1 Employment opportunities and challenges in an increasingly integrated Asia and the Pacific KEIS/WAPES Training on Dual Education System and Career Guidance Kee Beom Kim Employment Specialist ILO Bangkok October 27, 2014 Decent Work for All ASIAN DECENT WORK DECADE
2 Introduction 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
3 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), (%) Source: IMF, World Economic Outlook Database, April 2014.
4 And (robust) growth has often not been inclusive Gini coefficient, earliest year in 1990s and latest year in 2000s Source: ADB, Asian Development Outlook 2012.
5 And while extreme working poverty has declined remarkably, and a sizeable middle class is emerging Employment by economic class (millions) Source: Kapsos and Boumpoula (2013). many are above but near the poverty line
6 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
7 And economic growth has not always brought about more and better jobs ( jobless growth ) Average annual growth of real GDP and total employment, Source: ILO, OECD, World Bank, G20 labour markets: outlook, key challenges and policy responses, September 2014
8 Countries face the challenge of creating more jobs, and in Asia, where unemployment rates in remain relatively low Unemployment rates (%) Note: Preliminary estimates Source: ILO, Trends Econometric Models, October 2013.
9 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 which is often characterized by inadequate earnings, poor working conditions, limited social protection, and unrecognized by law
10 Labour market situation particularly bleak for world s youth 25,0 20,0 15,0 Youth unemployment rate in Indonesia, 2013 (%) Youth and adult unemployment rates in Viet Nam (%) 20,0 18,4 18,0 16,9 15,8 16,0 14,0 12,0 10,0 (%) 10,0 8,0 5,0 6,0 4,0 2,0 4,5 2,1 1,8 2,2 1,2 1,4 2,8 1,0 1,5-0, Never attended Incomplete primary Completed primary Completed lower secondary Completed upper secondary Vocational training College (technical) University and above Source: ILO, based on national labour force surveys. with many young people queuing for good jobs
11 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).
12 Amidst complex challenges, employment increasingly prominent in international and national policy agendas Integrating employment in national development plans E.g. Philippine Development Plan 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
14 Overview Background Findings of the study Current situation (Chapters 1-2) AEC impact (Chapters 3-6) Priorities for action (Chapter 7)
15 Background Findings of study Current situation (Chapters 1-2) AEC impact (Chapters 3-6) Priorities for action (Chapter 7)
16 BACKGROUND The study focuses on how the AEC 2015 affects people through the labour market. 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.
17 Background Findings of study Current situation (Chapters 1-2) AEC impact (Chapters 3-6) Priorities for action Chapter 7
18 IMPRESSIVE ECONOMIC PERFORMANCE, BUT TOO MANY WORKERS IN ASEAN STILL HAVE POOR QUALITY JOBS.
19 CURRENT SITUATION 1. ASEAN integration in the global context $2.4 trillion GDP in 2013; 300 million labour force. Relative resilience to global economic crises. Between , 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 , 83 million workers joined the middle class; number expected to reach 144 million by But rising inequality is a major concern
20 CURRENT SITUATION 1. ASEAN integration in the global context 40% of workers are in low-income agriculture. Public social security expenditure, most recent year (per cent of GDP) 13% youth unemployment. High informality, low social protection coverage. 59% in vulnerable employment (own account plus unpaid family workers). Persisting gender disparities.
21 CURRENT SITUATION 2. Connecting across borders 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).
22 Background Findings of study Current situation (Chapters 1-2) AEC impact (Chapters 3-6) Priorities for action (Chapter 7)
23 THE AEC WILL DELIVER BENEFITS TO THE REGION, BUT RISKS LEAVING SOME BEHIND AND AGGRAVATING INEQUALITIES.
24 AEC IMPACT 3. Managing structural change for decent jobs AEC could increase GDP by 7.1% by Estimated growth in employment under AEC, relative to baseline, 2025 (% of total employment) 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.
25 AEC IMPACT 3. Managing structural change for decent jobs Gains will be uneven - varying by country, sector, gender. Vulnerable employment as a share of additional job gains under the AEC scenario, 2025 Fewer new jobs for women than men. Many new jobs could be in sectors that are vulnerable and informal. Inequalities could worsen.
26 AEC IMPACT 4. Moving up the skills ladder Different demand for different skill levels: Estimated skills and educational mismatch in highskilled occupations, 2025 High-skill jobs: +41% Medium-skill jobs: +22% Low-skill jobs: +24% But skill mismatches are likely to worsen. More than half of highskill jobs may be filled by under-qualified workers.
27 AEC IMPACT 4. Moving up the skills ladder 70% of employers believe secondary school graduates do not have right skills. Share of respondents who agree that skills of secondary, tertiary, and vocational graduates match enterprise needs, 2013 Quality and relevance of education and training need to be improved to meet industry requirements.
28 AEC IMPACT 5. Linking wages to productivity AEC could create huge productivity gains which could translate into wage gains. Change in labour productivity under the AEC, (per cent) Countries can compete based on higher labour productivity, not on low wages Some countries could avoid middle income trap. 28
29 AEC IMPACT 5. Linking wages to productivity Significant wage and productivity gaps. Wages of skilled workers likely to benefit most from AEC. Labour productivity and average wages in Thailand s manufacturing sector, (Index, 2001=100) Sharing productivity gains with low-paid workers key for equitable growth and development. Effective minimum wage institutions needed.
30 AEC IMPACT 6. Reaping the benefits of labour mobility Migration between ASEAN countries increasing Growth from 1.5m to 6.5m between Intra-ASEAN share of outflow of international migrant workers, (per cent of total) 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.
31 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. Share of 7 high-skill occupations under AEC in total employment, various years Protection of migrants and regional and bilateral migration management key issues. Poor ratification of ILO Conventions that safeguard rights of migrant workers.
32 Background Findings of study Current situation (Chapters 1-2) AEC impact (Chapters 3-6) Priorities for action (Chapter 7) 32
33 TO REALIZE THE FULL POTENTIAL OF THE AEC AND DELIVER SHARED PROSPERITY, ASEAN MUST TAKE DECISIVE ACTION NOW 33
34 PRIORITIES Decent 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
35 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
36 B. ENSURE THAT ECONOMIC GAINS LEAD TO SHARED PROSPERITY 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. 36
37 C. STRENGTHEN REGIONAL COOPERATION 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. 37
38 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: 38
39 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
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