RESEARCH AND PRACTICE
IN HUMAN RESOURCE MANAGEMENT

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Heng, T. M., & Low, L., (1994). Human Resource Development in the Asia Pacific: Issues, Challenges and Responses, Research and Practice in Human Resource Management, 2(1), 47-66.

Human Resource Development in the Asia Pacific: Issues, Challenges and Responses

Toh Mun Heng & Linda Low

Abstract

This paper provides an overview of human resource development (HRD) policies and human resource movement in the Asia Pacific region. Among the issues and challenges is the movement of high level manpower in contrast with low level manpower as economic development and industrialisation become more complex and sophisticated. This follows from flows of direct foreign investment and activities of multinational corporations in the region. The business environment has changed due to regional integration, new technologies and globalisation of production.
One implication is that research and studies on HRD and the human resource movement must focus on changes in demography, work and lifestyle in a global multicultural environment. Another area which human resource studies can focus on is services as trade in services is being liberalised under the General Agreement on Tariffs and Trade (GATT). However, the caveats and limitations of any study on an Asia Pacific wide basis, especially on HRD and related labour information and statistics and direct foreign investments, are strongly highlighted in this paper.

Introduction

The Asia Pacific region is easily the next growth pole as it contains dynamic economies like China, those in the newly industrialising economies (NIEs), the Association of South East Asian Nations (ASEAN) and some major countries in the Organisation of Economic Cooperation and Development (OECD) bordering the Pacific coast. Some of these economies are members of the Pacific Economic Cooperation Council (PECC), a tripartite organisation involving government, business and academic representatives; the Pacific Basin Economic Council (PBEC) representing business interests as well as the Asia Pacific Economic Cooperation (APEC), a governmental body, but all dedicated to economic cooperation (see Table 1).1

This paper aims to provide an overview and analysis of the human resource development (HRD) dimensions of this growth area in terms of HRD policies and outlook as well as the all important phenomenon of human resource movement (HRM) which inevitably accompanies economic growth and development. Both HRD and HJM are spurred by direct foreign investment (DFI) flows which criss-cross the Asia Pacific region, as much pulled by Asian dynamism as pushed by recessions in major Anglo-Saxon economies.2 Among the issues and challenges, we will highlight in particular the movement of high-level manpower (Ong, Cheng & Evans, 1991) in contrast to low-level manpower as the level of development and industrialisation in many Asia Pacific countries becomes more complex and sophisticated.3 We will also consider other challenges to HRD and HRM posed by the changing business environment due to regional integration and globalisation of production.

Following this introduction, Section 2 will draw some important caveats and special considerations to be noted. It is crucial that we highlight these limitations at the beginning because any paper spanning the Asia Pacific in general, and on labour and capital flows in particular, is a tremendous challenge. Section 3 provides the main trends and characteristics of development in the Asia Pacific region and some broad human resource profiles. The issues related to DFI-induced high- level manpower movement are then discussed in Section 4. The last section summarises the conclusions and highlights possible policy implications related to HRD and HRM.

Some caveats and data limitations

As an overview on HRD and HRM trends in the Asia Pacific, this paper is immediately put to task to grapple with two issues concerning methodology and statistics. However defined, the Asia Pacific spans about 20 economies. Methodologically, this poses the issue of generalisation versus depth, and makes the development of a conceptual framework of analysis especially difficult. While the paper tries to draw out some general trends to provoke regional collaborative efforts to enhance development and growth, sufficient descriptive data about each country or cluster of countries do not exist for a comprehensive analysis of its current economic and HRD or HRM conditions. This makes the attempt to provide a framework to analyse the issues more systematically in Section 4 appear rather anaemic and less rigorous than intended.

Apart from length considerations which inhibit detailed country by country analysis, a more fundamental problem is the lack of reliable and consistent statistics in some of these economies. In economies like China, despite its economic reforms since 1978, even national accounts statistics like gross domestic product (GDP) or gross national product (GNP) are not constructed in the same way as those in market economies. Unreliable exchange rates and purchasing power parities (PPP) to convert national currencies for comparison to U.S. dollars compound the difficulties. For many Asia Pacific countries with large agricultural and rural sectors, the economics of the informal or underground sector further defy quantification. This is also true for labour and employment statistics. Even types of unemployment, ranging from structural unemployment to underemployment, may not be as standardised as in the advanced OECD countries; or by International Labour Organisation (JLO) standards. The PECC for instance, tries to overcome this by seeking the assistance of individual members in survey questionnaires but there is no way of cross-checking information and data even if some numbers are in suspect.

Besides labour data, that on capital flows and DFI are also as elusive. These data can vary among agencies or even on the basis of whether DFI is committed or approved. Like labour, sensitivities regarding DFI flows by nationality and source exist. For instance, DFI in China from Hong Kong and Taiwan is subject to political considerations. More statistics than are currently published are necessary to establish firm relationships between import, export and labour policies trends and the effective utilisation of capital and labour inflows; or trade-offs between importing skilled labour and internal development. In effect, lack of information and data severely hampers analysis.

Notwithstanding the above, some generalisations are still possible, and these may guide others to focus on specific areas in depth. Both top down (macro generalisations across the Asia Pacific region) and bottom up (micro country studies) approaches can complement each other. Also, given the current interest in the Asia Pacific region and the existence of so many Asia Pacific organisations striving for some common ground, it may be valuable to alert researchers to the deficiencies of existing data, and challenge them to remedy these problems.

Broad development indicators in Asia Pacific

Macro socio-econoinic trends

Table 1 showing the basic indicators of development in the PECC region reflects the variation in the size, structure and relative stages of development of the member countries noted in the caveats above. Between 1980 and 1990, the Asian NIEs comprising Chinese Taipei, Hong Kong, Singapore and Korea, enjoyed higher growth in GNP per capita growth with fairly tolerable rates of growth of inflation compared to the industrial countries. On the next rung is China, followed by Indonesia, Thailand and Malaysia while the industrialised countries languish in growth terms, although they have absolutely higher levels of development.

Though the ASEAN and ANIEs in the Asian Pacific region show diverse productive structures, some convergent trends are observed as they adopt similar export-led (Klein, 1990, Gray, 1991) and foreign investment-led growth strategies. Taking the lead away from traditional industrial countries’ sources, DFI from the NIEs is flowing rapidly into the ASEAN and other developing economies in the region. This replicates the growth synergy which traditionally radiated from the industrial countries to the developing ones. It means that the ANIEs are following in Japan’s footsteps and have come of age in the Asia Pacific region. Accompanying capital flows inevitably are labour and technology, making HRD an appropriate conduit and mechanism for economic cooperation.

By the early 1990s, a decline in the relative importance of agricultural activities in the ASEAN region (excluding Brunei and Singapore), China and Korea, was observed with a relative rise of industrial, especially manufacturing, activities. In the city states of Hong Kong and Singapore, agriculture as a share of GDP had virtually disappeared by 1991. Instead, reflecting their entrepôt and urban economies, their service sectors approximate the relative shares of those in the industrial countries. These structural changes have repercussions on employment, sectoral and occupational labour movement as well as on the labour market’s skill structure.

Thus, one can immediately appreciate problems of rural-urban migration as millions of Chinese peasants are causing a social upheaval by trying to get better jobs and standards of living in industrial areas. The same thing is happening, albeit to a lesser extent, in Indonesia, Malaysia and elsewhere in Asia Pacific both within and across national borders as the labour supply in one country tries to match the labour demand of another. Thousands of Malaysian cross the causeway to work in Singapore and many more do so clandestinely and illegally.

As can be seen from Table 1, the Asia Pacific is the most populous region including economies like China (the world’s most populous) and Indonesia (fourth after India and the United States). At the same time, many economies are experiencing rapid demographic changes. These will have a significant impact on the composition of their labour force as well as the magnitude and patterns of their expenditures. Many Asian countries have relatively young populations, with less than two-thirds of their population in the working age group (ages 15 to 64). The young Asians are enjoying higher per capita income following economic growth in the last decade or so. Besides greater means, being better educated and exposed to modern Western lifestyles, they are prepared to spend more than their parents or grandparents would to enjoy a better standard of living. Marriages and household formation are growing at a rapid rate and the demonstration effect coupled with demographic forces mean an estimate of over one billion consumers in Asia alone (The Economist, 30 October 1993).

Table 1
Basic indicators in some Asia Pacific economies
Population
million
1991
GNP per capita Average
annual
inflation %
Adult
illiteracy %
1990
US$m
1991
Average
annual %
Australia 17.3 17,050 1.6 7.0 <5
Brunei 0.3 9,400 na na na
Canada 27.3 22,240 1.7 4.2 <5
Chile 13.4 2,160 1.6 20.5 7
China 1149.5 370 7.8 5.8 27
Ch Taipei* 20.7 7,954 7.1 3.1 7
Hong Kong 5.8 13,430 5.6 7.5 na
Indonesia 181.3 610 3.9 8.5 23
Japan 124.5 26,930 3.6 1.5 <5
Korea 43.3 6,330 8.7 5.6 <5
Malaysia 18.2 2,520 2.9 1.7 22
Mexico 83.3 3,030 -0.5 66.5 13
New Zealand 3.4 12,350 0.7 10.3 <5
Peru 21.9 1,070 2.4 287.3 15
Philippines 62.9 730 -1.2 14.6 10
Russia 148.7 3,220 na na na
Singapore 2.8 14,210 5.3 1.9 <5
Thailand 57.2 1,570 5.9 3.7 7
United States 252.7 22,240 1.7 4.2 <5

1992
Sources: Work Bank, World Development Report, 2993 and country sources.

By the International Monetary Fund’s (IMP) estimate, between now and the year 2000, Asia as a whole will account for half of the growth in world trade, accounting for 3.5 billion of the world’s 6.2 billion people. One billion of these Asians will come from households with some consumer spending power to buy basic goods like colour televisions, refrigerators and motorcycles (The Economist, 30 October 1993). Perhaps 400 million of them will have disposable incomes at least equal to the average of the rich world today, three times as many as at present. All these add up to a lot of goods and services to be produced and certainly, a lot of labour to be mobilised.

The younger Asian economies also have higher projected population growth rates for the period 1991 to 2000 compared with the developed countries. These differing demographic profiles are manifest in different priorities in human resource planning. For countries with high fertility, the problems lie in population control and absorbing the rapidly growing labour force. For other industrial countries, the problems are in the nature of an ageing, low-growth population impinging on labour supply. Some like Australia, Canada and the United States have these problems averted by high immigration to augment their population growth and ageing labour force.

Noting definitional and other survey-related differences, Table 2 shows those who are employed and the unemployment rates in the Asia Pacific economies. The unemployment rates in the NIEs are generally low in comparison to the developing economies (except Indonesia and Mexico) and industrial economies (except Japan) currently in economic slowdown. One however notes with suspicion how the Indonesian unemployment rate is derived given its rural context and how the Japanese lifelong employment practice means a low-unemployment rate.

In terms of the employment structure by industry, employment in the service sectors for the developed economies and the ANIEs is relatively high in contrast with higher rural employment in China, Indonesia, the Philippines, Thailand and Peru. The growing importance of the manufacturing and service sectors also means higher demand for professional, technical, administrative and managerial workers particularly those trained in science and engineering.

This changing labour force structure is suggestive of several developments which will affect both the supply and demand side of the labour market:

  1. While the agricultural labour surplus in some Asia Pacific economies declines, there is evidence that employment is not being created fast enough to absorb such labour. The difficulty of retraining or forming new skills for rural labour is as formidable as increasing the rate of labour absorption in the industrial sectors.
  2. Within the Asia Pacific region, there is a diversity of labour surplus / deficit positions which creates vast opportunities for flows of labour and its attendant potential for transfers of skills and technology.
  3. With greater prospects of direct foreign investment flowing across the Asia Pacific economies in pace with industrial restructuring, diversification and globalisation, there will be further impact on the labour force structure.
Table 2
Labour force, employed and unemployed in some Asia Pacific economies, 1991
Labour force
15-64 yrs
million
Employed
million
Unemployment
rate %
Austra* 8.6 7.7 10.7
Brunei 0.2 0.08 6.1
Canada* 14.0 12.4 11.3
Chile 4.8 4.7 na
China 709.8 583.6 17.8
Ch Taipei* 8.9 8.6 1.5
Hong Kong 2.8 2.7 2.0
Indonesia 78.1 76.4 2.8
Japan* 65.8 64.4 2.4
Korea* 19.4 18.9 2.4
Malaysia* 7.6 7.3 3.0
Mexico 50.7 22.6 2.5
New Zealand 1.6 1.5 10.3
Peru 12.8 na na
Philippines 24.7 22.5 8.7
Singapore* 1.6 1.6 2.7
Thailand* 32.9 32.7 na
United States* 127.0 117.6 7.3

*1992
Source: As in Table 1 and OECD Employment Outlook, 1993.

The labour force participation rates for the Asia Pacific economies are generally lower in the developing economies than in the developed countries (see Table 3). More women are working than in the past in the .ANIEs, Indonesia and Malaysia, but the female labour force participation rates for the Latin American economies are among the lowest in the PECC region. The timing of higher female labour force participation rates varies among economies. The “M-shaped” female age-participation rate profile of South Korea is similar to some countries in the OECD.4 In the other ANIEs, there is only one peak which applies to the younger female cohort, followed by a more or less progressive decline. Thailand has an exceptionally high female labour force participation rate. Low labour force participation rates combined with high unemployment and underemployment rates have accentuated labour movements and the brain drain in the Philippines.

Table 3
Labour force participation rates in some Asia Pacific economies
Year Male Female Total %
Australia 1992 85.3 62.4 74.0
Brunei 1986 80.0 38.7 60.3
Canada 1992 73.1 57.5 65.1
Chile 1991 75.1 31.8 52.8
China 1991 82.2 53.1 80.9
Ch Taipei 1992 80.3 48.6 64.4
Hong Kong 1992 78.0 46.2 62.3
Indonesia 1992 71.2 43.4 57.1
Japan 1992 77.9 50.7 64.0
Korea 1992 75.3 47.3 60.9
Malaysia 1992 85.9 47.4 66.9
Mexico 1991 75.3 32.3 53.2
New Zealand 1991 82.3 62.8 72.6
Peru 1991 51.2 33.1 na
Philippines 1991 81.8 47.5 64.5
Singapore 1992 79.9 51.3 65.3
Thailand 1991 84.3 72.3 78.3
United States 1992 85.0 68.9 76.9

Source: OECD Employment Outlook, 1993 and country sources.

Some HRD profiles

Many Asia Pacific economies are becoming more aware of HRD strategies which can affect economic restructuring and international competitiveness. To ensure the necessary changes in productivity, increased investment in physical capital must be accompanied by measures to produce a more highly skilled and flexible labour force (Stahl, Appleyard & Toshikazu, 1992 and Stahl, Ball, Inglis & Gutman, 1993). Lifting the general skill level and the adaptability of the labour force requires HRD investment, reinforced by incentives and a managerial approach and an industrial environment conducive to skill formation (Behrman, 1990). Restructuring and the continuing emergence of new technologies displace the existing skills of a significant proportion of the existing workforce.5 Consequently, in addition to training new entrants to the labour force, a major role for the education and training systems is retraining displaced workers. When warranted it may also prove necessary to implement special labour market adjustments to aid workers in particular industries or regions.

Some HRD and HRM profiles considered selectively in Asia Pacific will highlight and differentiate how different economies have responded to the challenges. One should see some areas of complementarity in labour resource utilisation pattern and flows or competition in others.

The OECD countries in Asia Pacific like Australia, New Zealand, Canada and the United States are more open to immigration. Australia for instance, is a major migrant receiving country with close to 5 million people having settled permanently and net migration has accounted for approximately 40% of the population increase in the post-war period. While Canada, like Australia has been a traditional haven for immigrants, poor economic conditions has forced it to be more selective and pay more attention to the quality of people as a principal ingredient of competitiveness. The consensus among the business people is that Canada has been slow in confronting the new reality brought by new technology, the advent of a global economy, and the diminishing importance of raw materials and the growing importance of knowledge to the creation of wealth. This will definitely change after the OECD “jobs summit” in Detroit in March 1994 (see Footnote 5).

On the other hand, there is another group of relatively developed economies like Japan and the ANIEs which are reluctant to accept even short-term migrants although they are suffering from labour deficits. Since 1985, Chinese Taipei has experienced an increase in foreign workers when for years, due to the strict enforcement of immigration laws as well as special geographical and cultural characteristics, it was not exposed to the wave of international migration. But as the recent globalisation of economic activities opens a new stage in the development of international labour mobility, Chinese Taipei is becoming host to an increasing inflow of guest workers. Although the import of foreign workers may reduce the labour cost of employers, this benefit is offset by concern over rising social costs.

Hong Kong is in a similar situation where in the earlier years, an important component of population growth for Hong Kong was immigration. However, in more recent years, the increased level of emigration to other countries has almost offset any gain from immigrants who come mainly from China. The labour market is still very tight and many labour-intensive manufacturing processes have relocated in China to reap the benefit of lower labour cost across the border. This has accelerated the structural change of the economy in favour of the services industries while the manufacturing sector is upgrading both in terms of the product mix and the technology used. This structural change has led to an increase in demand for better educated workers.

South Korea faces the same policy dilemma as other ANIEs as to whether to have a more open foreign worker approach, or to expect the labour shortage to be overcome by some adjustment in the utilisation of domestic labour resources. Married women and older workers could be tapped to expand the labour force by 1.5 to 2.0 million. The labour shortage has also been claimed as a cyclical rather than a structural phenomenon due to the construction sector boom and an overheated economy. At the same time, reliance on foreign workers would slow down the pace of automation and impede overall structural adjustment. There are also social costs to be considered.

While the overall direction seems to be to control and regulate the foreign labour market, more microlevel labour market policies have been suggested to increase labour market efficiency. These include restructuring the labour market to provide better information, providing the infrastructure, such as childcare facilities, to enlarge the labour supply, raising the mandatory retirement age and the application of standards for part-time workers and other aspects. Greater transparency in foreign labour policy and the administrative mechanism would also be useful for private sector decisions. Stricter penalties need to be applied to employers of illegal foreign workers. Foreign workers also need to be better protected against exploitation and lack of medical benefits and compensation in cases of industrial accidents on humanitarian grounds, if nothing else.

As South Korean capital is increasingly exported to China and the ASEAN economies such as the Philippines, Indonesia and Thailand, some labour-saving technology may also have to be introduced in these economies as wages are being pushed up rapidly. Even though wages are relatively low, they are growing fast and labour bottlenecks are evident in some industries and occupations.

As human resources are Singapore’s only renewable resource and because its international competitiveness, as in other ANIEs, hinges so crucially on a top grade workforce, the government has intensified human resource development and continuing education and training. It has also successfully tapped many multinational corporations and foreign governments in forming training centres and programmes to provide continuous industrial training. There is a Skills Development Fund (SDF) to which employers with workers below a certain level of skills and salary pay a levy of 2% of their payroll. In return, approved training programmes are given a subsidy from the SDF. But Singapore faces a policy dilemma between attaining high rates of growth at the cost of a higher importation of foreign workers, including foreign domestic maids to free Singapore housewives to work. Singapore has expanded its catchment area of labour recruitment to include South Korea, Chinese Taipei, Hong Kong and Macau. In tapping these non-traditional sources for skilled labour to continue its drive toward restructuring, Singapore has had to be sensitive to its traditional sources, especially Malaysia and Indonesia, where less skilled workers come from.

In other ASEAN countries, the problems are more of unemployment and the need to widen employment opportunities and labour force participation, especially in Indonesia and the Philippines. Malaysia’s current challenge is to meet the new qualitative demands imposed on its human resources. These are as a result of its transformation from a commodity to a manufacturing-based economy and the competition is from neighbouring countries with lower labour costs. High economic growth rates in Malaysia, averaging 9% per year in the 1988 to 1992 period, 8% in 1993 and a forecasted 8.2% in 1994, have increased labour demand and reduced unemployment to full employment levels. Indications of the tight labour market are evident in the inflow of foreign labour, labour and skill shortages and wage pressures (Pillai, 1992). Foreign workers fill the vacuum in the low-wage plantation and construction sectors as Malaysians take better jobs in manufacturing.

Thailand’s development is at a critical juncture as the economy is restructuring to a more industrial and service base. A key issue is the development of human resources to support these efforts in an efficient manner. Thailand’s comparative advantage in human resources is being eroded with changes in its economic and social environment and population structure. Labour shortages, both quantitatively and qualitatively have increased at the basic, medium- and high-skill levels in science and technology and related fields. This has led to rising wage rates which has affected international competitiveness. The education and training system has not been sufficiently flexible to increase the production of manpower to meet with changing demand. Thus, under the Seventh Development Plan (1992—1996), very important development targets have been set with respect to education and training, upgrading income and labour welfare services and science and technology manpower development.

HRD ISSUES AND CHALLENGES

Direct foreign investment (DFI)

One of the most challenging issue is the growth and proliferation of DFI in the Asia Pacific region which has a direct, major impact on HRD and HRM. Apart from the traditional arguments of DFI and the attendant theories which try to explain the factors motivating its direction and composition, such as the product cycle, vertical and horizontal integration, the impact on labour can be discerned at two levels.6

One is the conventional idea that DEL from industrialised economies is attracted to set up production bases in developing countries to take advantage of the lower costs and abundance of unskilled labour there. The concept of “work-to-workers” is conveyed under this DFI pattern. This may or may not induce migrant workers from elsewhere in the region, but is simply the “export” of jobs from high cost sources where the DFI originates to the host countries which attract the DFL At least, this is the case until these host countries begin to have problems of labour shortages as in Singapore or Malaysia. The growth triangle which evolved among Singapore, Johor in Malaysia and the Riau Province in Indonesia is a further extension of this “work-to-workers” concept. After Singapore ran out of labour for more labour intensive industries, it encouraged them to relocate to nearby growth triangle partners. The mutual benefits would be that Singapore could hold its position in the products and functions at the high end while Malaysia and Indonesia enjoy the benefits of employment creation and market enlargement from the presence of the MNCs to boost their indigenous industrialisation effort. Workers who used to come to Singapore from Malaysia or Indonesia can remain in their countries with the jobs that are created.

In contrast, at another level, there is the flow of skilled manpower or high-level manpower (as opposed to low-level manpower) from the DFI source countries to effect transfer technology. This reflects the “workers-to-work” flow. With HRD as the motivation for most countries seeking the industrialisation path, once they are past the employment benefits of DFI, technology transfer and the flow of high-level manpower become more crucial.

However, one difficulty here is that there is no real consensus on the definition of high-level manpower as educational and other professional qualifications still vary widely from country to country. If we define high-level manpower as expatriate managers, administrators, professionals and technical personnel, one study has estimated a total of some 1.3 million such personnel in the PECC region (Tachiki in Low, 1994). This is expected to grow over the next decade for two main reasons. One is that the Asia Pacific region is the largest recipient and host to the world flow of DFI. The other is that since 1983, the compound annual growth rate of DFJ is three times higher than world exports with China as an emerging, awakening giant which could reverse the slowdown in trend of DFI.

In terms of distribution, the United States and Australia are the largest hosts of highly skilled expatriates. Since the Plaza Accord in 1985, the appreciation of the Japanese yen and currencies of the ANIEs have forced them to move their labour intensive and low value-added industries into the ASEAN region in the first instance. This makes ASEAN the second major host of highly skilled expatriates. This pattern of skills distribution reinforces those on DFI, trade and technology transfer in that the flow is top-down, from the developed to developing countries.

Direct foreign investment has increased the demand for highly skilled workers in the Asia Pacific economies. This has created a temporary labour shortage but this gap between supply and demand will close as educational investments in Asia Pacific economies bear fruit. The ANIEs began this process of human capital formation in the 1970s, initiating a HRD-Ied growth strategy that is quickly noted by other developing economies. An a priori hypothesis that may thus be drawn is that export-led, DFI-dependent growth strategies are quickly compatible with internal development of human resources. But as HRD ad technology transfer take time, a stop-gap measure is the reliance on expatriates. Even then, many ASEAN economies like Malaysia and Indonesia have “bumiputra” or “pribumi” policies respectively which inter alia boil down to conditional expatriate employment subject to a localisation process. Overall, we see a shift in the occupational structure of the Asia Pacific region from low-skilled workers to high-skilled workers in the twenty-first century.

In the short term, we find expatriates an important link in the transfer of technology and the development of human resources in the Asia Pacific economies. In this regard, the Asia Pacific economies are using fiscal incentives to open up channels through which MNCs are motivated to transfer technology and skills to local workers. Singapore’s Skills Development Fund encouraging MNCs to provide training for low-skilled employees, is an example which other developing economies may consider. Thus, we find the changing role of expatriates in technology transfer and HRD. From the conventional form of “import for substitution” (replacing local workers), the expatriates have become a form of investment asset as they serve as the means of skills and technology transfers.

In various country studies, the general finding is that the relationship between direct foreign investment and high-level manpower policies have been positive (Low 1994). The employment creation effects, transfers of skills and technology and localisation of expatriate positions have generally been witnessed and take place rather amicably although some Asia Pacific economies have quite strict regulations to ensure that they occur.

On the other hand, some fine tuning especially with respect to Japanese MNCs’ policies has also been noted. Case studies in Australia, Indonesia, Malaysia and Singapore bear the familiar finding that Japanese are less generous and quick in promoting local people to top positions in Japanese MNCs. This has less to do with a lack of local talent, a lack of faith or trust in them by the Japanese, and more to do with the Japanese culture and values. It would take time for such socio-cultural traditions and practices to be diluted and eventually changed. But as the PECC economies become more competitive and the people better educated and qualified, their moving up the ranks either as employees of MNCs or holding forth in their own right, would be inevitable.

Finally, in dealing with HRD and management, some country cases such as in Indonesia, Korea and Singapore, have noted the importance of bridging the socio-cultural understanding of MNC expatriates and local workers. Opportunities for such interactions are currently confined to work related activities which other possible occasions such as training schemes and social functions should not be overlooked.

Globalisation issues

With DFI, the “global logic” of multinational corporations (MNCs) supercedes the “national logic” of host countries, especially with the globalisation trend. Both the MNCs and host countries have recognised HRD as a strategic tool for competitiveness. To go global essentially means tapping and merging comparative, advantages (based purely on resource endowments) and competitive advantages (based on enhancing competitive factors and a conducive environment for change and innovations) found in different locations. The sole objective is to be internationally competitive which is made possible by such an international value-added chain.

Reinforcing this globalisation trend are three fundamental and probably irreversible changes that have occurred in the last decade or so as observed by Peter Drucker (1987). One is that the primary products economy has become uncoupled from the industrial economy. Second is that production has also been uncoupled from employment. Finally, capital movements rather than trade, in both goods and services have become the driving force of the world economy. Capital movements and trade have not quite become uncoupled, but the link has become both loose and unpredictable and in some cases strengthened. These basically reinforce what has been raised under the discussion on DFI.

Another set of challenges comes from changes in the business environment. Put very succinctly, there is a more rapid rate of business change and high uncertainty, increasing competitive pressures on both revenues and costs, rapid technological change, resulting in new skill demands, more complex, flatter, leaner, more flexible organisations, changing demographics and workforce availabilities, as well as changing external forces as in governmental regulation and regulations. New capitalist centres emerging in Asia Pacific include China and more deregulated economies in ASEAN and Latin America. The scope for globalisation has risen with this new business environment but so have the risks and expectations.

A tentative framework

We repeat and reiterate the methodological caveat from Section 2 and what we suggest here is a tentative framework to encapsulate the challenges and issues raised and the response. In a nutshell, the HRD challenge is to harness these stimuli of DFI, MNCs, globalisation and business environment to enhance current and future economic performance and sustain a competitive advantage. The response can be in the conceptual framework in Figure 1 At a macro level, we basically require more efficient utilisation of manpower and capital. International movement of factor (capital and labour) will be an added dimension in resource management.

Basic macro principles are suggested in Figure 1 depicting a matrix of capital and labour in deficit or surplus positions and the resulting policy options or responses. The examples of Asian Pacific economies fitted into the matrices are subject to nominal interpretation of the characteristics and are sensitive to the period under review.

Figure 1
Conceptual link between capital and labour
Conceptual link between capital and labour

Quadrant I shows a situation of labour resource in surplus but capital resource in deficit. This often characterises the initial stages of a developing economy. Without capital to create jobs, low-skilled labour may be in abundance though the high-skilled, managerial and professional workers are likely to be in short supply, exacerbated by a brain drain to developed countries who are offering better opportunities and prospects. In turn, when DFI is attracted, labour movement will likely involve the movement of managerial, highly skilled and professionals into these countries. Examples of Asian Pacific countries in this quadrant include the Philippines, China and the Latin American economies. Other developing countries may he just a shade off these characteristics for example Indonesia fits the quadrant with the exception that Indonesians generally do not prefer to work abroad for socio-cultural reasons more than economic ones. The only exception is perhaps in nearby Malaysia as a Muslim country which is reported to have quite a sizeable number of illegal Indonesian workers.

Quadrant II depicts a situation when any excess supply of labour as in Quadrant I has been absorbed by the expanding economy and it turns into a labour deficit economy which is still hungry for capital investment. A good case would be Malaysia given its buoyant economic growth and heavy investment in infrastructure like roads, ports and airports. To supplement its low level of capital accumulation especially by the private sector, Malaysia encourages the inflow of foreign capital. This brings along with it a pool of middle managers. It has encouraged an influx of foreign labour to supplement depleting local sources especially in plantations and mines.

Quadrant III is a situation when surplus capital has been built hut labour resource is not sufficient to utilise the capital fully. This will induce movement of labour across international boundaries in two ways. First, if production were to he expanded in the country with the available capital, it may do so with a concurrent inflow of foreign workers, both skilled and unskilled. Second, if the capital were to be invested in another country, the need for managers and other skilled workers to oversee the operation abroad may require an outflow of high-level human resource despite a general shortage of manpower in the country. The ANIEs and Japan easily fall into this quadrant with both an inflow of skilled and unskilled foreign workers and some of their own managerial and technical manpower working abroad in their “external” economies. Brunei would qualify on the broad characteristics of capital surplus and labour deficiency but it is so short of both skilled and unskilled workers that it has none to export. Neither has it pursued a policy of building a “second wing” or “external” economy like Singapore as it is still too preoccupied as an oil exporting country.

Quadrant IV is a situation of surpluses in both labour and capital. This looks like a desirable state where the labour and capital could be harnessed for economic production. However, excess supplies in both the labour and capital market are an indication of the economy not in synchrony. A negative scenario could arise such that there is simultaneous outflow of labour and capital especially when combined with poor economic conditions. Economic agents would have lost confidence in the economy and seek “greener pastures” overseas unless the government do something to turn the tide. The United States and other industrial economies in recession are basically capital rich with high unemployment but suffer a loss of competitive advantage and social drive as workers are reluctant to retrain and are well supported by unemployment benefits or sheltered behind protectionist policies.

To achieve and sustain cost competitiveness, human resource management involves monitoring personnel costs in terms of efficient manpower utilisation and downsizing to eliminate superfluous staff if necessary. To achieve competitive differentiation through total service and product quality, attributes of productivity growth, customer satisfaction, and other components of total quality become important. Developing leadership in staffing, appraisal and development of managers must occur alongside enhancing workforce capability and motivation in staffing, retention, motivation and rewards, development, communications and involvement, which must extend to all working life issues. These may cover social and family concerns like dual career couples striving for more quality family time, flexible work schedules and such which modern managers cannot easily ignore.

With the need to implement organisational restructuring and mergers or acquisitions as the corporate tree grows, there is increasing delegation of authority and responsibility. Concomitantly, there will be more streamlined approval processes, increased employee involvement and risk/reward compensation and empowerment to act. More so, as the corporate family reaches more layers stretching across borders, team building, shared vision and values which go beyond corporate ideas and include cultural values as well as other lateral relationships now become important.

These issues and challenges pose some strategic considerations. One is that cooperation with other disciplines or a multidisciplinary approach to HRD and human resource management would be beneficial. Two is that innovations in human resource management must be integrated with corporate business strategy through service development and training. Finally, more and more companies would be setting up international or regional wings of HRD departments with the need to tackle the increasing trend towards overseas assignments as business becomes more international. For instance, the Sony Precision Electronics Centre in Singapore has become Sony’s regional training centre.

Conclusions and policy recommendations

A rapidly growing dynamic Asia Pacific will entail a number of problems and challenges for human resource (HR) planners and managers in the coming years. Topics for theoretical and research development in the 1990s include ageing, career and life transitions, adult learning, communications, cross-cultural experiences, and labour force migration, and expatriation to name a few.

Problems will include the immigrant experience, as more immigrants enter this country. We will also be concerned with cultural assimilation and valuing differences. Moreover, we need to think about the experience of expatriation, that is, citizens of a country leaving for temporary, developmental job assignments or permanent assignments in another country as part of the regionalisation and globalisation effort. We need more partnerships with researchers and practitioners in other countries to create a more global HR profession.

In this respect, a few points may be noted for the future research agenda. Career and organisational changes suggest the importance of understanding transitions of all types. In particular the role of human resource management in complementing the efforts of industrialisation and overall economic growth. Moreover, they suggest the importance of communications in a global multicultural environment. We should consider the meaning of employee education and development in different cultures and across cultures. Given the ageing of the workforce in several countries, we should study the experience of the older workers, the stresses they face and the consequences on economic dynamism.

Innovative HR programmes for the 1990s will include helping people to value differences and appreciate opportunities. Comprehensive analyses will be required to guide HR policies. Human resource professionals can contribute by partnering economists, psychologists, demographers and other social and behavioural scientists to analyse the gap between current HR needs and labour force participation and project what will happen to this gap during the twenty-first century. The data will suggest trends and provide early warning signals that should guide public and private programmes and policies in such areas as childcare and elderly care support and job training for displaced workers and new entrants.

A more in-depth study on the relationship between DFI and high- level manpower is clearly indicated from this overview so far. Given the size, diversity and scope for economic complementation for the economies in the Asia Pacific region, both DR and human resource flows are expected to increase in magnitude and scope. As shown in the socio-economic indicators in the region and the projections of labour supply and demand, the areas and opportunities for resource pooling and sharing as well as learning from each other are tremendous.

As a start, even if a consensus on what is high-level manpower can be arrived at, information and statistics on high-level manpower are frequently wanting or unavailable. In some countries, these may be considered too confidential and sensitive to be readily released. Data with respect to DR may be slightly better but a more detailed breakdown by sectors could be improved upon. The most difficult area is to establish the link between such investment and employment creation, both in high— and low-level manpower.

A new area where HR studies should he focused on in services especially when trade in services are being liberalised under the General Agreement on Tariffs and Trade (GATT). This could open new areas and dimensions as service companies venture out like manufacturing ones. Growth in both demographic and national income means higher consumption of services as the modern society means greater urbanisation. In this new area of services, clear and transparent documentations of laws, regulations and other conditions following deregulation and privatisation in many Asia Pacific economies, would be germane.

  1. The PECC has four Latin American members, namely, Chile, Columbia, Mexico and Peru, also Japan, the United States, Canada, Australia, New Zealand, the Pacific Islands Nations, Russia (the former Soviet Union), China, Hong Kong, Korea (South), Chinese Taipei (Taiwan) and the six ASEAN countries comprising Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. Out of these 21 PECC members, subtracting Chile, Columbia, Peru, the Pacific Islands Nations and Russia and adding Papua New Guinea will give the 17-member APEC. Chile will be a member of APEC by the end of 1994.
  2. This paper draws data and information from a compilation by Linda Low on members of the PECC for the PECC Human Resource Development Outlook which has been published annually since 1990/91.
  3. High-level manpower covers highly skilled and professional workers and low-level manpower comprises all others with low skills or no special qualifications.
  4. The M-shaped curve shows a bimodal peak where female labour force participation rates by age are high before marriage and after bringing up children when the women can return to the workforce.
  5. The “Jobs Summit” that was convened by the Group of Seven (the United States, Canada, Japan, the United Kingdom, France, Germany and Italy) in Detroit in March 1994 reflects the concern with growing unemployment in these major OECD countries, despite economic recovery as in the United States. The systemic cause of unemployment is not just losing international competitiveness in the wake of rapid and more efficient industrialisation in the ANIEs and developing countries, but the threat posed by technologies and globalisation. However, the strategy of the “Jobs Summit” is to take a supply-side view to retrain workers to meet up with these inevitable challenges of labour-saving technologies and globalisation of production.
  6. Horizontal integration is expansion in overseas production bases by producing the same products as in the domestic market. Vertical integration is expansion in these production bases by adding a stage in the production process that conies before or is subsequent to the firm’s principal processing activity.

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