Abstrak
Remittance is amount of money which sent by
overseas workers to their family at origin country. This type of income is
significant in generate a number of important positive contribution to the
economic development of many household whose mostly lives in rural areas.
Viewed from the macroeconomic perspective,
remittances also influences the increase of national income of individuals in
each family who are getting the chance for the overseas employment and tend to
reduce poverty and inequality in recepient countries, as well as increase
aggregate investment and growth. At microeconomic
stand point, the family who’s regularly earn income from remittances; can
improve their economy condition such as increase the daily consumption for food
and the basic needs. Futhermore, this income also used to increase saving,
spend more on the education, improve children's health and estabelsihed a small
or medium-sized of businesses in the community. The data from BNU (Banco
Nacional Ultramarino) revealed that every year, workers in South Korea sending
money to family with the total amount of US$ 1,746,250.22
(BNU, 2013). Meanwhle, the data from Western
Union Agency recorded remittances every three months with the
total amount ofUS$ 1,200,538.30. Total
remittances recorded by SEPFOPE in 2013
reachedUS$ 2,946,838.53.
Introduction
Timor Leste as a newly independent state in the era
of milleneum, as a new country it is true that there are variety of challenges
facing in the process of economic development. With the rapid rate of
population growth about 3.3% each year, many of Timorese are still living under
poverty line (World Bank, 2008; WFP, 2010). Beside the above condition,
Timor Leste is rich with natural resources such as oil and gas. However, rely
on natural resources will not guarantee the sustainability of the economic
development for the future. Related to a sustainable development, the
government has adopted some important policies in recent years through the
implementationof varies programs in the sectors of agriculture, fisheries and
tourism. The aims of these policies are to substitute the dependency on oil and
gas sector. These productive sectors which mentioned above are related to the
world's labour market. In the era of globalization, the demand of the workforce
is increasing every year especially in developed countries. This is one of the
indicators for youth in less developed countries to seek for overseas
employment with the expectation to gained more skills and earned more income.
Although it's considered as "low wages" for people in developed countries,
the amount of money earned is very valuable for people in poor countries in
order to improve the economy of their household.
Policy of the Government of Timor-Leste
The Timor Leste Government policy, through the
Secretary of State for Professional Training and Employment Policy (SEPFOPE) is
to reduce unemployment, improve the quality and skills of human resources,
creating conducive working conditions for the workers through employment
protection, and elaborate the"Labor Code" in accordance with the
international provisions. Associated with the demand of the labor market
opportunities in developed countries, the Government of Timor -Leste use this
opportunity to reduce the rate of unemployment which has reached 3.6 %
(SEPFOPE, 2010). To achieving this goal, the government has been implementing
some programs in the area ofVocationalTraining at existing training centers and
the implementation of Overseas Employment Program. This program will have two
positive impacts, the fisrt is to increase the number of human resource which
equiped with varies ability and ready to enter the labour market. The second is
to fullfill the overseas employment program, this program will gives an
opportunity to the youth to work overseas and support the family’s economy.
Overseas Employment Program
Overseas employment is one of the programs under
the responsibility of the National Employment Department (DNE). Implementation
of this program is based on the agreement with the countries that want to
receive workers from Timor Leste. During this period, the Government of Timor
-Leste has signed agreements with the Government of South Korea and Australia.
In the agreement those countries agreed on some important issues, one of the
agreement is the period of contract for the workers, The South Korean
Government provides an employment opportunity for the period of one to three
years, if the workershas estabelishedgood performance and behaviour, the
contract will be extended for another two years; over five years if the workers
still maintain positive performance and behaviour, the South Korean Government
will provide the Special Visa namely E7 which give an opportunity for workers
for the freely movement in South Korea as well as the right to choose on a
company which they want to work for. On the other hand, the Australian
Government opened a program called 'seasonal workers' contracts that provide
opportunities to the workers from Timor Leste with the provisions of the
working period for three to six months in each year. The type of the contract
with a short period is one of Australia's policies to restrict foreigners to
stay longer in Australia.
Overseas Employment has been implemented by the
government since 2008: in the first phase, the Government of Timor-Leste
through SEPFOPE sent 50 workers to South Korea. In 2011 the South
Korean Government was asking for 2,500 workers, but Timor Leste was only
offering 400 workers; in 2012, South Korea raised the number of
employees reached to 2750 people, Timor Leste once again releasing only 500
workers. In 2013 the South Korean government demanded workers jumped up
to 3,500 people, but the number which derived from the Government of
Timor-Leste only reach to 280 workers. Judging from the small number
that sent by the Government of Timor Leste, South Korea also reduce the number
of employees to 1,750. In 2014 the number of bids not receive yet an
answer from the Government of Timor-Leste on how many number of workers will be
delivered.Total number of workers which sent by the Government of Timor-Leste
was not in accordance with the amount requested by South Korea in 2011 until
2013, which should reach 7,570 workers, it can be concluded that the
Government of Timor-Leste has wasted opportunity in improving human resources
while reducing the income of remittance that should be received by Timor Leste
in large numbers. Based on the information from the relevant department which
responsible for the program said, "SEPFOPE has its own criterias that
should be met by prospective workers to South Korea such as attending Korean
language course in a few months: in fact, many workers did not pass the final
exam" (Alves.P 2014). This statement can be concluded that
the approach of the Government policy through SEPFOPE should be improved, and
it’s necessary to overcome challenges as fallowed:
- Limitations of training centers which only localizing in a few districts.
- Dissemination of information on overseas employment to the rural areas is not evenly distributed.
- Korean language training techniques do not work well because the candidates do not attend to the fullest.
- Mechanisms of teaching from Korean teachers are not effective due to the limited recognition of local languages.
- The allocation of funds from the Timor-Leste Government for Korean language training is not included in the category of priority to the Human Resources Development Funds in each year.
If these constraints be addressed and corrected the
results of this training for the candidates will offer a large number of
workers in accordance with the request submitted by the South Korean
Government.
Workers in South Korea and Australia
The number of workers currently working in South
Korea reached 1,358 people. Data from the National Employment Department
which administers overseas employment can be seen in the following figure:
Through this figure, it can be analyzed that the workers employed in the fisheries sector achieve the highest number compared to the number of workers in the agricultural sector and factories. This shows that the fisheries sector is a priority for the labor market in South Korea. Based on the facts, SEPFOPE need to focus in creaating good estrategis on training techniques in the fisheries sector and maksimised coordination with relevant ministries such as the Ministry of Agriculture and Fisheries. The goal of coordination is to prioritisedthe investment in the fisheries sector in Timor-Leste. Another point is to prepare labour market of this sectors in order touse the lebour withskills, knowledge and experience when the contract with South Korean Government is end.Compared to the number of workers employed in South Korea, the number of workers employed in Australia is very small and only apply to the two sectors such as hospitality and agriculture. The total number of Timorese workers in Australia can be seen in the following graph :
From this graph shows that, Australian labor market
is in need of people who have skills in the hospitality sector. The number on
the chart above becomes an indicator for the Government of Timor-Leste to more
focus on technical training in the hospitality sector. To support this, one of
the training to focus is the English Language Training, this training as a way
to respond to the selection with more competitive bycompanies in Australia
which seeks for more workers from Timor Leste. Another point is that the
Improvement of the skills of human resources in the hospitality sector is very
useful because in the coming years Timor Leste can become a tourist destination
for neighboring countries such as Australia and New Zealand.
Remittance from the Workers
When disccused about the number of overseas workers, it’s closely tied to the
income earned by workers every month. Income earned on a monthly basis mostly
sent to families living in Timor Leste. Based on the data obtained from the BNU
Bank (Banco Nacional Ultramarino), each year the total money sent by
workers in South Korea to their families in Timor Leste totaled US$
1,746,250.22. Data from Western Union Agency indicates the progress
of income for the quarterly remittances was US$ 1,200,538.30. If counted
the whole amountof income from overseas employment program has received a
remittance of US$ 2, 946,838.53. The data is considered incomplete
because some finacial institutions operating in Timor Leste as Mandiri
Bank, ANZ and small agencies that deal with the money transference services has
not report yet the information of remittances through their service.
The total income earned by the workers overseas is very significant. Workers
and their money is theimportant elements to supportthe improvement of family
economy at the country origin. Nevertheless a few percent of the money had to
be cutted for the operational cost as a fees on transferes services which apply
in all the financial institutions which work in this sector.. For example,
Western Union, if it received a total transfer of US$ 1000.00, operating
rates for tax can reach 10% of the amount of money sent. The system does
not provide a profit to the workers remitters receivers because the money sent
to the family must be cut with a high percentage of tax payments.
To respond to the high operational cost by the
financial institution or business which focuses in this sector, the Government
of Timor-Leste needs to implement some of the policies as follows:
- Reduce taxes on money that is transferred by the workers.
- The government of Timor Leste working closely with companies that provide contract to workers, to immediately create a permanent form of deposits in accordance with the duration given by the Bank.
- Forming a National Bank that provides operational with a small tax percentage of the price to the workers who work abroad and give high interest money that helped workers to deposit their money for their overseas employment contracts.
This idea is reasonable when viewed from the
paradigm of macro-economic stand; this system is effective to improve
the economy in the country from the income which regularly sends to to existing
bank. Furthermore, the Nasional Bank can implement the "saving &
loan" system to people that requires capital for their businesses. If workers
(owners of money) have completed their contracts and intend to return to Timor
Leste, they can take all the money in the refer bank.
The national income of every family is one of the indicators to measure the
growth of economic of its citizens. Through the national income, experts can
evaluate the progress of economic development. . Looking on the positive
contributions, in the 2014 State Budget Debate, SEPFOPE pick the issue in the
plenary and addressed by parliamentarian from the opposition party, Nina Rangel
dos Reis who questioned the national income that does not count the
remittances. Vice Finance Minister, Santina Cardoso acknowledges this weakness
when answering the question of annual remittances as income for the State.SEPFOPE
Plans to conduct in depth analysis about impacts of the overseas workers’
remittances on the state economic development, SEPFOPE admits that over the
years there has been no thorough analysis of overseas income which sends by
Timorese workers. Looking at these shortcomings, in 2014 SEPFOPE had planned to
provide funding support to conduct useful analysis in depth on the issue of
remittance to Timor Leste. Support will be given to Timorese students who are
conducting studies on master's degree in the field of development in New
Zealand. The thesis entitled "Overseas Activities that contribute to
the Economic development of Timor Leste: an analysis of remittance of overseas
Timorese workers." Through this article, we can see a thorough
analysis of the overseas employment program policy and resulting benefits for
long-term economic development.
Many people talk about government ineffectivity in
addressing the problems of unemployment faced by the State at this time. Some
said that the government does not give attention to the necessities of the
overseas workers. It is true that there are many reasons that support the ideas
presented above and SEPFOPEacknowledges the advantages and disadvantages of the
program implemented. Disadvantages of this program are visible such as sending
workers abroad means that the country loses more skills labor or workers.
However in the reality, this program has its advantages to reduce the rate of
unemployment in the country, moreover the workers gain new skills, knowledge
and more importantly gain income and sent back to their family in Timor Leste.
Conclusion
The remittances obtained by Timorese overseas workers very positively
contribute to the economic development of the family who mostly lives in rural
areas. The total numbers of workers with 1,389 people working in South
Korea and Australia have produced a remittance of US$ 2,946,838.53 each
year for the local economy. However in some point, the Government of Timor
-Leste failed to respond to the number of workers requested by South Korea and
Australia. Looking at this reality, the government needs to improve the
overseas programs working systems, and the efforts of the new policy should be
done in order to support workers income bydeposit their money into the National
Bank at the country origin which might raise high interest of the money and
give them an advantage when the contract period is completed. SEPFOPE needs to
undertake training through overseas employment program with the clear mission
where workers can learn and has good work experience and when they get the
chance for the overseas employment; those experiences that they get might
change their mentality to be more professional in the area they chose. SEPFOPE
policy by implementing overseas employment program have a positive impact such
as enhance skills and good experience and included moreincome in order to
improve the economy of the family and provide significant income for the State.
***
References
Alves, P. (2014)" Director fo Nasional
Employment Department" SEPFOPE, Dili, Timor-Leste
BNU (Banco Nacional Ultramarino), 2013:
"Specific data of income transference from workers in South" Dili,
Timor Leste.
National Employment Department (DNE), 2013:
"2013 Annual Report of National Employment Department, Overseas Employment
Program: Dili, Timor Leste.
SEPFOPE (2013): "Work Guidelines of
Secretariat of State for Professional Training and Employment Policy” Dili,
Timor Leste.
World Bank (2013), Qouted from World Food Programe:
"Fighting hunger worldwide" Dili, Timor Leste.
Western Union - Timor Leste (December
2013):"Specific data of income transference from workers in South"
Dili, Timor Leste.
