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2009/HRDWG31/065 Item: LSPN

Professional Recognition: An Instrument for

Promoting Labor Mobility During a Global Economic Crisis

Purpose: Information

Submitted by: Philippines

31st Human Resources Development Working Group Meeting

Chicago, United States 22-25 June 2009

6/18/2009

1

Professional Recognition

and Labor Mobility:

Enablers to help overcome the

Global Economic Crisis

Presented by the Philippines APEC Group Undersecretary Mona D. Valisno, PhDPresidential Assistant for Education

Office of the President of the Republic of the Philippines

PECC-ABAC 2008 Report:A Recap (1)

• Labor mobility has the potential to facilitate mutually beneficial outcomes– Sending countries avail of remittances as well as skills and knowledge through circulatory migration

– Receiving countries have alternative ways of coping with demographic changes in aging populations

– Employers in developed countries can address skill shortages in the domestic labor force

– Economic migrants broaden their employment opportunities to a global labor market

• APEC member countries can benefit from an open discussion of the issues involved

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PECC-ABAC 2008 Report:A Recap (2)

• Demographic shifts, economic disparities, finer segmentation of labor markets, expanding social networks and technological change will remain drivers of labor mobility in spite of the current turmoil

• Regional economies should respond through smart policies to anticipate future needs, minimize negative adjustments, and maximize future benefits

• The search for talent is now becoming global in nature

– An Economist Intelligence Unit (EIU) survey of 1,006 global CEOs highlights the lack of available local talent as the greatest barrier to growing businesses in both emerging and developed markets (cited by 51% or respondents)

– A Manpower survey of 39,000 employers worldwide conducted in the first quarter of 2009 finds 30% of employers still have trouble filling jobs despite the ongoing economic slowdown

PECC-ABAC 2008 Report:A Recap (3)

• However, sociopolitical problems can set back trade in services

– Governments can make the costs in hiring international workers prohibitively high and in so doing negate net benefits from migration

– Migrants may not be adequately protected from exploitation or discrimination in both sending and receiving countries

– Support can be lacking in smoothing out migrants’ integration process into their new surroundings

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Ongoing Global Slowdown is a Challenging Time for Labor Mobility• Periods of economic decline have, in the past, diminished work opportunities abroad such as the Great Depression– World Bank estimates 93% of migration is economic in nature

• Once more, preliminary evidence suggests declining migration (data takes time to collect)– The Wall Street Journal calls it “The Great U-Turn” (6/6/09)– ILO expects retrenchment in cyclical sensitive jobs: construction, finance, export manufacturing and tourism

– World Bank predicts remittances will fall by 5-8% in 2009—the first annual decline since 1986

• Policies detrimental to labor mobility may exacerbate this situation by discouraging would-be migrants – Asking local firms to lay off foreign before native workers– Lowering caps on the intake of migrants – Discouraging firms that recruit internationally from availing of government support

Changing Times Require Changing Attitudes Towards Labor Mobility

• Fundamental realities have not changed– Demographic trends identified in the 2008 PECC/ABAC report prevail • For instance, those 75 or older will increase as a percentage of APEC populations, while those in the crucial 15-24 young adult range will decrease

– The IMF (2009) estimates the fiscal cost of aging populations to be ten times that of dealing with the financial crisis for developed countries• In this sense, the financial crisis is a precursor to far more drastic changes to the fiscal situations of developed countries

• Labor mobility can play a role in the inevitable adjustment process

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Can Professional Recognition Hasten the Recovery Process?

• Communicating the needs of employers in destination countries better to would-be economic migrants is beneficial to both parties– Gaining relevant skills is a long and costly process, especially to those from LDCs; accurately perceiving signals from the global labor market can help them make career decisions

– Also, educators can better align their curricula to meet emerging global standards

• Professional recognition is part of the solution– In economic-speak, “adverse selection” of unqualified persons is mitigated by having verifiable credentials

– The productivity and competitiveness of enterprises is reduced by being unable to identify and tap the competencies of internationally mobile workers

– Meanwhile, unfamiliarity with the competencies of developing countries’ workforces is a disincentive to investment

Mutual Recognition Agreements (MRAs) and Labor Mobility

• Article VII of the WTO General Agreement on Trade in Services (GATS) concerns recognition in facilitating services trade– It would particularly benefit Mode IV migration or “Movement of Natural Persons” by making credential portable across borders

• However, WTO negotiations under the Doha Round remain stalled, in part over differences on Mode IV– Sending countries see it is a free trade issue, while receiving countries see it as a migration issue outside the remit of trade negotiations

• MRA negotiations have thus moved to regional fora – APEC has MRAs for engineering and architecture

– ASEAN, with 7 of its 10 members in APEC, has a mandate to implement seven MRAs in time for its single market in 2015

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Labor Mutual Recognition Agreements: Some Definitions

• Are “agreements between two or more parties to mutually recognize or accept some or all aspects of one another’s conformity assessment results”

• Labor MRAs typically have educational (such as degrees attained) and professional (years of practice) requirements

• Harmonization involves determining a standard to apply to all with respect to these requirements

• Meanwhile, benchmarking determines how countries relate to each other in light of these requirements

• Comparability is key in making it possible to fairly and accurately benchmark different countries’ standards– Transparency enables cross-country evaluation

A Continuum of Labor Mobility and Recognition

Labor Mobility Without Mutual Recognition

Countries

subject foreign

nationals to

their own

licensing

regimes such

as local board

exams

� Labor Mobility With Recognition via Harmonization

Member countries agree on core requirements in the process of benchmarking qualifications

Labor Mobility With Automatic Recognition

Unlikely case

where member

countries do

not harmonize

licensing

regimes and

grant license by

endorsement

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Establishing Comparability of Educational Attainments

• What meaningful similarities and differences do conferred degrees have in member countries?

• Arriving at core curricular content is advisable to minimize foreseeable barriers among professionals wishing to practice regionally

• Development of standard areas of practice is desirable– For example, nurses’ knowledge of medical, surgical, maternity, pediatric, and psychiatric care needs to be decided, as much as possible, to establish a common frame of reference

• Creates a benchmark to be followed by all prior to turning to specializations

Licensure or Board Exams

• Receiving a relevant degree suffices as grounds for licensure in some countries, while others require passing a board examination

• Difficulties arise in establishing comparability when passing board exams is necessary for practice in some countries but not in others

• Once more determining core qualifications is key

• The principle of subsidiarity can apply in these instances by bringing to the regional level issues left unresolved at the national level

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Licensure or Board Exams (2)

• Analyzing what existing exams reveal about acquired skills lends options to countries that still need to administer board exams in line with others’ practices

• Setting benchmark criteria comes into play

– Option 1: Set it to regional best practice (e.g., Singapore in Southeast Asia) and ask those coming up short to compensate by undergoing additional training or examination to achieve this standard

– Option 2: Set it to the regional median

– Option 3: Adopt an international standard instead of developing a pan-regional testing regime

Licensing and Qualifications

Outside of the context of mutual recognition agreements, many globally-recognized credentials are bestowed by Western-based organizations and administered by similar testing services (e.g., ETS, Prometric, or Pearson VUE)– Cost is then a barrier, especially for test-takers from LDCs

• First, a potential workaround is to negotiate “bulk discounts” for international test-takers by guaranteeing a number of test takers in a given year

• Second, collaboratively developing region-wide exams drawing on APEC’s collective expertise in test design and measurement can mitigate concerns about cost as well as specificity to industrialized country needs– Solutions to the global economic crisis regularly mention the need to promote consumption among Asian countries

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The Philippines, Migration, and Global Economic Slowdown

• So far, Philippine migration has held up– 2008 was a record year for deployments (1,376,823) and remittances ($16.4B) despite outbreak of crisis

– RP remittances have not declined during the first three months of 2009, contrary to expectations of banks (Citigroup, HSBC, RBS) & IFIs (IMF, W. Bank)

– At present rates, deployments and remittances should post a modest increase in 2009

• Upskilling of migrants has been a national policy objective since 1995; observed benefits include:– Enhanced marketability of skilled workers – Greater protection by working in regularized trades– More find work in fields where international demand remains robust despite downturn such as health care

Over 1/3 of Overseas Filipino Workers Now Going Abroad are College Graduates - The Largest Percentage Share by Educational Attainment

0

5

10

15

20

25

30

35

40

45

1988

1990

1992

1994

1996

1998

2000

2002

2004

College Graduate

Some College

High School Graduateor Some High School

Elementary SchoolGraduate or Lower

Data from Ducanes and Abella (2008)

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Possible Philippine Initiatives in Implementing MRAs

• Complete mapping of fellow ASEAN members’ requirements to practice in MRA professions: medicine, nursing, dentistry, accountancy, surveying, engineering, and architecture (10 countries x 7 professions) – The same can be done for APEC engineering and architecture MRAs together with proposals in medicine, technical and vocational education and training (TVET)

– Implementation matters more after signing these agreements

• Facilitate meeting of various countries’ licensing authorities to discuss harmonization of core requirements based on the results of this exercise– Discuss how to establish equivalence enabling regional practice

– Psychometricians in each country can work together in establishing equivalency of testing regimes such as equating difficulty levels of examinations

In the End, We are All on the Same Boat Regarding Migration

• The Philippines offers skilled workers fluent in the world’s lingua franca (English), but it can only help so much when confronted with confusing market signals– Policies favoring short-term expediency and ignoring long-term demographic trends at the domestic and international levels can distort supply-and-demand relationships in the global labor market to the benefit of no one in particular

• Foreign employers can signal their hiring intentions more clearly to prospective migrants by establishing what skills they require

• In response, migrants can more accurately tailor their skills to grasp these opportunities, while educators adjust accordingly

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Thank You!