Adjustment of the Labor Market to the Foreign Outflow of Skilled Labor : The Case of Construction Workers

The paper is an exploratory study of labor market adjustment to the outflow of construction workers. It argues that the ease with which the market adjust to out-migration or to any change in demand of any skill depends on the cost of acquiring training for and the relative abundance of inherent talent and aptitude by the skill. The shorter the training period, the less costly the training inputs and the more abundant the manpower qualified for the skill, the quicker the adjustment. Migration may pose a problem in the case of high-level manpower such as scientists, professor, entrepreneurs and managers. They are difficult to replace since the supply of manpower of suitable aptitude and intelligence for these occupations is relatively small in any population. Moreover, their training is relatively long and requires expensive educational inputs. The current composition of migrating labor, construction workers, nurses, seamen and domestic help, is not problematic in this respect. They are of average ability and their training cost is not particularly high. The study bears out the expected easy adjustment. The rapid outflow of manpower in these occupations has been matched by an equally rapid production of the corresponding skill. The construction industry, for instance, experienced persistently high unemployment despite the migration. The yearly entry of labors more than offsets the outflow. The production of nurses and seamen in colleges and universities grew rapidly as a response to foreign market opportunities. The Philippine labor market as a whole shows great flexibility in the supply of labor with inexpensive training. The study conducted a small survey of construction workers in six construction sites in Metro Manila to obtain information on the responsiveness of supply to foreign market demand and the vacancies created by the outgoing workers. It asked questions on where workers get their training, length of training period from one skill level to another (unskilled to middle level to master craftsman), geographic mobility, occupational mobility and unemployment experienced in the last two years. The study shows that more than 90 percent of the sample relies on on-the-job and other nonformal sources of training; that the training period is fairly short except for the master craftsman level (two to five years) and that there is a fair degree of geographic and occupational movement. All these indicate a flexible supply of workers for construction and support the aggregate statistics showing large yearly increment of labor force in the industry. The study concludes that there need not be cause for serious concern about the replacement of outgoing workers since they are easily replaced. There is, however, a tendency for the better qualified and the more experienced workers to be selected for foreign jobs. This can lead to deterioration of quality of the workers left behind.