Contingent Workforce Environment in Asia 2020

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CONTINGENT WORKFORCE ENVIRONMENT IN ASIA
CHINA, INDIA, INDONESIA, JAPAN,
KOREA, MALAYSIA, SINGAPORE
2020

2 workspend.com
CONTENTS
Section I – Staffing Industry Overview
Section II – Contingent Workforce Regulations
Overview
Section III – • GDP
• Languages
• Legal Overview
• Major Industries
• Ease of Doing Business
• Country Profile (Data
from the World Bank)

SECTION 1
STAFFING
OVERVIEW FOR
EACH COUNTRY

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CHINA
China is still the dominant nation in the global market, especially since it has the largest workforce in
the world. But its popularity is reducing due to the increase in regulations and higher wages and
taxes.
In China, temporary agency workers are called “Dispatched Employees”. Dispatched laborers are
technically employed by their agencies rather than the companies they perform the work for, so any
workplace grievances must be dealt with by the dispatch agency.
Labor Dispatch has been a favored method to hire employees in China. According to the
International Labor Organization’s (ILO) Conditions of Work and Employment 64th issue, in China,
dispatched employment first emerged in the late 1970s, and in the 80s and 90s, the number of
employment agencies grew exponentially. The ILO report also added that the reason for the surge
of growth of dispatched labor the was due to the downsizing of the state sector, immigration of
rural workers to the cities and the unemployment of fresh graduates.
Fixed term employees are entitled to almost the same benefits as open term employees. It is worth
noting that part-time work allows much more flexibility under People’s Republic of China law, than a
lot of other countries.

INDIA
India has the second largest workforce following China. It has a notoriously slow bureaucracy
and is highly regulated. There are currently forty-four labour laws that the government is in the
process of reducing to just four.
There is no definition for “Contingent Workers” according to Indian Law, and most of the
instances where contractors are employed is where staffing agencies send their employees to
work with the client (very similar to China).
It is a highly attractive destination for employers due to the low minimum wages and availability
of a large pool of labour. It is also largely an English speaking country, hence easier to do
business in for MNCs. The cost of doing business is also very low, although slightly higher than
the regional average.
In India, the usage of the MSP/VMS model is driven by large corporations with multi-region
contingent workforce programs using India as the base for the program.

INDONESIA
Indonesia is Southeast Asia's largest economy, rich in all types of natural resources. The Contingent
Workforce is regulated by the Indonesian Manpower Law, which protects the rights and interests of both
workers and employers. The Manpower Labor Law can and does change frequently, and employers
must maintain familiarity with current regulations and how they affect hiring practices.
The data provided by the International Labour Organization shows that that increasing investment in
education has expanded the pool of educated workers; although, these investments have not translated
into substantial gains in labour productivity. Indonesia has dramatically increased rates of school
enrolment and the average years of schooling since its transition to democracy. The country is now close
to achieving universal literacy among the youth population and the government has promised
continuing education funding.
Some Key figures:
▪ Steady growth of GDP at 4% per capita with low inflation
▪ Indonesia's 64.7 % population is employed with an overall total unemployment rate of 4.8 percent.
▪ 11.6% of the Indonesian adult population has advance degrees.
▪ 23% of the working population averages over 48 work hours per week, otherwise the average is 39
hours per week
Source: International Labour Organization (ILO), Asian Development Bank & OECD

JAPAN
According to the World Employment Confederation (WEC) report released in Feb 2020, based on 2018
data:
▪ Japan has the 3rd largest contractual workforce at 3.8 million
▪ 2nd largest revenue generator for Staffing firms globally : 50 Billion US Dollars
Majority of contingent workers in Japan are temporary agency workers, a.k.a. dispatched workers (haken
rodosha), and fixed-term employees (yuki keiyaku rodosha). The use of dispatch workers and fixed term
employees has increased over the last decade or so.
The use of temporary agency workers is regulated under the Act for Securing the Proper Operation of
Worker Dispatching Undertakings and Improved Working Conditions for Dispatched Workers ("Worker
Dispatch Act"). The use of fixed-term employees is regulated under the Labour Standards Act and Labour
Contract Act. Companies are not allowed to supervise or control dispatch workers.

KOREA, REP.
The Korean labour market is highly regulated and employee friendly, with strong labour unions and stringent laws
protecting the employees. Korea has a civil law system and court decisions have a precedent value. The Labour
Standard Act (LSA) is the main statute guiding the employment relationship and providing details on minimum
employment standards.
While there is no concept of agency workers, the Dispatched Workers Act regulates the use of employees of another
company by way of "worker dispatch" from a temporary work agency. Dispatch type of arrangements are very popular
in Korea, as any problems with terminating the employee can be prevented.
Any organization employing ten or more workers must prepare a handbook with details of work hours, how the hours
are calculated, details on vacation etc. The handbook must be filed with the Ministry of Employment and Labour
(MOEL). There is a limit on working hours of 8 hours per day and 40 hours per week. Employees can do a maximum of
12 hours overtime, and must be paid a premium for the same*.
Behavior that would be just cause for termination in other countries, very often might not amount to just cause in
Korea. If an employee were found to be performing very poorly, every effort must be made to give the employee
opportunity to help improve, otherwise it is very likely that the court might overturn the case.
* Employment law in the Republic of Korea – an overview – Lewis Silkin

MALAYSIA
• Malaysia ranks 15th globally in the World
Bank Ease of Doing Business Report
2019
• Streamlined Procedures (e.g. permit
application, online procedures)
• Reformed legislation regulating
worker protection and social benefit
(e.g. introduction of unemployment
protection schemes)
• Reduced government bureaucracy and
improved efficiency in public service
• Conducive atmosphere for business
growth and employment opportunities
• Total Labor Force** – 15.66 Million*
• Unemployment rate – 3.3%*
• A total of 31.4% were considered outside the
workforce
**Labor force refers to those who, during the reference week are in the 15 to 64 years (in completed years at last
birthday) and who are either employed or unemployed
* Department of Statistics, Malaysia.Data as of June 2019
0.0 5,000.0 10,000.015,000.020,000.025,000.030,000.035,000.040,000.0
2015e
2020f
2025f
2030f
2035f
A Well Distributed Large Urban Population Provides
Recruitment Flexibility For Firms
Malaysia - Urban population, '000, World Bank/UN/BMI
Malaysia - Rural population, '000, World Bank/UN/BMI

SINGAPORE
Singapore, which was traditionally an immature market for contracting, has recently had an increase in the
usage of temporary and contractual workers. The Singapore Business Review, citing data from a Kelly OCG
survey, shows firms having 38% contingent workers in 2019, up from 8% in 2017. The Report also added that
78% of C-suite leaders in Singapore planned to hire contingent workers and 7 out of the 10 C-suite leaders
also believed that mid-level positions would see the most growth for contingent workers.
The same survey also added that one third of the organizations surveyed has about 30% contingent workers
in their workforce, up from 20% in 2017. Nearly 3 out of 5 firms use contingent workers to increase talent
supply and address talent shortages, and over 90% of the organizations felt that their best talent was found
through the contingent workforce.
▪ The total employment grew in 2019 as
compared to 2018, based on the figures
released by the Singapore Ministry of
Manpower
▪ The Retrenchment of workers also remained
constant in 2018 and 2019.
Employment Growth
Retrenchment of Workers 2016 to 2019

SECTION 2
CONTINGENT
WORKFORCE
REGULATIONS

CHINA
Labor dispatch is generally regulated by Section 2 of the PRC Labor Contract Law. In January of 2014,
China’s Ministry of Human Resources and Social Security approved these specific rules regarding
labor dispatch in the country (Order No. 22) to prevent companies from taking advantage of the
liability loopholes. The two regulations restrict what types of positions dispatched staff can hold, the
proportion of workers in a company that can be comprised of dispatched staff, and how they are
returned to their agencies.
The new Interim Regulations limit labor dispatching frameworks to the following three types of
positions:
▪ Temporary positions: This refers to a position with a duration of no more than six months.
▪ Auxiliary positions: This refers to a position that provides auxiliary services to the core business of
the employer/user enterprise.
▪ Replaceable positions: A position that can be performed by a dispatched employee in place of a
permanent employee during the period when such an employee is away from work for study,
vacation, or other reasons.
Equal Pay Equal Work – Dispatched workers cannot be paid lower wages than fulltime employees
who are in similar positions.
Total dispatched workers must not exceed 10 percent of the company’s total number of employees of
the user enterprise

INDIA
The labour enactment in India, is divided into 5 broad categories: Working Conditions,
Industrial Relations, Wage, Welfare and Social Security. There are over fifty national laws
and many more state-level laws. The main central laws dealing with labour issues are:
Similarly as in China:
• Equal Pay Equal Work – Contractors cannot be paid lower wages than fulltime
employees who are in similar positions.
• The hiring company bears ‘equal liability’ with the staffing agency for any harm caused
by the staffing agency in violation of law
1. Minimum Wages Act 1948
2. Industrial Employment (Standing orders) Act
1946
3. Payment of Wages Act 1936
4. Workmen’s Compensation Act 1923
5. Industrial Disputes Act 1947
6. Employees Provident Fund and Miscellaneous
Provisions Act 1952
7. Payment of Bonus Act 1965
8. Payment of Gratuity Act 1972
9. Maternity Benefit Act 1961

INDONESIA
Contracts in Indonesia are governed by either:
▪ Adat (customary) Law or
▪ The Indonesian Civil Code
Generally, Adat Law governs contracts between members of the indigenous population in a rural setting. It is not
designed for use in international transactions.
Temporary work agencies need to take the form of a legal entity business with license from a government
agency responsible for labour/ manpower affairs.
A work agreement for a specified period of time cannot be made for jobs that are permanent by nature.
When hiring an employee in Indonesia, you must specify what type of employment contract you are offering.
Employment contracts are legally binding and must adhere to the Indonesian Manpower Law. A fixed-term
employment agreement must be in writing and in the Indonesian language. If it is not made in writing, a fixed-
term employment agreement is deemed an indefinite-term employment agreement
The longest period that an employee can stay on one contract is 2 years, with a possible 12-month extension.
No probation is needed for fixed-term contracts.
Hours worked beyond the following are considered overtime in Indonesia:
▪ 7 hours per day and 40 hours in a week; for 6 days per week; or
▪ 8 hours per day and 40 hours in a week; for 5 days per week
Temporary agency workers must not be used by employers to carry out their enterprises’ main activities or
activities that are directly related to production processes, except for auxiliary service activities or activities that
are indirectly related to production processes. Source: OECD

JAPAN
The rules for using dispatch workers in Japan are very clear and specific.
Under the Dispatch Worker Act and other relevant regulations, some of
the key points are:
▪ The host company cannot directly interview the candidate or set up a
screening process.
▪ In principal, the same dispatch worker can be used three years by a firm,
after which either the person must be hired as a full-time worker or be
terminated.
▪ Companies can use dispatch workers for the same position
indefinitely but the person must be replaced every three years.
▪ If a host company uses a dispatch worker in violation of applicable laws,
then they are deemed to have made a direct employment contract offer
to the worker.

KOREA, REP.
The 1998 Act on the Protection etc. of Dispatch Workers was designed to protect the rights of dispatch
workers. a company is prohibited from engaging dispatched workers in direct production processes and can
only engage dispatched workers in 32 specified business roles. These include computer expert services, travel
guide services, and security services.
Companies employ, in Korea, often workers via manpower supply companies and via subcontracting
agreements. These employees are not retained directly by the Company, but are retained via a manpower
company (“Dispatched Worker”) or a subcontracting agreement (“Subcontracted Worker”).
If the Company has a sufficient degree of control over the worker, in the eyes of the specific Korean court, the
worker is deemed a Dispatched Worker and, thus, an employee of the Company.
This independent contractor LSA risk often arises when a company retains an independent contractor to
perform essential functions for the company in Korea. These functions often include delivery, repair, special
engineering services and sales services. The risks increase when the independent contractor’s main source of
income is from this one company, the independent contractor is “dependent” on the company and the
company imposes substantial control over the independent contractor.
The Act requires that any person employed as a dispatch worker for two years must be automatically classified
as a regular full-time employee and must receive all the pay, allowances, working conditions and benefits to
which all regular workers are entitled.
A maximum contract period of two years has been imposed on fixed-term contracts as well as on part-time
work and a maximum of 12 overtime hours have been imposed on part-time work.
Source: The Worker Dispatch System of Korea: Status and Challenges - Sungteak Kim

MALAYSIA
1. There are no restrictions on the usage
of contract workers in Malaysia
2. There are no restrictions on the type of
work that contractors might be used
for.
3. There is no tenure limit in place for
temporary or part-time assignments
4. No restrictions have been specified in
the Employee Act
5. Contractors are not given any rights
toward permanent employment
6. The Employment Act regulates the
working week to no more than 48
hours in one week.
7. Overtime pay is at a minimum 1.5
times regular pay per hour
The staffing industry is regulated by Act 246, the Private Employment Agencies
Act - 1981 (as amended to 2006). The Act covers both commercial and not for
profit agencies, but excludes newspapers (and websites) as long as they are not
acting as conduits of information between employers and workers.
This Act is administered by a Director General. The Act further states that
“No person shall carry on the business of a private employment agency
except under the authority of a valid licence issued by the Director General
to apply the Act.”. The Director General is appointed by the Ministry of
Employment.
Liability of principals and contractors for wages – under section 33.1 of the
Employment Act of 1961, “principal and the contractor and any such
subcontractor (not being the employer) shall be jointly and severally liable with
the employer to pay such wages as if that employee had been immediately
employed by the principal and by the contractor and any such subcontractor”
According to the “Private Employment Agencies Act of 1981:
“Worker” means any person who works for hire or reward, whether as
apprentice or not, and includes any person seeking such work.
Malaysian laws permit common law argument and precedent inherited from
Britain and other Commonwealth countries which might have an impact on
judicial outcomes of commercial disputes.
CONTINGENT WORKFORCE
LANDSCAPE

SINGAPORE
The Employment Act details the minimum terms and conditions of employment in Singapore and does not make any
distinction between a temporary employee, contract employee, daily-rated employee or employee on tenured
employment. There is no single ‘test’ that can be used to differentiate between a full time employee and a contractor.
Local labour laws allow for relatively free hiring and firing practices. Either party can terminate employment by giving
the other party the required notice.
There are four main contract periods.
• Up to three months
• Over three months (workers covered by the Employment Act)
• One Year
• Over one year
Similar to other ‘commonwealth’ nations, Singapore differentiates between a ‘Contract of service’ Vs. ‘Contract for
Service’. A Contract of Service is an agreement between an employer and an employee. In a Contract for Service, an
independent contractor, such as a self-employed person or vendor, is engaged for a fee to carry out an assignment or
project:
Contract of Service Contract for Service
• Has an employer-employee relationship • Has a client-contractor type of relationship
• Employee does business for the employer • Contractor carries out business on their own
account
• May be covered by the Employment Act • Not covered by the Employment Act
• Includes terms of employment such as
working hours, leave benefits, etc.
• Statutory benefits do not apply
Source: Singapore Ministry of Manpower

SECTION 3
GDP,
LANGUAGES,
LEGAL, MAJOR
INDUSTRIES,
EASE OF DOING
BUSINESS &
COUNTRY
PROFILE

GDP (2018)
13.6
2.7
1
4.9
1.6
0.35
0.36
GDP (2018) IN TRILLIONS (USD)
GDP IN USD (TRILLION)
China India Indonesia Japan Korea, Rep. Malaysia Singapore
Source: World
Development
Indicators
database

LANGUAGES
Country Industries
China
Standard Chinese or Mandarin (official; Putonghua, based on the Beijing dialect), Yue (Cantonese), Wu (Shanghainese), Minbei
(Fuzhou), Minnan (Hokkien-Taiwanese), Xiang, Gan, Hakka dialects, minority languages (see Ethnic groups entry)
note: Zhuang is official in Guangxi Zhuang, Yue is official in Guangdong, Mongolian is official in Nei Mongol, Uighur is official in
Xinjiang Uygur, Kyrgyz is official in Xinjiang Uygur, and Tibetan is official in Xizang (Tibet)
India
Hindi 43.6%, Bengali 8%, Marathi 6.9%, Telugu 6.7%, Tamil 5.7%, Gujarati 4.6%, Urdu 4.2%, Kannada 3.6%, Odia 3.1%, Malayalam
2.9%, Punjabi 2.7%, Assamese 1.3%, Maithili 1.1%, other 5.6% (2011 est.)
Note: English enjoys the status of subsidiary official language but is the most important language for national, political, and
commercial communication.
Indonesia
Bahasa Indonesia (official, modified form of Malay), English, Dutch, local dialects (of which the most widely spoken is Javanese)
Note: more than 700 languages are used in Indonesia
Japan Japanese
Korea, Rep. Korean, English (widely taught in elementary, junior high, and high school)
Malaysia
Bahasa Malaysia (official), English, Chinese (Cantonese, Mandarin, Hokkien, Hakka, Hainan, Foochow), Tamil, Telugu, Malayalam,
Panjabi, Thai
Note: Malaysia has 134 living languages - 112 indigenous languages and 22 non-indigenous languages; in East Malaysia, there are
several indigenous languages; the most widely spoken are Iban and Kadazan
Singapore
English (official) 36.9%, Mandarin (official) 34.9%, other Chinese dialects (includes Hokkien, Cantonese, Teochew, Hakka) 12.2%,
Malay (official) 10.7%, Tamil (official) 3.3%, other 2% (2015 est.)
note: data represents language most frequently spoken at home
Source: CIA World Factbook

LEGAL SYSTEM
Country Industries
China
Civil law influenced by Soviet and continental European civil law systems; legislature retains
power to interpret statutes; note - in March 2017, the National People's Congress passed a
new civil code, the General Rules of Civil Law, which became effective the following October
India
Common law system based on the English model; separate personal law codes apply to
Muslims, Christians, and Hindus; judicial review of legislative acts
Indonesia Civil law system based on the Roman-Dutch model and influenced by customary law
Japan
Civil law system based on German model; system also reflects Anglo-American influence and
Japanese traditions; judicial review of legislative acts in the Supreme Court
Korea, Rep.
Mixed legal system combining European civil law, Anglo-American law, and Chinese classical
thought
Malaysia
Mixed legal system of English common law, Islamic (sharia) law, and customary law; judicial
review of legislative acts in the Federal Court at request of supreme head of the federation
Singapore English common law

MAJOR INDUSTRIES
Country Industries
China
World leader in gross value of industrial output; mining and ore processing, iron, steel, aluminum, and other
metals, coal; machine building; armaments; textiles and apparel; petroleum; cement; chemicals; fertilizer;
consumer products (including footwear, toys, and electronics); food processing; transportation equipment,
including automobiles, railcars and locomotives, ships, aircraft; telecommunications equipment, commercial
space launch vehicles, satellites
India
Textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery,
software, pharmaceuticals
Indonesia
Petroleum and natural gas, textiles, automotive, electrical appliances, apparel, footwear, mining, cement, medical
instruments and appliances, handicrafts, chemical fertilizers, plywood, rubber, processed food, jewelry, and
tourism
Japan
Among world's largest and most technologically advanced producers of motor vehicles, electronic equipment,
machine tools, steel and nonferrous metals, ships, chemicals, textiles, processed foods
Korea, Rep. Electronics, telecommunications, automobile production, chemicals, shipbuilding, steel
Malaysia
Peninsular Malaysia - rubber and oil palm processing and manufacturing, petroleum and natural gas, light
manufacturing, pharmaceuticals, medical technology, electronics and semiconductors, timber processing; Sabah -
logging, petroleum and natural gas production, Sarawak - agriculture processing, petroleum and natural gas
production, logging
Singapore
Electronics, chemicals, financial services, oil drilling equipment, petroleum refining, biomedical products, scientific
instruments, telecommunication equipment, processed food and beverages, ship repair, offshore platform
construction, entrepot trade

EASE OF DOING BUSINESS (GLOBAL RANKINGS)
Global Rank
Starting a
Business
Getting
Credit
Paying Taxes
Trading
across
Borders
Enforcing
Contracts
Resolving
Insolvency
China 31 27 80 105 56 5 51
India 63 136 25 115 68 163 52
Indonesia 73 140 48 81 116 139 38
Japan 29 106 94 51 57 50 3
Korea, Rep. 5 33 67 21 36 2 11
Malaysia 12 126 37 80 49 35 40
Singapore 2 4 37 7 47 1 27
Source: World Bank

COUNTRY PROFILE
Source: World
Development
Indicators
database

ABOUT THE AUTHOR
Sameer Srivastava has over twelve years of experience in designing, implementing and managing MSP programs
and integrated talent solutions in Europe, Asia and the US. Sameer’s current responsibilities include oversight for
Workspend’s operations and business development in APAC and EMEA.
Prior to joining Workspend, Sameer was leading Kelly OCG’s Implementation services in EMEA and later went to
head their MSP and RPO Operations in India. Post Kelly OCG, Sameer was at Allegis Global Solutions where he
managed Implementation and Operational teams in India.
Sameer also has experience working as an IT and Change Management Consultant in the US and the UK. Sameer
holds a bachelor’s in computer science from the University of Nebraska, Lincoln (USA) and an MBA from Cranfield
University (UK).
©2019 Workspend, Inc.
Sameer Srivastava
VP – International Operations
ssrivastava@workspend.com
+91 900 8777 422

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