Monday, August 8, 2016

Happy 49th ASEAN Day!

Today is ASEAN Day, the 49th anniversary of the founding of ASEAN on August 8, 1967 with the signing of the Bangkok Declaration by Indonesia, Malaysia, the Philippines, Singapore and Thailand.  These founding members were later joined by Brunei (1984), Vietnam (1995), Laos (1997), Myanmar (1997) and Cambodia (1999).

In celebration of ASEAN Day, today’s AEC Blog entry forgoes the usual commentary and instead provides the lyrics and tune of the ASEAN Anthem:

Raise our flag high, sky high 
Embrace the pride in our heart 
ASEAN we are bonded as one 
Look-in out to the world. 
For peace, our goal from the very start 
And prosperity to last. 
We dare to dream we care to share. 
Together for ASEAN 
we dare to dream, 
we care to share for it's the way of ASEAN.

Friday, June 24, 2016

Brexit's Effects on ASEAN

Yesterday the British people voted to leave in the EU, e.g., "Brexit".  UK Independence Party leader Nigel Farage called this the "Independence Day" for the UK from the EU.  

By happenstance, today is also the premiere of "Independence Day: Resurgence," the sequel to the disaster movie "Independence Day."  In the sequel, the aliens destroy London and Singapore with a megaweapon. 

The Brexit referendum is the legal equivalent of that megaweapon.   Read more at my earlier post. 

We are now in for 2+ years of negotiations on separation treaties and free trade agreements for the UK, EU and their trading partners.   More work for lawyers and consultants, but bad news overall.

Friday, June 3, 2016

ASEAN Minimum Wage May Raise Compensation and Institutional Issues

This week Indonesian Vice President Jusuf Kalla proposed an ASEAN minimum wage for workers.  According to the Jakarta Post, Kalla made the proposal during a World Economic Forum meeting on ASEAN in KL:
Vice President Jusuf Kalla introduced the idea amid concerns over a lack of protection for nationals of ASEAN member states.   "Vietnam very much supports what I have said about the need for ASEAN countries to protect their citizens from exploitation," Kalla said on Thursday as quoted by Antara news agency.
He said other ASEAN member countries had expressed interest in pushing for a minimum wage for workers in the region. Kalla said manpower ministers from ASEAN member countries would meet shortly to discuss the issue. "We are in agreement. Cambodia has also agreed," he asserted. 
Kalla added that the government did not want large multinational companies in ASEAN countries to compete for the lowest wages. "Competition is good, and so far we have not lost out due to low wages because the raw material is the same, the factories too," Kalla said. 
I am not going to debate here whether government-mandated minimum wages are economically beneficial to workers, consumers or employers.  However, the Indonesian proposal does raise some ASEAN-specific issues which I’d like to discuss.
First, would we have an ASEAN region-wide minimum wage, or would there be allowances for the less-developed countries of Cambodia, Laos, Myanmar and Vietnam (CLMV)?  Kalla’s comments indicate support from Cambodia and Vietnam, who presumably would want such allowances.
Second, would the scope of the minimum wage only cover wages, or would benefits such as retirement, severance, medical, leave, etc., also be covered?  In other words, is the term “minimum wage” to be taken literally or will it cover all aspects of worker compensation?  Will there be different wage scales for different sectors?
Third, who would be covered?  All workers in an ASEAN country, including guest workers?  Or only ASEAN nationals?  What about ASEAN nationals who are in another ASEAN country but on an undocumented basis?  Or who are working in a special economic zone?
Fourth, how the workers ensure that their rights to a minimum wage are protected?  Would they go to an ASEAN institution (not likely) or an ASEAN member state’s government (much more likely)? Could they go to dispute resolution or to administrative means?    Who would investigate?  What sanctions would be imposed on the employer? Would the workers be entitled to receive back wages? 
Fifth, even if the enforcement process will be necessarily nation-based instead of region-based, how will the ASEAN national agencies or courts interpret and apply the ASEAN minimum wage documentation? Will they look at the negotiating history, statements by government officials and the like? 
All of this leads to my final question, what legal form will the ASEAN minimum wage take?  Will it be the usual ASEAN declaration of an aspirational nature, which might mean that the minimum wage would be fully or partially unenforceable?  Or will it have more legal weight, which would make it more effective but will require more legal and institutional infrastructure?
In previous posts, I have called labor mobility the “third rail of ASEAN” which politicians will touch only at their peril. The ASEAN minimum wage proposal does not touch this third rail, but it raises similar issues with similar potential controversies: it’s not touching the third rail, but it is close enough to hear the electricity humming down the line.