Decent Work for All ASIAN DECENT WORK DECADE 2006-2015

Kee Beom KimEmployment Specialist

ILO BangkokOctober 27, 2014

KEIS/WAPES Training on Dual Education System and Career Guidance

Employment opportunities and challenges in an increasingly integrated Asia and the Pacific

Aimed at setting the context, highlighting the labour market opportunities and challenges in countries in Asia-Pacific that education, training and public employment systems need to address

Opportunities and challenges are not only national, as the Asia-Pacific region is becoming increasingly integrated:

ASEAN Community 2015;

Regional Comprehensive Economic Partnership (RCEP): ASEAN+6

South Asian Association for Regional Cooperation (SAARC)

Trans-Pacific Partnership (TPP)

ILO/ADB report: ASEAN Community 2015: Managing integration for better jobs and shared prosperity

Introduction

Policymakers around the world face opportunities but also increasingly complex economic and employment challenges

While economic growth has been robust in many Asia developing countries in past decades, integration into the global economy has brought more exposure to external shocks and periodic crises

Growth in Real gross domestic product (GDP), 1991-2015 (%)

Source: IMF, World Economic Outlook Database, April 2014.

Source: ADB, Asian Development Outlook 2012.

And (robust) growth has often not been inclusive…

Gini coefficient, earliest year in 1990s and latest year in 2000s

Employment by economic class (millions)

Source: Kapsos and Boumpoula (2013).

And while extreme working poverty has declined remarkably, and a sizeable middle class is emerging…

…many are above but near the poverty line

With poverty being primarily rural, increasing labour productivity, particularly in agriculture, is critical…

Growth in value added per worker in agriculture (index, 1993=100)

Source: ILO calculations based on World Bank, World Development Indicators.

…to support structural change while reducing working poverty

And economic growth has not always brought about more and better jobs (“jobless growth”)

Average annual growth of real GDP and total employment, 2008-2013

Source: ILO, OECD, World Bank, G20 labour markets: outlook, key challenges and policy responses, September 2014

Countries face the challenge of creating more jobs, and in Asia, where unemployment rates in remain relatively low…

Unemployment rates (%)

Note: Preliminary estimatesSource: ILO, Trends Econometric Models, October 2013.

…the challenge of improving the quality of jobs, including those in “vulnerable employment”…

Share of own-account and contributing family workers (“vulnerable employment”) in total employment (%)

Source: ILO, Trends Econometric Models, October 2013.

…which is often characterized by inadequate earnings, poor working conditions, limited social protection, and unrecognized by law

Labour market situation particularly bleak for world’s youth…

4,5

2,1 2,2

1,2

2,8

1,0

15,8

1,8

16,9

1,4

18,4

1,5

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

16,0

18,0

20,0

15-24 25+ 15-24 25+ 15-24 25+

2010 2011 2012

(%)

Never attended Incomplete primary Completed primary

Completed lower secondary Completed upper secondary Vocational training

College (technical) University and above

-

5,0

10,0

15,0

20,0

25,0

Source: ILO, based on national labour force surveys.

Youth unemployment rate in Indonesia, 2013 (%) Youth and adult unemployment rates in Viet Nam (%)

…with many young people “queuing” for good jobs

While much progress has been made, gender gaps remain wide

Labour force participation rates by sex, 2014 (%)

Source: ILO - Estimates and Projections of the Economically Active Population (EAPEP), 2013 Edition (Update April 2014).

Integrating employment in national development plans E.g. Philippine Development Plan 2011-16 Mid Term Update targets

unemployment rate of 6.5~6.7%, 664,000~753,000 additional jobs, 17% underemployment rate

National employment policy (e.g. Fiji and Cambodia)

G20: “Creating more productive and better quality jobs is at the heart of our countries’ policies aimed at achieving strong sustainable and balanced growth, poverty reduction and increasing social cohesion” (G20 Leaders’ Declaration, September 2013)

G20 Employment Plans

Post 2015 Development Agenda: Open Working Group on Sustainable Development Goals has proposed 17 goals,

including “Goal 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all”

Amidst complex challenges, employment increasingly prominent in international and national policy agendas

Background

Findings of the study

Current situation (Chapters 1-2)

AEC impact (Chapters 3-6)

Priorities for action (Chapter 7)

Overview

Background

Findings of study

Current situation (Chapters 1-2)

AEC impact (Chapters 3-6)

Priorities for action (Chapter 7)

How can integration be managed to ensure decent work and

inclusive growth?

What are implications for job creation, job quality, women?

What kind of skills will be in demand?

What will be the effect on labour migration?

What will be the impact on productivity and wages?

Findings based on innovative CGE model simulations,

occupational projections, policy analyses and

ASEAN employers’ survey.

The study focuses on how the AEC 2015 affects people

through the labour market.

BACKGROUND

Background

Findings of study

Current situation (Chapters 1-2)

AEC impact (Chapters 3-6)

Priorities for action Chapter 7

IMPRESSIVE ECONOMIC PERFORMANCE,

BUT TOO MANY WORKERS IN ASEAN

STILL HAVE POOR QUALITY JOBS.

• $2.4 trillion GDP in 2013; 300 million labour force.

• Relative resilience to global economic crises.

• Between 2007-13, ASEAN countries grew faster than the global

average.

• Changing trade and FDI flows.

• Rising FDI inflows relative to rest of the world.

• Rapidly growing middle class.

• From 1991-2013, 83 million workers joined the middle class;

number expected to reach 144 million by 2017.

• But rising inequality is a major concern …

CURRENT SITUATION1. ASEAN integration in the global context

• 40% of workers are in

low-income agriculture.

• 13% youth unemployment.

• High informality,

low social protection

coverage.

• 59% in ‘vulnerable’

employment (own

account plus unpaid

family workers).

• Persisting gender

disparities.

Public social security expenditure, most recent

year (per cent of GDP)

CURRENT SITUATION1. ASEAN integration in the global context

• Massive wage and infrastructure differences across

countries.

• Building connectivity key to the AEC mission of equitable

development.

• Master Plan on ASEAN Connectivity and the Strategic Transport

Plan will contribute to strengthening the AEC.

• Existing integration agreements provide basis for further

cooperation.

• Trade agreements with Australia, China, India, Japan, Rep. of

Korea, New Zealand and others.

• Sub-regional economic zones (SIJORI, GMS, IMT-GT).

CURRENT SITUATION2. Connecting across borders

Background

Findings of study

Current situation (Chapters 1-2)

AEC impact (Chapters 3-6)

Priorities for action (Chapter 7)

THE AEC WILL DELIVER BENEFITS TO

THE REGION, BUT RISKS LEAVING

SOME BEHIND AND AGGRAVATING

INEQUALITIES.

• AEC could increase

GDP by 7.1% by 2025.

• Will create and

destroy jobs.

• Sectors likely to grow

in most countries are

trade and transport

and construction.

• Overall net job gain:

14 million additional

jobs by 2025.

Estimated growth in employment under AEC,

relative to baseline, 2025 (% of total employment)

AEC IMPACT 3. Managing structural change for decent jobs

• Gains will be uneven -

varying by country,

sector, gender.

• Fewer new jobs for

women than men.

• Many new jobs could be

in sectors that are

vulnerable and informal.

• Inequalities could

worsen.

Vulnerable employment as a share of additional

job gains under the AEC scenario, 2025

AEC IMPACT 3. Managing structural change for decent jobs

Estimated skills and educational mismatch in high-

skilled occupations, 2025• Different demand for

different skill levels:

• High-skill jobs: +41%

• Medium-skill jobs: +22%

• Low-skill jobs: +24%

• But skill mismatches

are likely to worsen.

• More than half of high-

skill jobs may be filled

by under-qualified

workers.

AEC IMPACT 4. Moving up the skills ladder

• 70% of employers

believe secondary

school graduates do

not have right skills.

• Quality and relevance

of education and

training need to be

improved to meet

industry requirements.

Share of respondents who agree that skills of

secondary, tertiary, and vocational graduates match

enterprise needs, 2013

AEC IMPACT 4. Moving up the skills ladder

• AEC could create huge

productivity gains –

which could translate

into wage gains.

• Countries can compete

based on higher labour

productivity, not on low

wages

• Some countries could

avoid middle income

trap.

Change in labour productivity under the AEC,

2010-25 (per cent)

AEC IMPACT 5. Linking wages to productivity

28

• Significant wage and

productivity gaps.

• Wages of skilled workers

likely to benefit most from

AEC.

• Sharing productivity

gains with low-paid

workers key for equitable

growth and development.

• Effective minimum wage

institutions needed.

AEC IMPACT 5. Linking wages to productivity

Labour productivity and average wages in

Thailand’s manufacturing sector, 2001-13

(Index, 2001=100)

• Migration between ASEAN

countries increasing

• Growth from 1.5m to 6.5m

between 1990-2013.

• Mainly medium and low

skilled workers migrate,

further growth likely.

• High demand in

construction, agriculture

and domestic work.

• Migration flows will be

driven by demographic and

wage disparities.

Intra-ASEAN share of outflow of

international migrant workers, 2006-12

(per cent of total)

AEC IMPACT 6. Reaping the benefits of labour mobility

• Free flow of skilled labour

under AEC affects less

than 1% of workforce;

little impact expected.

• Protection of migrants

and regional and bilateral

migration management

key issues.

• Poor ratification of ILO

Conventions that

safeguard rights of migrant

workers.

Share of 7 high-skill occupations under

AEC in total employment, various years

AEC IMPACT 6. Reaping the benefits of labour mobility

Background

Findings of study

Current situation (Chapters 1-2)

AEC impact (Chapters 3-6)

Priorities for action (Chapter 7)

32

TO REALIZE THE FULL POTENTIAL

OF THE AEC AND DELIVER SHARED

PROSPERITY, ASEAN MUST TAKE

DECISIVE ACTION … NOW

33

PRIORITIESDecent work in an integrated ASEAN

A. FACILITATE AND MANAGE

STRUCTURAL CHANGE.

B. ENSURE THAT ECONOMIC GAINS

LEAD TO SHARED PROSPERITY.

C. STRENGTHEN REGIONAL COOPERATION.

34

A. FACILITATE AND MANAGE

STRUCTURAL CHANGE

Align industrial and employment policies.

Support small and medium enterprises.

Link education and training systems to private sector

demand.

Invest in infrastructure and connectivity.

Establish social protection floor, including for migrant

workers.

35

Strengthen the wage–productivity link through stronger

wage setting institutions:

Minimum wages to protect workers against unduly low wages.

Collective bargaining to negotiate improvements in

working conditions and to raise productivity.

Promote gender equality.

Protect migrant workers.

Support youth employment.

B. ENSURE THAT ECONOMIC GAINS

LEAD TO SHARED PROSPERITY

36

Implement existing ASEAN commitments.

Cebu Declaration on Migrant Workers.

Bandar Seri Begawan Declaration on Strengthening Social

Protection.

Extend mutual recognition arrangements to medium

skilled workers.

Ratify international labour standards to create level

playing field.

Strengthen labour market information and monitoring.

Boost tripartite dialogue.

C. STRENGTHEN REGIONAL

COOPERATION

37

Ultimately, the success of

ASEAN regional integration

will depend on how it affects

the labour market – and

therefore on how it improves

the quality of life of women

and men in the region.

The full report “ASEAN Community 2015:

Managing integration for better jobs and shared

prosperity” can be accessed at: www.ilo.org/asia38

Concluding thoughts

Countries around the world facing a heterogeneity of employment challenges and opportunities

Effective education, public employment services and career guidance systems play an important role in addressing challenges and seizing opportunities

On basis of tripartite dialogue and meeting needs of labour market

ASIAN DECENT WORK DECADE 2006-2015

Decent Work for All

For more information, please contact:

Kee Beom Kim (kim@ilo.org)

ILO Decent Work Technical Support Team

For East and South-East Asua and the Pacific

www.ilo.org/asia