes a semi-skilled stream with jobs lasting from one to four years. Since the COVID-19 pandemic, these schemes have grown significantly, with approximately 30,300 workers in the PALM scheme and 17,400 in the RSE in 2022–23. Samoa, Tonga, and Vanuatu have been the three largest participating countries in terms of both number of participating workers and the share of their working-age population (20–59 years old) joining the schemes, at 11.5 percent, 20.0 percent, and 20.4 percent, respectively.94 Both schemes are heavily regulated to protect worker welfare. Employers must provide health support, accommodation, and pastoral care. The PALM scheme also offers trainings on basic essential skills, knowledge about migration, and job- specific skills with qualification upon completion, either fully or partially funded by the Australian government. From July 2024, PALM employers are required to offer 120 hours of work over four weeks to seasonal workers in the scheme, failing which they must pay workers’ wages equivalent to 120 hours over four weeks.95 92 OECD (2022) 93 HRD Korea (2017) 94 Bedford (2023) 95 Australian Government (2024) 22 Pacific workers earn significantly more in the schemes than what they would at home. Net earnings from seasonal work are estimated to be three to four times higher for Tongan workers, and nine to ten times for ni-Vanuatu workers (or the indigenous population of Vanuatu).96 Even after subtracting expenses, workers remit an average of US$390 per month, nearly 1.8 times the average earnings in their origin countries. 97 Despite these benefits, growing participation has raised concerns about worker welfare and labor shortages in the countries of origin. Cases of inadequate accommodation, long working hours, and excessive deductions have been reported 98 , although most workers surveyed report being satisfied with their treatment. 99 High wages abroad attract essential workers, causing labor shortages in both public and private sectors in PICs with small populations and skill stocks.100 To address this, Samoa has put a cap on annual deployment under the schemes and prioritized the unemployed and poor for mobilization from mid-2024, while Vanuatu has introduced its own emergency visa to bring in foreign workers. Reintegration of returnees is challenging due to limited economic opportunities and lack of policy support. Returned workers, particularly low-skilled workers, struggle to find jobs and use their skills for community and national development. Targeted reintegration policies are needed to better utilize returnees’ skills and knowledge. 101 Wage premiums incentivize workers to migrate Significant wage premiums are a powerful force for migration from low-income to higher-income countries. These premiums refer to the increased earnings potential in locations where skills are more productive and command higher wages.102 For example, elementary job workers, such as laborers and helpers, can earn over ten times more in Australia than in some PICs (see box 2.1), twice as much in Thailand than in Myanmar; and 3.4 times more in Malaysia than in Indonesia (Figure 2.2, a). High-skilled workers also see even higher gains - Filipino nurses and doctors earning 12.8 times more in the United States and Vietnamese skilled workers earning 16.5 times more (Figure 2.2, panel b). Figure 2.2. Migrating from low- to higher-income countries can increase wages significantly a. Income gain of workers who are engaged in b. Income gain of high-skilled workers elementary occupation 1,651 1,521 1,277 953 858 846 701 634 423 503 338 198 Vietnam-USA Philippines-USA Thailand-USA Marshall Islands- Tonga-Australia Fiji-Australia Myanmar - Indonesia- Myanmar - Indonesia-Saudi Timor-Leste - Tonga-Australia Singapore Malaysia Thailand Australia Arabia USA Source: Average monthly earnings of employees by sex and occupation, taken from ILO stats. Note: Elementary occupation refers to jobs that involve the performance of simple and routine tasks. 96 Doan, Dornan, and Edwards (2023) 97 World Bank (2021) 98 AWU (2024) 99 Doan, Dornan, and Edwards (2023) 100 Curtain (2022) 101 Redden, Bedford, and Bedford (2023) 102 Clemens, Montenegro, and Pritchett (2019) 23 Exchange rate fluctuations also affect migration by altering earnings gaps. A prolonged depreciation of a destination country’s currency can reduce its attractiveness. For instance, the Japanese yen’ depreciation has reduced Vietnamese migrants’ earnings by 10 percent to 20 percent post COVID-19, leading to lower participation in Japan’s Technical Internship Training Program (TITP) and Specified Skilled Workers program (SSW).103 Similarly, the depreciation of the Malaysian ringgit against the currencies of the Philippines, Indonesia, and Thailand has decreased migration from these countries to Malaysia.104 The cost of migration is a formidable barrier for the poor Migration costs can limit mobility, particularly for the poor and the low-skilled. For example, Vietnamese migrants to Malaysia face burdensome migration costs, amounting up to some 4.3 months of their Malaysian earnings, depending on recruitment modalities (Figure 2.3, a). Care workers going to Japan under TITP pay an average of US$3,600–US$5,000 to recruitment agencies, while Japanese employers cover most recruitment costs. 105 In Indonesia, international migrants often come from relatively better-off families who can bear the cost of migration and manage the associated risks.106 Figure 2.3. Migration costs vary considerably across different modes of recruitment and corridors (in months of earnings in destination) a. Migration costs across different modes of recruitment b. Total migration cost in the Myanmar/Cambodia/Lao 3.23 3.02 3.2 PDR–Thailand corridors (2018, 2024) Cost (no. of months of earnings) 2.6 2.3 2.5 2.5 2.5 Costs in terms of months of 1.7 earnings in the first job 2.1 0.9 1 0.9 1.9 1.6 Recruitment broker Manpower agency Not using agency and broker Using agency or broker Not using agency and broker Using agency or broker Not using agency and broker Using agency or broker Not using agency and broker Cambodia - Myanmar - Lao PDR - Thailand Thailand Thailand Viet Nam - Malaysia Cambodia - Myanmar - Lao PDR - Thailand Thailand Thailand 2018 2024 Sources: ILO 2018 for the Viet Nam–Malaysia corridor; ILO 2020 for the Cambodia/ Myanmar/ Lao PDR–Thailand corridors. Sources: ILO 2020; World Bank-ILO 2024 surveys. Note: Migration cost includes recruitment fees, documentation-related fees, medical exams, and international and domestic travel expenses. Policies and political factors influence migration costs and their composition. For the Cambodia/Lao PDR–Thailand corridor, recruitment costs constitute about 90 percent of total migration costs.107 To reduce this, the Philippine government introduced a zero recruitment fees policy for workers going to Saudi Arabia.108 Korea’s public job matching under EPS helped to reduce worker-incurred costs to 1.3 months of their Korean earnings, covering mainly international travel.109 Costs for Cambodia and Lao migrants to Thailand have been declining, while those 103 Tomiyama (2023). 104 Jajri and Ismail (2014) 105 Lan (2023) 106 Halim et al. (2019) 107 According to World Bank-ILO 2024 surveys of Myanmar, Cambodian, and Laotian low-skilled migrants in Thailand. 108 World Bank (2023a) 109 Cho et al. (2018) 24 for Myanmar workers have increased (Figure 2.3, b), likely owing to continued labor demand in Thailand and political uncertainty in Myanmar. Diaspora networks reduce migration costs by providing information and support. Workers go where there are good job opportunities Labor shortages in destination countries have boosted the demand for foreign labor across skills levels. In Australia, unfilled vacancies have risen steadily (Figure 2.4), with persistent shortages of technicians, trade workers, health professionals, and community and personal service workers.110 Japan also faces significant labor gaps in hospitality, construction, and personal services, with an expected shortages of 11 million workers by 2040.111 Korea’s small and medium enterprises, which offer lower wages, also experience shortages, prompting the government to expand labor migration programs.112 While most acute in high-income countries, aging populations in many MICs will likely worsen labor shortages over time .113 Shifts in the education and skills profile of labor markets in destinations influence migration patterns. As local workers upskill and often move away from low-skilled jobs, opportunities for foreign labor arise, as seen in both middle-income and high-income EAP countries.114 For instance, nearly 80 percent of Malaysian firms report hiring migrant workers for jobs that locals avoid.115 Similarly, Singapore relies on migrants for roles in construction and marine shipyards, roles that are unpopular among locals.116 Growth in specific sectors or occupations, such as in the knowledge economy, often drives demand for skilled migrants. Singapore has attracted global talent since the 1990s to support its knowledge-based economy. 117 Australia’s number of Skilled Employment visa holders (permanent and temporary) more than doubled between 2021/22 and 2022/23. Middle-income countries like Thailand and Indonesia also face shortages of skilled workers like specialists in information, communications, and technology (ICT).118 Labor shortages can also arise in countries with a shortage of skilled workers, as occurs in the Pacific. Papua New Guinea relies on foreign workers in management, professional services, and food professionals (such as chefs), sourced mainly from the Philippines, China, and Australia119 , as well as in skilled jobs in the expanding Liquefied Natural Gas sector 120 (see chapter 4). Fiji relies on migrants for various occupations, from experienced professionals to blue-collar jobs.121 Emigration of semi-skilled and skilled workers from these economies has the potential to exacerbate shortages of such workers, driving governments in turn to adopt policy measures aimed at facilitating recruitment from other countries – as in the case of Vanuatu’s waiver of visa fees to attract foreign workers.122 110 Jobs and Skills Australia (2023) 111 Recruit Works Institute (2023) 112 Korean government (2024); Cho et al. (2018); Randall (2023) 113 Poggi et al. (2024); World Bank (2017) 114 Moroz et al. (2021) 115 Theng and Romadan (2020) 116 Loh et al. (2021); Singapore MOM (n.d.) 117 Pan and Theseira (2023) 118 ILO (2020) 119 UNDP and Deloitte (2017); Voigt-Graf (2015) 120 Voigt-Graf and Odhuno (2019) 121 ILO (2019); Kumar and Oum (2019) 122 Kalsakau and Roberts (2024) 25 Figure 2.4. Labor Shortage in Australia Figure 2.5. Thai firms’ demand for foreign workers 500,000 4.0 became acute as they recovered from the COVID- 3.5 19 pandemic 400,000 3.0 Numer of demanded foreign 2.5 425,612 300,000 2.0 200,000 1.5 workers 1.0 100,000 121,519 0.5 113,014 56,555 73,720 33,013 0 0.0 July July July July October October October October January April January April January April January April January April Unfilled vacancies (left axis) 2019 2020 2021 2022 2023 % Unfilled vacancies over Labor force Sources: Thailand Ministry of Labor; World Bank, Source: Australia Bureau of Statistics, Business Register, taken from OECD Stats forthcoming. The COVID-19 pandemic highlighted the essential role of migrants in filling labor gaps. In Australia, the restriction on entry and departure of international students and working-holidays visa holders following travel restrictions pushed job vacancies to an unprecedented level, underscoring the labor market’s dependency on foreign workers, especially in agriculture and hospitality sectors.123 At the onset of the pandemic, many migrants in Southeast Asian countries returned to their origin countries due to job losses or lack of healthcare. For example, some 2 million Myanmar workers returned home from Thailand. 124 The resumption of travel and associated removal of restrictions saw the return of migrants in these economies – in the case of Thailand, for example, firms’ demand for foreign labor, particularly Myanmar workers, spiked upon recovery (Figure 2.5). Aging populations and declining birth rates are fueling migration within the region Aging countries with shrinking labor forces increasingly recognize the need for foreign workers to sustain their economies and social contracts. Between 1980 and 2020, the percentage of people aged over 65 doubled in high- income and many middle-income EAP countries. This share is expected to continue rising. Yet the pace of aging varies widely across the region. Japan leads the region with 30 percent of its population aged over 65, followed by Australia, Korea, New Zealand, Singapore, and Thailand at about 16 percent (Map 2.1, a). Korea is projected to quadruple its populations aged over 80 by 2040. Malaysia is now classified as an “aging” society (meaning more than 7 percent of its population is aged 65+). To keep the dependency ratio at the 2020 level, Korea; Taiwan, China; and Thailand would need to expand the working-age population by more than 35 percent of the current working-age population (Map 2.1, b). As aging countries experience shrinking workforce, effective migration policies are essential to prevent workforce declines. While policies aimed at boosting female labor force participation, extending retirement ages, and automation are important, they are insufficient on their own. At the same time, some LMICs in the region are experiencing a youth bulge, putting pressure on labor markets and social protection systems. Countries like Lao PDR, the Philippines, Indonesia, PNG, and Timor-Leste are projected to see their working-age populations grow 123 Downham and Litchfield (2022); Lucas (2023) 124 ASEAN (2022); World Bank (forthcoming) 26 steadily through 2050. But economic growth and job creation may not keep up with labor market demand, increasing the pool of potential migrants, especially youth, from these countries.125 To address these demographic shifts, aligning the skills of surplus labor in younger countries with demand in aging countries is critical. Understanding the skills profile of those who will retire, along with evolving trends in skills demand, will help facilitate this alignment. Map 2.1. Aging population and working-age population needs a. People aged 65 or over in 2020 b. Percentage changes in current working-age population needed by 2035 to keep the dependency ratio the country had in 2020 Sources: For population data: United Nations World Population Prospects 2022; United Nations Department of Economic and Social Affairs (UN DESA); World Bank, original calculations for this publication. For GIS data: Global administrative areas (GADM). Note: In panel b, positive values mean the country needs migrants by 2035 to sustain the same dependency ratio it had in 2020. Negative values mean the country will have excess workers by 2035 if it sustains the same dependency ratio it had in 2020. Technological change, migration policies, and other factors influence migration Remote work enabled by technology is an emerging alternative to migration, allowing workers to seek foreign employment without physically migrating. Online gig platforms offer flexible employment opportunities across borders, and can be especially appealing to women, youth, and those with limited local options. The EAP region has about 180 million online gig workers and nearly 80 percent of them are from tertiary cities, according to the World Bank’s new estimates of the number of online gig workers.126 Some countries like China, Indonesia, and the Philippines are expanding their presence in this sector.127 125 Belmonte and McMahon (2019); Milasi (2020); Zaiceva and Zimmermann (2016) 126 Refer to World Bank (2023b) for limitations on estimating the number of gig workers. 127 Doan et al., (forthcoming) 27 Not all EAP countries are ready to grasp remote Figure 2.6. Top 5 skills sought after by online jobs work opportunities, however. 128 For instance, by 2021/22, internet usage as a proportion of the population ranged from 96 percent in Singapore to 62 percent in Lao PRD and merely 32 percent in Papua New Guinea (World Development Indicators). Online jobs to date have tended to be concentrated in software development and technology, creative fields and multimedia, and clerical and data entry, with demand primarily coming from the United States (Doan et al., forthcoming). These jobs typically require English proficiency, computer skills, and higher education (Figure 2.6). Countries are adapting migration policies to attract Source: US O*Net database, analyzed by authors, Doan et al. digital nomads (individuals who travel while forthcoming. Note: 5=most needed, 0=least needed. working), retirees, and high-skilled workers. Digital nomad visas, such as those in Indonesia, target remote workers and offer economic benefits through increased consumption and knowledge sharing. 129 Retiree visa programs in countries like Thailand, Malaysia, and the Philippines are designed to attract wealthy older individuals, boosting domestic demand. Meanwhile, countries like Australia and New Zealand maintain skills-based immigration programs to fill labor gaps, while Japan hires foreign nurses through bilateral agreements. In sum, migration in the EAP region has many drivers (see spotlight 2.1 on climate-driven migration and spotlight 2.2 on conflict-driven migration). Economic migration in EAP is fueled by the pursuit of better opportunities. Aging countries face labor shortages, while countries with a youth bulge have surplus labor, creating imbalances that migration helps address, thereby enhancing the utilization of labor and human capital more broadly. 128 A country’s competitiveness in online gig work involves four key dimensions: (1) the quality and quantity of the workforce and their willingness to work in industries that may involve evening shifts; (2) competitive labor and infrastructure cost, as well as tax benefits; (3) penetration and quality of relevant public infrastructure such as telecommunications, electricity, and banking services; and (4) an enabling environment with good ease of doing business, macroeconomic stability, and rule of law. These dimensions vary across the region. 129 Sánchez-Vergara, Orel, and Capdevila (2023) 28 Spotlight 2.1. Climate Change, Natural Disasters, and Migration in the East Asia and Pacific Region The East Asia and Pacific (EAP) region is expected to face significant climate change and related natural disaster events over the next few decades, potentially affecting internal and international mobility. The region is highly vulnerable to floods, tropical hurricanes, and sea level rise (Figure S2.1.1). With high population density and varied geography, its subregions may simultaneously experience rising temperature, volatile precipitation, and extreme climate events. These can drive migration as productivity and habitability deteriorate, but the scale and nature of resulting migration will also depend on mitigation measures, social protection, migration pathways, and individual circumstances. Figure S2.1.1. Some EAP countries are highly vulnerable to natural disasters a. Average annual exposure to natural disaster b. Types of disasters experienced, by country, select events, select EAP countries EAP countries 2,000 1,779 Viet Nam Number of natural disasters per year 1,591 1,500 PICs* Lao PDR* 1,000 Cambodia 454 500 289 0 20 40 60 80 100 85 36 Percent of disasters 25 Drought Floods 0 Storm Strong Wind Cyclone/Tornado/Typhoon Landslide Earthquake Pest attacks Fire (forest + urban) Sources: World Bank, original calculations for this publication using data from the DesInventar project (www.desinventar.net/). Note: EAP = East Asia and Pacific; PICs = Pacific Island countries. *. Data for Lao PDR are available until 2012 only. Data for Timor Leste data correspond to 1999 –2017. Data for the Pacific Islands correspond to 1999–2014. Extreme weather events, like heat waves in Southeast Asia, affect human mobility by altering incomes and habitability, widening the wage gap between origin and destination areas. Heat stress may reduce habitability, leading to permanent migration, particularly in humid and densely populated coastal cities in Southeast Asia.130 Similarly, extremely harsh winters in Mongolia have caused permanent out-migration among traditional pastoralists. 131 However, lower incomes from climate impacts may result in “trapped” populations. 132 For example, two successive years of drought decreased migration in rural households in Thailand and Viet Nam as household assets were eroded.133 While natural disasters may spur migration, countercyclical remittances can stabilize affected households.134 Figure S2.1.2 illustrates how climate change exacerbates or impedes mobility. 130 Ibid. 131 Roeckert and Kraehnert (2022) 132 Cattaneo and Peri (2016); Mbaye and Okara (2023); Thiede, Robinson, and Gray (2022); Zickgraf (2018) 133 Quiñones, Liebenehm, and Sharma (2021) 134 Yang and Choi (2007) 29 Figure S2.1.2. Climate change affects migration through income and habitability Source: World Bank, original illustration for this publication based on World Development Report 2023 (World Bank 2023). Climate-driven migration is likely to be short-distance and short-duration internal movements, as seen in the Philippines and Viet Nam, though it can deter migration for resource-constrained households. Projections suggest increased internal migration than international migration, with some 3 million to 6 million climate migrants projected in the Lower Mekong subregion by 2050.135 Rising temperatures have increased internal migration in the Philippines, 136 and typhoon-induced income shocks have driven migration to urban areas for work opportunities in Viet Nam.137 Established migration networks may facilitate international migration in response to climate change events. In EAP, the pace of disaster onset and disaster intensity also affect the type of mobility responses. Recurring shocks may result in migration for employment outside agriculture, as in Cambodia,138 while sudden onset floods can lead to local movements followed by quick return.139 Migration responses vary with shock intensity: for instance, in the Philippines, weather shocks can increase international labor migration up to a peak intensity point, after which reductions in income may curtail mobility.140Climate-induced migration affects well-being and labor market outcomes in both origin and destination areas. For instance, the large-scale migration of farmers could shift the occupational structures in origin areas away from agriculture, which the migrants may face labor market mismatches, and strain local resources in the short term.141 Policy actions are critical. Climate change mitigation and adaptation measures such as adaptive social protection and regular migration pathways help households diversify income sources and limit losses. Governments, international organizations, civil society, and the private sector can support skilling initiatives to minimize labor market mismatches and migrants’ adjustment costs. Other forms of support include ensuring portable benefits, providing financial services, and undertaking planned relocation of climate-vulnerable communities, as seen in Fiji in recent years. 142 Regional or bilateral mobility agreements, like those among member-countries of the Association of Southeast Asian Nations (ASEAN), can enable free movement of people in response to climate change. For further discussions on climate-driven migration and related policies, see the 2023 World Development Report on migration.143 135 Clement et al. (2021); Trisurat et al. (2018) 136 Bohra-Mishra et al. (2017) 137 Gröger and Zylberberg (2016) 138 Bylander (2015) 139 Call et al. (2017); Mbaye and Okara (2023); Yuan and Zhu (2016) 140 Pajaron and Vasquez (2020) 141 Roeckert and Kraehnert (2022) 142 Witschge (2018) 143 World Bank (2023) 30 Spotlight 2.2. Conflict-driven Migration in the East Asia and Pacific Region— The Case of Myanmar Refugees in Malaysia The East Asia and Pacific (EAP) region’s share of global conflict-induced displacements has declined steadily over the past decade; refugees in EAP have dropped below 3 percent of the global refugee population, according to United Nations High Commission on Refugees (UNHCR) data on refugees. But recent political instability in Myanmar has led to a surge in refugees and internally displaced persons (IDPs) to neighboring countries. Displacements have been triggered by persecution, protests crackdowns, election controversies, the 2021 military takeover, and fighting between de facto authorities and Figure S2.2.1. Total refugees and asylum seekers ethnic groups. Malaysia hosts the highest number of from Myanmar and other countries in select EAP refugees and asylum seekers from Myanmar (180,000+), host countries, 2023 followed by Australia (140,000+) and Thailand (90,000+). Number of refugees and asylum 200,000 Most refugees in Malaysia and Thailand are from 150,000 Myanmar (Figure S2.2.1). 100,000 seekers 50,000 Of the 188,210 refugees and asylum-seekers registered with the United Nations High Commissioner for Refugees 0 (UNHCR) in Malaysia, 58 percent are Rohingya, 30 percent are other Myanmar refugees, and 12 percent are from Afghanistan, Pakistan, Somalia, and the Republic of Yemen 144. Most are men (65 percent) and 81.5 percent of Rohingya are less than 35 years old (World Bank From Myanmar From other countries 2022). Refugees tend to reside in Malaysia for about 10 Source: United Nations High Commissioner for Refugees years, on average. Many are not the first generation of (UNHCR), https://www.unhcr.org/refugee- refugees. 145 Educational levels are generally low, statistics/download/?url=S71wGq . particularly among Rohingyas (more than 80 percent not Note: EAP = East Asia and Pacific. having completed primary school). Despite low education, most refugees speak the local language (Bahasa Malaysia). According to the World Bank’s small sample surveys in 2021, 94 percent of the Rohingya respondents can speak at least a little Bahasa Malaysia, but only 37 percent of them can speak English and fewer than half can read and write both languages. Most have internet access (96 percent) and use smartphones for social networking, but few used the internet to search for jobs. Despite having no rights to work, many refugees work informally, often pursuing low-paying jobs to support their families. While labor force participation in the host community is low (about 50 percent), refugees’ labor force participation is at least 10 percentage points lower. The gender gap is more pronounced among refugees, particularly Rohingya population; 60 percent of men are in the labor force, compared to only 10 percent of women (Figure S2.2.2). Longer displacement tends to lead to improved labor market integration in Malaysia. Refugees, especially women, work fewer hours, and earn less than members of the host community. While members of the host community work 45 hours per week on average, the displaced Rohingya population work about 30 hours. More than 20 percent of refugees worker fewer than 30 hours per week, compared to 7 percent of hosts. The average monthly income for refugees is RM1,400 (about US$297) or less, compared to RM2,604 (about US$555) for hosts. 144 UNHCR (n.d.) 145 World Bank and UNHCR (forthcoming) 31 Refugees and hosts often work in the same sectors, but refugees are more likely to have low-skilled jobs. About one-third of refugees work in “Other Service” activities, including personal service activities, compared to 13 percent of hosts and only 1 percent of the general Malaysian workforce. Some 44 percent of refugees are in low- skilled elementary occupations, compared to 20 percent among hosts, and 6 percent in the Malaysian workforce (Figure S2.2.3). Granting refugees the right to work is critical to reduce underemployment and poverty, enabling them to invest in their children’s education, and supporting family members in Malaysia, Myanmar, and elsewhere. This could boost the Malaysian economy through increased labor, consumption, and tax revenue. Additional support, such as targeted social assistance and training in technical, language, and digital skills, together with employment services, can further enable refugees to contribute to the Malaysian economy and society. Figure S2.2.2. Refugees from Myanmar have very low labor force participation rates in Malaysia, especially women (percent) Male Female Total 61 58 51 51 54 40 36 40 41 27 27 11 Rohingya Other Host Community Refugees from Myanmar Non-Myanmar Refugees Source: World Bank and UNHCR forthcoming, based on the first systematic survey of refugees and hosts in Malaysia collected during December 2023–April 2024. Figure S2.2.3. Most refugees from Myanmar work in low-level jobs 100 80 60 Percent 40 20 0 Rohingya Other Hosts Refugees from Myanmar Refugees from other Foreign nationals All Malaysian countries nationals Managers Professionals Technicians/Associate Professionals Clerical Support Workers Services and Sales Workers Skilled Agricultural/Forest/Fishery Workers Craft and Related Trades Workers Plant and Machine Operators and Assemblers Elementary Occupations Sources: World Bank and UNHCR forthcoming, based on the first systematic survey of refugees and hosts in Malaysia collected during December 2023–April 2024; World Bank 2022. Note: Occupations are at the Malaysia Standard Classification of Occupations (MASCO) 1-digit level. The last two columns present shares of foreign and Malaysian workers, respectively, in the sample states in Malaysia across occupational categories, based on estimates from the Malaysia Labor Force Survey 2022. 32 Chapter 3. How does migration influence human capital development and reallocation? Key message: The consequences of migration for human capital development are complex and vary across origin and destination countries. Migration supports economic growth and reduces poverty in EAP by offering more productive and efficient utilization of human capital. But not all migration is positive, and it can have uneven distributional impacts. In origin countries, concern about the impacts of high skilled emigration on skill stocks (so- called “brain drain”) are common, though evidence is mixed. In destination countries, migration delivers net economic benefits, including labor market benefits, but some groups of workers can be adversely affected by competition from migrant workers. Better understanding these impacts is important for sound migration policy setting. Sub-messages: 1. 1. The labor market effects of migration vary, depending on migrant profiles, labor market contexts, and policies in both origin and destination countries. Wage and employment impacts tend to be small but are unevenly distributed in both origin and destination countries, with some groups, sectors, and regions benefiting more than others. 2. 2. In origin countries, migration can result in skill losses from emigration, especially in the short-term, but these can be offset by remittances and increased incentives for education. 3. 3. In destination countries, the impacts of migration depend on the skills of migrants and natives. High-skilled migrants in many cases see their skills underutilized, though this can be true in origin countries as well. Low- skilled migrants can help natives move into higher-skilled roles, fostering education and training, but they can also compete with natives or previous migrants, resulting in adverse consequences for the latter, notwithstanding positive overall economic and labor market impacts. Effects in origin countries Migration affects origin countries in various ways. Remittances provide stable foreign exchange, support household consumption, and boost investment in education and health care, thus helping reduce poverty. Migration can affect demographic changes, altering labor markets and social structures. In doing so, it can ease unemployment by reducing labor supply in overcrowded job markets. It has potential to result in brain drain, where skilled professionals leave their origin countries, but it can also lead to brain gain and reduce brain waste (the underutilization of workers’ skills and qualifications). The impacts depend on the context, the type of migration (who migrates, and under what circumstances), and related policies. Box 3.1. illustrates potential effects of migration and resulting remittances on labor markets and human capital development. The impacts of migration on human capital: brain drain and brain gain The loss of skilled professionals is arguably the primary migration-related concern of origin countries. In EAP, the emigration rate of high-skilled labor is relatively high (Figure 3.1). This reflects the fact that high-skilled workers find better career opportunities, higher wages, and improved living conditions abroad, as well as migration opportunities, more readily than low-skilled workers. Importantly, as discussed in chapter 1, many high-skilled migrants receive their tertiary education in destination countries and remain in the country for employment. 33 Box 3.1. Illustration of labor market effects from migration and resulting remittances Labor market impact of migration and resulting remittances depend on who migrates, who returns, and who are in demand (Figure B3.1.1). Figure B3.1.1. The complex impacts of migration on the labor force, remittances, employment, and wages Note: HH = household. Migration and remittances can either accelerate or decelerate human capital development (Figure B3.1.2). Figure B3.1.2. The effects of migration and remittances on human capital and competitiveness Source: World Bank, original illustration for this publication. The potential negative impacts from high-skilled emigration can be significant, especially in the short-term, and especially in smaller economies which often have less flexible labor markets and less adaptive education systems. Pacific Island Countries (PICs), for example, face challenges as skilled workers leave for seasonal overseas jobs and 34 high-skilled workers often do not return after studying abroad. Disproportionate outflows can create labor market mismatches and sectoral skill shortages, resulting in political frictions over migration.146 Large outflows of skilled workers, especially when concentrated in certain sectors, occupations, or geographic areas, can also hinder domestic investment and productivity, as seen for European firms, with recovery over a few years as firms and workers adjust.147 High turnover can discourage firms from investing in training, an issue seen in the Philippines, where firms use training bonds to retain workers under which workers must reimburse training costs if they leave the job before completing an agreed employment period. Despite the loss of skilled professionals, migration can also have a positive impact on human capital in origin countries over time. High-skilled migrants are likely to remit more than their low-skilled counterparts, although less frequently148, with these remittances helping to increase household spending on education (as discussed in the next sub-section). Higher earning prospects through migration can also incentivize education, thereby increasing human capital in the medium to long term. The Philippines presents a widely recognized example: Changes in U.S. visa policies for nurses, for example, spurred higher nursing enrollment and graduation in the Philippines – generating 10 additional licensed nurses per nurse migrant, owing to education policies that allowed existing education institutions to expand nursing programs.149 Figure 3.1, panel b, demonstrates that countries with a high share of tertiary-educated emigrates tend to have high levels of human capital pools (measured by the Human Capital Index). By the same token, the prevalence of low-skilled migration opportunities has potential to reduce incentives for education. Figure 3.1. Brain drain or brain gain? a. Share of tertiary-educated emigrants as a share of b. Share of tertiary-educated emigrants and all migrants in EAP countries Human Capital Index in EAP countries 1.0 Singapore Hong Kong Human Capital Index, 2020 0.8 SAR, China 0.6 Malaysia Indonesia Philippines 0.4 0.2 0.0 0 20 40 60 80 Percent of high-skilled emigrants Source: World Bank, World Development Report 2023 Migration Database; Human Capital Index. Note: Data are for 2020. Panel b takes the data in panel a and compares them to a nation’s stock of human capital, as captured by its measure on the World Bank Human Capital Index. EAP = East Asia and Pacific. Temporary or circular migration, which is especially common in EAP, also helps to mitigate brain drain, as migrants return with new skills.150 In PICs, between one-quarter and one-third of migrants return home.151 Some countries, 146 Alesina and Tabellini (2024); Hangartner and Spirig (2023); Lebang and Peters (2022); Mayda, Peri, and Steingress (2022) 147 Giesing and Laurentsyeva (2021) 148 Bollard et al. (2011) 149 Abarcar and Theoharides (2024) 150 Dos Santos and Postel-Vinay (2003); Dustmann, Fadlon, and Weiss (2011); Dustmann and Glitz (2011) 151 Gibson and McKenzie (2011) 35 such as Malaysia, Singapore, Viet Nam, (as well as Australia Awards Scholarship recipients), mandate the return of students funded by government scholarships, which helps replenish the domestic talent pool. Returnees often bring valuable skills, especially in technology, engineering, and business managements (see box 3.2). Emigration and return migration promote trade, investment, knowledge transfer, and firm linkages152 and ethnic networks play a crucial role in facilitating these processes .153 There is evidence of this in Taiwan, China, for example, where returnees’ ties to the United States have allowed them to identify market opportunities, raise capital, build management teams, and establish partnerships with specialized producers, fostering growth and innovation in the semiconductor sector.154 Migration impacts human capital in other ways as well. Evidence from EAP suggests that remittances are used to promote the development of human capital, as discussed in the sub-sections that follow. However, migration can also have negative impacts on children’s learning capabilities. Family disruptions due to migration can impair children’s mental health and education outcomes, particularly affecting their cognitive and socioemotional development. In Indonesia, despite the presence of remittances, migration had minimal impact on school enrolment, attendance, or educational attainment—a finding attributed to the absence of caregivers .155 In PICs, communities with seasonal migrant households have raised concerns about child neglect and behavioral issues in children of migrant households, although rigorous evidence on a causal relationship has been lacking.156 Similar impacts are found for internal migration (see spotlight 1.1 on China). Box 3.2. The benefits of circular migration on human capital While spotlight 1.1 on China discusses the Chinese government’s efforts to encourage the return of overseas Chinese professionals, the broader EAP region also presents some evidence on how returnees can significantly bolster local economies by introducing advanced skills, fostering innovation, and driving economic growth. The Republic of Korea. Returnee scientists and engineers have had a significant impact in Korea. Programs like the “Brain Return 500” have attracted Korean professionals back to the country. Incentives include research grants. These returnees have helped establish cutting-edge research institutes and startups, contributing to Korea ’s position as a global leader in technology and innovation. Yet, scientists and engineers who have received their PhDs in the United States in recent years have chosen to remain in the United States in larger numbers than previous generations, owing to increased competition between foreign PhD holders and their Korean counterparts.157 Despite various policy attempts, Korea has fallen short of transforming research institutes toward greater return migration of highly educated and high-skilled Korean migrants.158 Viet Nam. The booming tech sector in Viet Nam has benefited from returnee entrepreneurs and professionals. Many Vietnamese who studied or worked abroad have returned to start their own businesses or take leadership roles in local companies. For instance, major technology firms have benefitted from the expertise of returnees who understand global market trends and possess advanced technical skills. These returnees are also instrumental in fostering a startup culture and mentoring young Vietnamese entrepreneurs, thereby enhancing the country's innovation ecosystem. Taiwan, China. The return of nationals who were educated overseas has also benefited Taiwan, China, especially in the semiconductor and technology sectors. Initiatives like the "Taiwan Employment Gold Card" have made it easier for highly skilled professionals to return and contribute to the local economy. 152 Bahar et al. (2022); Bahar et al. (2024) 153 Kerr (2008) 154 Wang (2015) 155 Hapsari (2019); Nguyen and Purnamasari (2011) 156 Doan, Dornan, and Edwards (2023) 157 Song and Song (2015) 158 Park, Song, and Kim (2016) 36 Remittances contribute to human capital development A major visible economic benefit in origin countries from labor migration are increases in household income. Remittances generally exceed foregone income from the origin country, as well as the cost of migration. Evidence from Kiribati, Tonga, and Vanuatu show that even after subtracting living expenses in the host country, seasonal workers employed in labor mobility schemes in Australia and New Zealand remitted on average about 1.8 times what they would have earned at home.159 In areas where subsistence farming is prevalent and the cash economy is limited, remittances are often the primary source of fiat money (legal tender) for cash-based purchases of goods and services.160 Remittances foster human capital development by increasing education and healthcare spending, as seen in the Philippines 161 ; in Indonesia 162 ; in Viet Nam; and in PICs 163 . The use of remittances in education boosts GDP substantially (Figure 3.4, c), as human capital rises (Figure 3.4, d). In Viet Nam, remittances increase schooling and reduce child labor164 and increase children’s grade completion.165 Remittances also play a crucial role in reducing poverty, both by enabling consumption and investments. In Cambodia, international remittances increase total daily per capita consumption by 12-14 percent, reducing poverty by 5-6 percentage points.166 In PICs, remittances finance daily expenses (including for food) and home extensions and repairs, providing more durable and disaster-resistant dwellings.167 Importantly, the impacts of remittances on poverty and inequality largely depend on the socioeconomic status of households receiving remittances. Indonesia saw a decline in poverty and inequality as many migrants come for high-poverty regions.168 In other contexts, such as in Tonga and the Philippines, this has not been the case – though even here non-migrant households can benefit from multiplier effects.169 Remittances support macroeconomic stability Remittance inflows to EAP have increased nearly five-fold in the last two decades and amounted to US$134 billion in 2023) and US$85 billion excluding China. Remittances to EAP countries primarily originate from high-income destinations (Figure 3.2). For instance, Cambodians in Korea send more remittances per capita than those in Thailand. While 23 percent of EAP emigrants move to middle- and low-income countries, remittances from these destinations account for only 10.8 percent of total inflows.170 Intraregional movement constitutes 46 percent of emigration from EAP countries, yet remittances from these destinations made up only 39 percent of total inflows. The potential macroeconomic impact of remittances can be demonstrated by a new purpose-built model (see appendix D) which focuses on migration from the Philippines (a labor surplus country) to Japan (a labor deficit country). Simulations show that remittances rase the relative wages in the non-tradable sector, irrespective of whether migration is mostly low- or high skilled (Figure 3.4). 159 World Bank (2023b) 160 World Bank (2023a) 161 Clemens and Tiongson (2017); Yang (2008) 162 Adams Jr and Cuecuecha (2016); World Bank (2017) 163 Doan, Dornan, and Edwards (2023); Gibson and McKenzie (2014); World Bank (2021) 164 Binci and Giannelli (2016). 165 Nguyen and Nguyen (2015). 166 Roth and Tiberti (2017) 167 Bedford, Bedford, and Nunns (2020); World Bank (2021) 168 Agwu, Yuni, and Anochiwa (2018); Odozi, Awoyemi, and Omonona (2010); Brown and Jimenez (2008); Chea (2023); Nguyen (2008); Nguyen, Marrit, and Lensink (2012); Pernia (2008); Prakash (2009) 170 High-income countries also dominate as the major source of inflows in South Asia, Latin America and the Caribbean, and the Middle East and North Africa regions (Ratha, 2022). 37 Figure 3.2. Emigration from and remittance inflows Figure 3.3. Top 15 remittance-receiving countries in to EAP by destination EAP 0.1 0.1 Low-income 6.0 3.3 40.6 7.3 countries Remittance inflows as share of GDP in 17.0 31.9 Non-EAP middle- 57.7 2023 (%) Percent 47.8 income 15.1 countries 10.8 9.9 9.2 9.1 9.0 EAP middle- 6.1 5.1 5.0 4.8 income 3.2 2.3 2.0 countries 29.0 31.5 Non-EAP high- income countries Share of emigration Share of remittance inflows Sources: Global Bilateral Migration Matrix; Bilateral Remittance Matrix; World Bank KNOMAD. Note: EAP = East Asia and Pacific. Figure 3.4. Impact of migration in origin country, scenario calibrations - Low-skilled migration scenario and low- and high-skilled migration scenario with remittances spent on consumption (panels a and b) - Education scenario with an assumption that 50 percent of remittances are spent on education (panel c) and human capital rises (panel d) a. GDP b. Relative wage of low-skilled workers 8 Low-skilled migration scenario 8 Low-skilled migration scenario Low-skilled and high-skilled migration scenario Low-skilled and high-skilled migration scenario 6 6 Percent Percent 4 4 2 2 0 0 1 2 3 4 5 1 2 3 4 5 Decades Decades c. GDP d. Human capital 50 50 Consumption scenario Consumption scenario 40 Education scenario 40 Education scenario 30 30 Percent Percent 20 20 10 10 0 0 1 2 3 4 5 1 2 3 4 5 Decades Decades Source: World Bank, original research for this publication. 38 Importantly, remittances support the macroeconomic stability of receiving countries. Figure 3.3 shows the top 15 remittance-receiving countries as share of GDP in EAP. International remittances in 2022 can finance 13.3 percent of total imports in Timor Leste, 24.6 percent in the Philippines, 54.7 percent in Samoa, and up to 66.0 percent in Tonga.171 Data from 72 developing countries suggest that those receiving remittances exceeding 1 percent of GDP (a condition met by 17 countries in EAP) tend to experience less volatility in real GDP growth, the nominal exchange rate, and import growth.172 The reason for this is that remittances are more stable than other forms of foreign capital inflows and are often countercyclical. During the global financial crisis of 2008–09, for instance, remittances remained stable even as other capital inflows declined sharply. 173 Also during the COVID-19 pandemic, remittances helped to smooth consumption in hard-hit countries such as the PICs.174 Evidence on the impact of remittances on the real exchange rate is inconclusive. In theory, large remittances can cause real exchange rate appreciation, due to increased demand for non-tradable goods and services (such as housing and personal services).175 This “Dutch disease” effect make exports less competitive while increasing imports. However, in developing countries in Asia, remittances only caused real exchange rate appreciation in countries with a low ratio of remittances to GDP (less than or equal to 1 percent); in contrast, in countries with a higher ratio of remittances to GDP, real exchange rates appear to have depreciated.176 Much can be gained by reducing remittance costs Remittance costs have dropped sharply in some EAP countries, approaching the global target of 3 percent, given increased competition, advances in payment systems, and technological innovations. Remittance costs have fallen faster in EAP than the global average, for both cash and digital transfers, reaching an average of 5.7 percent in the third quarter of 2023 (Figure 3.5). Digital transfers are particularly cost-effective, averaging 1.8 percentage points less than cash transfers. Figure 3.5. Remittance costs vary widely across EAP Costs to remit nevertheless vary widely across source countries (Q3 in 2023) countries and remain particularly high for PICs (Figure 14 Remittance costs (% of sending 3.5). due to differences in market structures, customer 12 10 and firm characteristics, financial infrastructure, and 8 the share of rural population in the origin country. 177 6 US$200) For example, migrants from Viet Nam and Indonesia in 4 2 Thailand pay significantly higher remittance costs 0 compared to those sending money to Malaysia and Singapore. Likewise, remitting from Thailand to Myanmar costs 8.7 percent and 12.7 percent to Lao PDR. Remittance costs to six PICs (Fiji, Papua New Guinea, Samoa, Solomon Islands, Tonga, Vanuatu) Source: World Bank, Remittance Prices Worldwide. range from 9 percent to 11 percent. 178 For countries Note: EAP = East Asia and Pacific. where remittances are a significant source of income, these costs are significant. In the case of Tonga, for example, a two-percentage point reduction in the cost to remit to Tonga would increase the remittance volume by 1 percentage point of GDP in a given year. 171 WDI and KNOMAD (2023) 172 Hosny (2020) 173 Islamaj et al. (2019) 174 Kpodar et al. (2021); World Bank (2021) 175 Lopez, Molina, and Bussolo (2007) 176 Hien, Le, and Nguyen (2020) 177 Beck, Janfils, and Kpodar (2022); Filho (2021) 178 Raithatha, Farooq, and Sharma (2021) 39 The impacts of migration and remittances on employment are varied The employment impacts of migration and remittances are both complex and varied. Worker outflows have the potential to reduce unemployment in origin countries, although the evidence suggests these effects tend to be small. If migrants were not working before migrating, the direct impact on labor markets is likely to be minimal.179 By the same token, out-migration also has the potential to lead to labor shortages in the short-term, especially in areas with high migration rates, in cases where migrant were working, and where unemployment was low or the skills of migrants were in short supply. Large worker outflows are associated with shortages of low-skilled workers in Lao PDR . 180 Internal migration can help to alleviate such local effects, but not where this is limited—as in Indonesia, where many migrants are from Jakarta and parts of Sumatra.181 Remittances also affect the labor market by boosting domestic demand, which helps create jobs, especially in the nontradable sector, and reduces unemployment. 182 In Samoa and Tonga, urban construction activity was significant in the early 2010s financed by remittances. 183 Resilient remittances to Tonga during the COVID-19 pandemic helped sustain labor demand and created new opportunities, including food and retail industries.184 At the same time, remittances have the potential to reduce household labor force participation by increasing the reservation wages of family members wo stay behind. In the Philippines, for example, members of households with at least one migrant are less likely to be employed.185 In Figure 3.6. A probability to become an Viet Nam, remittances decrease labor participation and employer rises as remittances rise (in migrant monthly working hours for labor-sending households. 186 households in the Philippines) (y=percent, Income effects may also be more pronounced for women in x=monthly remittances in US$) remittance-receiving households than males, with this gender-specific effect seen in the Philippines187 and in other developing countries. 188 Such effects, however, are not inevitable. In rural China, migration increases farm work for women of all ages189, and Bangladeshi migration to Malaysia does not crowd out household labor supply.190 Income effects might not be the only factor for labor market exits, as these decisions can reflect care arrangements between migrants and family members who stay behind, particularly in the case of households with female migrants. In Indonesia, remittances and female migrants reduce Sources: World Bank 2013, using Labor Force household labor supply 191 . At the same time, labor supply Surveys (LFS) and Family Income and Expenditure effects can be moderated by entrepreneurial activities Surveys (FIES) 2003, 2006, and 2009. 179 OECD (2016) 180 World Bank (2023a) 181 Saito (2023) 182 Chami et al. (2018) 183 Connell (2015) 184 Doan, Dornan, and Edwards (2023) 185 OECD (2017) 186 Nguyen and Linh (2018); Nguyen, Marrit, and Lensink (2012) 187 Rodriguez and Tiongson (2001) 188 Azizi (2018) 189 Démurger and Li (2013) 190 Mobarak, Chowdhury, and Rashid (2023) 191 Nguyen and Purnamasari (2011) 40 supported by remittances (easing financial constraints) and by knowledge transfers.192 There is evidence from Cambodia and PICs that migration has increased entrepreneurial activities.193 In the Philippines, the likelihood for family members who stay behind becoming an employer rises for both women and men as the amount of remittances rises (Figure 3.6). The impacts of migration and remittances on wages are complex The wage impact of migration depends on who migrates. A decline in labor supply can increase wages for stayers with skills similar to those of the leavers (see, for example, Dustmann et al. 2015). Emigration of high-skilled labor can potentially increase income inequality in the origin country by increasing wages for the remaining high-skilled workers. 194 Where migrants are primarily low-skilled, however, the effect may be the opposite. The complementarity or substitutability of labor also matters. If high- and low-skilled labor are complementary, the emigration of high-skilled labor could increase the excess supply of low-skilled labor, depressing their wages further.195 Outflows of low-skilled workers can also generate opportunities for skills upgrading, leading to higher productivity and possibly higher wages. In the Philippines, emigration during the 2000s led to a rise in real wages in the manufacturing sector. 196 In Myanmar, high emigration rates from Mon State to Thailand increased wages of unskilled agricultural workers, with evidence that this in turn prompted farmers to adopt cost-savings technologies, improving labor productivity and leading to skills upgrading.197 In sum, migration can affect labor allocation through multiple channels, with corresponding impacts on wages. In the short term, the departure of higher-skilled workers, if replaced with (slightly) lower-skilled workers, can shift the labor distribution and allow agricultural workers to enter nonfarm employment. In the long term, remittances can help households that stay behind overcome capital constraints, facilitating business start-ups and transitions out of agriculture.198 Net impacts will depend on who migrates and the conditions of their migration (including whether they return, to what extent they send remittances, and so on), as well as local labor market conditions. These factors will affect wages, and have broader distributional consequences, determining who gains and who loses from migration. Effects in destination countries The preceding discussion has focused on effects in origin countries, but impacts in destination countries are equally important. In EAP destination countries, an increase in the labor force due to immigration is likely to drive economic growth and offset any decline in GDP resulting from population aging and a shrinking labor force. The macroeconomic model presented (see appendix D for details) suggests that in the destination country, low-skilled migrants employed in the elderly care sector moderate the declines in GDP owing to population aging, reduce pressure on relative wages in the nontradable sector (elderly care), and improve overall productivity, by addressing acute labor shortages and the misallocation of resources (Figure 3.7). The influx of migrants expands the tax base and improves government revenue, and coupled with the higher GDP levels, reduces the public debt- 192 Clemens and Ogden (2020) 193 Connell and Brown (2005); Kogure and Kubo (2024) 194 Uprety (2019) 195 Uprety (2019) 196 World Bank (2006) 197 Filipski, Thome, and Davis (2020) 198 Dinkelman, Kumchulesi, and Mariotti (2024) 41 to-GDP ratio. Net fiscal contribution of temporary labor migrants is likely to be positive as most migrants arrive after completing their education. In the U.S., even undocumented immigrants contribute collectively about US$11.6 billion a year to state and local taxes.199 While an influx of migrants generates distributional effects across skill types, in the long term, economic growth expands the overall job market, including segments where migrants and natives compete. Theoretically, this expansion could allow natives to remain employed, but it may also attract more migrant workers, thereby maintaining wages at a low equilibrium in jobs that natives are not willing to accept. Upskilling and social welfare or other compensation to low-skilled natives whose employment is adversely affected is important in such contexts. Benefits can be large (measured by income per person) for destination countries when migration diversifies the workforce and spurs innovation.200 Figure 3.7. Effects of immigration on a rapidly aging economy: Various scenarios a. GDP 10 Deviation from Initial steady-state, % 5 0 -5 -10 -15 Aging Scenario -20 Migration Policy (250,000 with 10 Years Delay) -25 Migration Policy (250,000) Migration Policy (First 3 Years 350,000, then 70,000) -30 Migration Policy (First 3 Years 820,000 then 164,000) -35 0 5 10 15 20 25 30 35 40 45 50 Years b. Relative price of elderly care c. Low-skilled wages Aging Scenario Aging Scenario Migration Policy (250,000 with 10 Years Delay) Migration Policy (250,000 with 10 Years Delay) 1 Migration Policy (250,000) 4 Migration Policy (250,000) 2 0 0 -2 -1 Percent -4 Percent -2 -6 -8 -3 -10 -12 -4 -14 -16 -5 1 2 3 4 5 1 2 3 4 5 Decades Decades Source: World Bank, original research for this publication. Note: The different scenarios assume different levels of annual net migration inflows as well as assumptions about timing (immediate or delayed). The scenario assumes an annual net migration inflow of 250,000. All scenarios are expressed as the percent deviation from the model steady-state with no aging effects. 199 Gee, Gardner, and Wiehe (2016) 200 Ortega and Peri (2014) 42 Immigration typically expands the stock of skills in destination countries Immigration brings with it an influx of skills and diversifies skill sets available in the destination country’s labor force. It increases a destination country’s human capital by adding diverse experiences, behaviors, markets, knowledge and skills. A diverse population facilitates the emergence of new ideas by acting upon opportunities differently and by providing an environment conducive to experimentation. Net effects depend on migration policy and its skills bias. In some EAP countries, like Malaysia, a majority of migrants are low-skilled, though these workers are primarily employed on temporary permits. In many EAP countries, however, especially major destination countries, migration systems are skills-biased, meaning that each immigrant typically increases the average level of education in the host country. Figure 3.8 demonstrates that about half of the tertiary-educated workforce in New Zealand are immigrants, and four out of ten are in Australia. In Singapore, which has a highly educated population, immigrants make up about 10 percent of the high-skilled population. To attract more skilled workers, Singapore has recently rolled out a new point system (Complementarity Assessment Framework or COMPASS) that awards bonus points to Employment Permit applicants who are in jobs with a skills shortage and for firms that engage in innovation and international activities. Figure 3.8. The migrant share of the tertiary-educated population/workforce varies considerably in East Asia and Pacific 100% Share of tertiary educated 80% 60% immigrants (%) 40% 20% 0% Source: Database on Immigrants in OECD Regions. Countries use selective immigration programs to address current skills gaps in specific sectors and projected unmet future labor market needs. For instance, Singapore’s recent introduction of the Overseas Networks & Expertise Pass allows entry to experienced professionals, such as those filling specific tech occupations, who help to bridge skill shortages in strategic industries. Japan’s Specified Skilled Worker (SSW) program responds to industry-specific labor needs across 14 industries including care, aviation, and food manufacturing, by facilitating the entry of skilled workers to fill essential roles. But selective migration policies can restrict migrants to specific jobs. Policies preventing migrants from changing employers, sectors, industries, or visa types all serve to limit migrants’ career progression opportunities. This limitation can be particularly severe for seasonal or temporary migrant workers who remain in the same job for extended periods, disincentivizing investment in skills development. Segmented migration policies can also bifurcate the migrant labor force. The practice of linking migrants’ nationalities to specific sectors, as occurs in a number of EAP destination countries, is only applied to low- and in some cases semi-skilled workers. In Singapore, low-skilled and semi-skilled workers from countries such as the Philippines and Bangladesh, considered "nontraditional" sources of migrants, are restricted to work in the construction, marine shipyard, and process sectors, which have high labor demand but low public visibility.201 201 Pan and Theseira (2022) 43 Immigration can fill labor shortages in the short term Migrants often fill positions natives are unwilling or unable to take due to skill and other mismatches, such as those that are location-specific. In Malaysia, migrants work in the construction and low-skilled services sectors, while in Japan, they have helped address the urgent need for care workers. In Korea, manufacturing firms, especially small and medium enterprises, hire foreign workers to overcome difficulties in hiring natives.202 Migrants also contribute to labor supply flexibility, often synchronized with business cycles. Large inflows during boom periods, and large outflows during lean periods, work as a cyclical buffer in the labor market, as seen from descriptive evidence from Singapore 203 (Figure 3.9Figure 3.9.). Causal evidence from Australia shows that demand-driven visa policies do the same.204 Figure 3.9. Singapore’s active management of flows of foreign workers has allowed it to expand the workforce quickly during economic booms and contract it during recessions a. Total b. Construction sector 200 30 60 40 Changed in employed Changed in employed persons (thousands) persons (thousands) 40 Percent change Percent change 100 20 20 20 0 10 0 0 -20 -100 0 -20 -40 -200 -10 -60 -40 1991 2001 2011 2021 1991 2001 2011 2021 Sources: Pan and Theseira 2023. GDP growth rates are from the Singapore Department of Statistics. Employment numbers are from the Manpower Research & Statistics Department of the Ministry of Manpower (MOM). Note: Residents include both Singapore citizens and permanent residents. Non-residents refer to the foreign workforce (those on Work Permits and Employment Passes). The left-hand y-axis plots the year-on-year change in resident and foreign employment in the overall labor force (total), and for the construction, manufacturing, and services sector. The right-hand y- axis plots the overall GDP growth rate (year-on-year percentage changes) for the “Total” panel and the sector -specific GDP growth rate for each of the three sectors. Technological advancement, including automation, is sometimes considered as an alternative strategy to migration to fill labor shortages and mitigate the impacts of an aging labor force. While automation may have some impact, it is unlikely to fully address labor shortages and replace the need for foreign workers. The estimated share of jobs that can be automated is fairly small: 6 percent in Korea, 7 percent in Japan, and 9 percent in the United States, according to the OECD (2016). 205 Large and globally connected firms may be able to afford automation, which is often capital-intensive. But small firms are more likely to continue with production lines that require manual labor. 206 In Australia, demand for vocationally skilled workers is projected in the future to substantially exceed native supply, especially for tasks difficult to automate or offshore, according to Chand and Clemens (2021). By 2050, they estimate this gap will reach approximately two million workers. 202 Jeon (2018) 203 Pan and Theseira (2023) 204 Duncan et al. (2020) 205 The extent may vary depending on the methodologies used to assess automatability. 206 World Bank (2020) 44 The net effects of migration on employment and wages in destination countries tend to be positive, but migration does not benefit all In the EAP region, immigration generally has a positive effect on employment, suggesting a negligible displacement effect. Immigration affects the demand for native workers in two ways: while firms may substitute immigrant labor for native labor (substitution effect), they employ more native workers as output increases (output effect).207 In Malaysia, natives migrate to regions with higher immigration, suggesting an increase in labor demand due to immigration. For every 10 immigrants in a region, an additional 5 natives are employed, with 4 in full-time work and the rest in part-time employment (Del Carpio et al. 2015; Figure 3.10). Migrants can also help natives to specialize where their skillsets complement those of natives. In the case of Malaysia, migrants create jobs for higher-skilled Malaysian natives, thereby enabling Malaysians to specialize and enhance their wage premiums.208 In Australia, natives respond to increased immigration by taking jobs requiring more intensive communication skills and upgrading occupations.209 In Korea, medium- and high-skilled natives experienced increased employment and wages following increased low-skilled immigration, driven by complementarities as well as increased demand for local businesses.210 Figure 3.10. Change in the number of native Figure 3.11. Effect on wages of a 1% increase in Malaysians employed due to 1 additional migrant labor force equivalent increase in immigrants 0.3 Number of native Malaysians 0.2 1.06 0.1 0.013 0.039 0 -0.5 -0.047 -0.22 -0.029 -0.1 Degree and above 15-19 20-29 30-49 50-64 Certificate/diploma No formal Lower secondary Upper secondary Primary Age group Education level Sources: World Bank staff calculations using data from Labor Force Survey (Department of Statistics, Source: Staff compilations, using Bryant and Malaysia–DOSM). Rukumnuaykit 2013; Kim, Lee, and Peri 2022; Ozden and Note: The analysis is conducted using data for 2010–20. Wagner 2014. However, native workers who are closer substitutes to migrant workers can lose out from migration, as migrants often accept lower wages or work under less favorable conditions. In the informal sector, migrants (regardless of their skill level) often compete with native informal workers.211 Studies have found that inflows of low-skilled migrants can displace jobs held by incumbent low-skilled migrants.212 High-skilled migrant inflows have displaced native computer scientists and mathematicians.213 207 Ozden and Wagner (2014) 208 Özden and Wagner (2014); World Bank (2015) 209 Crown, Borjas, and Miller (2020) 210 Kim, Lee, and Park (2022); Kim and Lee (2023) 211 Fallah, Krafft, and Wahba (2019) 212 Dadush (2014) 213 Kerr et al. (2018) 45 The impacts of migration on wages are similarly varied, with different segments of the labor market impacted differently. In general, immigration likely has a small positive effect on wages for high-skilled workers, but a small negative effect on low-skilled workers (Figure 3.11). In Korea, while immigration leads to higher average wages, wages decrease for high school dropouts and rise for college graduates.214 Similarly, in Malaysian firms, foreign workers have positive effects on wages of managers and professionals but negative effects on wages of clerical and general workers.215 In Australia in contrast, there is no evidence that migration reduces the average wages of natives216 or that skilled visas adversely affect the wages of high-skilled workers, low-skilled workers, or previous migrants who may be close substitutes. Rather, skilled international workers tend to increase native wages, and induce further specialization and occupational upgrading.217 Immigration can also promote employment and wage growth through entrepreneurship, with evidence of a positive feedback loop between migration and innovation. In Australia, a one percentage point increase in the share of high-skilled migrants in regional employment results in a 4.8 percent rise in regional patent applications within five years.218 The distributional impacts of migration warrant the attention of policy makers. There is a need to balance the recruitment needs of employers with consideration for the impacts on native workers when formulating migration policies. Inevitably, not everyone ‘wins’ as a result of migration. Those who are adversely affected should be supported, through reskilling or upskilling that lead to enhanced labor market outcomes, and with other social protection measures (as discussed in chapter 5). Doing so is important not just from an economic perspective, but also with a view to ensuring political consensus around migration policy. Migration increases female labor force participation Migration plays a significant role in providing caregiving services for children and the elderly in some EAP economies, thereby freeing up time for native women Figure 3.12. Share of migrants and female labor to participate in market work (Figure 3.12). In Hong force participation in East Asia and Pacific Kong SAR, China, the presence of foreign domestic 70 Share of foreign born (%) workers has increased labor force participation of 60 MAC mothers with young children by 10-14 percentage 50 points and generated a consumption surplus of SGP 40 HKG US$130–US$200/month. 219 AUS 30 NZL BRN 20 THA These labor supply effects are concentrated among VUT 10 MYS WSM TON medium-skilled and highly skilled women, given that PNGJPN KOR VNM KHM SLB 0 FJI they face a higher opportunity cost for household LAO C… 30 PHL 50 IDN MMR MNG 70 90 production. Similar evidence is also found for Female labor force participation (%) Singapore, where legislation allowing visas for foreign Sources: OECD 2020; World Bank, World Development domestic workers resulted in an increase in the female Indicators; World Bank 2023. labor force participation rate 220 , and in Malaysia 221 . Note: The grey line refers to the OECD average. OECD Korea is piloting the opening of domestic work jobs to member countries are indicated with orange dots. Data Filipino workers under its Employment Permit System labels use International Organization for Standardization (ISO) country codes. 214 Kim, Lee, and Peri (2022) 215 Ismail, Yussof, and Awad (2014) 216 Breunig, Deutscher, and To (2017) 217 Crown, Borjas, and Miller (2020) 218 OECD (2024) 219 Córtes and Pan (2024) 220 Freire (2016) 221 KRI (2018) 46 (EPS) and applying the national minimum wage. Distributional impacts again cannot be ignored. There is potential for migration to curtail the employment of low- skilled native workers who are close substitutes to foreign domestic workers, at the same time that highly educated native women benefit from such migrant labor. 222 This dynamic might be particularly relevant for women who have been out of the workforce for child-rearing and elderly family care and may lack up-to-date skills to compete in high-skilled job markets. Migrant domestic workers (mostly females) often face vulnerable working conditions. About one million migrants in Hong Kong SAR, China; Malaysia; Singapore; and Thailand are domestic workers, with numbers higher if irregular workers are included.223 These workers are primarily females from Indonesia and the Philippines, while Thailand receives domestic workers mainly from Myanmar and Lao PDR.224 Households in Singapore increasingly hire foreign domestic workers through a company or employment agents who intermediate conflicts between employers and migrant workers. 225 While Hong Kong SAR, China has set a special minimum wage, in other countries, wages are determined by negotiations between origin and destination countries—for example, some US$400/month for Filipinos in Singapore. Abusive behavior at the workplace is a concern, particularly among domestic workers from Cambodia in Malaysia, and those from Myanmar in Singapore. 226 For workers from Indonesia and the Philippines, the origin governments set standard terms in their labor contracts and mandate their use in both Malaysia and Singapore, which appears to be somewhat effective in protecting their workers.227 The vulnerability of migrant workers and the importance of their protection are discussed in greater detail in chapter 4. Mismatches between qualifications and jobs reduce the benefits of migration While skilled and highly skilled migrants constitute a significant portion of the global migrant population, their skills and qualifications often go underutilized, resulting in what is known as brain waste. For the US, various factors contribute to occupational downgrading, including barriers to recognizing foreign credentials, limited opportunities for career advancement, the quality of human capital migrants have acquired in their origin countries, and limitations in language proficiency, as well as labor market frictions.228 Discrimination by employers based on race and cultural differences can also adversely affect migrant outcomes. 229 As Figure 3.13 demonstrates, many EAP migrants are overqualified for their jobs in destination countries: for example, 36 percent of Mongolian migrants and 26 percent of Filipinos are overqualified. In Australia, more than 50 percent of graduate visa holders (that is, migrants who have earned at least a bachelor’s degree in Australia) are in semi- skilled jobs (ANZCO Level 5 or 4 instead of being at Level 2 or 1).230 Brain waste represents loss of economic potential. Host economies may initially benefit from an influx of skilled migrants, even if they are overqualified for available jobs, as they help address much-needed labor shortages, but over time, this results in lower productivity and innovation than could have been the case. In the United States, 222 Hiller and Rodriguez Chatruc (2023) 223 Approximately 356,231 are in Hong Kong, SAR, China (as of 2023) (Hong Kong Statistics); 200,000–300,000 are in Malaysia (World Bank 2019); 268,500 are in Singapore (as of December 2022) (Singapore, Ministry of Manpower); and 127,792 are in Thailand (as of December 2022) (Thailand, Ministry of Labor 2022; ILO 2023a). 224 ILO (2023a) 225 ILO (2023a) 226 ILO (2023a) 227 ILO (2023a) 228 Mattoo, Neagu, and Ozden (2008) 229 ADB (2017) 230 Australian Government (2023) 47 about 21 percent of college-educated immigrants are either unemployed or working in jobs that require no more than a high school diploma, resulting in about US$40 billion in forgone wages annually.231 Evidence shows that formal recognition of foreign higher education improves employment probabilities and earnings for newly arrived immigrants.232 Brain waste can also generate social costs. Research conducted in Australia indicates that skilled immigrants who perceive themselves as experiencing brain waste tend to have lower levels of social integration than skilled immigrants whose skills are recognized by employers.233 Relatedly, evidence shows that barriers to transferring human capital endowments and educational skills pose a major challenge to migrant integration.234 Figure 3.13. The overqualification rate among immigrants differs by origin countries in East Asia and Pacific 40 Overqualification rate 30 20 10 (%) 0 Brunei… Papua New… Australia Malaysia Tonga Indonesia Cambodia Hong Kong Vietnam China New Zealand Lao PDR Singapore Fiji Myanmar Philippines Thailand Japan Mongolia Source: OECD Database on Immigrants in OECD and Non-OECD Countries (DIOC). Note: OECD = Organisation for Economic Co-operation and Development. Skills recognition is key to reducing brain waste. In many countries, overseas qualifications are not recognised, and administrative barriers are put in place to prevent qualified migrant workers trained overseas from working locally. Skills matching and employment service can help reduce brain waste. Migrants often face labor market frictions, such as lack of information about the labor market in the destination country, limited social networks, uncertainty concerning residence status, and legal barriers. In Singapore and Malaysia, recruitment through employment agencies that match skills of potential migrants with job openings has been shown to improve employment rates, particularly among low-skilled migrants.235 Evidence from around the world suggests that active labor market programs can also be effective in increasing employment rates and earnings for migrants —for example, by providing information to Syrian migrants in Jordan about their legal rights and how to prepare for job interviews236, and by implementing wage subsidies237and early job training238 for migrants in Denmark. Employment service support can also include assessing the qualifications and experience of foreign workers. To reap the full potentials of migrants, avoid brain waste, and accelerate integration, destination countries may benefit by facilitating language training, skill recognition, and skill matching programs. These and other policies are discussed in the chapter that follows. 231 Batalova and Fix (2021) 232 Tibajev and Hellgren (2019) 233 Farivar, Cameron, and Dantos (2022) 234 Batalova and Fix (2021); Chiswick and Miller (2008) 235 Battisti, Giesing, and Laurentsyeva (2019) 236 Caria and Orkin (2024) 237 Clausen et al. (2009) 238 Arendt et al. (2022) 48 Chapter 4. How do migration policies expand gains from migration? Key message: Migration policies play a critical role in shaping labor mobility patterns, influencing the extent to which individuals, firms, and countries of origin and destination benefit. They can help reduce and minimise any negative distributional effects of migration, and when coupled with broader social protection measures, can support those who do not benefit from migration. Despite their importance, migration policies in both origin and destination countries often lack, clear, long-term objectives, subject as they are to conflicting interests and perspectives, and to short-term political imperatives. Inclusive policy making which involves a wide spectrum of institutions and stakeholders with different interests in the design and implementation of regulatory frameworks for migration can support better policy and outcomes. Sub-messages: 1. Migration policies govern legal pathways throughout the migration cycle—from migrants’ admission to the destination country, to their stay, and to their possible return and reintegration to the origin country. In doing so, they shape migration patterns, determining how migration affects human capital development and allocation. 2. Migration policies are influenced by a range of stakeholders with conflicting interests and perspectives. Short-term political imperatives can result in migration policies that are restrictive, impacting migrants, and disregarding the significant economic benefits of migration. 3. Inclusive decision-making which is evidence-based and which balances competing interests is key to creating a more open and conducive regulatory framework for migration. Migration policies reflect diverse and sometimes conflicting interests and objectives In origin countries, labor migration policies are often considered to be a strategy for economic development and poverty reduction.239 These policies are typically outlined in official documents such as development plans or legislation. They commonly focus on governance, migrant protection, and the link between migration and development. 240 For instance, the Philippines has mainstreamed migration into its successive national development plans since the 1990s.241 The governments of Cambodia, Lao PDR, and Viet Nam see migration as a strategy for tackling unemployment, attracting remittances, alleviating poverty, and increasing economic growth.242 Papua New Guinea recognizes the significance of expanding labor mobility as an important strategy to harness development. In destination countries, labor migration policies are largely shaped by economic, demographic, and national security considerations, and are the product of compromises between these conflicting objectives, and between conflicting interests. 243 Globally, disaffected groups who are (or are perceived to be) adversely affected by migration have historically had a significant influence on migration policy. In the EAP region, these impacts have often taken the form of restrictions on the employment of low-skilled workers (as discussed in more detail in Box 4.2). But this situation is not static. Increasingly in EAP countries, migration policies are being employed to address labor market needs, offering clarity to both employers and migrants regarding quotas (often based on skill levels) 239 Lindquist (2012) 240 ADBI, OECD, and ILO (2016) 241 Opiniano and Ang (2024); Saguin and Shivakoti (2022) 242 Alffram et al. (2023) 243 Australian Government (2023a); Testaverde et al. (2017) 49 and sector needs over the long term.244 There is growing emphasis on the integration of migrants, especially in traditionally closed countries like Japan and the Republic of Korea. Despite the rising recognition of migration’s role in economic growth, many origin and destination countries still lack, clear, long-term objectives in migration policies. This undermines their effectiveness, and leads to short- term, ad hoc decision making which is unable to address long-term structural challenges.245 The role of vested interests and short-term political imperatives is also sometimes a barrier to effective policy making on migration. Stakeholders with specific interests in migrant labor include government officials, state agencies, the private sector, and the migration industry, many of which have entrenched interests in maintaining the status quo. Employers in particular often play an influential role in shaping migration policies, and generally have a strong interest in maintaining restrictive conditions for employment contracts to maximize profit.246 The fast-growing migration industry, comprising formal recruitment agencies and informal brokers, has also become a key stakeholder. A migration industry developed in the colonial era to sustain the development of the extractive economy.247 It grew and evolved rapidly starting in the 1990s, paralleling the rise of migration, forming a constellation of private actors that manages the recruitment, transport, and placement of workers in origin countries.248 International organizations have played an increasing role in supporting more open regulations centered on migrants’ rights and well-being. International norms, such as the International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families, the Global Compact for Safe, Orderly and Regular Migration, and related International Labour Organization (ILO) Conventions, provide a framework for states to develop their migration policies that respect and protect the rights and dignity of migrants and promote safe, orderly, and regular migration.249 Local governments also have their own interests and can be more progressive than the national state in migration policies.250 In Korea, local governments have signed a memorandum of understanding with their counterparts in the Philippines and other member-countries of the Association of Southeast Asian Nations (ASEAN) to manage seasonal workers, operating within the framework of the national policy on seasonal labor migration.251 A variety of civil society organizations advocate for migrants, aiming to change public perceptions and attitudes. Civil society organisations provide social assistance, support, and advocacy for migrant workers on issues such as exploitative recruitment process and employment conditions.252 Trade unions have also become more active in advocating for migrant rights.253 Civil society organizations have been instrumental in driving legislative and policy changes in the region.254 In the Philippines, for instance, they have significantly influenced emigration policies, 244 Testaverde et al. (2017) 245 Australian Government (2023a); Testaverde et al. (2017) 246 Testaverde et al. (2017) 247 Bastide (2021) 248 Alffram et al. (2023); Bastide (2020) 249 Rother (2023) 250 Castles (2004) 251 ADBI, OECD, and ILO (2024) 252 Piper, Stuart, and Withers (2017) 253 Rother (2023). 254 Bal and Palmer (2020); Domingo and Siripatthanakosol (2023). 50 including formal protection of labor emigrants255, participating in the government’s negotiations for favorable bilateral migration arrangements with destination states.256 Their work also occurs at a regional level, as in the case of the Migrant Forum in Asia (MFA), a prominent regional network of about 250 organizations effectively advocating for migrants’ rights and policy changes.257 Civil society advocacy strategy has shaped migration policy at the regional level, contributing to various ASEAN regulations. 258 Many countries have established institutional mechanisms for multistakeholder dialogue concerning labor migration policy. Such dialogue commonly involves government, trade unions, employers, and civil society, though participation can be limited as a result of restrictions on civil society.259 Institutionalized frameworks like the Overseas Land-Based Tripartite Consultative Council in the Philippines facilitate stakeholder feedback on legislation, increasing government accountability for migrant protection.260 In Viet Nam, broad consultations on migration policy reform include employer, worker, and anti-human trafficking stakeholders.261 Cambodia's Policy on Labour Migration was shaped through consultations with government, workers, employer organizations, recruitment agencies, civil society, and international organizations.262 At a regional level, the ASEAN Forum on Migrant Labour serves as a multistakeholder platform to monitor the implementation of the ASEAN Declaration on the Protection and Promotion of the Rights of Migrant Worker and to discuss policies enhancing migrant protection.263 How do migration policies expand net gains along the migration cycle? Policies in origin and destination countries addressing aspects before, during, and after migration are important determinants of the net gains of migration. Pre-migration: Skills development for better employment At the pre-migration stage, collaboration between origin and destination countries to develop workers’ skills can enhance their employment prospects in destination countries, ensuring that they have skills that are relevant to destination country labor markets. There are several examples in the region. The Australian Pacific Training Coalition (APTC) provides training programs to develop the skills of workers in the Pacific region, enhancing the employment prospects of graduates. Korea and Lao PDR collaborate to strengthen the information technology (IT) capacity of Lao workers so that they may have the opportunity to apply for jobs in Korea. 264 Japanese companies are providing training to foreign workers in several origin countries in the region so they can apply to jobs in Japan or in companies’ overseas branches.265 Pre-departure training is a common part of origin countries’ strategy to professionalize their transnational workforce before they go abroad. Training typically includes basic language training, professional skills, workplace discipline, and legal awareness. 266 However, these pre-departure trainings often fall short of regulatory 255 Rother (2022). 256 Hickey (2013). 257 Rother (2023) 258 Ramji-Nogales (2017) 259 ADBI, OECD, and ILO (2016) 260 Rother (2023) 261 ILO (2021) 262 Kingdom of Cambodia (2019) 263 Rother (2023); Wickramasekara and Ruhunage (2018) 264 UN ESCAP (forthcoming, 39–40) 265 UN ESCAP (forthcoming) 266 Alffram and al. (2023) 51 requirements in content and duration, can be costly for migrants, and fail to meet their actual needs.267 Facing the impact of these shortcomings, destination countries such as Japan are placing stricter controls on pre- departure preparations, leading to more formalized and extended trainings, emphasizing the need for collaboration between origin and destination countries.268 Entry: Destination countries’ unilateral formulation on how many can enter, guided by labor needs Migration policies in EAP countries are adapting to rapid aging and labor shortages. Australia’s 2023 Migration Strategy aims to address stagnating productivity and geopolitical risks alongside an aging population.269 Japan and Korea have drastically increased the level of migration across skill levels in recent years. Japan has expanded its Technical Intern Training Program (TITP) and the Specified Skilled Worker program [SSW(i) and SSW(ii)] which recently broadened the list of industries eligible for the SSW program (see Figure 4.1). Korea tripled quotas for its low-skilled EPS visa and the semi-skilled (E-7-4) visa (see Figure 4.2). Korea’s 4th Immigration Policy (2023–2027) shifts its migration policy objective to catalyze economic and regional development, building on greater openness from previous plans.270 Figure 4.1. The number of immigrants into Japan Figure 4.2. The quotas for immigrants into Korea has increased across all skill levels have increased 800 200 Quota for immigrants in Korea Number of immigrants in Japan 600 150 ('000) 400 ('000) 100 200 50 0 2009 2013 2008 2010 2011 2012 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Professional and technical fields (semi- and high-skilled) Technical Internship Trainees (low-skilled) E-9 (low-skilled) visa E-7-4 (semi-skilled) visa Source: Japan, Ministry of Health, Labour and Welfare, Sources: Republic of Korea, Ministry of Justice; Ministry 2024. of Employment and Labor. Note: The quota for 2024 is based on an announcement on the increase in the quota by the end of 2023. EAP countries formulate migration policies unilaterally, including job types, but have widely used bilateral labor arrangements (BLAs) to implement seasonal or temporary low-skilled migration schemes. Destination countries usually conclude the same type of agreement with multiple origin countries (see box 4.1). For instance, Japan’s SSW has 17 partner countries271, Korea’s EPS has 16 272, and Australia and New Zealand have arrangements with Pacific Island Countries (PICs). Malaysia and Thailand have similar BLAs with neighboring lower-income countries. Origin countries, like the Philippines, proactively use BLAs as a way to facilitate labor migration.273 High-skilled 267 Alffram and Sok (2023); Denney and Xayamoungkhoun (2023) 268 IOM (2021) 269 Australian Government (2023c) 270 Lee (2024) 271 The Philippines, Cambodia, Nepal, Myanmar, Mongolia, Sri Lanka, Indonesia, Viet Nam, Bangladesh, Uzbekistan, Pakistan, Thailand, India, Malaysia, Lao PDR, Kyrgyz Republic, and Tajikistan (as of September 2024). 272 The Philippines, Cambodia, Nepal, Myanmar, Mongolia, Sri Lanka, Indonesia, Viet Nam, Bangladesh, Uzbekistan, Pakistan, Thailand, China, Lao PDR, Kyrgyz Republic, and Timor-Leste (since 2015). 273 Mangulabnan and Daquio (2021) 52 migration, by contrast, is usually determined unilaterally, though Korea uses Free Trade Agreements to govern skilled worker mobility.274 Some origin countries, like the Philippines, impose restrictions on their citizens’ work abroad,275 as seen during the COVID-19 pandemic when the Philippines capped the deployment of healthcare workers to safeguard its health care system.276 Box 4.1. Bilateral labor arrangements are a key tool to shape migration governance Bilateral labor arrangements take two forms – nonbinding Memorandums of Understanding (MOUs) and legally binding Bilateral Labor Agreements (BLAs). They are an important instrument to strengthen cooperation on migration, making origin countries as co-managers of the migration process to improve its regulation.277 Countries like the Philippines have used these agreements to secure better employment terms and migrant protection, though destination countries usually more influence and stakeholder consultations are rather limited.278 These agreements regulate the entire migration cycle, from recruitment to return. Recent agreements have added elements of cooperation, such as recruitment process and fees, labor protections, and skills development (as seen in agreements the migration of nurses from the Philippines).279 Destination countries tend to prefer MOUs due to their flexibility in adjusting provisions to economic and labor market changes. But MOUs are often not published or shared with key stakeholders, limiting their effectiveness. 280 Some countries, such a as the Philippines and New Zealand, have improved transparency by making those agreements publicly available online.281 Despite this, monitoring and evaluation of bilateral labor arrangements remain weak, with agreements often renewed without assessing their impact.282 Destination countries unilaterally set eligibility criteria for migrants to meet specific economic needs and labor market demands, establishing requirements related to education, experience, language proficiency, and age. For instance, Singapore’s Overseas Networks and Expertise Pass allows high-earning individuals with outstanding achievements in the areas of business, arts and culture, sports, and academia to live and work in Singapore, with the flexibility to concurrently start, operate, and work for multiple companies. Most EAP countries restrict domestic work migrants to females. Some destination countries administer eligibility tests for entry, to ensure their labor and skills needs are met. Countries adopt point systems for high-skilled migrants that award higher points for individuals with advanced education, experience, and earnings. In the low-skilled migration space, applicants to Japan’s SSW(i) and Korea’s EPS must pass a language test. These language tests are seen as important for migrants’ productivity and integration.283 Japan’s SSW(i) also mandates technical skills testing before entry. For semi-/high-skilled migration, Australia requires skills assessments for certain professions such as nursing and engineering. High-skilled migration schemes are typically subject to fewer restrictions (box 4.2). Both high- and low-skilled migration regimes tend to have caps on foreign workers and designated industries. Singapore uses a flexible and transparent ceiling system to regulate the number and type of migrant workers in line with market demands. Malaysia has a similar but less coordinated approach, with ceilings on the number of 274 Jurje and Lavenex (2018) 275 Alffram et al. (2023) 276 Opiniano and Ang (2024) 277 ADBI, OECD, and ILO (2016) 278 Testaverde et al. (2017); Wickramasekara and Ruhunage (2018) 279 Domingo and Siripatthanakosol (2023); Testaverde et al. (2017); Wickramasekara and Ruhunage (2018) 280 ABDI, OECD, and ILO (2017) 281 Wickramasekara and Ruhunage (2018) 282 Wickramasekara and Ruhunage (2018) 283 Cho, Lee, and Kim (2021) 53 foreign workers set at the employer level and limited to specific sectors.284 Korea sets an annual quota for EPS workers by country, decided through multistakeholder consultations. Some destination countries use either negative or positive list approach to occupation openness. In Thailand, migrants are prohibited from working in 40 occupations, some of which are included in ASEAN’s mutual recognition agreements.285 In contrast, Australia publishes a list of occupations that are open to foreigners. Some EAP countries have used regularization programs or amnesties to provide temporary legal status to irregular migrants, limiting disruptions to labor supply. Malaysia has implemented various amnesty, regularization, or deportation programs, such as the 6P Program, which granted work permits valid for 2-3years to 521,734 irregular migrants.286 At the same time, raids and expulsions of undocumented workers in response to social and political pressures287 cause frequent shifts between legal and illegal statuses.288 Box 4.2. Restrictiveness of high- and low-skilled migration schemes High-skilled migration schemes tend to have fewer entry barriers, more permissive residence conditions, and better welfare measures (Figure B4.2.1, a). The EAP Migration Policy Database developed for this report (see appendix 3) shows that while high-skilled visas require education or qualifications, they are less likely to face restrictions like labor market tests or industry or sector-specific limitations. Exceptions include Malaysia, which uses its Critical Occupation List to inform its immigration policy. High-skilled visas also offer easier paths to permanent residency and citizenship, family accompaniment, and employer change (see appendix 2, Table A-4, measures on high-skilled migration by country). In contrast, low-skilled migration regimes often emphasize temporary stays, restrict employer changes (except Korea’s EPS), and often require migrants to return home. More flexible regimes, like Korea’s EPS and New Zealand’s RSE allow some job mobility, while rigid systems exist in Hong Kong SAR, China; Malaysia; and Singapore (Figure B4.2.1, c). Some of EAP developing countries, such as Myanmar, Papua New Guinea (PNG), and Viet Nam, reserve low-skilled jobs for their citizens, while Lao PDR opens to those who work in specific sectors (like agriculture) (see appendix 2, table A-3, measures on low-skilled migration by country). Countries with fewer high-skilled migrants, such as Thailand, Korea, Japan, and China, tend to have more open regimes than primary destinations like Singapore and Australia (Figure B4.2.1, b). This may reflect other factors at play in migration decisions – such as language barriers; workplace culture (for instance, Japan and Korea are known for long working hours and hierarchical corporate structures, which might not appeal to foreign professionals); recognition of qualifications; and career opportunities. Developing EAP countries tend to have more rigid skilled migration regimes than high-income counterparts (Figure B4.2.1, b). PNG, which relies on foreign workers to meet skilled labor needs, allows employers to recruit noncitizens for managerial, professional occupations, skilled trades, and other occupations that require a high-skilled level (“Green” category), but has strict qualification requirements, including professional registration requirements, for the semi-skilled (“Amber”) category and labor market tests.289 284 Testaverde et al. (2017) 285 Ekkabutra (2024); Testaverde et al. (2017) 286 ABDI, OECD, and ILO (2017) 287 Bastide (2020) 288 Anderson (2021) 289 Voigt-Graf (2016) 54 Figure B4.2.1. High-skilled migration schemes in EAP are typically subject to less restrictive measures a. Restrictiveness of low-skilled, semi-skilled, and high-skilled schemes Welfare measures skilled Low- Conditions of stay and residence Entry barriers Welfare measures skilled Semi- Conditions of stay and residence Most restrictive Entry barriers Mixed Welfare measures skilled High- Conditions of stay and residence Least restrictive Entry barriers 0 20 40 60 80 100 Share of measures (%) b. Restrictiveness of high-skilled migration schemes c. Restrictiveness of low-skilled migration schemes 2.5 2.5 Average restrictiveness score Average restrictiveness score 2.0 2.0 1.5 1.5 1.0 1.0 0.5 0.5 0.0 0.0 Entry barriers Conditions of stay and residence Welfare measures Entry barriers Conditions of stay and residence Welfare measures Sources: World Bank, original illustration for this publication, based on the EAP Migration Policy Database Note: The technical details of the database are described in appendix C. The analysis does not account for the number of migrants in each economy. Panel a draws on a sample of 20 EAP countries. EAP = East Asia and Pacific. Protecting migrants during migration journey Origin countries have improved recruitment regulations to reduce migrants’ vulnerability, especially arising from high migration costs. Recruitment agencies, while vital in matching workers to international jobs (particularly in the low-skilled segment) by helping bridge information gaps between workers and employers, are often criticized for untransparent matching practices and excessive fees. To safeguard migrants, countries of origin, like the Philippines and Viet Nam have regulated recruitment fees, while countries like Australia and New Zealand have shifted recruitment costs to employers. Despite these reforms, weak enforcement leads many migrants to incur significant recruitment-related debts, increasing their vulnerability. Some countries also mandate recruitment agencies to handle labor-related complaints from the migrants they have placed in jobs, but not all migrants are aware of this obligation (see box 4.3). Destination countries have improved protections for migrant workers, with regulations covering labor rights, social protection, and freedom from exploitation. Bilateral agreements, like those between the Philippines, Indonesia, and Malaysia, have set minimum wage and employment standards to enhance migrant welfare. However, restrictive policies, such as tying migrants to one employer, still heighten their vulnerability to 55 exploitation. Some reforms have allowed more flexibility, such as Korea's EPS, which permits migrants to change employers within the same industry. Meanwhile, civil society and diaspora networks continue to play an essential role in empowering migrants and advocating for stronger protections (see box 4.3). Box 4.3. Protecting migrants during recruitment and in the destination country The protection of migrants—both in the processes of recruitment and job matching and at the destination country —is crucial to enhance the net gains of migration. Migrants can be vulnerable to discrimination, exploitation, and abuse. Gender-based violence and harassment are also prevalent, especially among domestic workers and those in the entertainment industry. 290 Misconduct in the recruitment industry, especially through opaque and inflated fees, exacerbates migrant vulnerability.291 In Viet Nam, for instance, the government requires labor migrants to pay a safety deposit to ensure they return home after completing their labor contracts.292 These financial pressures make migrant workers more likely to seek ways to extend their stay abroad, even at the risk of irregularity and exposure to further restrictions on their mobility and rights.293 This vulnerability exposes migrant workers to labor and human rights violations, including harassment from employers.294 Wage violations are common, with many migrant workers receiving lower pay than what was promised.295 For instance, some workers in Malaysia have reported receiving no wages or less than agreed, often due to unlawful salary deductions. 296 It is well recognized that the practice of single employer sponsorship exacerbates exploitation, as seen among some low-skilled migrants from EAP in Gulf Cooperation Council countries. To address these issues, various regulations have been established to protect migrant rights. International and regional frameworks, such as the ASEAN Declaration on the Protection and Promotion of the Rights of Migrant Workers, have been adopted. Origin countries have implemented licensing schemes for recruitment agencies and brokers, transparency in recruitment processes, and regulations to limit recruitment fees. 297 At the same time, migrants’ rights have generally improved in destination countries in recent years, influenced by increased pressures from origin governments, civil society, and international organizations.298 For instance, origin countries employed migration bans, introduced migrant assistance mechanisms, and negotiated social security agreements with destination countries. Joint liability schemes are important efforts to increase the accountability of recruiters and employers regarding the protection of migrants’ rights, while recent initiatives from the private sector aim at increasing corporate responsibility regarding migrants’ protection. However, the implementation of regulations protecting labor migrants has been slow and ineffective. Enforcement of fee restrictions is lacking; rent-seeking behaviors from many stakeholders tend to sustain perverse incentives commanding high fees and generating abuses against migrant workers. 299 The ASEAN Declaration on the Protection and Promotion of the Rights of Migrant Workers took a decade to be adopted, remains non-binding, and lacks enforcement mechanisms.300 Integration in host societies: Migration policy as a long-term development strategy The rising focus on the long-term retention of migrants has led to increased pathways for permanent residency and integration efforts. Pathways that allow for transition into higher-skilled visa categories are an important feature of such change. For instance, Japan now allows TITP interns to transition to SSW(i) jobs, with 73.6 percent 290 Hickey (2013) 291 IOM (2019); IOM (2021); UN ODC (2015) 292 Alffram and al. (2023) 293 Alffram et al. (2023); Doan et al. (2023) 294 IOM (2021) 295 Alffram et al. (2023) 296 IOM (2023) 297 ADBI, OECD, and ILO (2017); Farbenblum (2017) 298 Piper, Stuart, and Withers (2017); Rother (2023) 299 Domingo and Siripatthanakosol (2023) 300 Rother (2018) 56 making this shift by the end of 2022. 301 In 2023, Japan introduced new pathways for high-skilled migration, including the Japan System for Special Highly Skilled Professionals (J-Skip), which offers permanent residency after one year.302 Similarly, Korea enables low-skilled EPS (E-9) visa holders to transition to semi-skilled (E-7-4) visas based on skills and other criteria, and adopts a point system for permanent residency which rewards skills, work tenure, income, and language proficiency. Countries also have expanded integration measures, such as language and cultural education, improved worker protections, and family accompaniment. In Korea, eligible migrants can attend the Korea Immigration and Integration Program (KIIP), which focuses on acquiring knowledge on Korean language, culture, and society and earn points toward permanent residency.303 Japan’s updated Initiatives to Accept Foreign Nationals and for the Realization of Society of Harmonious Coexistence includes, inter alia, improving Japanese language education, strengthening local consultation mechanisms for migrants, and providing support for migrants across the life cycle.304 Australia’s PALM scheme reform in 2024 introduced a family accompaniment pilot for PALM workers. Alongside integration, fostering social cohesion is a key goal of long-term migration. Permanent residency promotes a sense of belonging, family reunification, and civic participation. Australia’s new migration strategy emphasizes nation building and community support to nurture social cohesion.305 In Korea, there is a consensus across the main political parties to prioritize the integration of families with Korean members, through social integration programs, including the establishment of multicultural family centers throughout the country.306 At the same time, some destination countries limit the number of migrants to protect social cohesion. New Zealand has introduced restrictions on low-skilled migration after a record net migration in 2023, including English- language requirements, a minimum skills and work experience threshold, and reduced maximum stays from five to three years.307 Return and reintegration in origin countries: Testing various policies to improve utilization of human capital Most migration in the EAP region is temporary or circular, making effective reintegration critical for both migrants and destination countries to mitigate overstays or other types of irregular migration. Migrants from Lao PDR and irregular migrants in Malaysia have expressed concerns about weak job prospects upon returning.308 Returning temporary low-skilled migrants may face financial constraints and skills mismatches, potentially leading to remigration or overstaying. Effective reintegration policies hinge on economic, political, and social environments of origin countries. Some origin countries, like the Philippines, have developed innovative programs to support returning migrants from which other countries can learn. The Philippines’ National Reintegration Center offers counseling, job search assistance, business development loans, skills training, and assistance to distressed workers. Its reintegration support starts with migrants’ departure from the Philippines309, and offers targeted supports based on the type of returnees (Figure 4.3). For instance, a recent program includes reskilling returning teachers who had returned from nonteaching jobs abroad to become teachers again in the Philippines. The Philippines has also made efforts 301 Yamaguchi (2024) 302 OECD (2023) 303 Korean government (2024) 304 Japan, Ministry of Justice (2023) 305 Australian Government (2023c) 306 Chung (2021) 307 https://www.theguardian.com/world/2024/apr/08/new-zealand-tightens-visa-rules-after-migration-hits-unsustainable-levels. 308 IOM (2023); ILO (2023) 309 Opiniano and Ang (2024) 57 to incorporate return provisions in BLAs to improve the norms and structures on return.310 Indonesia’s Productive Migrant Workers Village (Desmigratif) provides supports prospective migrants, migrant families, and returnees at the village level, including support for business development.311 Figure 4.3. The Philippines provides comprehensive and targeted reintegration service for returnees For all returnees: For licensed teachers: • One-stop shop for reintegration service - Reskilling support and employment facilitation to • Financial grants for business start-ups become teachers again • Livelihood loan For undocumented and distressed female returnees: • Training in financial planning, small business - Livelihood assistance management, and other skills Source: Department of Migrant Workers, the Philippines. Some destination countries in the region provide return support to migrants. Singapore’s nongovernment organizations (NGOs) offer training and certification for migrant domestic workers to improve their employability at home. In Korea, return forms part of the EPS policy framework. Its Happy Return Programme offers government-financed vocational training to enhance job prospects in origin countries; pre-return recruitment services, including assistance in applying for jobs in Korean companies located in migrant workers’ origin countries; and administrative support for insurance benefit claims upon leaving.312 Transnational initiatives that provide skills certification programs also help prepare migrants for reintegration while abroad. While there is generally no streamlined system for skills certification by employers in destination countries or by origin countries upon return, some promising initiatives exist. The Philippines’ Onsite Assessment Program, coordinated by TESDA, certifies skills gained abroad and supports returnees financially and socially, aligning with national certification standards through overseas assessment centers and training programs, facilitated by nongovernmental training institutions.313 Nevertheless, reintegration services are generally weak, as origin governments have prioritized expanding overseas employment and remittances over reintegration.314 They are often hampered by a lack of coordination among ministries and agencies, as well as local governments, which are at the forefront of migrants’ reintegration to their communities, and by a lack of an effective system to disseminate information about reintegration services.315 The lack of data on returnees further complicates such efforts. In sum, labor migration policies in both origin and destination countries are often seen as key strategies to support economic development and to address aging populations, focusing on governance, migrant protection, and migration's link to economic growth and development. While low-skilled migration policies are more restrictive than high-skilled ones, migration policies increasingly focus on long-term retention and integration of migrants by expanding pathways to permanent residency and offering transitions to higher-skilled visa categories. Given that most EAP migration is temporary or circular, countries see that effective reintegration is vital to prevent irregular migration, especially for low-skilled migrants. Collaboration between origin and destination countries can enhance skills development before, during and post-migration to improve migrants’ employment prospects, improving matches and reducing irregular migration and social costs. 310 Wickramasekara (2019) 311 World Bank (2019) 312 Cho et al. (2018); Wickramasekara (2019); Wickramasekara and Ruhunage (2018) 313 Saguin and Shivakoti (2022) 314 ADBI, OECD, and ILO (2017) 315 Wickramasekara (2019) 58 Spotlight 4.1. Turning Brain Drain into Brain Gain—Global Skill Partnerships A Global Skill Partnership (GSP) is an international cooperation model that trains individuals in their home countries with skills that are in demand in both home and potential destination countries. It strengthens the capacity of local training institutions, facilitates job matching abroad, and foster foreign direct investment and job creation in origin countries. Funding for training is primarily borne by the destination country, with shared financial responsibilities. This partnership can involve collaboration between governments, educational institutions, and private sector employers. Table S4.1.1 describes various types of skill partnerships and provides examples. The East Asia and Pacific (EAP) region has some good global practices. The Australia Pacific Training Coalition (APTC) trains Pacific Island workers for local and Australian jobs. This approach helps address skills shortages in both regions, increases employment opportunities for workers, and strengthens the overall skills base in the Pacific Islands. Less than 5 percent of graduates have migrated to Australia (APTC 2023, 68–69). The Republic of Korea’s Employment Permit System (EPS) offers priority in job matching for EPS jobs to graduates from training institutions supported by Korea International Cooperation Agency (KOICA).316 Success factors GSPs take various forms. Successful GSPs have adopted some of the following approaches. Align skills partnerships with visa programs in destination countries. Australia, for example, does this through its Pacific Australia Labour Mobility (PALM) and Pacific Engagement visas. Enhance the quality of local training institutions. For example, APTC partners with TVET providers in the Pacific Island Countries to better align with labor market needs, develop their teacher capability, improve their qualification standards, and upgrade their training facilities.317 Strengthen the institutional capacity of governments in origin countries. For example, the World Bank’s project between Morocco and Germany in the tourism sector enhanced the capacity of Morocco’s public employment service (PES), the National Agency for Promotion of Employment and Skills (ANAPEC), to improve the connection between job seeker and jobs.318 Improve cross-border recognition of skills and qualifications gained in the origin country or through GSPs though collaboration between governments and employers in both origin and destination countries. For example, a joint program in Viet Nam and Germany, the Partnership Approaches for Development-Oriented Vocational Training and Labour Migration (PAM), aligned vocational training with both countries’ qualifications through coordination with Viet Nam’s Department for Vocational Education and Training, LILAMA2 International Technology College in Viet Nam, and employers in Viet Nam and Germany. After obtaining a certificate in metal processing from Viet Nam, each worker on the international labor mobility track must go through a formal individual recognition process in Germany.319 An alternative is mutual recognition agreements (MRAs) which aim to facilitate market access and encourage greater international harmonization of compliance standards. But MRAs can be costly. Despite efforts to promote 316 CGD (2020) 317 APTC (2017a, 2017b, 2020) 318 Adhikari et al. (2021) 319 An et al. (2023) 59 skilled labor mobility, only two out of eight MRAs in ASEAN are gaining significant traction – namely, MRAs for accountancy and engineering services. 320 Where MRAs are not feasible, international standards, regional qualification frameworks, and gig economy platforms can facilitate skills assessments.321 Harmonize training standards and increase diaspora engagement. For instance, given the divergent standards in Kosovar and Germany in construction, the Youth, Employment, and Skills (YES) Global Skill Partnership shifted to development of a skills qualification standard.322 Diaspora can play an important role in skills recognition, including through their linkages with both origin and destination countries. The Kosovar-German diaspora, for instance, provided 60 percent of the investment in a college in Kosovo, which provides vocational training aligned with German standards in health care. It has high graduate employment rates in Kosovo and Germany.323 Share responsibility in financing for long-term financial sustainability, as training can be costly. For instance, training costs per student for PAM and the APTC were estimated at about €10,000 (2023) and €7,700 (2022), respectively.324 In the context of development aid framework, destination countries tend to fund the cost. For example, a Japanese firm funds language and technical training for workers from EAP (Cambodia, Indonesia, Lao PDR, Myanmar, the Philippines, Viet Nam) and India for placement under its Specified Skilled Worker program. By 2023, estimated 30,000 students had enrolled or completed the program, with 3,000 placed in Japan. Engage employers throughout the process to meet their needs and improve their participation. For example, in a collaborative effort between Belgium and Morocco in the information and communications technology (ICT) sector, industry associations were involved but individual employers were not in the pilot (see further Box 5.2). As a result, some mismatches of expectations occurred, including on criteria to be eligible for training—originally, unemployed ICT college graduates, which was changed to unemployed non-ICT college graduates—and the desired technical skill level of trainees to be attained through training.325 Marshall government support. The Philippines has made it a national priority to develop its education and training system for jobs that are in demand abroad and domestically, including but not limited to nurses, caregivers, ICT professionals, and seafarers, making it a leading source of nurses, caregivers, and seafarers globally. Engage international organizations. These organization can strengthen institutional capacity in origin countries, a critical factor for scalability and sustainability. For instance, the World Bank collaborates with education and TVET systems in origin countries—notably, Morocco—to expand training in the hospitality and construction sectors for international employment.326 The Bank’s pilot project in Morocco helps strengthen the country’s labor market intermediation systems through its public employment service (ANAPEC), which coordinates with employer associations, organizes employer visits, reviews curricula vitae, facilitates job interviews, provides feedback to trainers, and manages migrant workers.327 320 The other six professions are architectural services, doctors, dentist, nurses, tourism professionals, and surveying qualifications. Despite these hurdles, there have been positive developments in MRAs. Notably, the ASEAN Declaration on Skills Mobility, Recognition, and Development for Migrant Workers is expected to be adopted in October 2024; it aims to enhance migrant workers access to skills development and facilitate labor migration (ASEAN 2024). 321 Requirements in education, experience, and professional regulation in the origin country must still be in place as they lay the foundation for workers’ profession or skills to be practiced outside their home country (Cedefop 2019; Correia de Brito, Kauffmann, and Pelkmans 2016). 322 CGD (2021) 323 Bequiri (2024) 324 An et al. (2023); APTC (forthcoming) 325 Rodriguez (2023) 326 Adhikari et al. (2021) 327 Rodriguez (2023) 60 Table S4.1.1: Various types of skill partnerships have been adopted in East Asia and Pacific Implementation Government-to-government Development aid Regional Public-private partnerships Sector-wise modality (G2G) Example: APTC (Australia Example: ASEAN Economic (PPP) Example: Germany’s Triple Win Example: Japan’s economic Pacific Training Coalition) Community Example: Lufthansa and the Program partnership agreements Philippine government Duration 2008–present (Indonesia); 2007–present 2005–present Circa 2020 2013–present 2009–present (the Philippines); 2012–present (Viet Nam) Countries Japan, Indonesia, the Australia and the Pacific ASEAN member countries Germany and the Philippines Germany, Bosnia and Philippines, Viet Nam Herzegovina, the Philippines, Indonesia, India, Jordan, Tunisia Main stakeholders Governments in these Australia Department of Governments, professional Lufthansa Technik Philippines, German Agency for involved countries Foreign Affairs and Trade regulatory authorities, Lufthansa Technical Training International Cooperation (GIZ), (DFAT); TAFE Queensland; professional associations Center, Philippine Department German Federal Employment TVET providers in the Pacific; of Trade and Industry Agency, nursing schools at the Pacific and Australian firms origin and industry associations Direct linkage to Yes Yes Yes Yes Yes facilitate labor mobility Sectors Nursing, care work Auto repair, manufacturing, Accountancy, architectural Aircraft mechanic and Nursing construction and utilities, services, doctors, dentist, engineering tourism and hospitality, engineering services, nurses, health and community tourism professionals, and services surveying qualifications Funder Governments (language Mainly Australia’s DFAT Not applicable Lufthansa GIZ and German employers training) and employers Number of 2008–15: ~1,500 (Indonesia) 20,000+ beneficiaries since its Engineering MRA gained the Data not readily available. Since 2013, 4,700+ nurses have participants (Gentile 2019, 224); since 2009, founding (2019) (APTC 2020) most traction: 2,876 in 2018 been placed in Germany 3,600+ (the Philippines) (Japan, (Gentile 2019, 12). (Luciano and Schimpf 2021) Ministry of Foreign Affairs 2023); since 2012, 1,700+ (Viet Nam) (VietnamPlus 2022) Results Japanese nursing exam passing 84% employed domestically MRAs helped develop regional Lufthansa Technical Training A 2021 survey of participants rates in 2023: 45.7% (Viet (2019) (APTC 2020) and 10% standards and support Center trains mechanics and found 95.4% of feedback was Nam); 15.9% (the Philippines); gained employment in regulatory cooperation, but engineers for Lufthansa Technik mostly positive (Luciano and 11.5% (Indonesia) (Tanaka and Australia (2023) (APTC have had minimal impact on global and local networks. Schimpf 2021). Yoshimura 2024) forthcoming) international labor mobility (Ziguras and Barker 2024). Source: World Bank, original compilations for this publication. Note: The types of skill partnerships are by no means mutually exclusive. ASEAN = Association of Southeast Asian Nations; MRA = mutual recognition agreement; TVET = technical and vocational education. 61 Chapter 5. Policy recommendations Key message: Migration in the EAP region is expected to accelerate given demographic differences between countries in the region. Coordinated policies between origin and destination countries are essential to enhance matches between migrants and labor demand in destination countries, expand regular pathways, and manages potential distributional and social impacts, ensuring that migration contributes to regional economic development. Sub-messages: 1. To reduce mismatches, origin countries should integrate skills development into migration policies to upskill the workforce and expand local and global employment opportunities. Destination countries should align migration policies with labor demand. Collaboration between both countries, supported by international organizations, can foster skills partnerships and mutual recognition of qualifications. 2. To mitigate irregular migration, especially for low-skilled migrants, both origin and destination countries need to collaborate to enhance transparency in job matching, reduce migration costs, and to increase flexibility for migrants to change employers. International organizations can assist by compiling migration data for evidence-based policymaking. 3. To moderate distributional and social costs, origin countries can strengthen protections for vulnerable low-skilled migrants and their families and provide return/reintegration support. Both origin and destination countries can collaborate on preparing migrants for reintegration through skills training prior to their return. Countries in the East Asia and Pacific (EAP) region are increasingly recognizing the untapped potential of migration, especially as a way to address labor shortages in aging economies. Box 5.1 demonstrates that migration policies are most effective in moderating economic impacts of rising dependency ratios, if managed as part of a comprehensive and coordinated policy package. Policies aimed at boosting national fertility rates in aging societies are sometimes advocated in lieu of migration; however, such policies have seen limited success. Low fertility rates are a result of complex social and economic conditions, such as intensive parenting in China, housing prices in Singapore, economic and labor market uncertainty in the Republic of Korea, and gender inequalities at home and work.328 These are not easily remedied by population policies. Box 5.1. Migration, combined with other policies, is the best remedy to boost economic growth in an aging society like Japan Boosting net migration inflows to Japan for just a few initial years can substantially enhance Japan’s economic growth for the coming decade (Figure B5.1.1). Alternative policies to mitigate challenges associated with aging that are modelled include shifting production abroad through foreign direct investment (FDI), increasing female labor participation, and investing in technology—particularly in the care services sector, beyond automation in the manufacturing sector. As Figure B5.1.1 demonstrates, each of these policy scenarios individually results in a less dynamic impact on economic growth than a modest migration scenario of 164,000 net inflows per year. Reforms offer synergies. Notably, a combination of policy actions would significantly moderate the negative repercussions of population declines (the purple line in Figure B5.1.1). Figure B5.1.1. Migration is the most effective policy to deal with aging in Japan, but a combination of policies, including 328 Boydell et al. (2023) 62 migration, work even better Aging Scenario Migration Policy Scenario Technological Policy Scenario FDI Scenario 5 Female Participation Scenario Policy Mix Scenario 0 Deviation from Initial steady-state, % -5 -10 -15 -20 -25 -30 -35 0 5 10 15 20 25 30 35 40 45 50 Years Source: World Bank, original research for this publication. Note: The baseline aging scenario entails the entry of 164,000 net inflows of migrants per year for the entire projection. The migration policy scenario assumes 250,000 net inflow of migrants per year. Technology policy scenario assumes investments into different technologies such as artificial intelligence (AI) boost annual productivity by 0.4 percentage points. Female participation scenario assumes female labor force participation increases by 5 percentage points. The policy mix scenario accumulates all scenarios into one to see the combined effect on GDP. All scenarios are expressed as a percent deviation from the model steady-state with no aging effects. FDI = foreign direct investment. Policy reforms are urgent to enhance the “match” between migrants and labor demand in destination countries. As the World Bank’s World Development Report 2023 establishes, this match between migrants and labor demand enhances net gains from migration—both for the migrant and their household in the origin country, and for labor market outcomes in destination countries. This chapter presents various policy recommendations within the broad framework of enhancing the match. Key reform areas include proactively encouraging skills development, introducing flexible visa categories that respond dynamically to changing labor market conditions and thus facilitating flexible migrant quotas in high-demand seasons and sectors, and facilitating integration in destination and reintegration in origin countries. In the absence of such reforms, irregular migration is likely to continue to expand so long as labor demand persists. It also discusses how international cooperation and support from international organizations can help to achieve these objectives. Table 5 guides this chapter on how both origin (young) and destination (aging) countries can reform their policies to attain common policy objectives to make migration beneficial for migrants and both origin and destination countries. To support the discussion, Box 5.2 presents good practices in managing labor migration throughout the migration cycle. These practices are especially relevant for low-skilled migration where market failures tend to be more pronounced. 63 Table 5.1: Policy recommendations to enhance net gains from migration Policy objectives Origin (young) countries Destination (aging) countries International cooperation and support Reduce - Integrate skills - Match migration policies - Support global skills mismatches development into labor with labor demand partnerships and migration and development - Utilize skills partnerships and facilitation of cross- strategies recognize qualifications and border recognition of - Increase flexibility in experience abroad. skills and qualifications education systems Reduce irregular - Enhance transparency in - Enhance flexibility in - Develop dataset on low-skilled job matching and cost migration systems to improve migration costs migration - Streamline migration the reallocation of migrant including profiles of systems labor and to adapt to changing migrants labor market needs Reduce - Migrant protection, - Upskilling/ Reskilling of those - Strengthen bilateral distributional and especially for the low-skilled who lose out from migration, and regional social costs - Public employment service coupled with social protection agreements to and financial supports to measures. enhance governance enhance return and - Integration support for of low- and semi- reintegration migrants, including expanding skilled migration skills development opportunities for migrants Strategies for origin countries Strategy 1 – to reduce mismatches: Integrate skills development into labor migration and development strategies, while enhancing human capital. Origin countries will need to develop technical, vocational, and professional skills that align with the demands of both domestic and international labor markets, such as in healthcare and IT, as the Philippines’ TESDA does. They should enhance flexibility in skills development systems by including short-term, demand-driven, elective course options, and e-learning courses, targeting youth, especially in remote, deploying e-learning courses. Public employment services should provide integrated career counselling services for up-to-date information about local, national, and international labor markets. Governments and training institutions should collaborate with industry leaders and foreign employers to finance, design, and deliver skills development programs, as well as to provide youth with opportunities for apprenticeships and on-the-job training. In the sea-faring industry, for instance, shipowners have developed direct links with the maritime training institutions in the main labor supply countries like the Philippines, linking with a recruitment campaign.329 Regular labor market assessments, both locally and internationally, are essential for ensuring that training programs are responsive to labor demands. Governments can promote the use of remittances for skills investment by creating programs that direct funds toward education and skills training, working together with central banks. These can include remittance labeling and matching grants for education and vocational training. In this vein, lowering remittance costs would avail 329 Kahveci, Lillie, and Chaumette (2011) 64 more financing space for remittance-receiving households. Policies that foster competitiveness, such as simplified licensing requirements for remittance service providers in the Philippines and Malaysia, expand low-cost service.330 Moreover, digital transfer services, like the Philippines’ e-Peso initiative, enhance remittance efficiency and financial inclusion by providing access to e-wallets and mobile banking services. Box 5.2. International good practices governing migration systems Countries around the world have adopted a variety of good practices. Pre-migration: To enhance the match with job demand in destination countries, in the Philippines, the Technical Education and Skills Development Authority (TESDA) provides training and skills certification of migrant workers to develop a world-class skilled workforce for productive employment abroad. Recently, it has also focused on skills training for returnees. As Spotlight 4.1. discusses, to address labor needs and limit brain drain, Belgium and Morocco have developed a Global Skill Partnership (PALIM project) to train Moroccan talents to work in the information and communications technology (ICT) sector in both countries. The project involves public and private stakeholders to ensure the relevance of the training course for employers’ needs. It has expanded to the hospitality and tourism sectors, adding new partners such as Germany, the Arab Republic of Egypt, and Tunisia. a To address information asymmetries and promote job matching, India launched a digital system providing services via electronic platforms for emigrant workers, foreign employers, and officials overseeing the recruitment and deployment process. The eMigrate system provides online job applications, as well as multiple services including a list of recruitment agencies that have pledged to uphold greater accountability, a grievance mechanism available to migrants in India and abroad, and data collection.331 To prevent fraudulent practices by recruitment agencies, the Employment Permit System (EPS) of the Republic of Korea operates a Korean government-led recruitment program based on mandatory memorandums of understanding (MOUs) with Asian countries. That process has lowered the cost of migration for foreign workers. Private recruitment agencies that were bypassed in that system were incentivized to offer training to migrant workers.332 During the stay in destination countries: To improve the protection of migrants overseas, Indonesia has developed an integrated service system run through its mission abroad. Indonesian missions are responsible for the protection of labor migrants from the time of their departure, the monitoring of work contracts, and providing legal aid to labor migrants and seafarers.333 To provide grievance mechanisms for migrants and protect them from exploitation, Germany has established a free and anonymous counselling service (Fair Integration) on social and labor law issues, available in federal states and in various languages.b The Philippines has negotiated bilateral social security agreements not only to enhance the protection, equal treatment, and nondiscrimination of overseas Filipino workers, but also to guarantee social protection of migrants returning to the Philippines after spending their most productive years abroad. c To support the economic and social integration of migrants, Australia has developed a comprehensive national framework at the three tiers of government (federal, state, and local) to plan and deliver services supporting the settlement of migrants. In addition to mainstream social services available to migrants, settlement services focus on English language skills, participation in the workforce, and access to education. d Return and reintegration: Mexico has developed the comprehensive “We Are Mexicans” program to promote 330 Macmillan and Blechman (2019) 331 ILO and IOM (2020) 332 Cho et al. (2018) 333 IOM (2010) 65 dignified and productive reintegration of return migrants. It provides services to help Mexican returnees, including certification of qualifications and experience abroad, skills retraining, health benefits, an online job-matching platform, and information on investment opportunities.e a. https://gsp.cgdev.org. b. https://www.faire-integration.de/en/topic/2.welcome.html. c. https://www.sss.gov.ph/sss/appmanager/viewArticle.jsp?page=SocSecAgreement. d. https://immi.homeaffairs.gov.au/settlement-services-subsite/files/the-national-settlement-framework.pdf. e. Wickramasekara 2019; Government of Mexico, https://www.gob.mx/sre/articulos/we-are-mexicans-a-program-for-a-dignified- productive-and-beneficial-return-to-mexico. Strategy 2 – to mitigate irregular low-skilled migration: Reduce migration costs through transparency and technology. Deterring irregular migration requires addressing high migration costs and the lack of accessible, reliable information on job opportunities, especially for workers in remote areas – something that is especially relevant in the case of low-skilled employment. Governments can improve transparency in job availability and intermediation fees by leveraging technology, ensuring that employment opportunities are easily accessible and clearly communicated and thus helping aspiring migrants make informed decisions. Furthermore, governments should simplify administrative procedures to reduce time and costs associated with regular labor migration, e.g., time spent to validate job demands. Governments can invest in developing digital platforms for job matching, salary comparison and employer reputation. This would enable job seekers to compare job offers, research employers and their reputations, and verify the legitimacy of recruitment agencies. These platforms could be operated in partnership with recruitment industry associations to ensure their buy-in. For example, the Philippines’s Department of Migrant Workers (DMW) has implemented online job fairs to facilitate access to overseas employment. Governments can incentivise recruitment industries, such as access to job fairs. To balance domestic labor market concerns, these digital platforms can be integrated into an existing domestic job portals. Leveraging recruitment-licensing fees collected, governments, in collaboration with local recruitment industry associations, can provide capacity-building and training programs to recruitment agencies and informal brokers to enhance their digital literacy and technical skills. The aim would be developing standards and best practices to make recruitment more transparent, competitive, and compliant. These efforts can potentially be implemented through partnerships with public and private entities that provide digital literacy training to the broader population in the country. A performance-based ranking system for recruitment companies can help better regulate recruitment fees and improve standards. Key performance indicators would include recruitment fees, job matching success, compliance with regulations, and migrant complaints and resolutions. Governments should publish the ranks to incentivize recruitment agencies’ performance, together with data on the recruitment costs paid by workers, including salary deductions for recruitment fees, as done under Korea’s EPS. Incentives like priority access to job fairs and capacity- building partnerships can be provided to the better-performing recruitment companies. Overall, this performance-based system can incentivize recruitment agencies to build positive reputations, attracting a larger pool of employers and job seekers. Strategy 3 – to reduce social costs. Enhance benefits of migration through flexible education systems, better protection of migrant workers, and improved reintegration. Not all migrants and families benefit from migration. 66 Low-skilled migrants, especially in the informal sector, are vulnerable to poor working conditions. Reintegration can be challenging if they return from a prolonged period of labor migration having accumulated few skills. These negative distributional impacts can be reduced. Other actions could include the following. To strengthen migrants’ safety nets, governments can provide migrants with a comprehensive insurance package. Such coverage could potentially be developed by partnering with the private sector as well as other relevant government agencies. One practice from the region which is notable globally sees the Philippines Overseas Workers Welfare Administration (OWWA) provide overseas Filipino workers with life insurance and personal accident insurance, as well as health insurance (PhilHeath), which extends coverage to the worker’s dependents in the Philippines. This insurance also offers assistance to repatriate distressed workers, as occurred during the COVID-19 pandemic. To better protect migrants, and especially women, during overseas employment, origin governments can create and support legal aid centers in destination countries with significant migrant populations, to ensure that migrants have access to legal services. These centers can establish dedicated helplines that provide migrants with easier access to legal services (free or low-cost), including consultations, representation, and education about their rights. Such centers could partner with diaspora organizations to generate a network of support. Some origin countries have been proactive in providing such support—including India, Indonesia, the Philippines, and Sri Lanka. The provision of legal services to migrants can generate a signaling effect that the origin government is committed to upholding the rights and well-being of their citizens, thereby deterring exploitive practices. Reintegration support programs should be comprehensive, encompassing economic, social, and psychological aspects. Governments can establish tailored employment programs, especially for those returning after working in low-skilled jobs for a prolonged period. This support can include experience recognition, vocational training, and job matching services that facilitate job placement. Some migrants return home with minimal savings because they have used their earnings to support their families’ well-being. They tend to lack access to credit. Targeted support for this group can also include financial grants or low-interest loans to help them start businesses, coupled with entrepreneurial skills training, as exemplified by the support programs offered by the Philippines National Reintegration Center. To succeed, it is imperative that skills training providers regularly follow up with businesses and reinforce the training received. The microfinance literature indicates that such follow-ups during the first year of a small business significantly increase its success rates. Social reintegration can be bolstered through community-based initiatives that foster social cohesion. Psychological support should be readily available, offering free counselling and mental health services, especially for female returnees who had traumatic experiences abroad or face stigma. To better prepare for migrants' returns, governments can establish comprehensive investment incentive programs, coupled with financial literacy interventions. Financial literacy programs would educate migrants and their families on effective financial management, savings, and investment strategies through tailored workshops and digital platforms. In addition, offering tax incentives, matching grant schemes for investments in local businesses, and easing access to markets can expand the impact of remittances.334 For instance, Mexico’s 3x1 Program multiplies migrant contributions with government funds. Adopting a similar model can promote business development and thus help returnees be financially stable and well-prepared to reintegrate into their home economies. 334 McKenzie and Yang (2015); OECD (2017); Ratha (2007) 67 Strategies for destination countries with aging populations Strategy 1 – to reduce mismatches. Align migration policies with labor demand and utilize skills partnerships. The form that migration takes matters to migration outcomes. Governments should ensure the migration policies are based on analyses of market trends and skills needs in various sectors, to help align the migrant workforce with current and future labor market demands. To help achieve this, migration policies should be formulated through broad stakeholder consultations, including interagency committees or task forces with representatives from key government agencies (such as labor, justice, foreign affairs, education, health and local governments) and relevant stakeholders. To manage labor gaps and shortages, skills partnerships with origin (young) countries should be expanded to facilitate tailored training programs in young countries which align with specific needs of both young and aging destination countries. This is a strategic solution to demographic and economic challenges faced by both aging and young countries. Moreover, migrants may underperform if their skills and qualifications are not recognized, wasting human capital. The extent of such impacts depends on migration and employment policies. To reduce brain waste, governments should simplify processes to recognize foreign qualifications. Online portals can help make the process transparent by allowing applicants to submit their qualifications for evaluation and track the status of their recognition applications. In the fields where national security and safety are of concern, countries can develop bridge training or on-the-job training programs that help migrants fill gaps in their skills or knowledge to meet local certification standards. Strategy 2 – to reduce irregular low-skilled migration. Enhance flexibility in migration systems to improve the reallocation of migrant labor. Irregular migration and lack of compliance undermine the benefits of migration and often cause considerable hardship for migrant workers. While expanding regular migration pathways through simplifying migration procedures and enhancing transparency in job matching, destination countries should ensure that regular migration channels address labor market needs. This includes allowing migrants to change their visa categories within the country, provided that they have secured a job that aligns with the new visa category. Furthermore, migration systems should allow migrants to change employers, facilitating the reallocation of migrant labor to areas with rising demand and aligning with domestic labor practices, while also better protecting workers from abuse (particularly relevant in the case of low-skilled migration). Where irregular migration is prevalent, governments should examine and address reasons for irregular migration, which generally are result from mismatches between demand for migrant workers in the economy and legal pathways available for economic migration. Governments should also employ strategies to regularize irregular migrant workers, such as through the provision of temporary amnesties and issuance of work visas —a strategy employed in recent years in countries like Malaysia and Thailand. Regularization of migrants brings with it multiple benefits beyond protection of workers, improving potential “matches” with the labor market, and bolstering their economic contribution to the economy. Governments can incentivize firms to hire regular migrants. It can rank firms’ performance in managing foreign workers and offer priorities in allocating permits for foreign labor employment to better-performing companies. For instance, Korea’s EPS has an elaborate system to rank EPS firms. This transparency would also reduce burdens on origin governments, which tend to put in place measures for its labor attaché in destination countries to validate jobs offers by firms. This validation process can be demanding when a large number of job offers must be handled, as for migrants from Indonesia and Myanmar, thus leaving few resources available for labor attachés to conduct their role to better protect their migrants. 68 Strategy 3 – to reduce distributional and social costs. Provide skills development training to workers who have similar skills as migrants and expand integration and protection support for migrants. As economies expand with more labor inflows, consumers, employers, and workers gain. Not everyone gains from migration, however. Existing workers and migrants whose skills can be easily substituted by new migrants, can potentially face lower wages or unemployment. Destination government should prioritize supporting those individuals, households, and firms who lose because of migration. This could include retraining programs targeted to transition workers into sectors with higher demand for labor, particularly those not filled by migrant workers. The support should accompany strong social protection support that include job creation incentives and vocational training programs. In parallel, governments should incentivize employers to participate in sectoral support programs like apprenticeships and wage subsidies under broader active labor market programs. Employment services can play an important role for migrants who often face labor market frictions such as lack of information about the labor market in the destination country, limited social networks, uncertainty concerning residence status, and legal barriers. Active labor market programs have been shown to be effective in increasing employment rates and earnings for migrants—for example, by providing information on interview preparation and legal rights to Syrian migrants in Jordan, and by implementing wage subsidies and early job training for migrants in Denmark.335 To enhance the productivity of migrant workers, governments should grant migrants access to affordable education and training programs. This can be done by providing firms with training incentives to train migrants, through tax rebates or reimbursement of training costs, as is often done for native workers. Access to education can also enhance the job prospects for migrants in their origin countries after their return, therefore decreasing the likelihood they will overstay their visas or work permits in the destination country because of lack of opportunity at home. Establishing partnerships with local businesses and industries can also facilitate the creation of apprenticeship and mentorship programs, offering migrants practical experience and opportunities for upward mobility. Governments should enhance legal frameworks to provide comprehensive protections for migrant workers, especially low-skilled temporary workers, seasonal migrants, and domestic helpers. This includes mandating clear and enforceable labor contracts outlining wages, working hours, and conditions, while ensuring compliance through robust monitoring and surprise inspections of workplaces. Legal aid should be accessible to help migrant workers asset their rights. Policies should enforce minimum living wages—that is, migrants need to earn a wage that is sufficient to afford a basic but decent standard of living in destination countries. For domestic helpers, regulations should ensure prevailing minimum wages, adequate living conditions, legal working hours and overtime payments, and rest periods. Grievance mechanisms should allow workers to report abuses and seek redress without fear of retaliation, as exemplified by Korea’s foreign worker welfare centers where migrant workers can discuss their problems in their own language. For migrants in remote areas, mobile support services can be provided. Efforts to improve migrant integration are particularly pertinent for EAP countries with negative public perceptions of migrant workers and in an early stage of multiculturalism. Government support programs can include offering language and vocational training to enhance workers' skills and employability. These can be tailored to migrants’ needs—especially for low-skilled migrants, enabling them to improve their communication skills, thus reducing frictions at worksites and in communities stemming from communication challenges. Community support networks can play a crucial role in helping migrant workers integrate into society, providing social and emotional support, as stipulated in Japan’s new roadmap on foreigner integration. To better coordinate 335 Caria et al. (2024); Clausen et al. (2009); Arendt et al. (2022) 69 various support programs for new immigrants, Canada has put in place Local Immigration Partnerships; their success often hinges on municipal leadership.336 Enhancing contacts between migrants and host communities is important. Working together with civil society, local governments can establish community centers that host cultural exchange events, language classes, and social activities where migrants and natives can meet and interact. As some companies have shown, creating mentorship schemes appears effective in building personal connections and mutual understanding between natives and migrants. Areas for bilateral and regional collaboration and international organizations Area 1. Foster skills development partnerships to generate a pool of human capital that meets labor demand in both origin and destination countries. Collaborative initiatives can be implemented between educational institutions, government agencies, and private sector stakeholders—as is detailed in spotlight 4.1 on Global Skill Partnerships. One approach is to establish joint training programs that align with the needs of specific industries or sectors in both origin and destination countries. These programs can include curriculum development, teacher exchanges, and hands-on training experiences designed to equip participants with the skills and competencies demanded by employers. Technology can facilitate the implementation of these partnerships. Virtual classrooms, online courses, e-learning platforms, and virtual reality-based learning programs offer cost-effective and scalable solutions for delivering training and education to a wide audience. Collaborative online programs can be developed to address specific skill gaps and labor shortages identified in both origin and destination countries. Moreover, countries can promote the exchange of knowledge and expertise through virtual mentorship programs, online forums, and digital skill- sharing platforms, allowing individuals to access learning opportunities regardless of geographical location. Skill partnerships can be established in conjunction with foreign direct investment (FDI), given that a greater human resource pool can promote domestic industries and support FDI. Industries often collaborate with educational institutions and training providers to ensure that the workforce possesses the necessary skills demanded by foreign investors. By aligning skills development initiatives with the needs of FDI projects, countries can enhance their attractiveness to investors and facilitate sustainable economic growth. At the regional level, governments can work together to develop common frameworks and guidelines for assessing and recognizing qualifications. This could involve establishing regional accreditation bodies that oversee the equivalency of educational and professional credentials across member states. By harmonizing standards and procedures, countries can reduce administrative barriers and facilitate the mobility of skilled workers within the region. Although much can be gained from such measures, ASEAN’s slow progress in implementing the ASEAN Qualification Reference Framework indicates practical challenges to implementation, arising from variations in educational systems, accreditation processes, and language barriers among ASEAN member states. Differences in regulatory frameworks and bureaucratic procedures also contribute to delays and inconsistencies in the recognition process. Furthermore, the voluntary nature of ASEAN agreements and the lack of binding mechanisms for enforcement appear to pose limitations in implementation. Area 2. Develop dataset on migration costs, to better inform migration policies and to reduce irregular migration. In collaboration with origin and destination countries, international organizations should develop standardized methodologies for collecting data on migration costs, informed by the existing work by the World 336 Blower (2020) 70 Bank and ILO. This can focus on the low-skilled segment where market failures are more prevalent. Such datasets should include information on recruitment fees, documentation expenses, and travel costs incurred by migrants; regional data hubs, managed by relevant migration agencies, can help to consolidate information from various countries. International organizations or regional bodies like ASEAN could serve as coordinators for such efforts. Data should be collected on a regular interval to keep track of trends, helping governments respond to shifts in migration patterns. To overcome resistance from stakeholders who benefit from high migration costs, it is important to introduce financial or regulatory incentives. These would include tax incentives for agencies that reduce fees or international recognition for countries that implement low-cost migration systems. Stronger support for civil society organizations can help increase the political power of migrant rights groups, ensuring that migrant voices are reflected in policy discourse. Area 3. Use bilateral and regional agreements to enhance governance of low- and semi-skilled migration, ensuring the protection of migrant workers’ rights and promoting their well-being. Bilateral agreements (BLAs) can establish standardized employment conditions that outline the rights and responsibilities of recruitment agents, employers, and migrant workers. To date, many BLAs have lacked provisions intended to protection the rights of migrants.337 BLAs can regulate the recruitment process to prevent fraudulent practices by recruitment agencies. This may involve establishing mechanisms for migrant workers to lodge complaints and seek redress. Public job matching service under Korea’s EPS is considered as a transparent, equitable recruitment practice. The Australia–Papua New Guinea agreement on the Pacific-Australia Labour Mobility Program places restrictions on the role of private recruiters. BLAs can incorporate mechanisms that would allow wages to adjust based on factors such as inflation rates, cost of living, or changes in the minimum wage in the host country. This ensures that wages keep pace with economic conditions and maintain their purchasing power over time, without the need for frequent negotiations. Some negotiated wages under BLAs have not been changed for years. 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Categorizations of countries in EAP Table A - 1: Destination, origin, and Pacific Island economies Destination Origin Pacific Island countries Australia Cambodia Fiji Brunei Darussalam China Kiribati Hong Kong SAR, China Indonesia Marshall Islands Japan Lao PDR Micronesia, Fed. Sts. The Republic of Korea Mongolia Nauru Macao/Macau SAR, China Myanmar Niue Malaysia The Philippines Palau New Zealand Timor-Leste Papua New Guinea Singapore Viet Nam Samoa Thailand Solomon Islands Tonga Tuvalu Vanuatu Notes: The categorization of destination and origin economies is primarily based on net immigration rates. Net immigration economies are categorized as destination while net origin economies are categorized as origin. For Hong Kong SAR, China and Macao/Macau SAR, China, immigration includes immigration from China. Table A - 2: Aging and labor abundant economies Aging Labor abundant Australia Cambodia Brunei Darussalam Fiji China Kiribati Hong Kong SAR, China Lao PDR Indonesia Marshall Islands Japan Micronesia, Fed. Sts. Korea Mongolia Macao/Macau SAR, China Nauru Malaysia Niue Myanmar Papua New Guinea New Zealand The Philippines Palau Samoa Singapore Solomon Islands Taiwan, China Timor-Leste Thailand Tonga Viet Nam Tuvalu Vanuatu Notes: The categorization of aging and labor abundant economies is based on the change in the share of the working age population aged 15-64 between 2022 and 2050. Economies with a negative change (i.e. a declining share of the working age population) are categorized as aging ones, while those with a positive change (i.e. an increasing share of the working age population) are categorized as labor abundant ones. 91 Appendix 2. Migration systems in EAP Table A - 3: Low-skilled labor migration systems Migration policies Australia Japan Republic of Korea Malaysia New Zealand Singapore Thailand Visa/ labor Employment permit Work permit migration Work visa scheme Work visa scheme system Work permit system Work visa scheme Work permit system scheme system Temporary Work (International Work Permit for Relations) visa Non-professional Visitor’s Pass Recognised Seasonal Specified skilled Migrant (subclass 403) worker (i) / (ii) employment visa (E- (Temporary Employer Limited Section 64 Border Pass Pacific Australia 9) Employment) Visa Worker/Migrant Labour Mobility Domestic Worker stream To allow nationals of To address labour countries that share a land To address labour To address labour To address labour To address labour To address labour shortage in the border to enter on a Objectives shortage shortage in specified shortage in SMEs shortage in approved horticulture and shortage in certain industry fields sectors temporary basis or for viticulture industries sectors seasonal work at a specified location To work in specific To work in specific circumstances that To improve the circumstances that To reduce To protect the improve the country’s To protect the rights improve the To prevent irregular country’s international of foreign workers clandestine or country’s rights of foreign irregular migration migration international relations international workers relations relations To enable skills To encourage To encourage migrants to development and migrants to return To protect the rights return home after their income support in home after their of foreign workers home countries permits expire work permits expire √ √ √ √ √ √ √ Temporary Employer must labour Departure guarantee Security deposit post a security Worker contribution to a migration insurance; Return (Bank/Insurance cost insurance guarantee) bond ($4,000) per repatriation fund worker Short-term: up to 9 (i): 4-12 months, Three years, 12 months, Contract months renewable up to 5 duration Long-term: 1-4 years renewable and renewable up to 5 7-9 months 2 years, renewable 2 years, renewable once possible re-entry years years (ii): 6 months or 1-3 92 Migration Australia Japan Republic of Korea Malaysia New Zealand Singapore Thailand policies years, no stay limit on renewable basis Nationality restrictions (Fiji, Kiribati, Nauru, Sector-specific Sector-specific skill Quota approval by Nationality restrictions Regulation Papua New Guinea, Annual quota by Annual quota of quota based on over inflows Samoa, Solomon exam and language industry Ministry of Foreign 19,500 (Myanmar, Cambodia, Lao proficiency test Affairs dependency ratio Islands, Timor-Leste, PDR, and Viet Nam) ceiling (DRC) Tonga, Tuvalu, Vanuatu) Employers apply for permits at job centres after Prior permission of the Sponsored by a demonstrating authorised Temporary Must have a job Signed employment efforts to fill Activities Sponsor, offer from a Sector-specific agencies in the respective contract with an available positions Sector-specific levy that is approved by Accepting with Korean workers payment Recognised Seasonal levy payment countries; a list of selected the Department of Employer before (Tiered) applicants is provided for Organization first; then foreign Employment and applying the prospective employer’s workers are Workplace Relations recommended from consideration a prequalified job seekers roster Employers can usually only employ Nationality Application for Nationality workers who are Signed standard restrictions (14 Certificate of labour contract restrictions (15 from eligible Pacific Signed employment contract Eligibility countries, by sector) nations except in countries, by special sector) circumstances Nationality restrictions (12 countries) Managed by both Direct employment sending and Direct employment Direct by an employer or Direct employment receiving by an employer or employment by an Direct employment through the origin by an employer; governments; through the origin by an employer, employer, indirect Employment country’s work- Indirect employment Employer apply for a country’s work-ready Private recruitment indirect employment employment process ready pool; through private Certificate of pool; companies/Brokers through recruitment through Online application employment Confirmation of Visa Indirect employment agencies employment submitted by agencies Issuance (CCVI) through a licensed applicant before worker can Pacific agent agency (EA) apply for a work visa 93 Migration Australia Japan Republic of Korea Malaysia New Zealand Singapore Thailand policies at the Korean Embassy in their country of origin Application of labour standards (e.g. Strict enforcement Application of labour of labour National labour standards accommodation Minimum hourly standards (e.g. Equal treatment Application of labour Labour standards, work wage of $25.47 for standards (e.g. cap for both natives and minimum wage, between natives and standards (e.g. protection hours, wellbeing of at least 30 hours of on employment migrants (e.g. wage and statutory working migrants minimum wage) workers) and work agency fee paid by other benefits) hours) Assurance Protocol foreign worker) for workplace exploitation Financial assistance Foreign Worker for work-related Casualty insurance; Compensation injuries through the Industrial Accident Health insurance National Pension Compensation Scheme Accident Medical insurance Health insurance (FWCS)/Employment Compensation Insurance Injury Scheme Corporation (ACC) Ongoing support Ongoing support from employer, Health Insurance Industrial Accident Employment from employer and Work Injury PALM scheme Protection Scheme support service line, Compensation insurance; for Foreign Workers the Ministry of Compensation Act Savings fund contribution Insurance Guarantee insurance Business, Innovation (WICA) and country liaison (SPIKPA) and Employment officers Employer Employer contribution to contribution to initial mobilisation Health insurance National Pension Housing Housing mobilisation costs costs (e.g. visa, (e.g. flights) flights) Access to Family Tax Benefits, Child Care Subsidy and Medicare (under Health insurance Medical insurance the PALM Family Accompaniment Pilot) 94 Migration Australia Japan Republic of Korea Malaysia New Zealand Singapore Thailand policies Pre-departure Foreign Worker Pre-departure Settling-in orientation; briefing; arrival Programme (FW Further support on Employment training Pre-departure briefing; Social language, module (minimum orientation; SIP); recreation connections to integration accommodation, 20 hours) after Information booklet centres and other community and transportation etc. arrival (Get ready pack) resources for culturally relevant by a registered health and well- groups. support organization being Employer/job- Employer/job- Change of Transferable to Transferable to Employer-specific specific and non- Employer-specific specific and non- Employer-specific status other employers other employers transferable transferable Happy Return Programme: Offering vocational training, pre-return recruitment services, job matching Return assistance, administrative support for insurance benefit claims, and community networking services Change of visa/work permit No √ √ No No No No category Pathway to No Mixed, for SSW(ii) No No No No No residency 95 Table A - 4: High-skilled labor migration systems Migration New Australia Japan Korea Malaysia Singapore (i) Singapore (ii) Thailand policies Zealand Visa/ labor Work visa Employmen Work visa Employment migration Work visa scheme Work visa scheme Employment pass Work visa scheme scheme t pass scheme pass scheme Skilled Employer Sponsored Regional Professionals, including (Provisional), Skilled Professor (E-1), Foreign Employmen SMART – Highly Skilled Regional (Provisional), Language Instructor (E-2), t Pass Talent/Executive, Professional Visa, Personalised Employment Skilled Work Regional Researcher (E-3), Technical (Category I Long-Term Working Visa, Post Study Pass, Overseas Networks & Employment (Provisional), Instructor/Technician (E-4), and II), Resident (LTR) – Working Visa Work Visa Expertise Pass (ONE), Pass, S Pass Temporary Skill Professional (E-5), Cultural Residence Highly-skilled (Skilled Labor), J- Tech.Pass Shortage, Temporary and Sports (E-6), Pass-Talent Professional/Remo Skip Graduate, Temporary Designated Professionals (RP-T) te Worker Work (Short Stay (E-7) Specialist) To allow To allow international foreign To encourage the To allow To enhance the students to To attract high-earning professionals, To address labour employment of foreigners country’s To allow foreigners to live and foreign professionals, top managers, shortage within high-skilled to engage in attractiveness as a Objectives engage in professional work talents, and established executives, and specific foreign professional regional hub for work and activities temporarily entrepreneurs/experts other skilled region/position professionals in work and high-potential after across sectors workers to certain fields activities foreigners finishing engage in studies employment To ease visa processing and To enable To promote fair To allow international enable flexible students to employment To attract foreign To offer greater flexibility students to live and conditions of stay contribute to practices and talented residents and boost innovation in the work temporarily under the the local improve labour in contributing to country after finishing studies preferential economy market economic growth immigration and society transparency treatment To encourage highly To ease process specialised skills, and regulations knowledge or concerning experience that can recruitment of help local business foreign experts √ √ √ √ √ √ √ √ Temporary Financial labour proof (at migration least NZD$5,000) 96 Migration New Australia Japan Korea Malaysia Singapore (i) Singapore (ii) Thailand policies Zealand Varies, between Contract Varies, between 3 3 months – 5 1-2 years 1-5 years 1-3 years 2-5 years 2-5 years 1-10 years duration months – 5 years years Labour market Letter of Labour Within 3-6 Labour market Letter of testing through qualification Regulation market months after Letter of testing; employer Points-based recommendation/97upera the Fair endorsement by over testing completing recommendation/Employm nomination/sponsors system nnua by relevant Consideration relevant inflows (Exemptions studies in ent contract hip organisation Framework government apply) New Zealand (FCF) agency Quota subjected to Points-based Employer labour agreement, Complementari apply for Minimum level of developed between ty Assessment Application for Application for Certificate Expatriate Minimum conditions on education, work the Australian Framework Certificate of of Confirmation of Visa Post from past employment and/or experience, and Government (COMPASS); Eligibility Issuance (CCVI) relevant education certificates position in (represented by the Self- government targeted fields Department) and Assessment agency employers Tool (SAT) Relevant skills Minimum Certificate/License must be Minimum assessment and Minimum salary salary Minimum salary Minimum salary authenticated by relevant salary English proficiency requirement requiremen requirement requirement Department/Agency requirement exam t Verification proof required for post- Employment Employmen Employment contract secondary contract with t contract diploma and specified institutes above qualification Direct Direct Direct employment by an Direct application Direct application employment by employer, or at the Direct employment by an application by Direct application by an employer, or Direct employment by indirect through Embassy/Consula employer; by employer individual, individuals; indirect Employme an employer, through certified agency te with Application made via the either online Indirect application by employment nt process sponsorship/nominati (CA); Online submission of electronically or via Immigration or on paper appointed employment through an on application via the necessary Diplomatic Office Department through the agency or employer appointed Board of documents ’s portal Immigration employment Investment (BOI) Department agency website Equal treatment Strict Health insurance Worker between natives and Application of Equal enforcement of coverage at least Protection migrants through the labour standards treatment Resources including the labour USD$50,000; or Labour Equal treatment between (Migrant and Fair Work (e.g. minimum between Singapore Global Network, standards social security protection natives and migrants Other Ombudsman (FWO) wage, statutory natives and EDB Connections Concierge based on the contribution; or Employees) and Assurance working hours) migrants Employment of USD$100,000 bank Act 2023 Protocol for Foreign deposit 97 Migration New Australia Japan Korea Malaysia Singapore (i) Singapore (ii) Thailand policies Zealand workplace Manpower Act exploitation (EFMA) Sector-specific Employer Accident quota based on contribution Compensatio dependency 17% flat rate for Minimum pay rates to social National Pension National Pension n ratio ceiling personal income based on occupation security Corporation (DRC) and levy tax scheme by (ACC) requirement SOCSO (only S Pass) Industrial Publicly Medical Private Accident funded insurance Health insurance National Health Insurance health Compensation health (mandatory for insurance Insurance services S Pass) National Departing Australia Pension Superannuation Health insurance under EPF Payment (DASP) (optional) Social integration Transferable to other Transferable to Employer-specific; employers, other employers, Transferable with Transferable to other but job- Change of through Change Employer/job-specific and Employer- Transferable to other Employer- condition (i.e. New employers, except for specific if status of Status of non-transferable specific employers specific company is Temporary Work qualification Residence endorsed under is non- application targeted industry) degree or below Return Change of Mixed, only for Skilled visa/work Employer Sponsored √ √ √ √ √ √ √ permit Regional and Skilled category Work Regional Mixed, only for Skilled Pathway to Employer Sponsored √ √ √ √ √ √ √ residency Regional and Skilled Work Regional 98 Table A - 5: Migration systems governing out-migration in origin countries Philippines Viet Nam Indonesia Lao PDR Cambodia Myanmar Mongolia Timor-Leste Tonga 2011 Sub- Decree no. 190 on the Management of the Sending of Cambodian Law Number 18 of 2013 Labor Law; Workers National 2017 on Protection 2020 Decree no. Abroad 2006 Law on Employment of Indonesian 245 on Placement through Bilateral Migrant Overseas Strategy 2017- Migrant Workers; of Lao Workers to Private cooperation Migration Workers Workers; 1999 Law 2022 Law of 2030; Bilateral Regulation Work Abroad; Recruitment agreements framework/ and 2021 Decree for Relating to Mongolia on Labor cooperation Number 10 of 2022 Ministerial Agencies; (e.g. New policies/ Overseas Vietnamese Overseas Force Migration agreements 2020 on Agreement no. 1995 Sub- Zealand’s RSE, laws Filipino Act employees Employment (Revised) (Australia’s SWP Procedures for 1050 on the Decree no. 57 Australia’s SWP 1995 working abroad and PALM; the Placement of Management of on Sending and PALM) under contracts Republic of Indonesian Employment Khmer Korea’s EPS) Migrant Workers Service Enterprise Migrants to Work Abroad; Policy on Labour Migration for Cambodia 2019-2023 Migration as 2024 military part of ban on men √ √ √ developmen applying to t strategies? work abroad Enable Strengthening seeking & labour securing Reduce Promote equal job migration Promote and overseas unemployment opportunities and Promote governance Regulate the protect the Encourage labor employment in the country Migration supply of labour employment framework; relations with interests of exports to high- systematically and improve the part of that is in abroad; Enhance Protection and regard to the citizens abroad; income markets and protect country’s medium- accordance with protection for promotion of employment of Encourage the Policy and protect the the rights and economic term the national workers and better the rights of Mongolian citizens flow of objectives legal rights and privileges of growth through economic interest; Protect regulate migrant in a foreign country remittances and interest of workers; household developme migrant workers recruitment workers; and the protection strengthen workers working Enable the income, nt plan and their family agencies sending Harnessing of their rights and engagement abroad systematic knowledge and from human rights workers abroad labour legitimate interests with the Tongan utilization of experience from violation migration to diaspora human abroad maximise resources of social and the State as 99 Philippines Viet Nam Indonesia Lao PDR Cambodia Myanmar Mongolia Timor-Leste Tonga economic well as the development knowledge experience and skills gained abroad. The Ministry of Labor and Criteria for The Ministry of Vocational Register with host The state Trade and Training shall the Secretariat Government countries Labor Jobseeker to administrative body Economic Integrated one- seek and of State for services to Administration register with may organize Development stop service for provide Training, provided to guarantee Agency to the employment under (MTED) placement and support/ Vocational and prospective protection administer labor Department specific agreements supports the protection (LTSA) incentive Employment migrants through a working abroad of Labour and memoranda of selection and for searching (SEFOPE) certificatio understanding preparation of for good database n process workers overseas job market Private recruitment √ √ √ √ √ √ √ √ √ allowed? Recruitment companies managed through licensing? Related √ √ √ √ √ √ √ regulations to incentivize good practices? Deposit Guarantee (VND 2 billion; money deposit Cash security Agency Minimum registered Guarantee VND 500 million Deposit (Rp1.5 (USD$100,000) guarantee license fee capital (not less than bonds for each billion) (USD$20,000) (K25 million) 300,000,000 MNT) additional branch) Licensed SIP3MI license Service Agent License issued for 3 Written Controls/ enterprises to valid for 5 years to carry out years; Prohibitions warning; penalties directly organize and extendable agreed duties on certain persons Temporary over the provision of with Board and undertake to provide suspension or recruitment overseas (BP2MI) responsibility mediation services revocation of firms employment recommendation; for obtaining (including civil authorization service Criminal provisions in full the servant, NGO, legal 100 Philippines Viet Nam Indonesia Lao PDR Cambodia Myanmar Mongolia Timor-Leste Tonga to those providing rights and entity engaged in inaccurate data or privileges of tourism etc.) inappropriate workers placement Service fee determined Recruitment by the Central fees charged Prohibition to No fees Committee, Prohibition to claim by charge recruitment charged to Service charge paid to either from migrant recruitment service fees to workers the workers companies migrant workers Department to workers of Labour or Service Agent Ceiling rates set by the government for expenses for preparation and Ceiling rates for training; The brokerage mediator shall be commission (if responsible for any refunded to expenses on the licensed preparation/101upe enterprise) rann, transportation, medical, and visa, except if borne by the host/employer Recruitment Ave Pa’anga Pau agencies/the remittance Ministry shall Programs/ New ruling in voucher; assist workers Measures to 2023 for 25% Collaboration in opening and Remittance enhance of earnings to with the using a Mobilization developmen be sent home government of personal bank Strategy 2022 t impact of via approved New Zealand account to remittances banks and World Bank remit money to reduce to their remittance costs families 101 Philippines Viet Nam Indonesia Lao PDR Cambodia Myanmar Mongolia Timor-Leste Tonga Authorization Overseas of the Ministry Employment of Labour and Supervisory Vocational Committee to Compulsory Training coordinate Direct Direct Labor supply medical (MLVT) with local and recruitment by recruitment by Migrant contract must be Prospective Authorization of Employment and life according to foreign employer/licens employer/licens protection registered with migrants register the Labor mediation insurance the PRAKAS entities to ed agent ed agent measures/ the Ministry of with the Administration agreement; Labor for agency- ensure proper through through programs Labour - Invalids government Agency contract hired implementati transparent transparent and Social Affairs workers on of policies process process and protection of workers overseas Employment Contract contract between the At least 1 recruitment professional staff Written Demand letter agencies and – with experience agreement and MLVT; Quarterly records on and suitable between the employment Contract Contract citizens working foreign language government and contract, with Pre-departure Pre-departure and exit between abroad submitted to ability – for labor legal workplace training training approved. recruitment the state central management entity/government and agencies and administrative body activities and in destination accommodati worker (Job orientation country on details Placement education Service Contract) Salaries, Health Orientation training, Recruitment accommodation, insurance including general agencies shall Same workplace Same workplace health care, social (depending on information on be responsible rights and rights and insurance and destination legislations, rights, for the protection as protection as other benefits Before Working country risks, health and working local workers local workers Minimum provided as in Protection covers requirement, social insurances conditions and (e.g. PALM (e.g. PALM wage for contracts administrative and e.g. Malaysia and social welfare Access to living scheme covers scheme covers domestic technical under Foreign measures education, conditions, accommodation accommodation workers in protection of Worker healthcare, and including skills, , , selected employment Compensation social insurance salary, superannuation, superannuation, destination rights, including Scheme benefits, health health s employment FWCS/Foreign health insurance, insurance, contract Worker insurance, education and education and Hospitalizatio accommodatio training training n and Surgical n, and opportunities) opportunities) Policy transport SKHPPA) 102 Philippines Viet Nam Indonesia Lao PDR Cambodia Myanmar Mongolia Timor-Leste Tonga Regular During Working Pre-departure health/medical Protection covers training and examination supervision and employment when abroad facilitation of the training fulfillment of (depending on worker rights, destination Pre-departure through the country Pre-departure training and Citizen Protection requirement, training orientation Portal/Sisnaker/Sis e.g. The courses ko P2MI Republic of Korea’s minimum 20- hour employment training) Overseas Migrant employment workers are support fund entitled to National Social National Social take civil or Security/Insurance Social Security Security System criminal Fund action for loss of rights and privileges Pre- Pre-departure departure/Pre- Labor Fund orientation work orientation National training center Becora to Any skills Skills empower developmen development Training Timorese youth t/ training program/trainin Training on course on to compete in linked with g in destination vocational skills culture, labor global job migration/ Access to Skills training and Orientation training country (e.g. and foreign Language law, and market; overseas job education and job certification of for employment in Australia’s PALM language prior to training occupational Skills matching training expertise foreign country scheme and sending worker safety in development (excluding New Zealand’s abroad foreign program in pre- RSE training country destination departure programme country (e.g. training)? Vakameasina) Australia’s PALM scheme) Family/ guardian/ √ Parental/ community/ √ Branguay spouse/ guardian district clearance clearance approval need to be 103 Philippines Viet Nam Indonesia Lao PDR Cambodia Myanmar Mongolia Timor-Leste Tonga obtained by migrants for their overseas employment Exit clearance/ Check at Exit controls departure the airport date arrangement Welfare Fund √ √ √ established for migrants Labour Attaché Licensed Diaspora related appointed in enterprise to institutions and The Ministry of Thailand, The report and organizations, Employer Labor and Social Republic of Diaspora related coordinate with Recruitment including and Welfare and Korea, and institutions, Vietnamese agencies shall Special diplomatic embassies, Programs to recruiting Ministry of Foreign Malaysia to including diplomatic make proper missions/attaches in consulates, support agencies to Safety and security Affairs, or a monitor the regional Pacific missions/consulat arrangements foreign country to attaches, and migrants to be protection for representative to employment communities, es in foreign for the ensure labor rights Timorese return home responsible worker’s provide and provide national countries; also repatriation of of Mongolian communities in adverse for repatriation administration of necessary entities, and bear all workers at citizens working abroad; situations repatriation labor working assistance to embassies/high associated least 30 days abroad Employers to of overseas abroad through migrant commissions expenses in the prior provide advice workers embassy/consulate workers facing abroad event of and welfare in foreign country difficulties at accident/death of support for the worker repatriation destination country Reintegratio Loan Employment After Working Job Migrant Support for job National n support program – support; Protection covers counselling, resource creation, Diaspora programs – Land Bank Preferential social self- center (MRC) employment, or Engagement e.g., capital for rehabilitation and employment offer other opportunities Policy 2023- employment business activities reintegration creation, skills reintegration in 2027 service, through skill recognition, support, projects/programs; training, improvement and transfer of including Financed by loan service social security information Employment programs benefit from on skills Promotion Fund, destination development SME Development countries to and Fund, and other Cambodia employment special government opportunities funds 104 Appendix 3. The EAP Migration Policy Database The EAP Migration Policy Database aims to capture migration policies across a range of dimensions that govern the intake of economic migrants in selected EAP countries (Table A - 8). Given the number of visa schemes that are in place and the commonalities between them, they are grouped by the type of migrants, the objective of the migration scheme, and the type of migration, described in Table A - 6 below. Table A - 6: The types of migrants, objectives, and types of migration used to classify migration schemes Type of migrants Objective Type of migration General Labor shortage Temporary This refers to visa schemes that are This refers to the objective of using This refers to temporary migration not specific to a skill level migration to fill labor shortages schemes High-skilled Economic dynamism Permanent This refers to visa schemes for high- This refers to the objective of using This refers to permanent migration skilled workers, typically specified migration to spur the economy, schemes, that is those that are based on occupation and income typically targeting high-skilled direct pathways to permanent workers such as digital nomad visas residency Semi-skilled Job search This refers to visa schemes for semi- This refers to visas that allow /mid-skilled workers, typically migrants to enter the country to specified based on occupation and search for jobs, and typically income requires them to apply for another visa once a job has been obtained Low-skilled Nation-building This refers to visa schemes for low- This refers to visas that target skilled workers, typically specified workers from specific countries, based on occupation and income such as visas for workers for Pacific Island countries to work in Australia and New Zealand Special entry This refers to visa schemes for specific categories of workers, such as digital nomad visas and care worker visas The dimensions of migration policy included in the database include: (1) entry barriers, (2) conditions of stay and residence, and (3) welfare measures. These are elaborated in Table A - 7Error! Reference source not found.. Table A - 7: Dimensions of migration policy included in the database Measures Description Entry barriers Economic needs test Do firms needs to advertise vacancies or request for permission from relevant authorities or provide sponsorship to hire migrant workers? 105 Measures Description Quota Is there a maximum number of migrant workers allowed per sector or per firm? Industry restrictions Are there any industry restrictions for hiring migrant workers (i.e. only certain industries are allowed to hire migrant workers)? Age restrictions Are the any age restrictions for migrants? Medical test prior to entry Is passing a medical test required prior to arrival? Language test prior to entry Is passing a language test required prior to arrival? Education/qualification Are there any explicit education, qualification, and work experience requirements requirements stated for migrants? Employment contract prior to Is an employment contract required prior to entry? entry Minimum salary earned Is there a minimum salary tied to the job within a visa category? Minimum savings Is there a minimum level of savings required to be eligible for the visa category? Source country restrictions Are there any restrictions on the source countries for migrants (i.e. only workers from selected countries are permitted to immigrate)? Technical skills test prior to Is a technical skills test required prior to entry? entry Conditions of stay and residence Maximum duration specified Is there a maximum stay duration specified for migration? Possibility of visa Can the visa be extended or renewed? extension/renewal Possibility to change visa Is it possible for a migrant to change their visa category while in the category in destination destination country (for example, from a student visa to a working visa, or country from a low-skilled visa to a high-skilled visa)? Pathway to residency Does the visa provide a pathway to permanent residency? Pathway to citizenship Does the visa provide a pathway to citizenship? Welfare measures Employer change restrictions Are migrant workers able to change employers in the country? Unemployment benefits Are migrant workers entitled to unemployment benefits? Social security benefits Are employers required to provide social security benefits for migrant workers? Accompaniment by family Are migrant workers allowed to be accompanied by their family members (i.e. members spouse, children, or parents)? Employment of family If migrant workers can be accompanied by family members, are the family members members allowed to work? Access to public healthcare Do economic migrants have access to public healthcare? Application of minimum wage Does the minimum wage (if it exists) apply for migrant workers? The characteristics of the migration policies presented in Table A - 7 are then assessed using a thorough desk review of the policies, mostly through an online search conducted in March-April 2024. Whenever possible, official websites of the immigration departments or ministries of the respective countries are used as the main source of information. The Migration and the Law Database (MatL) focusing on economic migrants, produced by the Global Knowledge Partnership on Migration and Development (KNOMAD) was used as the main source of information for several dimensions, namely the application of minimum wage, access to public healthcare, social security as well as unemployment benefits. In other cases, the MatL 106 was used when alternative sources of information were not available such as employment of family members and pathway to residency or citizenship. Based on the desk review, the characteristics of migration policy were coded as “Yes”, “No”, “Mixed”, or “Not applicable”. These codes are direct responses to the questions presented in Table A - 7 under the “Description” column. The “Mixed” response is applied when there are conditionalities placed (including in the MatL), or when different migration schemes grouped together have different characteristics. An active effort is made to ensure that there are limited “Mixed” responses resulting from the grouping of the migration schemes, and the majority of characteristics of migration policy were coded as “Yes” or “No”. Depending on the characteristic, either “Yes” or “No” is considered the “most restrictive” or “least restrictive” response. For example, for the economic needs test, “Yes” is considered the “most restrictive” response, while for the possibility of visa extension/renewal, “Yes” is considered the “least restrictive” response. Table A - 8: List of economies and migration schemes included in the database ECONOMY VISA SCHEME AUSTRALIA • Skilled Nominated (subclass 190) • Skilled Regional (subclass 887) • Skilled Independent (subclass 189) • Employer Nomination Scheme (subclass 186) • Regional Sponsored Migration Scheme (subclass 187) • Permanent Residence (Skilled Regional) (subclass 191) • Skilled Employer Sponsored Regional (Provisional) (subclass 494) • Skilled Regional (Provisional) (subclass 489) • Skilled Work Regional (Provisional) (subclass 491) • Temporary Skill Shortage (subclass 482) • Temporary Graduate (subclass 485) • Temporary Work (Short Stay Specialist) (subclass 400) • Global Talent (subclass 858) • Working Holiday (subclass 417) • Pacific Engagement Visa (PEV) (subclass 192) • Special Category (subclass 444) • Temporary Work (International Relations) visa (subclass 403) Pacific Australia Labour Mobility stream CAMBODIA • E-class (EB, EP, EG, ET) CHINA • Talent (R-visa) • Work (Z-visa) FIJI • Long Term Work Permit • Short Term Work Permit • Work Permit for Non-Citizen Skilled Contracted Workers • Work Permit Under Religious or Education • Work Permit Application for Overseas Employers & Secondments • Work Permit Application for Non-Government Organisations (International/Regional) 107 ECONOMY VISA SCHEME • Authority to Work or Study while on a Visitors Permit • Business on Visitor Permit HONG KONG SAR, • General Employment Policy (GEP) CHINA • Immigration Arrangements for Non-local Graduates (IANG) • Top Talent Pass Scheme • Quality Migrant Admission Scheme • Technology Talent Admission Scheme (TechTAS) • Admission Scheme for Mainland Talents and Professionals (ASMTP) • Admission Scheme for the Second Generation of Chinese Hong Kong Permanent Residents • Enhanced Supplementary Labour Scheme • Foreign Domestic Helpers • Working Holiday Scheme • Special Scheme to Import Care Workers for Residential Care Homes • Sector-specific Labour Importation Schemes INDONESIA • Foreign Worker Utilization Plan (Rencana Penggunaan Tenaga Kerja Asing, RPTKA) • Limited Stay Permit (Kartu Izin Tinggal Terbatas, KITAS/ITAS) • Bali Remote Worker Visa (E33G) • Visitor Visa (B211A) JAPAN • Highly Skilled Professional (J-Skip) • Working Visa • Working Visa (Skilled Labor) • Working Visa (Nursing Care) • Specified Visa: Designated Activities (Future Creation Individual, J-Find) • Working Visa: Specified Skilled Worker (i) / (ii) • General Visa: Technical Intern Training (i) (a)/(b) • Working Holiday Programme THE REPUBLIC OF • Special talent (F-5-11) KOREA • Professional, including Professor (E-1), Foreign Language Instructor (E-2), Researcher (E-3), Technical Instructor/Technician (E-4), Professional (E-5), Cultural and Sports (E-6), Foreign National of Special Ability (E-7) • Job Seeker (D-10-1) • Employment Permit System (General E-9) • Employment Permit System (Special Case H-2) • F-1-D Workation Visa • Working Holiday (H-1) • Short-term Employee (C-4) LAO PDR • Labor Visa (LA-B2) • Expert Visa (E-B2) MALAYSIA • Employment Pass (Category I, II, III) • Resident Pass-Talent (RP-T) • Visitor’s Pass (Temporary Employment) 108 ECONOMY VISA SCHEME • Professional Visit Pass (De Rantau Nomad Pass) • Social Visit Pass (PLS@XPATS) • Returning Expert Programme (REP) MONGOLIA • Employment Visa (HG) • Sector-specific (C1-C11) MYANMAR • Employment Visa • Journalist Visa NEW ZEALAND • Skilled Migrant Category Resident Visa • Care Workforce Work to Residence Visa • Straight to Residence Visa • Transport Work to Residence Visa • Work to Residence Visa • Post Study Work Visa • Accredited Employer Work Visa • Recognised Seasonal Employer Limited Visa • Supplementary Seasonal Employment Work Visa • Samoan Quota Resident Visa • Pacific Access Category Resident Visa (for Fiji, Kiribati, Tuvalu,Tonga) • Pitcairn Islander Resident Visa • South Island Contribution Resident Visa • China Skilled Workers Visa • Thai Chefs Work Visa • Japanese Interpreters Work Visa • Special Work Visa (China, Indonesia, Philippines, Republic of Korea, and Viet Nam) • Global Impact Work Visa • Work Exchange Scheme • Singapore Work Exchange Programme • Working Holiday Visa • Talent (Arts, Culture, Sports) Work Visa • Religious Worker Work Visa • Specific Purpose Work Visa • Entertainers Work Visa • Sports Events Visitor Visa • Short-term Entertainment Act Visitor Visa • Arts and Music Festival Visitor Visa • Academic Visitor Visa • Visiting Media Visitor Visa • Student and Trainee Work Visa PAPUA NEW GUINEA • Working Resident Visa: Employment, Consultant/Specialist, Short-Term Employment • Business Visa: Restricted Employment Visa (REV) • Special Exemption Visa: Foreign Officials (Short/Long-Term), Research Academic, Religious Worker, Medical Worker 109 ECONOMY VISA SCHEME • Journalist Visa PHILIPPINES • Pre-Arranged Employee Visa (9G): Commercial/Non-Commercial • Special Employment Visa for Offshore Banking Unit • Special Non-Immigrant Visa SINGAPORE • Personalised Employment Pass (PEP) • Overseas Networks & Expertise Pass (ONE) • Tech.Pass • Employment Pass • S Pass • Work Permit for Migrant Worker • Work Permit for Migrant Domestic Worker • Training Work Permit • Work Holiday Pass (under Work Holiday Programme / Work and Holiday Visa Programmes) • Work Permit for Confinement Nanny • Work Permit for Performing Artiste • Miscellaneous Work Pass TAIWAN, CHINA • Employment Gold Card • Employment Pass Card • Visitor Visa for Employment-Seeking Purpose • Working Holidays Scheme THAILAND • Non-Immigrant Visa (B) (To Work/Teaching) • SMART Visa • Long-Term Resident (LTR) • Section 64 Border Pass (Myanmar, Cambodia, Lao PDR, and Viet Nam) • Non-Immigrant Visa (M) for Media & Film Crew Visa • Non-Immigrant Visa (R, R-A) for Religious Activities TIMOR-LESTE • Work Visa (VTB) VIET NAM • Foreign Workers/Working Visa (LD) 110 Appendix 4. Policy scenarios using the adapted Global Integrated Monetary and Fiscal Model This appendix documents the adapted version of the Global Integrated Monetary and Fiscal model (GIMF) and illustrates the potential impact of migration and investment scenarios for Japan using GIMF. The analysis studies the conditions needed for immigration and investment policy to raise growth and stabilize debt dynamics. The analysis and simulations highlight the high uncertainty of the demographic problem and scale required to address it. Adapted version of GIMF GIMF is a multiregion dynamic stochastic general equilibrium (DSGE) model developed by the Economic Modeling Division of the International Monetary Fund (IMF) for policy and scenario analysis (Kumhof et al. 2010). This analysis adapted a version of the model that incorporates elements to be able to evaluate the macroeconomic impact and management of aging. An important aim is to be able to examine the impact of aging on different sectors of the economy (both tradable and nontradable), and the types of ways technology, migration, and labor market policies can support the decline in the working-age population—while maintaining macroeconomic consistency using GIMF. There are numerous links and assumptions made in GIMF and its structure is complex. Thus, its application for this type of analysis is meant to be illustrative to help think through the macroeconomic implications of certain policies via scenario analysis. In the core GIMF structure, households and firms adhere to classical optimization principles, incorporating model-consistent and forward-thinking expectations. Additionally, the model uses sticky prices and liquidity constraints on expenditures, suggesting that monetary policies and fiscal deficits have real effects. However, these effects gradually diminish as wages and prices adjust over time. Shocks within the model are transmitted via a financial accelerator mechanism, operating through procyclical shifts in asset prices and risk premiums. The model is a three-region model. Japan plays the role of the home country with aging demographics. The Philippines plays the role of a country with younger demographics. The third region is the rest of the world. The production of goods and services uses five factors: skilled capital, skilled labor, unskilled capital, unskilled domestic labor, and unskilled foreign labor. In the context of aging, the analysis focuses on the unskilled bundle that would be relied upon to support the elderly care sector. Skilled capital ( ) and skilled Labor ( ) aggregate into a skilled bundle ( ). −1 1 −1 1 −1 ) = (1 − ) ( + ( ) Unskilled capital ( ), unskilled labor ( ), and unskilled foreign labor ( ) aggregate in an unskilled bundle ( ). −1 1 −1 1 −1 1 −1 = (1 − − ) ( ) + ( ) + ( ) The skilled and unskilled bundles are aggregated into tradable ( ), nontradable elderly care ( ), and other nontradable ( ) sectors. 111 −1 1 −1 1 −1 ) ) = (1 − ) ( + ( −1 1 −1 1 −1 ) ) = (1 − ) ( + ( −1 1 −1 1 −1 ) ) = (1 − ) ( + ( where (A) is the productivity (nonstationary) trend and defines the elasticity of substitution between production inputs. , , and are shares of skilled basket input in the production of tradable goods, elderly care nontraded services and other nontradable goods and services, respectively. The market price of skilled and unskilled capital, skilled and unskilled labor, and foreign labor are denoted , , , , . The marginal cost of skilled and unskilled bundles are denoted by Λ , Λ and given by the following equations. 1− 1− 1− Λ = ( ) + (1 − ) 1− 1− 1− 1− Λ = ( ) + ( ) + (1 − − ) Additionally, tradable goods, elderly care nontraded services, and other nontradable goods and services are denoted by Λ , Λ , Λ and represented as follows. 1− 1− 1− Λ = Λ + (1 − )Λ 1− 1− 1− Λ = Λ + (1 − )Λ 1− 1− 1− Λ = Λ + (1 − )Λ To simplify the introduction of unskilled labor, the model assumes that only overlapping generation (OLG) households supply skilled labor, while liquidity constrained (LIQ) households supply both skilled and unskilled labor. The share of unskilled labor in LIQ households is given by . Migrants are assumed to be unskilled LIQ households. Skilled LIQ households mimic the labor supply of OLG households. = (1 + ⁄ ) These represent the most major modifications to the GIMF model used for this analysis. For a full accounting of the core GIMF model see Kumhof et al. (2010). Possibilities to counteract the effects of aging and increase the policy space available Migration The analysis identifies the oncoming labor shortage as being concentrated in the nontradable elderly care sector, which is categorized as made up primarily of less skilled labor and associated with lower levels of productivity. Physical labor shortages in the elderly nontradable sectors would result in rising relative wages in that sector, leading to an inefficient allocation of resources toward sectors with lower levels of 112 productivity. Therefore, the analysis suggests that authorities should pay particular attention to boosting paths to immigration for less skilled nontradable labor. Indeed, authorities in Japan have tried to address this issue and most recently by proposing to eliminate restrictions on foreign nursing workers to provide home care services338. However, given the scale required for counteracting the oncoming demographic headwinds, such measures will likely still not be enough. Furthermore, immigration policies tend to focus on “high-skilled workers.” This focus would be helpful but not optimal. Increasing the labor force through high-skilled immigration will help raise the tax base and improve fiscal sustainability and strengthen the housing market through increased demand for housing. Such a policy, however, would likely not be the most efficient solution for either Japan or the countries from which it is pulling labor. Given that Japan’s historically low levels of immigration compared to other member countries of the Group of Seven (G7) and general reluctance to encourage migration as part of the measures to counter unfavorable demographics, Japan should target the specific skills in the area most needed for sustainability: namely, health care. Figure D.1. Better use of resources available Youth Unemployment Across Countries There are also cross-border benefits of focusing immigration policy toward less-skilled workers that 35 Viet Nam Philippinnes Thailand could work in the elder care sector because of the 30 Indonesia Brazil Nepal large pool of underutilized populations in 25 China prospective immigrating countries (Figure D.1). The 20 segment of the foreign population ages 15 to 24 Percent that Japan would ideally target under an 15 immigration policy to avoid acute labor shortages 10 have high levels of unemployment in their home 5 countries. Being open and creating a path for 0 training and productive employment in Japan in the elder care sector for this segment of the population 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 Source: US Federal Reserve Economic Data (FRED) would reduce the cost of the country of origin. Emigrating countries, such as the Philippines, would then benefit from increased remittances while not losing part of their tax base. The model-based scenarios assume Japan pulls labor from the underutilized segment of the emigrating country, so it models under optimal conditions. Of course, if Japan were to pull labor from those already employed in their home country, the home country would still receive remittances as compensation, but the overall impact on welfare would not be as high. A lack of physical migration to Japan could lead to deleterious effects on the housing market. So far, the focus on mitigating demographic headwinds in Japan have focused on monetary, fiscal, and structural reforms (Abenomics), as well as a technology-centric solution to elder care. However, even if these types of reforms and productivity increases were to meet their full potential, there would still be a structural increase in the oversupply of housing as Japan ages that authorities would need to contend with. Hashimoto et al. (2020) show that population decline can have nonlinear effects on house prices and perhaps even lead to a vicious cycle once people begin to expect that house prices will decline in the future and begin listing their houses en masse, exacerbating the oversupply of housing and put further downward pressure on real estate prices. Given the large share that real estate accounts for in household 338 https://english.kyodonews.net/news/2024/03/1906dc1a4af1-japan-to-ok-home-care-visits-by-more-foreign-workers-amid-shortages.html 113 wealth in Japan, a change in house prices can have important implications for macroeconomic stability. In Tokyo, which has some of the more favorable demographic dynamics, Uto et al. (2023) project the value of housing assets could decline by 1.3 percent annually or about 30 percent by 2045. The scenarios are calibrated to illustrate the benefits that migration can have on preventing house prices and consequently housing-related wealth from declining as much relative to the other scenarios under consideration (Figure D.2). Not pursuing or simply postponing a more aggressive immigration plan increases the risks of a financial crisis connected to a collapse in real estate prices that could spread through Japan’s economy. Hashimoto et al. (2020) propose various housing policy initiatives to help stabilize the housing market from a supply-side perspective. However, these policies likely pale in comparison to the effect an even a moderate increase in foreign migrants could have to help stabilize the housing market through higher demand. Figure D.2. Migration scenarios illustrating the housing effect Source: World Bank, original modeling for this publication. Migration needs to take a more prominent role in staving off demographic headwinds to better mitigate risks in sectoral specific labor shortages as well as shoring up the housing sector, which forms most household wealth in Japan. Levels of net migration had been rising before the COVID-19 pandemic, reaching net migration rise of about 183,000 in 2019. The latest United Nations population projections assume a net flow of 100,000 migrants, while the National Institute of Population and Social Security Research (NIPSSR) assumes a more optimistic figure of about 163,000, in line with recent trends. NIPSSR also provides a series of population projections conditional on alternative net migration flows annually. These projections illustrate how much migration alone can help meet the demographic challenge. The implications from the different outlooks suggest that to maintain a relatively constant population and share among working-age and 65+ population would require a net migration of about 750,000 annually: essentially, solving the demographic issue solely with a higher level of migration. Obviously, this is an extreme case, but it helps provide a benchmark for calibrating the migration scenario as do all the demographic scenarios provided by NIPSSR. Figure D.3 presents the various scenarios. 114 Figure D.3. Population projections conditional on net migration a. Population projections conditional on net b. Ratio of population over 65 conditional on net migration migration Millions of people, annual Percent, annual 130 45 43 0 Annual Net Migrant Flows 120 41 100k 110 39 163k (Baseline) 37 250k 100 0 Annual Net Migrant Flows 500k 35 100k 750k 90 163k (Baseline) 33 250k 31 80 500k 29 750k 70 27 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070 Source: National Institute of Population and Social Security Source: National Institute of Population and Social Security Research. Research The high border openness scenario assumes an annual net migration of about 375,000 (calibrated in between the 250K and 500K scenario as provided by NIPSSR). This would be the equivalent of reducing the physical labor shortage by about 40 percent (the ratio of the 65+ population rises to only 34 percent, instead of 39 percent under the baseline projection). The more modest migration scenario assumes about 250,000 net migrants, which would be equivalent of reducing the physical labor shortage by about 20 percent (the ratio of the 65+ population rises to only 36.5 percent instead of 39 percent under the baseline projection). The shock the model uses to reflect an increase in migration is an increase in the share of unskilled foreign labor as an input in the production function. Migration can come from anywhere in the world, but the model uses the Philippines as a conceptual emigrating country in the three-region setup. The Philippines is chosen to take advantage of the population pyramid dynamics, as in other prospective sources of migrants in the region. The increase in the labor force helps offset the decline in GDP relative to the baseline aging scenario. The larger tax base improves government revenue along with the higher level of GDP, reducing the public debt-to-GDP ratio. Moreover, because the migration policy targets unskilled workers used for inputs into the elder care sector, it importantly reduces the pressure on the relative wages in the nontraded sector and improves the second-order effects on overall productivity from the misallocation of resources caused by acute labor shortages. However, an increase in the aggregate supply of the economy in the short term would possibly need some fiscal demand management if monetary policy was at the effective lower bound (ELB). Credibility has an important impact on the efficacy of the policy reforms that are announced, as Colacelli and Corugedo (2018) highlight. For instance, a fully credible migration policy allows firms and households to react to an expected increase in potential output and respond accordingly today, instead of waiting for the policy to unfold over time. Under these circumstances, firms respond by increasing investment to build up the capital stock required to accommodate the rise in the labor force. At the same time, households increase their consumption because of the expected permanent increase in income. The combination of factors increases the policy space for monetary policy because the nominal interest rate does not need to decline by as much in the baseline. Another scenario examines where the more modest migration scenario is delayed by 10 years. The key difference in these scenarios is that the macroeconomic benefits of migration are not felt in the first 115 decade and generate minor labor shortages in the elder care sector during that time. However, that is not to say that authorities should procrastinate without incurring any costs. Delaying a ramp-up in immigration, especially given the time it can take for migrants to integrate, risks the formation of acute labor shortages, creating bottlenecks and a sharp increase in the relative wages in the nontraded sector in successive decades. This would reduce GDP and constrain the ability of policy to respond to shocks. The delay scenario assumes migration ramps up in successive decades consistent with the modest migration scenario; however, the speed in which migration can catch up could be overly optimistic. The main impact from the perspective of the country of origin (the Philippines) under the migration scenario is reflected in higher remittances, which boost output mainly through higher consumption (Figure D.4). Typically, remittances are treated as an added source of household income that is used to raise overall consumption. How much is spent on consumption is uncertain, but about 75 percent is the best estimate (Ponsot et al. 2017). This level is reflected in the main migration scenario for the Philippines. The base case scenario assumes that it is predominantly low-skilled workers who migrate. However, the model also considers an alternative of a mix of low- and high-skilled workers (67 percent and 33 percent, respectively). In this scenario, high-skilled workers can earn more in Japan relative to their low-skilled counterparts; thus, the amount of the remittances is larger in the alternative, despite factoring in that high-skilled workers tend to send a lower percentage of their income home than their low-skilled counterparts. Figure D.4. Migration scenarios and the effect of remittances on the origin country (the Philippines) Source: World Bank, original modeling for this publication. An alternative scenario is constructed so that a larger share of remittances is invested into education rather than consumption (50/50). This can happen naturally as the country of origin uses remittances to raise overall living standards, which in turn leads to a shift in preferences toward higher levels of education. Of course, policies could also be made to encourage higher levels of investment from remittances by improving the overall investment climate in the country of origin. The returns to education begin to be felt in the second decade of the simulation and grow modestly over time, boosting potential output. To round out the different migration scenarios, another scenario considers the example where Japanese retirees temporarily relocate to the Philippines (Figure D.5). In this scenario, a stock of about 1 million 116 Japanese relocate to the Philippines for about 10 years before returning home. This could potentially help stabilize the elderly care system in Japan, with the Philippines providing health services. For the Philippines to accommodate an increase in Japanese retirees requires an increase in foreign direct investment (FDI) to build capacity to take care of an increase in elderly population. This would include retirement villages and recreational facilities tailored to Japanese standards and culture, ensuring a seamless integration of the retirees to the Philippines. The Philippines eventually benefit from a small permanent increase to potential output from stronger economic integration with Japan and greater tax income for the government. Figure D.5. Migration scenarios and the effect of Japan retirees temporarily moving to the Philippines Source: World Bank, original modeling for this publication. Foreign direct investment FDI has been identified as another potential source that Japan can exploit to help support its demographic problem. Japan has very low FDI assets outside Japan and liabilities inside Japan relative to other G7 countries. Furthermore, Japan also experiences exceptionally high rates of return on its FDI, a simple calculation using OECD data show rates of return of about 6-7 percent across different industries (Figure D.6). Colacelli et al. (2021) also calculate high return rates and argue that the higher yields for Japan (1 percentage point) could be a result of its favorable geographical allocation of FDI into high-growth emerging markets in Asia. This argument seems plausible. Thus, the model considers emerging Asia to be a continuing source of this type of investment moving forward. 117 Figure D.6. Japan’s high rates of return on foreign direct investment (across industries) Rate of return on FDI income/FDI position Percent, annual Auto Manufacturing Ex-Auto Services 14 14 12 12 10 10 8 8 6 6 4 4 2017 2018 2019 2020 2021 Source: Organisation for Economic Co-operation and Development (OECD). The FDI scenario assumes that Japan raises its FDI share of its net foreign asset position from 67 percent to 72 percent and receives the high rates of return it has experienced in the past (Figure D.7). The scenario captures the dynamics of Japan raising its FDI position in a country like the Philippines and establishing a production hub and recouping the high rates of return. Some of the output will flow back to Japan in the form of imported goods and services. In the case of the elder care sector, the sector could eventually exploit a similar type of setup, where the increasing importance of artificial intelligence (AI), robotics, and remote monitoring in health care could conceivably be partially outsourced abroad. This type of organization would likely be attractive and help get around some of the barriers in cultural integration such as language that have prevented more migration into Japan up until this point. Therefore, in this type of scenario, increasing FDI in a foreign country could conceivably reduce the pressure on labor markets in the home country via direct outsourcing as well as higher productivity gains from abroad. Some important dynamics to consider are that output remains relatively unchanged and domestic investment declines in the short term relative to the baseline aging scenario, while the relative interest rate rises in response to an increase in capital outflow. Figure D.7. Illustrative FDI scenario Source: World Bank, original modeling for this publication. 118 Technology Evidence on the impact of technology on the labor market is mixed, but the model assumes that technology will be labor-augmenting or labor-saving. Acemoglu and Restrepo (2017) provide some evidence that suggests there is a trade-off between the increased use of robots and a reduction in employment. However, a cross-country study done by Graetz and Michaels (2015) finds that increased adoption of robots help raise average growth rates by about 0.4 percent, while increasing labor wages and total factor productivity. The technology scenario mainly assumes there is an elasticity of substitution of low-skilled workers, with technological advances that have labor-augmenting or labor-saving qualities. The scenario plausibly assumes that the elasticity of substitution of technology increases productivity by 0.4 percentage points, reflecting the more optimistic analysis on the topic (Figure D.8). In particular, the scenario focuses on taking care of the elderly as a function of technology assisting health care workers. It draws on current examples of robots helping nurses save as much as 25 percent of their day-to-day tasks by ushering patients through the hospital and delivering medication (Min, 2023). These are the types of innovations that should not replace nurses but support their tasks. The “hidden” role that family members have in taking care of the elderly must also be recognized, and thus how technology could also be utilized to help the efficiency of high-skilled workers in this task should be considered. The adoption of new technology is assumed to require specific investment; therefore, investment rises relative to the aging baseline scenario and contributes to lowering the price of the unskilled bundle. The final impact on the relative wage of unskilled labor could be ambiguous. The balance between productivity enhancing effects and task replacing effects is achieved by the choice of elasticity of substitution between unskilled labor and unskilled capital. In the scenario, the targeted investment for the deployment of technologies in the elder care sector help alleviate pressure on physical labor shortages and thus reduce the relative wages in the elder care sector relative to the aging baseline scenario. Of course, new technology connected to facilitators like AI that require new capital should provide an opportunity to replace the excess housing stock with more productive infrastructure such as data centers. However, increases in technological advancements do not have nearly as large an impact on protecting housing- related wealth as in the migration scenario. Figure D.8. Illustrative technology scenario Source: World Bank, original modeling for this publication. 119 References Acemoglu, D. and P. Restrepo, 2017, “Robots and Jobs: Evidence from U.S. Labor Markets,” NBER Working Paper No. 23285. Colacelli, M., & Corugedo, E. F. (2018). Macroeconomic effects of Japan’s demographics: can structural reforms reverse them?. International Monetary Fund. Colacelli, M., Gautam, D., & Rebillard, C. (2021). Japan’s Foreign Assets and Liabilities: Implications for the External Accounts. International Monetary Fund. Hashimoto, Y., Hong, G. H., & Zhang, X. (2020). Demographics and the housing market: Japan's disappearing cities. Kumhof, M. M., Muir, M. D., Mursula, S., & Laxton, M. D. (2010). The global integrated monetary and fiscal model (GIMF)–theoretical structure. International Monetary Fund. Min, A.C. (2023). Three robot musketeers join Changi General Hospital, providing needed relief for nurses. https://www.straitstimes.com/singapore/three-robot-musketeers-join-changi-general-hospital- providing-needed-relief-for-nurses Ponsot, F., Vásquez, B., Terry, D., & de Vasconcelos, P. (2017). Sending Money Home: Contributing to the SDGs, one family at a time. Report to the International Fund for Agricultural Development (June). Graetz, G. and G. Michaels, 2015, “Robots at Work,” CEP Discussion Paper No. 1335. Uto, M., Nakagawa, M., & Buhnik, S. (2023). Effects of housing asset deflation on shrinking cities: A case of the Tokyo metropolitan area. Cities, 132, 104062. 120 Appendix 5. Major origin and destination economies in EAP Table A - 9: Major EAP origin countries by EAP destination (Share in the total immigrants, %) Origin countries Destination Cambodia China Indonesia Lao PDR Malaysia Myanmar Philippines Viet Nam Australia 24 6 10 10 Hong Kong, China 85 5 4 Japan 39 3 14 17 Korea 4 57 5 13 Malaysia 62 18 6 New Zealand 24 12 Singapore 23 9 61 Thailand 19 2 26 52 Source: WDR 2023 Migration Database Table A - 10: Major destinations by EAP origin countries (Share of emigration in destination, %) Upper middle Origin High income Lower middle income income Lao PDR China Indonesia Cambodia Thailand Viet Nam Japan Singapore Philippines Timor-Leste Korea Australia Malaysia Samoa New Zealand Destination Australia 5 6 77 18 9 8 4 1 5 29 28 8 Bangladesh 3 11 7 Canada 5 7 1 9 1 11 5 Indonesia 7 60 Japan 20 7 10 Malaysia 26 27 New Zealand 15 55 Saudi Arabia 37 10 Singapore 1 3 61 5 Korea 8 15 5 Thailand 64 75 UK 23 11 15 4 7 USA 20 54 49 5 12 21 4 26 14 15 34 12 42 Source: WDR 2023 Migration Database 121 Appendix 6. Country pages Australia Immigration in 2020 (foreign nationals) : 2,829,195 11.0% of population Emigration in 2020 (foreign-born) : 603,990 2.4% of population Growth in net immigration 2000-2020 (foreign-born) : +76.5% Remittance inflows in 2000 (US$ million) : 518 0.1% of GDP Remittance inflows in 2023 (US$ million) : 1,656 0.1% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) Selected immigration schemes Low-skilled schemes : Temporary Work (International Relations) visa (subclass 403) Pacific Australia Labour Mobility Stream High-skilled schemes : Skilled Employer Sponsored Regional (Provisional), Skilled Regional (Provisional), Skilled Work Regional (Provisional), Temporary Skill Shortage, Temporary Graduate, Temporary Work (Short Stay Specialist) 122 Brunei Darussalam Immigration in 2020 (foreign nationals) : 111,963 25.6% of population Emigration in 2020 (foreign-born) : 46,246 10.6% of population Growth in net immigration 2000-2020 (foreign-born) : +82.3% Remittance inflows in 2000 (US$ million) : - - Remittance inflows in 2023 (US$ million) : 2 0.01% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 123 Cambodia Immigration in 2020 (foreign nationals) : 79,342 0.5% of population Emigration in 2020 (foreign-born) : 1,087,198 6.5% of population Growth in net immigration 2000-2020 (foreign-born) : -221.6% Remittance inflows in 2000 (US$ million) : 103 2.8% of GDP Remittance inflows in 2023 (US$ million) : 2,800 6.7% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 124 China Immigration in 2020 (foreign nationals) : 811,199 0.1% of population Emigration in 2020 (foreign-born) : 10,697,951 0.8% of population Growth in net immigration 2000-2020 (foreign-born) : -61.4% Remittance inflows in 2000 (US$ million) : 758 0.1% of GDP Remittance inflows in 2023 (US$ million) : 49,500 0.3% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 125 Fiji Immigration in 2020 (foreign nationals) : 14,082 1.6% of population Emigration in 2020 (foreign-born) : 227,023 25.3% of population Growth in net immigration 2000-2020 (foreign-born) : -70.5% Remittance inflows in 2000 (US$ million) : 43 2.4% of GDP Remittance inflows in 2023 (US$ million) : 500 9.1% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 126 Hong Kong SAR, China Immigration in 2020 (foreign nationals) : 479,631 6.4% of population Emigration in 2020 (foreign-born) : 1,072,196 14.3% of population Growth in net immigration 2000-2020 (foreign-born) : -3.3% Remittance inflows in 2000 (US$ million) : 136 0.1% of GDP Remittance inflows in 2023 (US$ million) : 408 0.1% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 127 Indonesia Immigration in 2020 (foreign nationals) : 355,509 0.1% of population Emigration in 2020 (foreign-born) : 4,579,897 1.7% of population Growth in net immigration 2000-2020 (foreign-born) : -80.9% Remittance inflows in 2000 (US$ million) : 1,190 0.7% of GDP Remittance inflows in 2023 (US$ million) : 11,000 0.8% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Note: The number of immigrants from Thailand is the same as that from Singapore and Timor-Leste. Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 128 Japan Immigration in 2020 (foreign nationals) : 2,242,698 1.8% of population Emigration in 2020 (foreign-born) : 1,040,655 0.8% of population Growth in net immigration 2000-2020 (foreign-born) : +86.2% Remittance inflows in 2000 (US$ million) : 773 0.02% of GDP Remittance inflows in 2023 (US$ million) : 5,485 0.1% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) Selected immigration schemes Low-skilled schemes : Specified Skilled Worker (i)/(ii) High-skilled schemes : Highly Skilled Professional Visa, Working Visa, Working Visa (Skilled Labor), J-Skip 129 Kiribati Immigration in 2020 (foreign nationals) : 3,125 2.6% of population Emigration in 2020 (foreign-born) : 5,430 4.5% of population Growth in net immigration 2000-2020 (foreign-born) : - Remittance inflows in 2000 (US$ million) : - - Remittance inflows in 2023 (US$ million) : 15 5.4% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 130 Republic of Korea Immigration in 2020 (foreign nationals) : 1,528,182 2.9% of population Emigration in 2020 (foreign-born) : 2,288,936 4.4% of population Growth in net immigration 2000-2020 (foreign-born) : +67.3% Remittance inflows in 2000 (US$ million) : 4,524 0.8% of GDP Remittance inflows in 2023 (US$ million) : 7,939 0.5% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) Selected immigration schemes Low-skilled schemes : Non-professional employment visa (E-9) High-skilled schemes : Professionals, including Professor (E-1), Foreign Language Instructor (E-2), Researcher (E-3), Technical Instructor/Technician (E-4), Professional (E-5), Cultural and Sports (E-6), Designated Professionals (E-7) 131 Lao PDR Immigration in 2020 (foreign nationals) : 48,732 0.7% of population Emigration in 2020 (foreign-born) : 1,253,242 17.2% of population Growth in net immigration 2000-2020 (foreign-born) : -89.1% Remittance inflows in 2000 (US$ million) : 1 0.04% of GDP Remittance inflows in 2023 (US$ million) : 225 1.5% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 132 Macao/Macau SAR, China Immigration in 2020 (foreign nationals) : 80,411 12.4% of population Emigration in 2020 (foreign-born) : 144,831 22.3% of population Growth in net immigration 2000-2020 (foreign-born) : +105.3% Remittance inflows in 2000 (US$ million) : - - Remittance inflows in 2023 (US$ million) : 90 0.2% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 133 Malaysia Immigration in 2020 (foreign nationals) : 3,476,562 10.7% of population Emigration in 2020 (foreign-born) : 1,864,037 5.8% of population Growth in net immigration 2000-2020 (foreign-born) : +857.0% Remittance inflows in 2000 (US$ million) : 342 0.3% of GDP Remittance inflows in 2023 (US$ million) : 1,750 0.4% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) Selected immigration schemes Low-skilled schemes : Visitor’s Pass (Temporary Employment) High-skilled schemes : Employment Pass (Category I and II), Residence Pass-Talent (RP- T) 134 Marshall Islands Immigration in 2020 (foreign nationals) : 3,297 7.6% of population Emigration in 2020 (foreign-born) : 28,382 65.4% of population Growth in net immigration 2000-2020 (foreign-born) : - Remittance inflows in 2000 (US$ million) : - - Remittance inflows in 2023 (US$ million) : 30 10.6% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 135 Micronesia, Fed. Sts. Immigration in 2020 (foreign nationals) : 2,830 2.5% of population Emigration in 2020 (foreign-born) : 35,092 30.5% of population Growth in net immigration 2000-2020 (foreign-born) : +40.0% Remittance inflows in 2000 (US$ million) : - - Remittance inflows in 2023 (US$ million) : 23 5.1% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 136 Mongolia Immigration in 2020 (foreign nationals) : 21,348 0.7% of population Emigration in 2020 (foreign-born) : 87,693 2.7% of population Growth in net immigration 2000-2020 (foreign-born) : -114.9% Remittance inflows in 2000 (US$ million) : 1 0.1% of GDP Remittance inflows in 2023 (US$ million) : 440 2.2% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 137 Myanmar Immigration in 2020 (foreign nationals) : 66,595 0.1% of population Emigration in 2020 (foreign-born) : 3,703,008 6.8% of population Growth in net immigration 2000-2020 (foreign-born) : -214.8% Remittance inflows in 2000 (US$ million) : 102 1.4% of GDP Remittance inflows in 2023 (US$ million) : 1,500 2.3% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 138 Nauru Immigration in 2020 (foreign nationals) : 2,202 17.9% of population Emigration in 2020 (foreign-born) : 2,401 19.5% of population Growth in net immigration 2000-2020 (foreign-born) : - Remittance inflows in 2000 (US$ million) : - - Remittance inflows in 2023 (US$ million) : - - Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 139 New Zealand Immigration in 2020 (foreign nationals) : 495,732 9.7% of population Emigration in 2020 (foreign-born) : 739,566 14.5% of population Growth in net immigration 2000-2020 (foreign-born) : +259.3% Remittance inflows in 2000 (US$ million) : 215 0.4% of GDP Remittance inflows in 2023 (US$ million) : 617 0.2% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) Selected immigration schemes Low-skilled schemes : Recognised Seasonal Employer Limited Visa High-skilled schemes : Post Study Work Visa 140 Palau Immigration in 2020 (foreign nationals) : 5,087 28.3% of population Emigration in 2020 (foreign-born) : 437 2.4% of population Growth in net immigration 2000-2020 (foreign-born) : - Remittance inflows in 2000 (US$ million) : - - Remittance inflows in 2023 (US$ million) : 1 0.4% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 141 Papua New Guinea Immigration in 2020 (foreign nationals) : 31,069 0.3% of population Emigration in 2020 (foreign-born) : 3,120 0.03% of population Growth in net immigration 2000-2020 (foreign-born) : +263.7% Remittance inflows in 2000 (US$ million) : - - Remittance inflows in 2023 (US$ million) : 3 0.01% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 142 The Philippines Immigration in 2020 (foreign nationals) : 186,541 0.2% of population Emigration in 2020 (foreign-born) : 6,226,195 5.7% of population Growth in net immigration 2000-2020 (foreign-born) : -647.4% Remittance inflows in 2000 (US$ million) : 6,924 8.3% of GDP Remittance inflows in 2023 (US$ million) : 40,000 9.2% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 143 Samoa Immigration in 2020 (foreign nationals) : 4,024 2.0% of population Emigration in 2020 (foreign-born) : 105,275 53.1% of population Growth in net immigration 2000-2020 (foreign-born) : -11.1% Remittance inflows in 2000 (US$ million) : - - Remittance inflows in 2023 (US$ million) : 300 32.1% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 144 Singapore Immigration in 2020 (foreign nationals) : 2,183,765 38.4% of population Emigration in 2020 (foreign-born) : 355,211 6.2% of population Growth in net immigration 2000-2020 (foreign-born) : +114.7% Remittance inflows in 2000 (US$ million) : - - Remittance inflows in 2023 (US$ million) : - - Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) Selected immigration schemes Low-skilled schemes : Work Permit for Migrant Worker/Migrant Domestic Worker High-skilled schemes : Employment Pass, S Pass, Personalised Employment Pass, Overseas Networks & Expertise Pass (ONE), Tech Pass 145 Solomon Islands Immigration in 2020 (foreign nationals) : 2,520 0.4% of population Emigration in 2020 (foreign-born) : 4,082 0.6% of population Growth in net immigration 2000-2020 (foreign-born) : -119.7% Remittance inflows in 2000 (US$ million) : 4 1.0% of GDP Remittance inflows in 2023 (US$ million) : 85 5.2% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 146 Thailand Immigration in 2020 (foreign nationals) : 3,632,496 5.2% of population Emigration in 2020 (foreign-born) : 1,089,862 1.6% of population Growth in net immigration 2000-2020 (foreign-born) : +209.4% Remittance inflows in 2000 (US$ million) : 1,697 1.3% of GDP Remittance inflows in 2023 (US$ million) : 9,800 1.9% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) Selected immigration schemes Low-skilled schemes : Section 64 Border Pass High-skilled schemes : SMART – Talent/Executive, Long-Term Resident (LTR) – Highly- skilled Professional/Remote Worker 147 Timor-Leste Immigration in 2020 (foreign nationals) : 8,401 0.6% of population Emigration in 2020 (foreign-born) : 39,577 3.0% of population Growth in net immigration 2000-2020 (foreign-born) : +80.2% Remittance inflows in 2000 (US$ million) : - - Remittance inflows in 2023 (US$ million) : 200 8.6% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 148 Tonga Immigration in 2020 (foreign nationals) : 3,742 3.5% of population Emigration in 2020 (foreign-born) : 61,413 58.1% of population Growth in net immigration 2000-2020 (foreign-born) : -23.6% Remittance inflows in 2000 (US$ million) : - - Remittance inflows in 2023 (US$ million) : 222 40.6% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 149 Tuvalu Immigration in 2020 (foreign nationals) : 240 2.2% of population Emigration in 2020 (foreign-born) : 4,051 36.6% of population Growth in net immigration 2000-2020 (foreign-born) : - Remittance inflows in 2000 (US$ million) : - - Remittance inflows in 2023 (US$ million) : 3 4.8% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 150 Vanuatu Immigration in 2020 (foreign nationals) : 3,254 1.1% of population Emigration in 2020 (foreign-born) : 2,116 0.7% of population Growth in net immigration 2000-2020 (foreign-born) : +120.2% Remittance inflows in 2000 (US$ million) : 14 5.0% of GDP Remittance inflows in 2023 (US$ million) : 177 15.1% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 151 Viet Nam Immigration in 2020 (foreign nationals) : 76,768 0.1% of population Emigration in 2020 (foreign-born) : 3,306,223 3.4% of population Growth in net immigration 2000-2020 (foreign-born) : -46.1% Remittance inflows in 2000 (US$ million) : 1,585 4.0% of GDP Remittance inflows in 2023 (US$ million) : 14,000 3.2% of GDP Top five origin countries, 2020 Top five destination countries, 2020 Number of foreign-born migrants, 2000-2020 Predicted old-age dependency ratio [65+/15-64], 2022-2100 (%) 152