Abstract

In the context of globalization and economic integration, labor mobility in general, international labor migration and export in particular are increasingly playing an important role in reshaping the future of the world’s economic geography. This study is conducted to provide insights into employment, costs and incomes of export labors in Yen Khe, Thanh Ba district, Phu Tho province. In-depth interviews and questionnaire surveys were applied to collect primary data on employment, costs and incomes of export labors, related issues and consequences. These were also supplemented by the secondary data collected from different sources during the study process. The study found that labor export not only helps to create jobs, reduce unemployment and underemployment, but also to diversify jobs for workers, contributing to the restructure of the local economy. Remittances from export labors contribute directly to the increase of individual workers and their families’ incomes, transforming the income structure in the way that is less dependent on local livelihood capitals and local livelihood strategies. However, labor export has also posed issues and consequences for export labors and their families. Notably, the status of illegal labor abroad, investment capital for labor export and related debt, services for labor export, voluntary unemployment, family conflicts, income inequality caused by remittances.

Introduction

In the context of globalization and economic integration, labor migration in general, international labor migration and export in particular are increasingly playing an important role in reshaping the future of the world’s economic geography. The study site, Yen Khe is a poor mountainous commune in Thanh Ba district, Phu Tho province, with natural conditions and resources mainly suitable for agricultural development. Given the limitations on livelihood capitals while having a large population, local employment is insufficient and does not guarantee income for a part of the labor force (People's Committee of Yen Khe Commune, 2015, 2017b). Therefore, labor export in particular is a livelihood strategy being selected by an increasing number of workers here. Labor export has created jobs for a significant number of rural workers. Remittances from abroad help increase household income and transform the economy structure in the way that is less dependent on local livelihood resources. As a result of labor export, many households have been able to invest in production, education and health care. The poverty rate has decreased significantly, the living standards of many households with export labor have clearly improved (Department of Labor - Invalids and Social Affairs of Thanh Ba District, 2018; People's Committee of Yen Khe Commune, 2015, 2017a, 2017b). However, labor export also raises many issues such as unemployment, income differentiation and other related consequences. Both positive and negative impacts of labor migration in Vietnam have been discussed elsewhere based mainly on the secondary data at national level (Anh, 2008; Consular Department of the Vietnamese Foreign Ministry, 2011; Duyen, 2009; Ishizuka, 2013).

This study provides insights into employment, costs and incomes of export workers in Yen Khe. The paper begins with an overview of the study site and the research methods applied to collect the data. The paper then analyzes employment changes and employment issues of workers before, during and after working overseas. The next sections provide an analysis on expenses for labor export and income from export labor; then it uncovers the issues and consequences related to the costs of and income from labor export.

The study site and research methods

Listed as a poor mountainous commune in Thanh Ba district, Phu Tho province Yen Khe has natural conditions and natural resources mainly suitable for agricultural development. Yen Khe has total population of 5,122 people, a high population density of 713 people/km2, and population growth rate of about 0.75% (data for 2017) (Thanh Ba District Statistical Office, 2010 - 2017). The total number of labors is 2,660, accounting for 53% of the population. In which non-agricultural labor accounted for 31.1%, agricultural labor accounted for 68.9% of the total labor. Labor with primary education accounted for 1%, secondary education accounted for 54%, high school education or higher accounted for 45% (People's Committee of Yen Khe Commune, 2015, 2017b). Abundant labor force is considered as an important resource for economic development but it also puts high pressure on employment. Therefore, labor export is one of the important solutions to create jobs and improve living standards for local people. Regarding economic structure, agriculture accounts for a low proportion of 16% of the commune's production value, manufacturing – construction and handicraft is 22% and the services is 21%. Income from other sources (pensions, remittances from abroad, remittances from migrant workers to other localities throughout the country) accounts for 41% (People's Committee of Yen Khe Commune, 2015, 2017b; Thanh Ba District Statistical Office, 2010 - 2017). Thus, labor export is considered as an option that plays an important role for socio-economic development, people in Yen Khe commune.

In the period from 2010 to 2017, Yen Khe had 250 labors working abroad as export labors, of which 21 cases came back and but continue to go abroad to work for the second time. The total number of export laborers for the period is 229 people from 221 households. On average, one out of every 7.7 households went to work overseas. Out of these 229 workers, 98 returned and are currently staying at the commune. The number of laborers currently working abroad is 131, accounting for 8.6% of total people at working age of the commune. The commune's export workers work in 11 countries and territories. In which there are 4 main markets are Taiwan (56.4%), Malaysia (18.4%), Japan (9.6%) and South Korea (9.2%). Other markets such as Arab, Russian Federation, Turkey, and Angola all account for a small proportion (People's Committee of Yen Khe Commune, 2017a).

Primary data were collected between November 2017 and November 2018. In-depth interviews were conducted with officials from district to commune and village level, with the bank officials, export workers and their relatives, representatives of households without export labor to obtain data on the study site’s socio-economic geography, current status of labor export, and the influences of labor export on employment issues, costs and income from export labor. The collected primary data were supplemented by secondary data related to labor export collected during the fieldwork. The questionnaire surveys were conducted for 50 households, divided into 2 groups, 25 households with export labor and 25 households without export labor. These participants were recruited from all 15 villages in which each group was selected according to the income level, high income, average income and low income. The questionnaire explored the influences of labor export on employment issues, costs and income from export labor of households. The data obtained from the questionnaire surveys were triangulated with and enriched by informal interviews, observations and field records. Secondary data on international migration and labor export of Vietnam were also used during the implementation.

Employment before, during and after labor export

In the context of limitation of development resources and local livelihoods, employment is the first and urgent need for laborers in Yen Khe commune. Therefore, strengthening labor export is one of the important goals in the National Target Program on Employment and Vocational Training for the period 2012-2015 (Vietnam Prime Minister, 2012) and the Target Program for Vocational Education - Employment and Occupational Safety period 2016-2020 (Vietnam Prime Minister, 2017) with many policies to support labor export, especially for poor communes and districts.

Employment has been the first benefit that labor export brings to local labors. In the period of 2010 - 2017, there were 229 new jobs created for 229 workers of Yen Khe commune through labor export (People's Committee of Yen Khe Commune, 2017a). The specific jobs that employees do before, during and after labor export are vastly different. These jobs can be classified into three sectors, (i) agriculture (ii) manufacturing, construction and handicraft, and (iii) services. Employment details of workers before going abroad, overseas and after returning home are reflected in Table 1.

Source: (People's Committee of Yen Khe Commune, 2017a) and Fieldwork from November 2017 to November 2018

Local reports and survey results show that the employment structure of employees by economic sector has markedly changed before going abroad, overseas and after returning home (see Table 2).

Source: (People's Committee of Yen Khe Commune, 2017a) and Fieldwork from November 2017 to November 2018

Before going abroad, laborers mainly worked in agriculture (85%). The number of labors working in industry - construction and small industry and service industries accounts for a small proportion, about 9%. Remarkably, there is a part of unemployed labor, about 6%.

During their time abroad, these workers mainly work in manufacturing and construction sector, accounting for 87% while the number of employees working in the remaining industries is not much, accounting for about 13%. Vietnamese workers abroad mainly do common jobs that require more physical and ingenious. The survey results show that the workers in Yen Khe going abroad hold diverse educational background and professional qualifications. The lowest education level is grade 7 and the highest is university-level professionals. For those who graduated university, college or vocational education, the professions they have been trained in Vietnam are not suitable for the demand for high quality labor abroad. Therefore, when working abroad, they are considered as unskilled labor. Many export workers have to do manually hard work that not many local workers can do not or want to do. Interview results show that overseas jobs are considered suitable for the physical health condition of Vietnamese workers. All 25 workers interviewed said that the work load in 8 hours is moderate. They all desire to work overtime to increase their income. However, whether or not this demand is met depends on the contracts, the companies that they work, and the labor management abroad.

Illegal labor is also a big problem for Vietnamese workers abroad. Many workers have fled to work illegally outside during their contract time. Some stay to work illegally after their contracts expire. Illegal workers are not only at risk but also do not receive any legal protection and assistance when facing uncertainties and risks overseas. Of the 25 workers interviewed, three in Taiwan admitted that due to the small number of jobs at the company, they escaped to work illegally full-time or part-time. Among them, there is 1 worker who has not come back for 8 consecutive years while the labor contract is normally signed for every 3 years.

When returning home, with the money earned, the skills and professional improved, workers have found more diverse and appropriate jobs locally. However, the number of workers returning to work in agriculture sector is still high, accounting for about 43%. Notably, the unemployment rate among the export workers after returning home is quite high, about 10%. This reflects the difficulties and inadequacies in job creation/job availability for the export workers who return home. Out of 25 workers interviewed, up to 6 cases have signed the contract to work abroad for the second time, 13 workers have not returned. When asked about their planned work after returning home, 13 workers were very vague with no clear intention about what they were going to do after returning home. There are 20 out of 25 workers who want to continue to work overseas as export laborers for the second contract.

Interview results show that workers who are working abroad have no clear intention for their employment when returning home. Living and working abroad for a long time, they are familiar with a decent job, a civilized lifestyle, a higher standard of living in the country they worked. Therefore they are facing the fear of unemployment, unable to adapt to the working environment or unable to find suitable jobs in Vietnam.

Employment after returning home is still a difficult problem that the export labor faced after returning home. Ms. D (6 years in Malaysia, 35 years old, education level 9/12) could not get a job in industrial zones because of her senior age, and her professional qualifications could not meet the requirements of the job. Ms. H (6 years in Malaysia) spent all the money earned on building a house and buying cars, and then has returned to cultivating and animal raising work as before. Mr. H returned home after 4 months of working in Taiwan due to weak health, unable to meet the requirements of the job. His family had to send money to him to buy a plane ticket to return home. Mr. H (23 years old, University of Physical Education and Sports, working in Malaysia) and Ms. A (24 years old, University of Education, working in Taiwan) wish to use the money earned from export labor to find a job in the public sector that is suitable to their professional skills

Expenses for labor export

Going to work overseas is considered as an important decision of the workers and their families. This decision is influenced by many different factors, but most importantly, it requires large economic investments (Black, Bennett, Thomas, & Beddington, 2011). To work abroad, households have to mobilize funds from different sources. According to our survey from 25 households with labor export, the investment sources for labor export are diverse, including savings from production activities of the family, loans from relatives, preferential loans for social policies of agricultural banks, savings of the workers them self or their relatives who worked abroad previously.

Interview results show that only 3 out of 25 households can afford to invest in labor export, 4 households re-use the income from their previous overseas working, which is a relatively safe source of capital because workers do not have to pay interests. Six households borrowed money from relatives and 14 households borrowed from the bank at different interest rates. Currently, the Social Policy Bank and the Bank for Agriculture and Rural Development apply preferential policies for people who want to take loans to invest in labor export. However, they will be under high pressure to repay the debt and high risk of big debt if labor export fails.

The costs for export labor and the incomes of migrant workers are significantly different in each country. These depend on many factors such as destination country, the time of labor export, brokerage cost in Vietnam, certain jobs and salary level. Table 3 illustrates the results of in-depth interviews on labor export costs to different markets in relation to income, remittances and payback period.

Source: Fieldwork from November 2017 to November 2018

The cost of labor export is often proportional to the income of the employee. High labor export costs mean high incomes, large remittances, and vice versa. As two countries with developed economies, Japan and South Korea require higher costs for labor export, but return higher income for workers. After deducting expenses for accommodation and living expenses, they can send back to their families from 15 to 20 million/month. This level of investment in labor export is suitable for families with good economy and can accept risks if labor export fails.

Taiwan is a new industrial territory, migrant workers in this labor market have to pay for labor export at average cost. In turn, they earn average income. The payback period is usually from 12-13 months. This market is suitable for households with average income, who have to borrow some part of the cost. Laborers working in Malaysia have to pay lower labor export costs and, in turn, earn the lowest income. Thus the payback time takes typically from 4 to 5 months. This market is suitable for low-income groups. The survey showed that out of 8 households with migrant workers in Malaysia , 2 households have enough capital to invest; 3 households have to borrow about 50% and 3 households have to borrow 100% capital. Although the income in Malaysia is not much higher than that in Vietnam, workers can solve the shortage of jobs and the current economic difficulties.

Income from labor export

Table 4 simulates the income of migrant workers in different markets after deducting investment costs. In cases with stable jobs, after the first 3 years of working overseas, labors in Japan and South Korea receive a relatively large amount of money, about VND 500 million. For the Japanese market, from 2017 onwards employees can receive a maximum of 3 years employment contract. Since 2018, thanks to the policies for the intern trainee program in Japan, Vietnamese export laborers in Japan are allowed to increase the contract term up to 5 years in all industries (Department of Labor - Invalids and Social Affairs of Thanh Ba District, 2018). For the Korean market, the first labor contract lasts up to 5 years, then depending on the partner, the contract may be extended for the second time from 3 to 5 years. Therefore, after 5 to 8 years of working in Korea, workers can earn from 1 to 1.5 billion. This is a very large amount compared to the unskilled workers working in Vietnam.

Source: Fieldwork from November 2017 to November 2018

However, it is reported that there are many cases where workers are forced to return home before the contracts end. In these cases, the initial expenses have not been fully recovered. The reasons are varied from poor health condition, having an accident, unable to cope with the work pressure to other emergent problems during the first days working overseas. Returning home ahead of time causes significant economic losses for the workers and their families, it even takes many years to repay the borrowed capital/loan.

If labor export is successful, the economy of the whole household will be improved. The survey on 25 households with labor export shows in all three groups that their incomes increased significantly after having members working overseas with different income levels (Table 5).

Source: Fieldwork from November 2017 to November 2018

Among households with export labor in Korea and Japan, the total income increases an average of 210 million/year, equivalent to 3.4 times for the high-income households. The middle-income households, the increase is respectively 126 million and 2.7 times. The group of low-income households, the increase is respectively 75.8 million and 2.1 times. The groups of middle- and low-income households usually have laborers working in Taiwan and Malaysia. Regardless of income groups, the income change proves that labor export has contributed significantly to the economic improvement of these households.

Compared with the group of households without export labor, the income differences are more pronounced to all income groups but notably to the low income groups (see Table 6). The wider disparity among the low-income groups proves that labor export is of great significance, especially for the poor and near-poor households. However, this disparity also proves that the gap between rich and poor is widening in rural Yen Khe. Better-off households may continue to get richer while low-income households have few opportunities to improve their income.

Source: Fieldwork from November 2017 to November 2018

As can be seen in Figure 1 below, the income structure of the households with export labor has changed dramatically with the contribution of the income from export labor. The figure reflects the income structure of 25 households with export labor interviewed in Yen Khe. In particular, the proportion of agriculture, manufacturing and some service sectors in the household income structure have dropped sharply as labor export accounts for 68% of household income. Laborers working overseas have become the key breadwinner, creating major part of their household income.

Figure 1. Income structure change of households with export labor

Figure 1. Income structure change of households with export labor

Source: Fieldwork from November 2017 to November 2018

However, research data also indicate that the remittances from labor export can be the cause of many negative social issues. Family members living at home are lazy and tend to rely on remittances from abroad. In other cases, many people easily fall into gambling, alcohol, lottery, or prostitution. Besides, the increasing conflicts in families whose income has arisen so quickly in a short time is also the consequence of labor export.

Another notable finding from our interviews with the participants is that some workers after returning home are lazy to work or cannot find suitable jobs, but rely on money earned from abroad for a long time. Of the 98 workers who have returned home, 10 are in voluntary unemployment. This can be explained by the fact that these workers have adapted to a decent work with high-income abroad and have not yet found suitable jobs in the country. Their life is still guaranteed by the money and interest from that they earned overseas. They are satisfied with that money, want to rest, and do not want to work immediately. Some laborers after returning from labor export are getting older, which makes it difficult for them to find suitable jobs to their age and health condition. This is a great waste of labor force and capital from labor export.

Conclusions

In the context of limitation of local livelihoods, labor migration in general and labor export in particular is a popular tendency selected by an increasing part of labor force in Yen Khe commune. Labor export not only helps to create jobs, reduce unemployment and underemployment, but also to diversify jobs for workers, contributing to economic restructure of the locality. Remittances from export labors contribute directly to the increase of individual workers and their families’ incomes. Remittances have also transformed the income structure in the way that is less dependent on local livelihood capitals and local livelihood strategies.

However, labor export has also posed issues and consequences for individual export labors and their families. Notably, the status of illegal labor abroad, investment capital for labor export and related debts, services for labor export, voluntary unemployment, family conflicts, income disparities caused by remittances. These issues and consequences require appropriate solutions, especially labor training and labor export services, investment policies and capital support for labor export, development policies aim to mobilize and promote the values ​​of employment, human resources and remittance from export labors.

Acknowledgments

This paper is based on the research approaches of the Ministry-level Project "Migration and its impacts on livelihoods and poverty in coastal rural of the Red River Delta" (B2016-SPH-02). The first author is the project leader. The second author is the first author’s master student during the time of conducting her master thesis.

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