Costs and Benefits of Cross-Country Labour Migration in The GMS: Synthesis of The Case Studies in Cambodia, Laos, Thailand and Vietnam

December 2009 A CDRI Publication
COSTS AND BENEFITS OF CROSS-COUNTRY

LABOUR MIGRATION IN THE GMS:
SYNTHESIS OF THE CASE STUDIES IN
CAMBODIA, LAOS, THAILAND AND VIETNAM
Working Paper Series No. 45
Development Analysis Network (DAN) with support from The Rockefeller Foundation
CDRI Cambodias leading independent
development policy research institute
CDRI Cambodias leading independent
development policy research institute
Phonm Penh, December 2009
COSTS AND BENEFITS OF CROSS-COUNTRY
LABOUR MIGRATION IN THE GMS:
SYNTHESIS OF THE CASE STUDIES IN
CAMBODIA, LAOS, THAILAND AND VIETNAM
WORKING PAPER SERIES NO. 45
2009 CDRICambodias leading independent development policy research institute
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system
or transmitted in any form or by any meanselectronic, mechanical, photocopying, recording,
or otherwisewithout the written permission of CDRI.
Responsibility for the ideas, facts and opinions presented in this research paper rests solely with
the authors. Their opinions and interpretations do not necessarily refect the views oI CDRI.
ISBN 9789995052-33-1
Costs and Benets of Cross-country Labour Migration in the GMS:
Synthesis of the Case Studies in Cambodia, Laos, Thailand and Vietnam
December 2009
A CDRI Publication
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5 CDRI
Costs and Benets of Cross-
country Labour Migration in
the GMS: Synthesis of the Case
Studies in Cambodia, Laos,
Thailand and Vietnam*
1
Introduction
There is growing interest in promoting cooperation in the Great Mekong Sub-region
(GMS), which comprises Yunan province of China, Vietnam, Thailand, Myanmar,
Laos and Cambodia (see map). There are still remarkable differences in socio-
economic development among the six countries. As summarised in Table 1, Cambodia and
Laos lag behind Vietnam and Thailand in poverty reduction and other key social development
aspects. Job creation in the worse off countries does not keep pace with the increase in the
labour force. Due to the higher wages in Thailand and lack of year-round farming in Cambodia,
Laos and Myanmar, millions of people venture over the border to work in Thailand. Thailands
loose borders oI thousands oI kilometres make this migration very diIfcult to manage.
The magnitude, scope and scale of regional migration are not fully known because much of it
is undocumented or underground. Around 1 million Burmese and 180,000 workers each from
Cambodia and Laos work in Thailand, mostly entering through illegal means to fnd '3D
(dirty, diIfcult and dangerous) jobs that Thai workers would rather not do. At the same time,
signifcant numbers oI migrants Irom China (particularly Yunan) and Vietnam are Iound in
Laos and Cambodia. Migration within the Mekong region is characterised by inIormal fows oI
unskilled labour for economic rather than any other reasons. Migration outside the GMS region
is generally through contracts. Vietnam and Thailand have programmes to send their migrants
to many countries and receive billions of dollars of remittances each year.
Past studies (Maltoni 2006; Chan & So 1999; Asian Migrant Centre 2004) have identifed
GMS migrant networks, regular overview oI migrant fow (every two years), assessed the
vulnerability of migrants and social impacts (on children and family at home etc) and the risks
caused by the irregular nature of migration. A review of the literature by the Development
Analysis Network (DAN) member institutions indicated an information gap regarding economic
costs and benefts oI migration Ior individuals, households and sending communities. There
was a lack of quantitative data about migrants and underestimation of their number. Economic
contributions from migrants are not well known or documented. The current collaborative
study intends to address this gap.
* The synthesis which is based on individual country reports, is prepared by Chan Sophal, formerly
Senior Research Fellow and Research Advisor at CDRI.
Economic Costs and Benehts of Cross-country Labour Migration in the GMS: Synthesis of the Case Studies in Thailand, Cambodia, Laos and Vietnam
6 CDRI
The current article summarises and synthesises reports by research teams from the DAN
members. Rich details are available in the country reports to follow.
GMS Countries
Cambodia
Land area : 181,035 sq.k.
Population : 13.8 million
Cambodia
Lao PDR
Lao PDR
Thailand
Thailand
Vietnam
Population : 83 million
Vietnam
Population : 83 million
Yunnan Province, China
Yunnan Province, China
Source: Sciortino (2007)
Table 1: Selected Social Development Indicators in GMS Countries
Item Cambodia Laos Myanmar Thailand Vietnam
Maternal mortality rate
(per 100,000 live births)
437.0 530.0
100.0 urban
180.0 rural
24.0 165.0
Infant mortality rate
(per 1000 live births)
96.0 87.0
48.3 urban
50.1 rural
22.0 30.0
Life expectancy at birth
Female
Male
63.4 56.0 63.9 74.9 71.4
57.2 53.0 61.0 69.9 66.7
Adult literacy ()
Female
Male
73.6 66.4 91.8 92.6 90.3
64.1 56.0 91.4 90.5 86.9
84.7 77.0 92.2 94.9 93.9
Population below
poverty line
34.8 32.7 22.9 9.8 29.0
Population with access
to safe water ()
30.0 37.0
89.2 urban
65.8 rural
97.0 urban
91.0 rural
56.0
Human poverty index 74 66 45 22 39
Note. The hgures were for varying years from 2000 to 2004.
Source: Sciortino (2007)
7 CDRI
Countries in the GMS are at different stages but are faced with common problems of labour
migration and employment prospects for the young generation. While Vietnam, Cambodia
and Laos are confronting a lack of employment, Thailand is concerned with a shortage of
unskilled labour to meet the increasing demand. A study by the Thai Development Research
Institute (TDRI) predicts that Thailand will need 57 million workers Irom abroad to fll the
demand for unskilled workers in the medium and long term (Paitoonpong 2007). This suggests
that labour migration from neighbouring countries such as Cambodia and Laos to Thailand
is bound to increase. Governments of the countries will be in a better position to make sound
policy on labour migration and employment planning if they have common information and
understanding of current problems. This regional study aims to provide policy makers with
external and Iorward inIormation regarding economic costs and benefts to migrant workers and
their communities and suggest ways to improve policy and legal and institutional frameworks
to increase the benefts and reduce costs.
Table 2. Summary of Research Sites and 1oint Activities
Fieldwork for community analysis
Joint activities with partner institutions
Cambodia
Five communities that have migrants
going to Thailand
One community that has migrants going
to Malaysia
Trace Cambodian migrants in Thailand
with cooperation from TDRI
Interview migrants from Vietnam with
participation from Vietnam researchers
Laos
Six communities from different
provinces that have migrants going to
Thailand
Trace Lao migrants in Thailand with
cooperation from TDRI
Interview migrants from Vietnam with
participation from Vietnam researchers
Vietnam
One or two communities that have
migrants going to Taiwan or Malaysia
to Cambodia (in the south)
to Laos
Interview Vietnamese migrants in Laos
with cooperation from NSC/NERI*
Thailand
to Taiwan (this is useful for comparing
with communities in other countries)
Receive researcher(s) from CDRI to
interview Cambodian migrant workers
Receive researcher(s) from NSC/NERI to
interview Lao migrant workers
* Note. NSC stanas for National Statistical Centre. NERI stanas for National Economic Research
Institute
The DAN is a unique network of research institutes in Cambodia, Thailand, Vietnam, Laos and
Yunnan province. DAN has been conducting joint research Ior 10 years on issues shared by
the countries in the GMS.
1
The member institutions are infuential think-tanks or independent
institutes close to policy makers in their countries. The work oI DAN has been unique in jointly
addressing cross-border issues using the advantages of its members geographical locations
and proximity to policy makers. This has allowed researchers to travel beyond their borders to
1 For understandable reasons, Myanmar has not been part of the DAN. This study also does not
cover Yunnan province of China.
8 CDRI
Iollow up cross-border issues such as labour migration within the region. The joint studies have
also involved much secondary data review and interviews with concerned parties.
The research partners try to complement each other in addition to generating comparable
statistics. For this reason, the feldwork approach was not the same (Table 2). The study
employed common methodologies Ior the analysis oI microeconomic costs and benefts to
communities of cross-border migration. Within each community, households with migrant
workers were randomly surveyed to represent the population. Households without migrant
workers were also randomly surveyed to compare with migrant households. The sample size
Ior each group was suIfcient to represent the community. The survey provided characteristics
oI households and important data related to migration questions to be tackled in the project. In
addition, a few focus group discussions were conducted for each community to complement the
survey. Community characteristics were also collected. Cases of individual migrant workers
were followed to provide insights.
2
Prole of Labour Migration in Cambodia, Laos, Thailand and Vietnam
2.1. Thailand
The main motive Ior Thai workers seeking jobs abroad is a higher income, Iollowed
by limited job opportunities in Thailand. Most Thai migrant workers head to Taiwan, South
Korea, Singapore, Israel, Qatar and Japan. From 1970 to 1980, Thailand experienced more
worker emigration than immigration, many Thais leaving to fnd work in the Middle East,
Taiwan, Brunei, Hong Kong, Singapore and Japan. By the early 1990s, migrant workers from
neighbouring low-income countries outnumbered Thai workers leaving the country. Most of
the migrant workers in Thailand are from Myanmar, with smaller numbers from Cambodia,
China, Laos and south Asian countries.
Over the last two decades Thailand has transformed from a net emigrant to a net immigrant
economy, if one takes into account the undocumented workers from its neighbours. Although
the Thai government has formulated policies to cope with this change, the situation is beyond
control in many respects. Efforts have been made to register irregular foreign workers with
the Department oI Employment and allow them to work in specifed occupations. However,
foreign workers are often cited as a threat to national security, and attempts have been made to
arrest them and send them home.
In 2007 there were 161,917 Thai nationals reporting to the Ministry of Labour for work abroad,
compared with 160,846 in 2006. Of this total, 86.18 percent were male. The top six destinations
for Thai migrant workers in 2007 were Taiwan (52,193), South Korea (13,287), Singapore
(16,271), Israel (10,903), Qatar (5762) and Japan (8002).
2.2. Cambodia
Cambodia is a latecomer in management and administration of labour emigration. Most migrants
travel by informal or illegal means; the legal option is relatively new, costly and inconvenient
for most. Government agencies will face an increasing challenge to manage labour emigration,
9 CDRI
which is expected to rise because of both internal and external factors. Since the creation of
productive jobs does not keep pace with the annual labour Iorce increase oI some 250,000,
emigration pressure is likely to increase. Higher wages in Thailand, Malaysia, South Korea,
Singapore and Japan are also a factor.
In the last two decades there has been a change from emigration of refugees or people displaced
by civil war and political instability during the 1980s and 1990s to voluntary migration in search
for work at the borders or inside Thailand and other countries. A new wave of Cambodians
migrating to work in Thailand has emerged in the last decade. There have been both push and
pull Iactors: a shortage oI jobs in Cambodia and high wages in Thailand. There are basically
two types of labour migrants: those who work and stay for months or years inside Thailand
and those who work in areas near the border, mostly in farming. The long-range Cambodian
migrants are engaged in construction, Iactories, plantations, domestic help and fshing, mostly
3D jobs (IOM 2006).
At present, migrant workers come, not only from areas that used to receive Cambodian refugees
returning from Thai border camps, but also from many provinces in the interior. Fewer migrants
come from rural and remote areas, where communications and infrastructure are severely
limited. Although Thailand is still the destination of the largest number of Cambodian migrants,
other emerging destinations include Malaysia, South Korea, Saudi Arabia, Taiwan, Singapore
and Japan. This has been accelerating particularly since the mid-1990s, which were marked by
the attainment oI Iull peace in Cambodia and successive droughts and foods as push Iactors
(CDRI 2007b; Chan & So 1999).
There are basically two types of migrant workers from Cambodia: legal and illegal, in a strict
sense. Table 3 provides the most recent statistics on Cambodian migrant workers oIfcially
sent to three countries since 1998. Between 1998 and the end of 2007, there were 20,630
oIfcial workers to Malaysia, South Korea and Thailand. OI this total, 10,532 went to Malaysia,
3984 to Korea and 6114 to Thailand. The majority oI workers sent to Malaysia were Iemale,
serving as domestic help or housemaids, while most of those to Korea were males intending
to work in factories. Although Thailand has received migrant workers from Cambodia since
1994, most are undocumented or irregular. OIfcial migration started only in 2006, Iollowing a
memorandum of understanding between Thailand and Cambodia signed in May 2003.
2.3. Laos
Labour migration between Laos and Thailand is not new, especially not for people who live
along the border. Crossing the border to visit friends or relatives, to trade or to seek employment
are long-term traditions and make up part of the relationship between the communities on both
sides of the Mekong.
An exceptionally large amount of labour migration to Thailand began in the 1990s. This was
a result of Thailands economic development and Laos adoption of a comprehensive reform
programme called the New Economic Mechanism in 1986, which led to regional integration
and an 'open door policy. There are no reliable statistics on the number oI Lao migrant workers
in Thailand. Recent estimates vary from 150,000 to 300,000.
10 CDRI
Since 1992 the Thai government has used a registration programme as a tool to enable irregular
migrants to work legally. Beginning in 1996, the government opened employment in 39
provinces in seven sectors: agriculture, fsheries, construction, mining, coal, transportation and
manufacturing. In the following years, new registration policies were introduced, following
similar guidelines but introducing quotas to limit the number of migrant workers, largely in
response to the 199798 Asian fnancial crisis. However, in 2004 the government adopted a
new approach; migrant registration now required concerted eIIorts Irom government oIfces
including the ministries of Labour, Health and the Interior. Under the new policy, registration
became a three-stage process and was opened to employers and migrant workers in all provinces.
First, and similarly to earlier, both migrants and employers were required to register and pay
a fee. Second, migrant workers were expected to pass a medical exam. Failure of the exam
resulted in immediate deportation, while passing provided the migrant worker with health
insurance Ior the duration oI their work permit. Third, with the frst two steps accomplished,
the migrant was issued a one year work permit.
2.4. Vietnam
Before the aoi moi economic reforms in Vietnam, labour exports were mainly conducted within
labour cooperation Irameworks oIfcially agreed between the governments involved. The main
destinations Ior the frst outfows oI labour were eastern Europe and the Iormer Soviet Union.
The primary objective was to prepare a skilIul workIorce Ior industrialisation in Vietnam, as
well as to give jobs to young labourers or those who could not fnd jobs at home. Workers were
recruited according to quotas specifed in bilateral government agreements, and recruitment
was based on strict criteria. The Department of Overseas Labour reported that between 1980
and 1990 a total of 277,183 skilled workers and experts were sent to these countries. Among
them, 112,338 workers went to work in the former Soviet Union; 72,786 workers to East
Germany; 37,659 to Czechoslovakia and 35,099 to Bulgaria. These migrant workers were well
organised, well trained and provided with good access to basic public services such as health
care and vocational or on-the-job training in the host countries.
A new Department for Overseas Labour Management (DOLAB) was established as a part of
the Ministry of Labour, War Invalids and Social Affairs (MOLISA). The main duty of DOLAB
was to govern labour migration. The government then started to build up and implement a
National Strategy on Labour Service Exports. As a result there were several changes in the
traditional labour export markets. These were not limited to the size of labour exports but
affected the geographical distribution and method of operation as well. The government no
longer plays the role of sole labour service supplier to other countries. More autonomy has
been given to recruitment agents and enterprises to explore new markets, make contact with
new foreign partners and seek direct labour contracts. Strict regulations on remittances, control
of foreign exchange earnings and income taxes imposed on migrant workers have all been
abolished.
Additionally, the Law on Overseas Contractual Workers and its associated regulations were
enacted and implemented in 2006, formally institutionalising labour service export. The rights
and obligations of labour market actors, from government ministries and agencies to labour
recruitment and placement units to labour migrants, are more clearly defned. Moreover, the
new regulatory framework has provided migrants with economic incentives. Direct support
11 CDRI
and benefts, such as pre-migration training on social and working conditions abroad, Ioreign
language training and enhanced eligibility for pre-departure and emergency loans, have been
widely supplied. To give more active support to temporary labour migrants, relevant government
agencies have been instructed to take responsibility for holding the host countries responsible
for the protection of the workers.
The number of labourers formally emigrating for temporary work abroad has increased steadily
since the early 1990s, from around 1000 in 1991 to more than 82,000 in 2007. The trend was
interrupted briefy in 1998 by the Asian fnancial crisis but sped up again aIter 1999. The
number increased sharply in 2003 due to the opening up of the labour market in Malaysia;
more than 38,000 Vietnamese workers were given temporary labour contracts by Malaysian
companies that year. A DOLAB report revealed that at the end of 2007 there were around
420,000 Vietnamese temporary labourers working in more than 40 countries and territories.
They came from more than 50 rural provinces (out of 64), where underemployment and a
surplus oI low-skilled labour are major problems
3
Key Findings and Observations
3.1. Financial Costs of Migrating to Find Work
Table 3 summarises the fxed costs oI migrants entering Thailand to work, compared
with a much bigger cost for Thai emigrants to work overseas. For a Cambodian to migrate and
work in Thailand legally means costs oI USD747, Iour to fve times more expensive than going
irregularly. In Cambodia, the cost charged to migrants under the MoU is USD700. Cambodian
migrants with documents obtained in Thailand paid less to the brokers.
Migrants from Laos in the case study faced lower costs to go to Thailand because they did
not travel as far. For Thai migrants to work in Taiwan, the cost was nearly USD5000. Nearly
USD4000 went to the broker in Thailand, while a work permit cost USD625. It is expected the
benefts Irom working in Taiwan will pay this high cost.
The variable and fxed costs Ior Vietnam are summarised in Table 4. The fxed cost Ior a
migrant to Taiwan is only USD3000, compared with USD4827 incurred by Thai migrants.
The cost for a Vietnamese migrant to work in Japan is less (USD2000) but the deposit is huge
(USD10,00015,000).
12 CDRI
Table 3. Survey Results on Fixed Costs of Migrant Workers (USD)
Cambodia Laos Thai
(emigrants) Legal Irregular
(with
document)
Irregular
(without
document)
Irregular
(with
document)
Irregular
(without
document)
Passport 110 4 - 14 - 36
Certifcate oI identity - 5 - - - -
Daily border pass - - - 1 - -
Weekly border pass - 26 - - - -
Physical check-up - - - - - -
- Sending country 10 - - - - 52
- Receiving country - - - 4 - 59
Brokerage fee 625 - - - - -
- Sending country - 29 83 15 96 3925
- Receiving country - 4 53 - - -
Transportation - - - - - -
- Sending country 2 28 25 7 6 57
- Receiving country - 49 56 2 4 -
Visa - 4 - - - 625
Work permit - - - - - -
Skills test - - - - - -
Training cost - - - - - -
Application fee - - - - - -
Other - - - 13 - 73
Total xed cost 747 150 217 56 106 4827
Source. TDRI surveys in 2007
Table 4. Average Cost of Migration and Work for Vietnamese Migrants in Selected
Countries (USD)
Malaysia Taiwan South Korea Japan
Countries of
Middle East
Remarks
Fixed costs:
15002000 3000 699 2000 1500 2000
Payable to labour
supply company in
Vietnam
450 for
insurance
and income
tax
10,00015,000
deposit to prevent
workers 'running
away
Payable to host
country
Variable costs
50 per
month
100
150 per
month
100 per
month
100150 per
month
150 per month
Spent by the workers
themselves.
In Japan and South
Korea, some
workers are provided
with free-of-
charge gas, kitchen
appliances
Sources: Collected from labour supply companies LOG and LATUCO in Hanoi, May 2008
13 CDRI
3.2. Financial Benets of Migrating to Work
For Thailand, the fnancial beneft Irom labour migration is nearly USD2 billion a year.
However, for the individual and household, the economic gain from migrating to Taiwan
varies considerably from one group to another. In contrast, the total economic cost does not
diIIer signifcantly. The average net return is about USD5613 per person per year during the
time abroad. The highest net return goes to divorced/deserted/separated workers, followed by
workers over 45 years old. The lowest net return is to workers under 30 years old, followed
by workers with limited education. However, a worker in Thailand who earned the minimum
wage and worked 365 days a year (in fact, there are weekends and holidays each year) would
earn a total of USD2213 per yearless than the net return for almost every group of Thai
workers or migrants to Taiwan.
For Cambodia, the fnancial beneft is less signifcant than Ior Thailand. Table 5 compares the
fnancial costs and benefts oI irregular and legal individual migrants to Thailand. Workers
sent to Thailand under the MoU are for a period of two years and can be extended for another
two. The total net earnings per year of irregular migrants are only USD300, while those of
legal migrants are USD1190. This is because total benefts Irom working outside the MoU
framework average only USD1000, compared with USD2530 for legal migrants.
Table 5. Financial Costs and Benets for Cambodian Migrants to Thailand (USD)
Irregular Legal
Daily Monthly Yearly Daily Monthly Yearly 2 years 4 years
Total Benefts 5 100 1000 10 230 2530 5060 10,1200
Direct (Net income) 5 100 1000 6 150 1650 3300 6600
Overtime 4 80 880 1760 3520
Total Costs 2 70 700 4 120 1340 2680 4660
Fixed 0 10 100 1 30 350 700 700
Variable 2 60 600 3 90 990 1980 3960
Total Net Earnings 3 30 300 6 110 1190 2380 5460
Source. CDRI survey of 526 householas ana migrants in six villages in September ana October 2007
The earnings of Lao migrant workers are low in comparison with their working conditions and
extremely long hours. On average, migrant workers from Laos earn about USD131 a month.
However, more than half of them earn less than the mean. From the survey, there is a difference
between the average earnings of male and female migrant workers: about USD168 per month
for men and USD112 per month for women. The estimated minimum wage that Lao migrant
workers are supposed to receive in accordance with Thai labour law (USD136) is USD5 per
month more than their average earnings.
A migration survey conducted by the Vietnamese government in 2004 revealed that an
anticipated economic beneft was cited by 69 percent oI respondents as the primary reason
for migration, while other issues such as education (4.5 percent) and family changes (20
percent) played a much smaller role. Recent records from MOLISA indicate that, on average, a
Vietnamese migrant worker can earn around USD150200 a month in Malaysia, USD300500
14 CDRI
in Taiwan, USD4501000 in South Korea and USD10001500 in Japan. These comparatively
high salaries are the most important Iactor pushing workers to seek jobs abroad. Educated or
highly skilled migrants can earn more than these average amounts.
Table 6. Average Income Earned by Vietnamese Migrants in Selected Countries
Country Types of job Average monthly income (USD)
Malaysia
Electronic assembling
Construction
Textiles & garments
Services
150200
Taiwan
Industrial workers
Construction
Fishery
House workers
Nurses 300500
South Korea
Industrial workers
Agricultural workers
Fishery 4501000
1apan
Electronics
Fishery 10001500
UAE
Construction
Electronics
Hotel and restaurant 4001000
Qatar Construction 300700
Srawooth Paitoonpong & Yongyuth Chalamwong (2007)
3.3. Remittances
International migration has enormous implications for the growth and welfare of both the
countries of origin and the destination countries. The receipt of remittances is important to
developing countries in particular. Remittances are an economic lifeline for many families.
Money transferred from abroad is a vital source of capital for poor households and a potential
vehicle for community development. Remittances help many families afford health care and
education and sometimes to invest in or start a business.
All the Thai workers interviewed sent money home during their time in Taiwan, and almost all of
them (97 percent) did so every month. Many of the workers sent back more than USD7813 in total.
The most popular method for sending remittances was wiring the money via a bank (45 percent).
Eighty-seven percent of the workers said their household was better off economically as a result
of their time in Taiwan. None said that they were worse off than before their migration. However,
only 24 percent said they would consider working in Taiwan again. Forty percent said they would
go abroad again, but to a different country. Twenty-one percent said they did not want to go abroad
again, while 16 percent were still unsure about what they were going to do.
Not every Cambodian working inside Thailand reported having sent money home. Overall,
only 73 percent of these migrants sent remittances home in the previous year. The case is
similar to that of migrants to Malaysia. Overall, 20 percent of the 48 workers in Malaysia (50
percent in the housework category) had not yet sent money home. On average, migrants sent
15 CDRI
home or came back with only USD3084 from the last trip, which lasted between a few weeks
and a few months. Migrants who went deep inside Thailand and stayed longer for each trip
remitted USD150180 from the last trip. Remittances for one year are around USD300 on
average, and the maximum can be USD1000.
The household survey in three provinces of the case study area found that Lao migrant workers
save about USD62 per month. The money that migrant workers can remit could be equal to or
less than their saving. In the feld survey, migrant workers themselves stated that they saved
about USD77 per month on average, and remitted about USD47 per month (USD571 per year).
Therefore the actual monthly remittances should be between USD47 and USD62.
The monthly earnings of Vietnamese migrant workers in Cambodia and Laos are around
USD100 on average. These can be considered remittances because they cross the border daily.
However, the earnings differ from sector to sector and between migrant groups. For near-
border migrants, the lowest income is for those engaged in goods transportation and hired
workers. Among migrants far from the border, factory workers have the highest earnings, an
average of USD165.70 per month. The next highest group is small traders, who earn an average
of USD153 per month.
4
Major Issues in Labour Migration
4.1. Thailand
For Thailand, the major issues include: management and regulation oI irregular
workers; monitoring and mitigation of the economic and social impacts of irregular migrant
workers (e.g. security and crime, contagious diseases); public health costs; human traIfcking;
labour standards and downward pressure on wages; over-dependence on cheap labour; and the
slowdown in technology production as a result oI cheap labour. The major issues regarding
emigration from Thailand are primarily the welfare of Thai workers abroad and a brain drain.
Foreigners working in Thailand can be classifed into fve groups: legal Ioreign workers with
visa and work permit; workers of international organisations or agencies; cross-border day
workers with a border pass; illegal or undocumented workers (registered and unregistered);
legal migrant workers from Cambodia, Laos or Myanmar present under MoUs.
Regulations regarding these groups differ. In this study the regulation of foreign workers has
been grouped into four topics: 1) immigration law and requirements; 2) the Employment of
Aliens law or work permits; 3) irregular migrant worker registration; and 4) the MoUs for
the employment of workers from Cambodia, Laos and Myanmar. Migrant workers are also
protected by the Labour Protection Act B.E. 2541, the Social Security Act 1990 and the criminal
code. Thais working outside Thailand are protected by the Act on Employment Agencies and
Job Seeker Protection 1985.
Registration of Irregular Migrant Workers
Previous government policy used registration as a way of policing irregular migrant workers.
The idea was to bring these workers into the open and thereby make regulation more eIfcient
and ensure social protection. The frst registration occurred in 1992, when employers in 10
16 CDRI
provinces along the border with Myanmar were permitted to register foreign workers. In 1993
the fshing industry in 22 coastal provinces was allowed to hire Ioreign workers. In 1996, two-
year work permits for foreign workers were established in 39 provinces and seven industries,
later expanded to 43 provinces and 11 industries. To register, a migrant had to pay a THB1000
(USD31) bond, a THB1000 fee and a THB500 physical check-up fee.
Between 1 September 1996 and 29 November 1996, some 323,123 illegal migrants were
registered, of whom 88 percent were Burmese, and 293,652 two-year work permits were
granted. Almost 80 percent of the migrants were registered by employers across three sectors:
construction (33 percent), agriculture (28 percent), and fsheries (18 percent).
Memoranaums of Unaerstanaing
The MoUs can be seen as a new approach to migration, which recognises that migration and
migrant workers should be managed rather than denied access. Open and safe channels, which
deal with the challenges of migration, are recognised as preferable. Denial served only to
push the problems underground, and as workers sought clandestine entry into other countries,
exploitation and violation fourished. In the Iuture Iees will be collected during the application
Ior jobs. This will provide Iunds to help administer the process and manage the fow oI migrant
workers between the GMS countries.
Social Costs
Particularly prevalent social problems of labour migration in Thailand include HIV/AIDS
and other contagious diseases; human traIfcking, prostitution and child labour; security and
crime; poor labour standards; and unemployment and the low-wage problems of unskilled Thai
workers.
4.2. Cambodia
Because Cambodias labour emigration is a relatively recent phenomenon, the country faces
a challenge of creating a legal framework to deal with it. Many oIfcials interviewed pointed
out that Cambodia lacks a migration policy or any specifc law on migration. The process oI
creating labour migration policy has been initiated with the assistance oI an ILO-Japan project
based in Bangkok.
There is a view that there should be an institution specifcally in charge oI managing labour
migration. It makes sense for the Ministry of Labour and Vocational Training to set up a separate
department to deal specifcally with labour migration. There was a consensus among all the
interviewees that more staff are needed to address acute labour migration issues. This may
require more funds from the government, but there should also be a way to for the department
to generate funding from this business, which brings hundreds of millions of dollars into the
country.
There should be adequate recruitment agencies to handle the approximately 200,000 migrant
workers (most still undocumented) if all are to go in legal ways. Both government and private
institutions need to be suIfcient and strong. Currently there are both a lack oI staII capable
of dealing with labour migrant issues and a shortage of private agencies to recruit, train and
send workers overseas. The government requirement for recruitment agencies to deposit
17 CDRI
USD100,000 with the Ministry oI Labour is a great fnancial constraint and a barrier to new
companies entering the business.
The cost of sending migrant workers to Thailand currently is USD700, including USD100 paid
by each applicant and USD600 (THB20,000) paid by the employer and/or recruitment agency,
which will deduct THB2000 baht a month from workers for 10 months. This cost is very high
compared to the monthly salary, which is only about THB6000 baht. Workers have to work
overtime to generate signifcant savings to send home, which is the main purpose oI migration.
The fee charged by illegal leaders is only USD100, and workers do not have to wait long if they
go by illegal means. While this choice is still open, it is understandable that most workers still
choose to go illegally, despite the risk of being arrested and sent back. Experienced workers
re-enter Thailand by themselves and pay only about USD50 for transportation costs.
The oIfcial cost oI an ordinary passport has been USD120 since 5 March 2007, when USD20
was added Ior the microchip to make an 'e-passport. About USD19 is added as an 'inIormal
fee, making the total price of a passport USD139. This fee is for issuance in two months. If
citizens need a passport sooner, they can get it in one week but have to pay USD224. It is unclear
where the extra fee goes. In Vietnam, the fee is only USD12 (200,000 dong), and the passport
is issued in fve working days. In Thailand and Laos, it is USD30 and is issued in three to fve
working days. Moreover, these countries have many oIfces to process passport applications,
including in the provinces, whereas Cambodia has only one small oIfce in Phnom Penh.
The requirement for recruitment agencies to bear the cost of sending workers is problematic. The
agencies stand to lose if workers run away from the contracted workplace. Desertion, especially
in Thailand, is quite high, according to the recruitment agencies. This is understandable because
only 6114 workers have been sent legally, while some 180,000 Cambodian workers are in
Thailand irregularly. It is likely that legal workers are tempted to fee their debt and join the
large crowd of undocumented workers.
The other problem oI regulation is that the fnancial costs oI sending workers abroad are borne
by recruitment companies or employers overseas. This means a company needs to advance
at least USD600,000 in order to send 1000 workers at a time, since the cost of sending each
worker is USD600. This is a lot of money to risk, especially for Cambodian companies that
are not rich but may be competent. Companies report substantial losses because of workers
running away while abroad. Having recognised this burden, the government does not disagree
with applicants now being required to pay for their own passport and some basic costs such as
health checks. Applicants to work in Thailand are required to pay USD100 by some recruitment
agencies
4.3. Laos
Labour migration is common in the historical relationship between the Lao and Thai populations,
especially in border regions. They also speak similar languages and have the same religion,
culture and traditions. More than 30 percent of Lao people living along the border have family
members or relatives living on the Thai side. Therefore, crossing the border to visit family,
trade or seek employment is taken as a normal activity by Lao and Thai people in this area.
18 CDRI
In the 1990s a mass stream of labour migration to Thailand was instigated by a new employment
policy in 1986 and the subsequent 'open door and integration policy, as Thailand headed into
a sustained period of socio-economic development. As a result, infrastructure, information and
communication networks linking the two countries were built to facilitate the movement of
goods, capital and labour.
Currently, there is no oIfcial fgure Ior the number oI Lao migrant workers in Thailand. Estimates
vary Irom 100,000 to 300,000. Economic reasons are identifed as the main determinant oI
labour movement to Thailand. It is expected to continue to increase over the next few years, for
many reasons. The most important are the demographic change occurring in both countries, the
increasing labour defcit in Thailand, the increasing per capita income and wage gap between
Thailand and Laos, the end of the general system of preferences for the garment industry in
Laos and continued regional economic integration.
The governments of both countries have shown great interest in solving the problem of irregular
labour migration. They have tried to set up a system to regulate and control labour migration.
However, due to high associated costs, complex procedures, lack of enforcement capability and
little public awareness of labour export, the system is not yet successful. Under this system,
only 5400 Lao people work in Thailand.
Labour migration by irregular channels still constitutes the main bulk of labour movement
Irom Laos to Thailand. The majority are young people with a low level oI education. More than
85 percent of the migrant workers have a primary school education or lower.
4.4. Vietnam
Very few poor people from remote rural localities have access to emigration opportunities,
contrary to the purpose of labour migration. The working poor in some economically
disadvantaged provinces have been entirely excluded from labour migration. The poor cannot
afford to migrate; the amount to cover pre-departure and training costs is too high for most.
The government programme to support them often faces technical and procedural bottlenecks.
Health is also an issue for the poor wishing to participate in the international labour market
because low-income households are more likely to suffer health problems.
Migrant workers who are under contract oIten take other Ireelance jobs without proper
justifcation or warning to their employer. This issue is said to be extremely serious in Japan,
South Korea and Taiwan. The reported ratio of desertion by Vietnamese workers is 2730
percent in Japan, 2025 percent in South Korea and 912 percent in Taiwan. This undesirable
phenomenon is explained, in most cases, by the underpayment of contract workers. For
example, it was reported by the Hanoi Labour Supply company (LATUCO) that while a formal
contract worker is paid around USD700 per month, an illegal worker can earn USD15002000
a month Ior the same job.
The positive effects of enhanced skills and knowledge obtained while working abroad were
not as evident as expected. The lack oI a sound oIfcial programme Ior the resettlement oI
returned labourers has oIten been acknowledged by government oIfcials as a crucial problem.
Moreover, some returning workers had no job at all. Given the low ratio oI skilled labour in
19 CDRI
Vietnam (around 30 percent), this implies an unreasonable waste of skilled and well-trained
people.
There were a number of cases of poor people being trapped by unreliable or even fake
inIormation on the quality oI overseas jobs and living conditions. Poor people, especially
those from mountainous and remote areas, often have very limited access to proper sources of
information and public communications. As consequence, they can easily become victims of
illegal recruiters who intentionally mislead them with promises of easy earnings and a prosperous
life abroad. Illegal recruitment and bogus information, in parallel with the dearth of support in
the recipient countries, often lead to violations in working conditions and contract abuse. Some
violations have already been disclosed in South Korea and Taiwan, where contract workers
broke their contracts and escaped to look Ior illegal jobs. Other violations are less obvious
and take the form of overwork, poor working conditions, low payment and exploitation by
employers. Broken dreams cost them time and resources and in many cases lead them further
into debt.
While the reasons for migrating for work are much the same for every migrant, the way of
leaving varies greatly between different groups heading for countries within and outside the
GMS. While the majority oI migrants heading Ior countries in East Asia, Europe or Iurther
afeld do so through Iormal channels, most oI the labour migration Irom Vietnam to GMS
countries is informal. These informal channels include illegal movement across borders and
people smuggling. The fow oI migrants Irom Vietnam seeking better employment opportunities
in Cambodia, Laos and Thailand has undeniably increased. The delay in formalising these
movements means it is an ever more expensive and unsafe enterprise for workers, particularly
those from poor rural areas.
5
Policy Recommendations
Based on these studies, we recommend that the following issues be addressed:
the exploitation of prospective emigrants; failures to adhere to workers contracts;
insuIfcient income to support the cost oI living in destination countries; high
brokerage Iees; insuIfcient labour protection; exploitation by employers; cultural and language
problems; reintegration problems. Last but not least, active collaboration with other GMS
governments on labour migration is very important. Most GMS governments have a shared
interest in better understanding the role of migration in national development and how it can
be Iacilitated. Specifc recommendations are Ior reducing the economic and social costs and
maximise the benefts.
Reducing Economic and Social Costs
Help people reduce the fxed costs oI migration by Iacilitating dialogues with the authorities x
in host countries and formalising and reducing the costs that migrant workers have to pay
once abroad. This is especially important Ior migrant workers in agriculture and fshing,
which attract high lease Iees Ior land cultivation or fshing rights.
Make all necessary regulatory changes to ensure the full protection of migrant workers; x
20 CDRI
secure their access to social services in more eIfcient, equitable and fnancially sustainable
ways; improve access to banking services Ior migrants; and reduce job application and re-
mittance costs.
Conduct a strategic review of recruitment agents and enterprises and the impact on migrant x
workers rights; put stricter controls on brokers and recruitment agencies; prosecute abusive
agencies and traIfckers; bring an end to recruitment agencies and enterprises violating the
laws and regulations; apply the maximum penalty to all unscrupulous agents.
InIormation concerning job opportunities, destinations, registration procedures, and access x
to social services and support should be made available at the grass roots so that people have
enough information to make informed decisions. The establishment of information points in
areas with high emigration rates could be a good option.
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More decisive efforts should be made to maximise savings and remittances and their posi- x
tive impacts. First oI all, it should be ensured that fnancial institutions encourage the maxi-
mum infow oI remittances. New mechanisms or channels should be established Ior migrant
workers to remit their earnings home. For example, it is highly recommended that the state
bank provide guidance for the establishment of overseas branches, or an expansion of its
cooperation with foreign banks, to allow migrant workers to maintain accounts abroad and
remit their savings easily.
In addition to the pre-departure training or orientation programmes, more support should x
be given to migrant workers on how to better manage their incomes and savings. This is
particularly important for poor and low-skilled workers.
Legal, language and cultural advice as well as job counselling should be provided to work- x
ers to help them better understand their of contracts, rights and obligations. This will also
increase their awareness oI the potential benefts and costs oI migrating.
21 CDRI
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22 CDRI
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23 CDRI
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Review of Current Practices ana Suggestions for Improvement.
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Camboaian Experience.
7) McAndrew, John P. (December 1998), Interaepenaence in Househola Livelihooa Strategies
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9) Teng You Ky, Pon Dorina, So Sovannarith & John McAndrew (April 1999), The UNICEF/
Community Action for Social Development ExperienceLearning from Rural Development
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10)Gorman, Siobhan, with Pon Dorina & Sok Kheng (June 1999), Genaer ana Development
in Camboaia. An Overview.
11) Chan Sophal & So Sovannarith (June 1999), Camboaian Labour Migration to Thailana. A
Preliminary Assessment.
12)Chan Sophal, Toshiyasu Kato, Long Vou Piseth, So Sovannarith, Tia Savora, Hang Chuon
Naron, Kao Kim Hourn & Chea Vuthna (September 1999), Impact of the Asian Financial
Crisis on the SEATEs. The Camboaian Perspective.
13)Ung Bunleng, (January 2000), Seasonality in the Camboaian Consumer Price Inaex.
14)Toshiyasu Kato, Jeffrey A. Kaplan, Chan Sophal & Real Sopheap (May 2000), Enhancing
Governance for Sustainable Development.
15)Godfrey, Martin, Chan Sophal, Toshiyasu Kato, Long Vou Piseth, Pon Dorina, Tep
Saravy, Tia Savara & So Sovannarith (August 2000), Technical Assistance ana Capacity
Development in an Aia-aepenaent Economy. the Experience of Camboaia.
16)Sik Boreak, (September 2000), Lana Ownership, Sales ana Concentration in Camboaia.
17)Chan Sophal, & So Sovannarith, with Pon Dorina (December 2000), Technical Assistance
ana Capacity Development at the School of Agriculture Prek Leap.
18)Godfrey, Martin, So Sovannarith, Tep Saravy, Pon Dorina, Claude Katz, Sarthi Acharya,
24 CDRI
Sisowath D. Chanto & Hing Thoraxy (August 2001), A Stuay of the Camboaian Labour
Market. Reference to Poverty Reauction, Growth ana Aafustment to Crisis.
19)Chan Sophal, Tep Saravy & Sarthi Acharya (October 2001), Lana Tenure in Camboaia. a
Data Upaate.
20)So Sovannarith, Real Sopheap, Uch Utey, Sy Rathmony, Brett Ballard & Sarthi Acharya
(November 2001), Social Assessment of Lana in Camboaia. A Fiela Stuay.
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1999-2000. Lana, Labour ana Rural Livelihooa in Focus.
22)Chan Sophal & Sarthi Acharya (July 2002), Lana Transactions in Camboaia. An Analysis
of Transfers ana Transaction Recoras.
23) McKenney, Bruce & Prom Tola. (July 2002), Natural Resources ana Rural Livelihooas in
Camboaia.
24)Kim Sedara, Chan Sophal & Sarthi Acharya (July 2002), Lana, Rural Livelihooas ana
Fooa Security in Camboaia.
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A Perspective from Nine Jillages in Camboaia.
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Non-farm Employment. A Perspective on Job Creation in Camboaia.
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28)Prom Tola & Bruce McKenney (November 2003), Traaing Forest Proaucts in Camboaia.
Challenges, Threats, ana Opportunities for Resin.
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& David Craig (March 2007), Accountability ana Neo-patrimonialism in Camboaia. A
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Decentralisation Meets Democracy. Civil Society, Local Government, ana Accountability
in Camboaia.
25 CDRI
36)Lim Sovannara (November 2007), Youth Migration ana Urbanisation in Camboaia.
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Governance in Camboaia. A Literature Review.
38) Pak Kimchoeun and David Craig (July 2008), Accountability ana Public Expenaiture
Management in Decentralisea Camboaia.
39) Horng Vuthy and David Craig (July 2008), Accountability ana Planning in Decentralisea
Camboaia.
40) ENG Netra and David CRAIG (March 2009), Accountability ana Human Resource
Management in Decentralisea Camboaia.
41) Hing Vutha and Hossein Jalilian (April 2009), The Environmental Impacts of the ASEAN-
China Free Traae Agreement for Countries in the Greater Mekong Sub-region.
42) Thon Vimealea, Ou Sivhuoch, Eng Netra and Ly Tem (October 2009), Leaaership in Local
Politics of Camboaia. A Stuay of Leaaers in Three Communes of Three Provinces.
43) HING Vutha and THUN Vathana (December 2009), Agricultural Traae in the Greater
Mekong Sub-region. The Case of Cassava ana Rubber in Camboaia.
44) Chan Sophal (December 2009), Economic Costs ana Benehts of Cross-boraer Labour
Migration in the GMS. Camboaia Country Stuay.
CDRI
CDRI - Cambodias leading independent development policy research institute
)56 Street 315, Tuol Kork, Phnom Penh, Cambodia
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COSTS AND BENEFITS OF CROSS-COUNTRY

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