Ensuring TemporarinessLessons from Existing Practices

by

Rupa ChandaProfessor, IIM Bangalore

WTO SymposiumGeneva

September 22-23, 2008

OutlineBackground and motivation

Ensuring temporariness under bilateral labour agreements

Ensuring temporariness under unilateral arrangements

Ensuring temporariness under broader and regional agreements

Role of source countries

Common features and desirable practices

Lessons for the GATS mode 4 negotiations

Background and Motivation

Temporary cross border movement of labour is an integral part of globalization

Several organizations and governments are increasingly recognizing the importance of managing temporary cross-border movement in a mutually beneficial manner

The General Agreement on Trade in Services (GATS) under the WTO provides a useful framework for managing temporary labour flows under mode 4 or movement of natural persons

But countries are unwilling to make binding multilateral commitments on mode 4 under GATS, especially for low and semi-skilled workers

However, a growing number of initiatives outside the GATS manage cross-border temporary movement of workers, including low and semi-skilled workers in services, seasonal work, agriculture, and industry

Initiatives are at the national, bilateral, and regional levels

Key issue in mode 4 liberalization is ensuring temporariness, especially for certain categories of service suppliers

Several questions are raised by such arrangements that facilitate mode 4 outside the multilateral context

Why has there been more progress outside the GATS?

Are these other arrangements more conducive to ensuring temporariness?

If so: What makes them more conducive? How do they operate? What kinds of institutional mechanisms do they involve? What are their good practices? Are there lessons for the GATS?

Ensuring Temporariness under Bilateral Labour Agreements

Bilateral labour agreements can be classified as guest worker, seasonal worker, cross-border worker, contract, project linked worker, working holidaymaker, and trainee arrangements

Serve bilateral interestsReceiving countries address labour shortages, promote

strategic interestsSource countries provide employment to surplus labour,

earn remittances

Work through defined administrative mechanisms, shared responsibilities, coordinated processes

Operational aspects regarding recruitment, entry, return, financial transfers, and capacity building help in ensuring temporariness

Ecuador-Spain

Agreement on Regulation and Planning of Migratory Flows signed in 2001

Recruitment, entry, return

Spain periodically forwards job offers to Ecuador

Bilateral technical unit screens and selects workers, helps selected workers with contract and visa related issues, provides pre-departure training, other assistance

Carriers must closely check all entry documents, failure subject to legal penalties

Contracts for several months (9), extendable within overall limit

Efforts to curb informal recruitment channels, regularize and make pre-entry process subject to scrutiny and administrative control including

communication of offers

establishment of an exclusive unit for recruitment

support structure for getting visas and contracts

regulation and checks in transport process

protection of workers from exploitation by unscrupulous employers

temporariness clearly specified, but performance rewarded

Spanish authorities can deny work authorizations to an employer if:

previous violations of immigration rules and contract terms

not guarantee the worker continued activity during duration of authorization

not demonstrate sufficient means to meet contract obligations

falsify information or documents in petitioning process

failure to tie up with Spanish social security system within 1 month of entry

Return obligations on temporary workers

required to sign commitment to return to Ecuador on contract expiry

report to Spanish consular office in Ecuador within month of return, failing which disqualified from future employment in Spain

early repatriation if fail to meet contract terms

Coordination across ministries and agencies on both sides to document and track return

Financial transfers

Remittances facilitated by:

reducing costs of transfers in cooperation with financial institutions

special savings account plans for returning migrants

directing remittances towards productive investments in Ecuador

Other development initiatives

Capacity building and development efforts

Training of migrant workers and aiding reintegration

Co-development projects between sending and receiving regions

Workers associations play important role

Canadian Seasonal Agricultural Worker Program (CSAWP)

Between Canada and Mexico, Canada and Caribbean countries

To serve mutual interest and facilitate movement of seasonal agricultural workers

Subject to determination of need by Canadian authorities

Heavy involvement of state in monitoring movement of workers, ensuring no local labour displacement

Elaborate institutional framework for managing migration, extensive coordination, various stakeholders involved, with scope for periodic amendment

Recruitment, entry, return

Hiring must be need based, supplement not displace Canadian labour

Canadians First principle, must show attempt to hire locally and failure to do so to justify petition for foreign workers

Overseas workers hired at premium as additional costs for travel, lodging

Workers screened and recruited by agencies/ministries in source countries based on job offers communicated by Canadian authorities

Liaison officers from source countries to monitor migrant workers’ living and working conditions, provide orientation, resolve disputes, provide legal and other assistance, communicate information on arrivals, returns, transfers

Clearly specified work contracts on duration, benefits, obligations for employers and workers

Penalties for unauthorized employment and transfers

Transfers possible to other employers subject to time limit on total stay

Re-hiring possible by naming of workers, such requests processed on priority basis, facilitating circular migration

Recognition bonus provisions for those staying for long period with single employer incentivizing strong employer-worker ties

Premature repatriation if failure to meet terms of contract

Cost structure for transport ensures accountability of employers and workers, penalties for non compliance, and right choice of workers

Financial transfers

Compulsory savings scheme for Caribbean workers

25% of workers’ wages withheld and remitted to source country governments

Ensures minimum level of remittances, used to cover admin expenses

Ensures use of formal banking channels

Incentivizes return to claim money

What incentivizes temporariness? What enables market access?

Recruitment and entry process involves:Obligations on employers and workersSpecified institutional structures and responsibilities Incentive cum disincentive based approach to facilitate entry

and penalize violationsUse of established systems (social security) for tracking and

ensuring complianceFlexibility within overall limits Scope for customization and reviewCoordination across multiple agencies, across sending and

receiving countries

Financial transfers and capacity building efforts in source regions create incentives to return

Ensuring Temporariness under Unilateral Arrangements

Some countries use unilateral schemes to target certain groups of workers

Seasonal and guest worker arrangements, temporary foreign worker programs, sector based schemes

Not signed with particular countries though flows tend to be from certain countries driven by geography, historical, social, cultural ties

Unilateral schemes often preferred as can be adjusted to host country’s economic cycle, used selectively to protect certain sectors and groups of workers

Korea’s Employment Permit System for foreign workers

Allows employers who are not able to hire Korean workers to legally employ sufficient number of foreign workers

Korean Ministry of Labour concludes MoUs with source countries, prepares roster of job seekers, issues employment permits, coordinates with multiple ministries and designated agencies

Government stipulations on type and scope of business able to avail of scheme Manufacturing, construction, fishery, service industries where

high rate of labour shortage

Quotas for individual sectors/industries to prevent adverse effects on local workers and prevent dominance of foreign workers in any industry

Quotas assigned across selected countries with which MoUs based on their performance on return and entry

Source country government selects candidates

Maximum duration of employment specified

Name hiring possible, reward for good performance and circular migration facilitated

Minimum stay required on return in source country before reentry possible

Capacity building element with training of workers post entry in Korea

Institutional mechanisms to prevent illegal stay, unauthorized transfer of jobs by worker, penalize contract violations

What incentivizes temporariness? What ensures market access?

Defined institutional mechanisms and structures

Customizing entry to suit local requirements

Coordination across multiple agencies

Prospects for re-entry

Outcome and performance based future entry

Restrictions and monitoring within host country

Understanding with sending countries

Source country obligations in screening

Ensuring Temporariness under RTAs

Broader agreements covering economic cooperation, trade and investment flows, with provisions for managing mobility of service providers and workers

Variety of approaches usedSome cover full mobility of labourSome allow/facilitate market access for selected groups of

workers and service providersSome have provisions for special visa arrangementsSome facilitate market access under existing visa regimes

Mostly focus on ICTs, Business Visitors, professionals, skilled suppliers

Majority provide only special access/facilitate access under existing immigration schemes, while retaining broad discretion

But several noteworthy elements

Chapters on movement of specific types of persons

Provisions in investment chapters for select categories linked to investment

Protocols for gradually easing labour mobility on a regional basis, right of establishment, residence

Detailed definitions for covered categories- ICTs, business visitors, professionals

Removal of labour certification or LMTs for covered groups

Port of entry visas for select categories, renewable, longer term

Explicit requirements to avoid measures that hurt trade in goods or services or investment activities

Attempt to develop and adopt common criteria, definitions, interpretations, creation of consultation groups

Role of Source Countries

Source country policies and administrative structures in many areas important for managing mode 4

Screening and selection prior to departureEducation and training pre-departureFacilitating remittances through formal channelsChanneling financial transfers to productive usesFacilitating reintegration of returning workers with

employment, loan schemes, setting up of enterprises

Multiple agencies involved within country

Good Practices

Some of these relate to:

Deeper level and wider range of institutional and stakeholder involvement

Regulation of pre-admission process

Regulation of period of stay through institutionalized mechanisms

Clarity on conditions for market access

Scope for flexibility, customization, periodic review

Defined scope for entry/relaxed conditions

Coordination between sending and receiving countries for managing flows

Clarity on definitions, categories, criteria for applying conditions

Larger context in which temporary labour flows seen

Specificity, clarity, detail on

Scope of work

Categories of workers

Temporariness (including renewal and extensions)

Sectoral and occupational focus

Conditions on employers and workers

Numbers admitted via quotas

Administrative mechanisms and institutional frameworks for recruitment and entry

Preferences for local workers

Economic needs tests and labour market tests

Wages and working conditions

Obligations on source and host countries under bilateral arrangements

Flexibility in design and implementation to suit local requirements

Mix of incentives and disincentives

Incentives for return through prospects of re-hiring, forced savings, development schemes in host country

Penalties for violations

Broad based stakeholder participation

public, private, civil society, international, trade unions

Interdepartmental and interagency coordination within and across countries

Regulation of intermediaries to encourage formal channels of entry

Longer term stable relationships encouraged for orderly migration and circular flows, subcontracting discouraged

Holistic approach to mode 4 beyond movement to cover capacity building, development in source country, remittances

Encouraging financial flows through formal channels to increase source country benefits

Ensure coherence with other policies

Some gaps exist howeverLabour market certification procedures not always

transparentCoverage under local labour laws for informal sector workersSocial security and other contributions without access to

benefitsPossible undermining of bilateral schemes by immigration

policiesFailure to address subcontracting, intermediaries in some

schemes

Lessons for the GATS Mode 4 Negotiations and Other Agreements

Need specificity, clarity, transparency in defining worker categories, sectoral coverage, employment terms and conditions, institutional framework, along with flexibilities for review and customization Customization of commitments to suit sectoral requirements Customization of commitments to suit business cycle, labour

market conditions

Commitments for low skilled would only be feasible with conditions Numerical ceilings with scope to suit local market conditions Wage parity requirement Specified period of stay and clear upper ceiling on total stay Limits on transferability across employers/jobs Economic needs or labour market test requirements Clearly demarcated visas

Need to ensure that quota adjustments, needs tests, and certification processes transparent and objective

Schemes suggest possible ways to expand the scope of mode 4 categories to cover low skilled

Use CSS category to make commitments on low skilled workers moving under contractual arrangements with overseas employers or recruitment/placement agencies

Can broaden scope of CSS category by Relaxing minimum eligibility requirements under CSS category

to include persons occupied in low skilled occupations, who are technically competent, with prior work experience, but without academic qualifications

Providing some form of juridical affiliation for low skilled workers in home country Institutional backing and certification could be provided by

source country authorities, authorized agencies, occupational guilds who could provide affiliation, take responsibility for screening, recruitment, return, reintegration

Contractual Service Suppliers-2 (CSS-2) would include those:

whose services are solicited temporarily by clients in the host country and contracted via government or government authorized agencies in the source country, without affiliate presence in the host country

screened and deployed overseas by manpower/authorized recruiting agencies/concerned government departments/guilds in the sending country

persons without formal academic qualifications but with on-the-job or other training and experience, who go to the host country for short periods of stay of up to 6-9 months and not exceeding one year at any one time (unless otherwise indicated in the commitments) to:

perform a service pursuant to a contract between their deploying government or authorized agency/establishment/occupational guild and a client located in the host country

fulfill qualification and competence test requirements in the form of local aptitude tests, apprenticeships, and learning period, where presence in the host country is required for this purpose

Committing countries could protect sensitive sectors or groups of workers by excluding certain sectors/occupations under horizontal commitments

Could ensure better use of GATS transparency provisions via enquiry points

Could impose obligations on source countries for screening, certification, placement, insist on institutional structures to formalize mode 4 processes

Explicit MFN exemptions for source countries lacking such institutional capacity not desirable as would create uneven playing field among source countries

Conclusion

Several features of unilateral, bilateral, regional approaches could be incorporated under existing GATS mode 4 framework

Given security, trade union, cultural, economic concerns in receiving countries, mode 4 commitments will have to be subject to conditions, but these could mimic conditions applied in alternate approaches

Conditions could be more stringent for less skilled categories

Some coordination between host and source countries required for managing mode 4, some onus should be placed on source countries

Capacity building and institutional development to manage mode 4 required in source countries

Flexibility in design and implementation should be present for host countries but objectivity and transparency required

Will these alternate approaches help or hurt multilateral efforts to liberalize mode 4

Could advance multilateral discussions by:

Serving as a learning experience

Enabling regulatory and institutional capacity building

Enabling investment in technology and data

Helping develop common positions on cross cutting issues under GATS

Instilling confidence to make more liberal multilateral commitments

Providing opportunity to test impact and validity of apprehensions regarding mode 4

Enabling domestic stock taking of factors affecting labour mobility

Could hinder multilateral discussions by:

Diverting attention from multilateral process

Buying out of key demandeur countries and groups

Creating inconsistencies between what is agreed at regional/bilateral level by developing countries and what is requested at the multilateral level

Regardless of approach, important to invest in capacity and institution building to manage labour mobility

GATS mode 4 negotiations have to be conceived beyond a one-way commitment process

Will require some onus on source and host countries through coordinated efforts and institutional mechanisms to ensure temporariness if progress is to be realized

Thank you