Will the AEC help or hinder HR in Singapore?

by Miklos Bolza08 Dec 2015
With the formal establishment of the ASEAN Economic Community (AEC) at the 27th ASEAN Summit last November, dramatic changes are on the horizon when it comes to the regional labour market.
 
According to the ASEAN Integration Report 2015, one of the initiatives for the AEC is the free flow of skilled labour across the region.
 
A recent HRD poll asked how Singaporean HRDs felt about these impending changes. The results were mixed with 47% of respondents excited or hopeful about the AEC, 47% cautious or concerned, and 6% neutral.
 
HRD spoke to Julia Yeo, legal director of Clyde & Co Clasis Singapore, about her thoughts on whether the AEC would create positive or negative effects for Singaporean HRDs.
 
“In my view, the AEC is an exciting and positive development from a HR perspective. The AEC is intended to transform Southeast Asia into a single integral market for trade, investment and easy mobility of labour to drive the economy of the region.”
 
One of the main changes HR should expect was greater human capital mobility and diversity across the regional workforce, Yeo said. This will also increase interest amongst expatriates from Europe, the US and other non-Asian regions as they relocate to participate in the region’s business activities.
 
This added inflow of workers will create some difficulties for HR however, Yeo said.
 
“The AEC will create some challenges in terms of managing employees with different cultural backgrounds, language abilities, mindsets and expectations.”
 
Specific to Singapore, there would be more pressure on HRDs to rethink the benefits and salaries they offer staff, she added. Since Singapore is an employer-friendly nation, it would be competing with employee-friendly countries such as Malaysia, the Philippines and Indonesia.
 
“ASEAN is a competitive marketplace where employees tend to move,” Yeo said. “This brings challenges in terms of offering attractive benefits to be an employer of choice while managing costs and exposure to protectionistic laws such as end of service severance, difficulty in firing, etc.”
 
She suggested HR offer benefits to staff across the region such that each employee received comparable benefits regardless of country. This should be done following the particular legal and cultural limits within each jurisdiction, she added.
 
Lastly, Yeo said the AEC would bring in greater competition for talent, especially with regards to attracting and retaining those with experience in managing regional operations who had knowledge of different legal and cultural nuances in multiple Southeast Asian countries.
 
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