Asean Economic Community

AEC Wishlist: Don't let migration hurt inclusion -

BANGKOK • A key feature of the just-launched Asean Economic Community (AEC) is greater mobility of workers in eight skilled professions. Meanwhile, a major challenge facing the international development community is how to confront widening income inequality.

That prompts the question of whether greater skills mobility within Asean is an inclusive type of economic integration - that is, integration that contributes to a reduction in income or wealth inequality. There are at least two major reasons why greater skills mobility can lead to greater inclusivity and lower inequality:

First, it strengthens the bargaining power of people relative to firms. Second, the skill mobility agreement also helps to level the playing field for small and medium-sized enterprises (SMEs) relative to large firms.

On the other hand, there is the risk that greater skills mobility can increase inequality and reduce inclusion.

Precisely because mobility enhances the skill premium for professionals, it could widen the income gap between high-skilled and lower-skilled workers, resulting in worsening inequality. Is this a big risk? It depends. 

Complementary reforms by governments are needed to ensure that the economic integration is truly of the more inclusive type.


A version of this article appeared in the print edition of The Straits Times on March 26, 2016, with the headline 'Don't let migration hurt inclusion'. Print Edition | Subscribe