A Breakthrough for Refugees’ Work Rights in Thailand and Malaysia?

As global aid budgets shrink, allowing refugees to work is more important than ever. Reforms should focus on accelerating refugee inclusion—ensuring refugees can support themselves and contribute to host economies, thereby reducing the overall need for external aid. Yet across much of the world, refugees are barred from working by legal restrictions and other practical barriers.

Refugee access to labor markets has been particularly restricted in Southeast Asia, where protracted conflict in Myanmar has driven the displacement of ethnic minorities for decades. Renewed state-sanctioned violence against the Rohingya people in 2017, followed by the military coup in 2021, triggered sharp increases in refugee outflows to neighboring countries. While Bangladesh hosts the largest number of refugees from Myanmar—with nearly 1 million Rohingya refugees in Kutupalong, the world’s largest refugee camp—Thailand and Malaysia also host sizable refugee populations of 87,227 and 201,653, respectively.

CGD’s Migration and Displacement program has highlighted practical, medium-term strategies to benefit Rohingya refugees and host communities in Bangladesh, where refugees face severe limitations on their rights to work and move freely. In this blog, we spotlight Thailand and Malaysia, which have also been historically restrictive.

Figure 1. Refugee populations, Southeast Asia

In CGD’s 2022 Global Refugee Work Rights Report, Thailand and Malaysia ranked among the lowest-scoring countries in terms of refugees’ labor market access, both in law and in practice. Despite being the top refugee-hosting countries in the Association of Southeast Asian Nations (ASEAN), neither is a signatory to the 1951 Refugee Convention. However, in the past year, both countries have signaled openness to expanding refugees’ work rights. If implemented fully, these reforms could enhance self-reliance, reduce aid requirements, and align refugee economic inclusion with national development priorities.

Thailand

In August, Thailand approved a landmark policy granting refugees from Myanmar the right to work outside of camps for the first time in decades. These refugees, predominantly of Karen and Karenni descent, reside across nine government-administered camps along the Thai-Myanmar border. The decision comes amid the escalating Cambodia-Thai border dispute, which has prompted the return of over 780,000 Cambodian migrant workers to their home country. With Cambodian migrants previously representing 12 percent of the Thai workforce, industries such as agriculture, manufacturing, and construction are facing mounting labor shortages. Simultaneously, cuts to food and medical aid in the camps have underscored the urgent need to develop sustainable livelihood solutions.

To address these converging pressures, Thai authorities recently launched a pilot work permit program that allows refugees to work for up to one year via employer sponsorship. Refugees will be eligible to work in over half of the country’s provinces: 18 in Central Thailand (including Bangkok), 17 in the North, and 8 in the East. The UN Refugee Agency (UNHCR) has identified 42,000 working-age refugees (18-55 years old) in the camps, of whom 12,000 have registered for the program to date.

Under the new framework, employers are responsible for selecting workers based on their skills, submitting documentation to provincial labor offices, and requesting formal permission for refugees to leave the camps. Workers’ families, however, will not be permitted to leave the camps under the initiative. Once work permits are approved, refugee workers are supposed to relocate to the destination provinces, receive identification documents, and gain access to banking services, enabling them to send remittances back to their households.

Prime Minister Anutin Charnvirakul publicly affirmed that refugees will be entitled to full welfare protections and workers' rights under the Labour Protection Act, providing crucial legal safeguards against exploitation. If proven successful, the program could extend to the estimated 5,000 refugees residing in urban areas and serve as a model for other countries facing similar challenges.

Malaysia

Malaysian officials are considering proposals that would allow refugees to work legally and access additional forms of social assistance. While refugees reside in urban areas rather than camps, Malaysia lacks a legal framework for refugee recognition and classifies them as illegal immigrants. This legal vacuum pushes many refugees into informal employment, mostly in the “3D sectors”—dirty, dangerous, and difficult—where workers face heightened vulnerability to forced labor and exploitation.

Pressure for reform is building from the private sector. The Malaysian Employers Federation has urged the government to authorize refugee employment to alleviate persistent labor shortages. Several companies and state governments have offered to provide training to refugees, while restaurant associations have sought refugee workers to fill thousands of vacancies in food service roles.

A 2019 study by the Institute for Democracy and Economic Affairs (IDEAS) estimates that allowing refugees to work legally could enable them to contribute over RM3 billion (US$725 million) to Malaysia’s GDP through higher spending and generate RM50 million (US$12 million) in annual tax revenues. If granted access to public education, refugees’ contributions could rise to RM6.5 billion (US$1.5 billion) in GDP and RM250 million (US$60 million) in tax revenues by 2040.

This month, Malaysia announced a target launch date of January 1, 2026 for its first national refugee registration system, as mandated by a 2023 National Security Council directive on the “management of refugees and asylum seekers.” The Ministry of Home Affairs began piloting the database through Immigration Department offices in July and has screened at least 37,000 individuals to date. While details remain largely undisclosed, Deputy Home Minister Shamsul Anuar Nasarah stated that registered refugees will be allowed to live and work legally in Peninsular Malaysia. Officials say a comprehensive national refugee policy will be formalized once the registration rollout is complete.

Complementary measures such as enforceable labor protections, skills accreditation, and access to schools and public health facilities will be essential. Refugee children are currently denied access to formal education and must access schooling through informal community centers. Policymakers should also draw lessons from past efforts: a 2017 pilot project allowed 300 refugees to work in the agrocommodities and manufacturing sectors, but failed after matching workers with incompatible jobs in remote regions.

A breakthrough?

Beyond addressing imminent labor shortages, Thailand’s and Malaysia’s prospective policy reforms are unfolding against the backdrop of a rapid demographic transition. Both countries are grappling with the challenges of an aging population: Thailand’s working-age population is projected to decline by nearly 30 percent from 2020 to 2060, while Malaysia faces similar headwinds as it transitions to an aged society, constraining growth.

In this respect, Thailand and Malaysia are not unique; high- and middle-income countries worldwide face comparable demographic shifts. Allowing refugees to work—and expanding migration pathways more broadly—can therefore yield dual benefits: increasing income self-reliance among refugee households while alleviating labor constraints for firms.

As more policymakers recognize encampment as a waste of scarce resources, Thailand and Malaysia could set an alternative model. A rigorous evaluation of Thailand’s work permit program would provide invaluable evidence on the effects of refugee labor market inclusion for both refugees and their host communities. However, the extent to which refugees will be able to work in practice remains to be seen. With proper implementation and measurement, these movements could mark a significant breakthrough for refugee inclusion in Southeast Asia and beyond.