The COVID-19 pandemic has resulted in major disruption of labour migration in the region, impacting livelihoods in countries of origin and destination (ILO, forthcoming). For net countries of origin, employment abroad is a major source of livelihood for the workers themselves and for their families and dependents back in their countries of origin, particularly through remittances. The pandemic saw a significant drop in deployments of international migrant workers (figure 2.5) as well as an increase in migrants returning home (ADBI, OECD and ILO 2022). This resulted in the stock of international migrant workers decreasing signifi-cantly in a number of countries (ILO, forthcoming).
For many migrant workers, the lack of access to social protection or other support measures (including financial ones) – most of which were available to nationals only – left little choice but to return home.6 Many of these workers are low paid and have low levels of savings and economic
6 These were just some of the challenges faced by migrant workers which affected their decisions and abilities to stay in a country.
Other challenges related to testing and health access, housing constraints and payment of wages (ILO 2020b; ADBI, OECD and ILO 2022).
resilience to sustain themselves and their depend-ents through extended periods of disruption.
In countries of destination, such as Brunei Darussalam, Malaysia, Thailand and Singapore, which rely heavily on migrant workers, en-terprises are still struggling to meet their labour demand needs. Before the onset of the pandemic (in 2019), international migrant workers accounted for nearly 40 per cent of the employed population in Singapore, 37 per cent in Brunei Darussalam, 14 per cent in Malaysia and 7 per cent in Thailand (ILO, forthcoming). Despite the re-opening of borders and an end to COVID-19 travel restrictions, governments have not fully opened labour migration pathways to pre-pandemic levels.
The resulting labour shortages in industries that rely heavily on migrant workers have prompted industry bodies and the private sector to lobby the government to address the issue by facilitating the entry of migrant workers, regularizing the irregular status of migrant workers (for example in Thailand) and establishing memoranda of understanding with other countries to promote the inflow of migrant workers (ILO, forthcoming).
Despite these efforts, in late 2022 many industry groups were still citing major labour shortages as a consequence of the lack of migrant workers, including in rubber plantations in Malaysia and in multiple sectors in Thailand such as construction and manufacturing.
Governments perceive labour migration as necessary for a recovery in economic output in migrant-dependent sectors. Recovery of economic growth, meanwhile, is a critical factor shaping the characteristics and magnitude of labour migration in South-East Asia. In Malaysia, for instance, more than 30 per cent of total employment in the agriculture sector is accounted for by migrant workers; in Singapore, more than 60 per cent of workers in the industry sector are migrant workers; and in Brunei Darussalam 56 per cent (ILO, forthcoming). Sectors with high density of migrant workers include manufacturing, construction, accommodation and food services, and domestic work. In Malaysia, in mid-2022, manufacturers were claiming to be short of around 600,000 workers, construction required 550,000 more workers, the palm oil industry reported a
2010 2012 2014 2016 2018 2020 0
25 50 75 100 125
23
2010 2012 2014 2016 2018 2020
0 200 400 600
113
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79
2010 2012 2014 2016 2018 2020
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77 2010
(a) Philippines (b) Indonesia
(c) Viet Nam (d) Myanmar
(e) Thailand (f) Cambodia
2012 2014 2016 2018 2020
0 500 1000 1500 2000
332
2010 2012 2014 2016 2018 2020
0 50 100 150
41
X Figure 2.5. Outflows of documented migrant workers, selected ASEAN Member States, 2010–20 (thousands)
Source: ILO (forthcoming).
shortage of 120,000 workers, and chipmakers were lacking 15,000 workers (Lee, Latiff and Chu 2022). In Thailand, enterprises took to lobbying the government – noting the labour shortages in sectors such as agriculture, construction, hospitality and garment-making (Charoensuthipan 2022). In Singapore, the construction and
processing sectors were among those cited as particularly in need of migrant labour (Heijmans 2022). It should be noted that the labour and human rights of migrants cannot be neglected, not only for the sake of the workers involved but also to ensure there is a level playing field in which the labour market can function more efficiently.
X Europe and Central Asia
After a strong recovery from the pandemic in 2021, with growth of 5.9 per cent, the region’s economy grew at 1.9 per cent in 2022 and is expected to slow to 0.7 per cent in 2023. Very modest annual growth is expected over the medium term. This is a rapidly evolving situation and some estimates suggest that the contraction in the region in 2022 has been even larger (World Bank 2022i).
Growth in 2022 and 2023 has been and will be significantly less than previous projections, owing to the conflict in Ukraine and the re-sulting economic and political fallout (World Bank 2022i). Geopolitical strife continues to wreak havoc on the region. The conflict in Ukraine and tighter monetary policy to attempt to curb inflation have led to a significant deterioration in economic conditions, with a considerable number of im-portant spillover effects (for example, increasing migration flows and weakening manufacturing output stemming from disruptions in supply chains and record high energy prices that have been exacerbated by restrictions on European trade with the Russian Federation as well as supply cuts by the Russian Federation). Inflation in Europe remains elevated and poses considerable risks to household purchasing power; in Central Asia, most economies are confronted with double-digit price increases. Some countries have put in place electricity consumption restrictions.
There is considerable heterogeneity of GDP growth in Europe and Central Asia. The impacts of conflict, the global slowdown, and rising prices are impacting countries in the region to different degrees. Growth in 2022 is estimated to have been of the order of 3.1 per cent in Northern, Eastern and Western Europe (IMF 2022b), whereas in Eastern Europe GDP is expected to
have contracted, largely because GDP growth in the Russian Federation is thought to have fallen more than 3 per cent in 2022 (IMF 2022b). The economic prospects of some economies in Central Asia were expected to improve in the latter half of 2022 (EBRD 2022). Several countries in the subregion are benefiting from the relocation of private businesses from the Russian Federation and Ukraine. Currencies have largely settled to pre-conflict levels, real estate in major cities is booming and some countries’ roles as re-exporters of goods from China are expanding. Oil-exporting countries such as Kazakhstan and Turkmenistan are benefiting from higher oil prices.
Major increases in energy prices are placing significant pressure on energy-intensive indus-tries in Europe. With energy prices elevated in the European Union (EU), energy-intensive industries are disproportionately affected (Hollinger et al.
2022). Manufacturing industry in Spain, for ex-ample, which employs around 2.5 million people and accounts for 11 per cent of GDP, consumes around a quarter of the gas and electricity used in the country (INE 2022). The situation forces businesses to try to reduce energy consumption where possible, for example by adjusting oper-ations, but levers to adjust operations can be limited – as observed in efforts to adapt to the pandemic (Stemmler 2022). Some EU countries are intervening to provide financial support to energy-intensive industries. For example, in July 2022 Germany launched a €5 billion fund to support its most exposed industries, such as chemicals, glass and metals (BMWK 2022); however, the level of support needed to cushion the full impact is not sustainable.
The impact of the energy price crisis on employment in Europe is not yet known. Though
energy-intensive industries directly employ only a small percentage of workers in the EU (around 3.2 million people in total, or 1.6 per cent of the employed EU-27 workforce), around 15 per cent of the region’s workers are employed in the industry sector as a whole (Bruyn et al. 2020). Any decline in competitiveness and industrial employment will also likely have knock-on effects in the region, whether through weakened macroeconomic pos-itions, falling investor confidence or input price inflation. In theory, the rising energy prices should work to accelerate the low-carbon transition in Europe, increasing the urgency to move away from fossil fuels and improving the relative viability of low-carbon energy sources and technologies. At the same time, there are other dimensions, such as the suppression of demand by higher household spending on energy, with subsequent implications for the shape of the impact on employment in different sectors.
In the long term the energy price shock may result in more opportunities for job creation in the emerging low-carbon sectors. In the meantime, the impacts of uncertainty and macro-economic weakening may reduce investment in the green economy, at least in the short term. Given the weakened state of public finances in Europe, governments will be under pressure to make savings and to redirect budgets to other sectors, which may include clean energy providers. Several countries, such as Germany, have also resorted to reviving the use of coal in industry and power generation, although the intention is that this move will be temporary and small-scale (European Commission 2022). Any reversal or watering down of previous commitments to the green economy represents a risk to employment in Europe, though opportunities to focus on a green recovery will still be present. The net impacts of energy prices on employment in Europe are a live topic that should be monitored over the coming year.