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Impacts of Neoliberal Labor
Market Reforms to Migrant Workers

Local supporters from Taiwan present in a drama the plight of Thai workers under their repressive employers and brokers.
Local supporters from Taiwan present in a
drama the plight of Thai workers under their
repressive employers and brokers.

A Paper Contribution of Mr. Ramon Bultron, Managing Director of the Asia-Pacific Mission for Migrants (APMM), to the Jobs and Justice Conference

Dec 7-8, Cebu, Philippines

The steady pace of neoliberal restructuring of labor markets both in the industrialized North and the underdeveloped South has created huge problems for both local and migrant workers. In the name of “flexibility”, many of the mandatory labor standards—those won by the unrelenting struggle of the working class for the past century—are being disregarded. As a result, the local workers face unprecedented attacks on their wages, job security, and democratic rights. More so, the migrant workers arguably experience far worse and exploitative conditions. In sum, the collective rights of both local and migrant labor are being eroded and their slavery under “freer operations of capital” is becoming more severe.

Dictated by the precepts of neoliberal globalization, the recent labor market reforms have produced joblessness, “race to the bottom” wages, loss of social benefits, contractualization, de-unionization, and the undermining of workers solidarity and collective action. These miseries brought upon workers are unparalleled our history. Conditions of migrant workers in the Asia-Pacific region follow the same worsening path as the labor and immigration policies of the host countries. As the host government policies on labor importation and immigration become stricter and more exploitative, so does the general situation of migrant workers become harsher. In fact, these official policies further engender corollary problems that make the life and daily struggle of migrant workers more difficult to bear.

To follow are some of the major policy trends in labor and immigration laws from Korea, Hong Kong, Taiwan, United Arab Emirates and Australia that describe how labor flexibility have promoted the unrestrained assault on their wages, job security, work conditions, social benefits and democratic rights.

The Trainee System and Employment Permit System in Korea

In the interest of profit, labor flexibility took shape in Korea in the form of the Trainee System and the Employment permit system.

The Industrial and Technical Training System (ITTS) for foreign workers was launched following the Japanese model. According to the program, the imported foreign workers would enter Korea as trainees and not as workers. Although their visa status is “trainee” they actually work in factories without training and are regarded as “disguised workers”. The migrants are denied of the worker’s three basic rights of unionizing, collective bargaining and collective action.

A classic example is the SEWON trainees (Documented case handled by KASAMMA-KO, the Alliance of Filipino migrant communities in Korea in June 2001). They were full-time workers in the Philippines before they were sent to Korea by an affiliate to receive “training” in Korea. They were supposed to remain as employees of the company in the Philippines. The company submitted all the necessary requirements to government agencies in Manila in order to be allowed to send the trainees.

But before the workers departed from the Philippines, they were asked by their employers to resign. And as soon as they arrived in Korea, they were again asked to sign a new contract under the Korean company. Because of the difficulties and the unfair working conditions, they decided to run away and become undocumented.

The most recent case in 2006 is of the four Filipino trainees working at Myeong Kyeong Co., Kyonggi province (South from Seoul), where they were forced to work under long working hours and dangerous and harsh conditions. In many cases, their overtime compensation was reduced despite their long working hours. (See APMM News Digest-November 2006).

The trainee system in itself is a system of modern-day slavery. If the workers’ rights are violated, any collective action will result to immediate repatriation or termination of contract. In addition, if they too ask assistance from any third party entity (NGO, churches, migrant centers) other than the recruitment agency that sent them to Korea, they will automatically be castigated or sent back to the Philippines.

Workers under the Industrial Technical Trainee System (ITTS) suffer many difficulties and human rights violation such as low wages, compulsory overtime and working during holidays, long working hours, intermediary exploitation of agencies, passport seizure of their employers, forced savings, verbal and physical abuse. Undocumented workers on the other hand are even more prone to abuse and difficulties such as non-payment of salary, and they are not entitled to insurance and protection whenever they experience industrial accidents.

The Trainee System in Korea is an exploitative system used by the Korean government to deprive migrants of their rights and privileges as workers. It breeds undocumented workers due to the inhuman working conditions in the workplaces. Korea has adopted the trainee system to prevent migrant workers from becoming permanent immigrants and to control their stay in the host country.

In August 2004, the South Korea government introduced the Employment Permit System (EPS) to reduce the number of undocumented workers and while at the same time ensure the need of the Medium and small scale businesses ease their unabated labor shortages. Staring January 2007, it will replace the more than a decade-old Trainee System.

Under the EPS, migrant workers willing to work in Korea are required to learn Korean culture and language in advance, and are permitted to work here for up to three years. They are entitled to enjoy the “same treatment” as local employees, including the right to organize, benefit from industrial accident insurance, and a guarantee of minimum wages.

However, there is no guarantee that the Employment Permit System (EPS) would improve the condition of migrant workers in any dramatic way. As expected, since the implementation of EPS, the number of cases of also increased. Based on data collected from the Ministry of Labor, the number of undocumented migrant workers stood at 138,000 in 2003 but the number increased to 188,000 in 2004 when the EPS was implemented. Although the number slightly decreased to 180,792 last year, it has increased again to 189,220 as of June of this year.

The Korean government is planning to allow the participation of four private organizations, such as Korea Federation of Small and Medium Business, the Construction Association of Korea, the National Agricultural Cooperative Federation, and the National Federation of Fisheries Cooperative in all the processes of recruiting, distributing, and counseling migrant workers under the EPS. These industry groups have historically played a major role in violating migrant workers’ human rights and labor rights as well as retaining venal practices under Industrial Trainee System which constitute ‘modern-day slavery” for migrant workers in Korea.

The Labor Importation Scheme
and Foreign Domestic Helpers in Hong Kong

Hong Kong is now a special administrative region under the Central Government of the Peoples’ Republic of China. But even during the time of it being a colony of Britain and up to now, the policy of Hong Kong generally remains the same—free market economy, that is, let market forces decide everything. Neo-liberal policies being prescribed by giant companies through their respective governments such as the USA, Japan and UK are being implemented in Hong Kong to the fullest.

Then and now, there is no such thing in Hong Kong as minimum wage, working hours, overtime pay etc. It will always depend on the “agreement” between the employers or management of big companies and the workers.

This standard contract gave the Hong Kong government and of course the employers full control over their imported workers. This can be seen more among the foreign domestic helpers which comprise the majority of the all imported workers. The FDHs are bound by the employment contract which is very flexible. As well, they are subjected to a flexible visa policy by the Immigration Department which is called The New Conditions of Stay for Foreign Domestic Helpers or popularly known among migrants as The Two-Week Rule. The contract is so flexible as far as job security is concerned. Legally speaking, the contract is a month-to-month contract for a maximum period of two years. The termination clause in the contract can end the contract anytime and any hour of the day by either party (but mostly of course the employer is the one initiating the termination) even with the flimsiest or weirdest reason such as “I don’t like the shape of your face”.

Working hours are flexible for the contract does not stipulate any working hours. Thus the average working hours of FDHs ranges from 12-16 hours a day. In industry, this can already be considered as hazards for it hastens the deterioration of health conditions of workers from fatigue and overwork. The most glaring expression of neoliberal labor market reform is the Minimum Allowable Wage (MAW). In this scheme, the government reviews the MAW annually. They can (based on their hard to understand formula for computation) lower or increase the minimum wage of FDH. For the last five years, the monthly minimum wage was reduced three times. The last one was for HK$400 each month. At the same time the government imposed a levy to all employers for the same amount—HK$400 per month for two years or duration of the contract.

As mentioned above, the particular condition of FDH and all foreign workers of being subjected to a very stringent immigration policy to control their movement make them all the more vulnerable to exploitation because of this labor flexibility scheme.

As a matter of policy, the Immigration Department, in times of labor disputes, allows employers to hire a new FDH as a replacement. But not in the case of FDHs. They have to finish their case and more, the nature of the case and the result of it must favor the conditions to allow them to process a new contract in Hong Kong without having to go back to their country of origin.

As a matter of policy the FDH is not allowed to process a new contract in Hong Kong if the previous contract was pre-maturely terminated.

The Broker System in Taiwan

Job security is a big issue among migrant workers in Taiwan. The Council of Labor Affairs (CLA) allows migrant workers to work in the island for a maximum of 6 years. This is divided into 4 contracts of 2 years, 1 year, 2 years and another year. That is if the employer would agree to extend the contracts of his/her employee.

After the first three years in Taiwan, migrant workers who are rehired or who are still eligible to come back to work for another three years would need to exit Taiwan even for a day. This is to prevent them from qualifying to become permanent residents.

One of the most controversial features of the migrant worker policy of the Taiwanese government is the broker system. It is a bane to the migrant workers for its exploitative and oppressive nature. The broker system ensures a docile and cheap migrant work force and in a few extreme cases uses naked violence to ensure their authority. Migrant

workers are made to pay a monthly brokers’ fee (in the guise of service fees) all throughout their stay in Taiwan. This, however, is meant to ensure that their employers would have someone to “manage” them. In effect, this frees the employers especially of manufacturing and construction firms not only the cost of its management expenses but also its responsibility and accountability to the workers. In effect, the employers are passing this on to the brokers.

The CLA legalized the broker system in 2001. Before this the brokers were already in operation and imposed fees on the migrant workers in the guise of loans. In 2001, the brokers were allowed to collect monthly service fees.

Take the case of Indonesian migrant workers there. They are made to pay NT$6,703 a month for 15 months which does not include the on-site handling fees. This is paid to the placement agency based in Indonesia supposedly because the Indonesians don’t pay any placement fee in their home country and such a fee is deducted in Taiwan. This is paid through the China Trust Bank of Taiwan. Indonesian workers thus have to pay NT$160,545 as placement and brokers fees in a three year period. This is a little more than 10 months of their basic minimum wage. In effect, they only earn in the last 26 months of their stay in Taiwan that is if they are extended for another year after their first two years of work. Extension for up to another 4 years in three contracts is at the discretion of the employer.

In effect, the mandatory labor standards, the minimum wage, job security and even the 8-hour workday are hardly applied and observed. The Labor Standards Law even legitimizes the exploitative and oppressive labor conditions of migrant workers by a provision that stipulates that both parties can renegotiate for better terms in their contracts. Usually it is the brokers who coerce the workers to sign such documents.

Visit Visa Scheme in United Arab Emirates

Migrant workers enter the UAE in two ways: either through placement agencies or through visit visas. Mostly, domestic helpers and construction workers pass through the former scheme. However, the dominant pattern for labor importation has been recorded through the visit visa system.

Companies sponsor “tourists” who apply for the visit visa and then employ them directly in their offices. These migrants are forced to work under promise that these sponsoring companies will assure them of residence visas and work permits.

After 60 days, these visitors would have to exit Dubai. Usually they go to a place called Kish island and there wait for another visit visa from the company. Many of them get stranded because they were abandoned by their sponsors. For those who do get another visit visa, they would have to accept lower wages from the company. Out of desperation, these stranded migrant workers agree to such measly salaries if only to get assurance for a job in Dubai.

Some companies force their migrant workers to work in other offices even though this practice violates the labor laws in UAE. An example is Jebel Ali located in the Free Zone (Industrial Complex), a company which produces carpets. Because business was supposedly slow, it forced its workers to become construction workers in its sister company. The migrants could not complain out of fear of losing their jobs. This company enjoys more flexible terms in labor management because it falls under the free zones which are exempted from labor laws in Dubai.

Middlemen called “organizers” also prey on these desperate migrants. In return for giving these unemployed and stranded migrants part-time jobs, the “organizers” demand 15-35% of the workers’ daily wages. If the regular wage is 100 dirhams per day, only 65-85 dirhams are received by the migrant. Migrants under visit visas also have no protection and insurance.

“The collective rights of local and migrant labor are eroded and their slavery under “freer operations of capital” is more severe.”

The Australian Visa Sub-class 457

The Australian Government and Australian employers are utilizing a visa class designed for ‘business entrants’ to force down the wages and conditions of workers in Australia through the exploitation of foreign guest workers burdened by contractual and visa obligations that disempower the guest workers and break down workers solidarity with their Australian worker counterparts. Amongst this class of visas, the Temporary Business (Long Stay) visa (Subclass 457) [“457 visas”] is of particular concern. The 457 visa sub-class was designed for stays of between 3 months and 4 years by employees or workers offering skills and knowledge not available in Australia.

The recent rapid growth of the approval of 457 visas reflects the changes in the rules and guidelines for the 457 visa sub-class. For every two permanent skilled migrants settling in Australia, there is now more than one 457 visa issued. 457 visa approvals increased from 24,000 in 1996-97 to 70,000 in 2005-06.

The increase in the 457 visa approvals must be seen against the increased emphasis in Australia’s migration program on skilled migrants. The report of the Australian Manufacturing Workers’ Union describes the change in the Australian immigration program –

Australia’s migration program is now primarily focused on attracting skilled migrants to address labour shortages in skilled occupations. The major change in the migration program over the past decade has been the decline of family migration and the growth in this skills stream. Skills migration is now the dominant stream of the overall migration program and is at record levels. In 2004-05, skill migration was 64.5% of the total migration program compared to 37.3% in 1997-97. The total number of migrant settler arrivals grew by 59.9% as a comparison between 1997-98 and 2004-05.

Australia’s migration program has become strongly oriented toward skilled migration over the past decade, mainly at the expense of family migration, with the objective of raising productivity and growth.

In particular, the removal of requirements for skills accreditation, demonstrated shortages, adequate attempts to recruit locally and a record of training by the employer has made the 457 visa an attractive short-cut that allows an employer to engage foreign workers on lower pay and conditions and without the protections of union membership, and the flexibility to be able to change employers. Cases have also emerged where employers fail to provide mandatory occupational health and safety training, and workers injured on the job shipped back to home countries before being able to lodge claims for compensation to which they are entitled.

The minimum wage under the visa sub-class [$41,850 per annum] is often less than the pay rate for a locally-recruited worker, and exemptions under the rules have seen many foreign workers legally paid considerably less than this rate. Unscrupulous employers unlawfully pay other foreign workers even lower rates by exploiting the dependence and isolation of the foreign worker.

The Government also notes that the 457 visas will force wages down.

The Immigration Minister has admitted that the motive of many employers utilizing 457 visas is to suppress wage claims.

‘Immigration Minister Amanda Vanstone has come under fire for admitting that importing foreign workers helped suppress wage claims. Senator Vanstone defended the controversial foreign guest worker scheme, saying it stopped unions from pushing excessive wage demands.

‘(Some parties) are opposed to the recruitment drive because it opens up the industry to other pools of employees, which undermines the unions’ ability to exploit high wages amid the skills shortage,’ she told the West Australian.’ (Shaw, M., ‘Guest workers cut wages: Vanstone’, The Age [Melbourne], 8/06/2006)

Case studies have revealed numerous cases where overseas recruiters and sponsors in league with Australia employers have –

Migrant Workers Resistance

The best shield and defense of migrant workers has been their organizations, the militant actions that they take, the solidarity extended by local workers’ movements as well as the advocacy of genuine migrant-serving institutions, churches and NGOs.

“The fight against neoliberal globalization is a fight for all workers, local or migrant. We need the unity of all working peoples of the world, advocacy, solidarity and militant and collective action.”

The various forms that labor flexibility take in the cases studies above highlight the common trends in labor market reform:

Whatever bittersweet name they ascribe to themselves, these policies are criticized and rejected by the ever-growing progressive migrants’ movement in the Asia-Pacific region. From small to big, from sporadic to widespread actions, the migrants make their movement felt in confronting the miseries and evil brought by labor flexibilization and other neoliberal schemes of global capital.

In Hong Kong, the most organized section among foreign workers is the FDH. They have hundreds of organizations, alliances, federations and unions from different nationalities. They are also the most militant. Because of their high sense of organization, the attempt of the Hong Kong government to lower the minimum wage for five consecutive years did not happen. It was only lowered for 2 times. Overall it is still a victory for migrant workers. They made history by mobilizing more than 12,000 migrant workers in a rally in 2004 against the proposed wage cuts.

In Australia, migrant workers organizations link strongly with Australian unions to campaign for the restoration of labor safeguards, protection of the rights of migrant workers and demand economic and social justice.

In the United Arab Emirates, thousands of migrants from India, Pakistan and Saudi Arabia stage varying forms of labor actions.

In Korea, migrant workers have broken the climate of fear by self-organizing and established self-help groups to protect themselves against crackdowns and other attacks. Being mainly undocumented, these migrant workers have been able to rally their strength to resist Korean policies on labor importation and immigration control. They actively sought assistance and solidarity from Korean NGOs and churches. What is exemplary is the solidarity generated by the concrete cooperation between migrant organizations and local Korean trade unions.

In Taiwan, more than 600 Filipinos staged work stoppage in the factory of Formosa Plastic Group, one of the leading petrochemical corporations because of unjust wage deductions, subcontracting to other companies, usury, physical abuses, and inhumane living conditions in the worker’s dormitories among others. They were later joined in by Thai migrants. By March 2006, almost 3,000 migrant workers went on strike and won their demands.

Migrant workers organizations, associations and unions work hand in hand with local unions and workers organizations, mass organizations of women, youth, students and neighborhood associations not only in the fight for economic and social justice but also with a clear agenda to stop the havoc of neoliberal globalization. The most recent experience of this was shown in the successful protests mounted by local and migrant groups during the 6th Ministerial Meeting of the World Trade Organization in Hong Kong last December 2005. This campaign raised the unity of the people’s movement in Hong Kong to fight against neoliberalism and one of its most gruesome instruments—the WTO. Thousands of migrant workers marched with local peoples to denounce the impact of neoliberalism to the lives of ordinary peoples.

In all these cases, the host governments have shown their true color by attacking the workers and peoples through various means—deception, cooptation, intimidation, de-legitimizing the struggles, declaring the actions/strikes as illegal and even outright use of violence through the use of the military and police.

Indonesian migrant workers learn to defend themselves.
Indonesian migrant workers learn to defend themselves.

And yet the migrant workers and their allies persist.

Labor flexibility as a major component of neoliberal policy must be understood as a means to control the working class, be they migrants or locals. It is a way of ensuring that the wages are low in order to ensure higher profit for capitalists and big corporations. The low wages and the long working hours is an assurance of higher benefits for them.

Aside from being a tool for exploitation and deprivation of economic justice, it also carries with it the instruments of political oppression and suppression. As workers come to realize the wretchedness brought by these neoliberal labor market reforms, and act on it in self-defense, the corporations and the states which protect them become more brutal and inhumane.

This fight against labor flexibilization and neoliberal globalization is a fight for all workers, whether they are local or migrant. The noose whose purpose is to wring dry the worker and ensure their slavery to capital will have to be cut. For that to happen, we need the unity of all working peoples of the world, advocacy, solidarity and militant and collective action.