Ensuring Temporariness Lessons from Existing Practices

Ensuring TemporarinessLessons from Existing Practices by Rupa Chanda Professor, IIM Bangalore WTO Symposium Geneva September 22-23, 2008

Outline • Background 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 interests • Receiving countries address labour shortages, promote strategic interests • Source 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 workers • Specified institutional structures and responsibilities • Incentive cum disincentive based approach to facilitate entry and penalize violations • Use of established systems (social security) for tracking and ensuring compliance • Flexibility within overall limits • Scope for customization and review • Coordination 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 used • Some cover full mobility of labour • Some allow/facilitate market access for selected groups of workers and service providers • Some have provisions for special visa arrangements • Some 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 departure • Education and training pre-departure • Facilitating remittances through formal channels • Channeling financial transfers to productive uses • Facilitating 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 however • Labour market certification procedures not always transparent • Coverage under local labour laws for informal sector workers • Social security and other contributions without access to benefits • Possible undermining of bilateral schemes by immigration policies • Failure 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

Ensuring Temporariness Lessons from Existing Practices