Thu, 13 Oct 1994

GATT to remove borders for workers

By Ridwan M. Sijabat

JAKARTA (JP): The good news is that as of the year 2005, workers all over the world, Indonesia included, are virtually free to move from one country to another.

The bad news is, as far as Indonesia is concerned, it's going to be a tough and competitive world out there for its workers.

This warning came from Yudo Swasono, head of the Research and Development Agency of the Ministry of Manpower, after studying the impact of the General Agreement on Tariffs and Trade (GATT) on the labor market. Indonesia is a member of GATT, along with 123 other countries.

Between now and 2005, when most of the existing barriers to the movement of workers will be lifted, Indonesia must strive to strengthen the skill and professionalism of its huge workforce, and make them competitive, Yudo told The Jakarta Post.

"This country will be flooded by professional expatriates when we open our labor market to the foreign countries who signed the agreement," he pointed out.

The clause concerning the labor market is part of the General Agreement on Trade in Services (GATS), one of the documents in the GATT treaty signed in Marrakesh, Morocco, in April.

When that particular paragraph comes into force in 2005, there will be greater movement of workers across national borders because the GATS compels all signatories to open their doors to foreign workers. There are exceptions, but only under strict conditions and are temporary in nature.

For a nation increasingly relying on exporting workers, this is good news. But, as Yudo pointed out, it works both ways, and Indonesia must be equally prepared to accept more foreign workers.

Currently the employment of foreign workers in Indonesia is strictly regulated and limited to only managerial-level positions which can not be filled by Indonesians. Their work permits are also reviewed periodically and they are subject to heavy income taxes.

Under GATS, Indonesia has already pledged to begin opening the various services sectors to foreign exporters and investors, including the tourism, hotel and transportation sectors.

The labor market's integration will be a major challenge, specifically for the Ministry of Manpower, because it has to make Indonesian workers more professional in order to make them competitive in the tough liberalized labor market after 2005.

Yudo acknowledged this is not an easy task, "because of the low quality of our human resources," he said, pointing out that 76 percent of Indonesian workers have only primary school education. Many of them did not even complete school.

Yudo, who received his doctorate on labor economics from the University of Illinois in 1989, said Indonesia could be competitive in labor market segments or in professions that require limited skills.

Massive campaign

He cited bus drivers, tour guides and middle level managers as examples. "We will lose out in the upper segments such as professional managers, lawyers and accountants," he said.

At present, Indonesia has about 2.5 million low and middle level professional workers and about 200,000 professional managers, lawyers and accountants.

The government has agreed to launch a massive campaign to publicize the impact of the GATS on the economy and its implication on workers.

Yudo said each country will still be able to impose some restrictions on the employment of foreign workers but they are strictly on the professional qualifications of the migrants.

He conceded that this clause is working to the advantage of the industrialized countries and at the expense of developing countries, Indonesia included.

"It's a bad trick by developed countries to bar developing and poor countries from taking advantage of the global trade," he said. "Who has the most professional managers and noted lawyers? The developed countries of course."

He stressed Indonesia has no choice but to comply and try to take as much advantage as it can out of the situation.

In the services sector, he says, Indonesia's main competitors will be Singapore, South Korea, Malaysia and the Philippines.

Regional cooperation through forums like the Association of Southeast Asian Nations (ASEAN) and the Asia Pacific Economic Cooperation (APEC) should also be exploited to Indonesia's advantage, he added.