The Social Development Situation and Prospects

of Asia and the Pacific into the

Twenty-first Century: Summary

MEETING PAPER NO 1, PART 2 OF 4

II. THE REGIONAL EMPLOYMENT SITUATION

Access to productive and remunerative employment is one of the most important means of poverty reduction, as labour is often the only major asset of the poor. The Programme of Action listed a wide range of actions to be taken by governments, civil society and the international community in support of the goal of expanding productive employment and reducing unemployment. The Agenda for Action on Social Development in the ESCAP Region includes a series of commitments and targets on expansion of productive employment covering such aspects as support for small farmers and informal sector employment, greater labour-market flexibility, improvement of working conditions with due attention to the needs of working women and migrant labourers, enforcement of laws against exploitation of children, training, and jobs expansion, including jobs for disabled persons.

A. Definition and measures

The Agenda for Action explains that "employment expansion" covers the expansion of opportunities for productive employment leading to the reduction of unemployment and underemployment. The definitions and measures of employment differ from country to country. Most countries measure labour force participation rates and unemployment. According to the International Labour Organization (ILO), an individual is considered to be unemployed if he or she is currently without employment, is actively seeking employment and is available for employment within certain period mutually acceptable to the prospective employee and a prospective employer. Estimates of unemployment are derived by using, among others, data from sample surveys on the employment status of individuals, data on people registered with agencies dispensing unemployment insurance and job applicants who register with employment offices. The different methods of estimating unemployment can give different results owing to differences in the effectiveness of data collection methods. Data on unemployment are also affected by definitional issues. For example, part-time employment, even if brief and involuntary, is counted as full-time employment. Discouraged workers, who are no longer searching for employment, and those undergoing training after an unsuccessful job search are not counted as unemployed. Therefore, caution is suggested in cross-country comparisons of employment or unemployment estimates.

A broader understanding of work and employment is also necessary. The important contribution of unremunerated work to the well-being of families and communities should be recognized, measured and understood. It is necessary to pay attention to the complementarity between unremunerated and remunerated work in evolving strategies for the expansion of productive employment. The holistic concept of "sustainable livelihoods" may assist in bringing the hitherto missing dimensions of work and employment to complement the traditional measures. It also highlights the sustainability aspect, which is only partially captured in such aspects as guaranteed employment or life-long employment.

B. Employment trends

There is a large diversity of problems and trends of employment in the developing countries in the region, depending on the level of development of their economies, including productive and technological bases, labour markets and institutions, and demographic and social characteristics. For discussion purposes, the countries are grouped into five categories with some commonalties in issues faced by the countries in each group. The first group comprises such industrializing economies as Hong Kong China, the Republic of Korea and Singapore. They have successfully managed a transition from labour-intensive to skill-intensive industries to retain their competitiveness in world markets. Unemployment in these economies is relatively insignificant, labour shortages are common and dependence on migrant workers is on the rise. Improvement of labour standards for all workers is an important concern.

The second group includes the emerging newly industrializing countries, such as Indonesia, Malaysia, the Philippines and Thailand. Employment conditions in these countries show a good deal of diversity. In Indonesia and Thailand, open unemployment is low (less than 4 per cent in Thailand), but more than half the labour force is still dependent on agriculture, with underemployment a continuing problem ("Follow-up to the World Summit for Social Development, priority theme: productive employment and sustainable livelihoods, report of the Secretary-General" (E/CN.5/1997/3)). At the same time, there are shortages of semi-skilled and skilled workers, particularly in Thailand. In the Philippines, open unemployment at 9.5 per cent (1994-1995) is a significant problem. Dependence on employment overseas, mainly in the Middle East and East Asia, continues. In Malaysia, the employment situation is beginning to resemble that in the newly industrializing countries, with labour shortages attracting migrant workers, mainly from Indonesia and the Philippines.

The third group consists of the transition economies: Cambodia, the Lao People's Democratic Republic, Mongolia, Viet Nam, and the Central Asian Republics. China shares features common to this group as well as those in the emerging newly industrializing economies (second group above). Reliable information on the transition economies is scarce. In general, these countries face a serious threat of unemployment because market-oriented reforms are likely to transform the significant amount of disguised unemployment in State and collective enterprises into open unemployment. The countries in Central Asia face additional difficulties arising from a growth crisis. A cautious pace of reforms in the State sector, rapid growth of agriculture, rural industries, export-led industries and modern services have so far succeeded in keeping unemployment in check (2.8 per cent in urban areas in 1994-1995) in China, where the agricultural sector still employs about 60 per cent of the labour force. The rate of open unemployment is high in other transition economies (for example, 9.4 per cent in Mongolia).

The South Asian countries (Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka), which comprise the fourth group, face daunting problems of underemployment and poverty. Open unemployment is not reported as a problem except in Sri Lanka, where it was 13.6 per cent in 1994-1995. In these countries, a large share, if not the majority, of the labour force is still in agriculture, and changes in the structure of employment have been slow, even though economic growth has accelerated in recent years. Underemployment continues to be the major problem even though open unemployment is low. Thus, in Nepal, almost half the employed find work for only a part of the year, although open unemployment is reported to be only 4.9 per cent. Urban unemployment is emerging as a major problem. Dependence on employment overseas, particularly in the Middle East, continues to be significant, particularly for Bangladesh, Pakistan and Sri Lanka.

The recent reforms have brought to light the problem of disguised unemployment in the formal sector, and retrenchment of these workers may add to the urban unemployment problem in a number of countries. Labour policy reforms in these countries have acquired increased prominence and urgency in recent years.

Included in the fifth (last) group are the Pacific island developing countries and territories, most of which are characterized by a narrow production base, a large subsistence sector and a small organized sector. Although favourable physical resource endowments and rich cultural traditions of caring and sharing have ensured secure livelihoods, concerns about the fragility of the economy and the environment as well as their sustainability are increasing. Economic growth has been slow and uneven during the past decade. The labour force is growing at a rapid pace in many countries, unemployment is rising, and underemployment has become a major problem in urban areas (for example, 30 per cent in Papua New Guinea in 1990).

C. Other employment issues

These include the challenges of growing contract labour and informal sector, female unemployment, unemployment among youth, exploitation of children and international migration of labour. Economic liberalization and structural reforms in a number of countries seem to encourage small-scale informal enterprises and formal-sector employers to prefer contract work arrangements. These arrangements seem to provide them with greater labour market flexibility, reduced labour costs, higher productivity and a way to circumvent labour laws and regulations which the employers consider excessive. This results in loss of job security, social and economic benefits, and possibly deterioration in employment and working conditions, at least in the short run.

Unemployment is generally higher among women than among men in most of the countries in the region (exceptions include Hong Kong China and the Republic of Korea). For example, male and female unemployment rates in Pakistan (1993) were 3.8 per cent and 10.3 per cent respectively, 7.9 per cent and 9.4 per cent in the Philippines (1994), and 9.9 per cent and 20.8 per cent in Sri Lanka (1994), excluding northern and eastern provinces (1997 Report on the World Social Situation (ST/ESA/252). Typically, women’s labour force participation rate is lower than that of men, they are concentrated in low productivity jobs in agriculture and informal sectors, and they earn lower wages than men in similar occupations. The underlying causes included unequal access to productive resources, limited opportunities for skills development, the double burden of family and economic responsibilities, and limited representation in decision-making and collective bargaining institutions. The Agenda for Action stipulates that the status of women in the labour force should be enhanced through the promulgation and enforcement of legislation and regulations to eliminate wage differentials between women and men engaged in the same work by 2010. In recent years, the emergence of export-oriented, labour-intensive industries in countries such as Bangladesh, India, Indonesia, the Philippines and Thailand have opened up opportunities for non-agricultural employment for women. This has allowed many young women from rural and urban areas to become important earners for their poor families. However, there are concerns about the conditions of work, including skills formation, in some of these industries.

Unemployment among youth has emerged as a serious problem in a number of countries in the region, where workers below the age of 24 constitute the bulk of the unemployed. The proportion of first job seekers, the majority of whom are young workers and women, in the total unemployed population has increased over the past decade. Unemployment among male youth (aged 15 to 24) as a percentage of total male employment in 1994 ranged from 27 per cent in Singapore, to 28 per cent in the Republic of Korea, 44 per cent in Pakistan (1993), 46 per cent in the Philippines, and 66 per cent in Indonesia (1992).

The fourth problem has to do with employment of children, often under exploitative conditions. The ILO estimates that globally there at least 120 million children (between 5 and 14 years old) employed as full-time workers. Of these, 60 per cent are to be found in Asia, primarily in South and South-East Asia. Poverty and inadequacies in the educational system seem to be the most common reasons. The Agenda for Action requires governments to promulgate laws to prevent the exploitation of child labour by 2000. A number of countries already have such laws on the books, but enforcement of the laws has been difficult owing to various factors, including resource constraints. There are hopeful signs that the incidence of child labour is on the decline. It cannot be eliminated in the absence of direct intervention by governments and civil society organizations.

International migration of labour from Asian countries continues to be plagued by a number of problems, including the growth of clandestine and illegal migration, unsatisfactory and abusive conditions of work, and a lack of protection for migrant workers. The most vulnerable groups among migrant workers are undocumented workers, female domestic helpers and entertainers. Policies and action are needed to enhance the effectiveness of national institutions dealing with migrant movements, strengthening cooperation between sending and receiving countries, improving the protection of migrant workers and their working conditions, and combating illegal migration. The Agenda for Action calls on governments to safeguard the welfare of immigrant workers, especially women, in compliance with national laws. Some progress in this area is perceptible largely because of bilateral efforts of sending and recipient countries.

D. Policies for expansion of productive employment

Rapid and sustained economic growth is essential for generating employment, as demonstrated by the experiences of countries in which unemployment is low. How such employment-generating growth could be achieved is still being debated, although there is general agreement that macroeconomic stability is a necessary, albeit not a sufficient, condition for growth. The role of the government as a source of growth has been greatly diminished in recent years and may diminish even further.

The view that expansion of productive employment will be achieved primary through stimulation of the private sector, including self-employment, is gaining wider acceptance. As a result, the stimulus for growth will have to come from the people and the domestic private sector and from abroad. Accordingly, virtually all the developing countries and territories in the Asian and Pacific region have embarked on policies aimed at liberalizing their economies in order to increase their competitiveness in international markets and attract foreign investment to finance growth. While the positive long-term effects of reforms are already evident in a few countries which implemented reforms earlier, the short-term adverse effeccts on employment have been observed in a number of countries. Thus, the right mix of stabilization policies and more judicious management of fiscal balances and public investment to promote the continuation of economic growth are necessary.

The Agenda for Action suggests that countries should pursue, in the pattern of growth and investment, plans that are effectively employment-intensive and directed at those sectors with the greatest scope for absorbing labour. For labour-abundant countries, the strategy will likely be based on the use of unskilled labour in agriculture and manufacturing, as the early experiences of the Republic of Korea and the more recent experiences of Indonesia and Thailand demonstrate. However, this strategy may be fruitful in the early stages and for only a limited period. Upgrading of labour skills and improvement of technologies should be actively promoted during this early period so as to maintain competitiveness and sustain growth. The experiences of the Republic of Korea and Singapore, which successfully shifted from low-skill labour-intensive activities to skill-intensive activities, are noteworthy in this regard.

Upgrading skills may not be enough to address the unemployment problem, as the problem of educated unemployed prevailing in some countries indicates, particularly India and Sri Lanka. The demand for that skilled labour must be generated through an appropriate pace of growth. Although globalization and integration of the world economy have opened many opportunities for developing countries, they also limit the room for governments to manoeuvre the policy instruments used in the past and penalize inappropriate policies and inefficiencies.

In a number of developing countries with high unemployment and/or underemployment, the agricultural sector and the informal sector continue to be important sources of employment, especially for the poor. The Agenda for Action calls on governments to determine the feasibility, scope and appropriate modes of land reform in both rural and urban areas by 2000 in order to enhance income-earning opportunities for the poor. In the medium-term, promoting the informal sector may be an important means of creating and expanding employment for the poor in these countries, albeit at subsistence wages. In this regard, the focus should be on removing unnecessary regulatory obstacles to enterprise formation and growth (including micro-enterprises and small-scale businesses), and measures to improve access to credit and improved technologies. The aim should be not only to create jobs but also to foster linkages between the informal and formal sectors and to help modernize the technologies in the informal sector. Improving the functioning of the capital market may be an important ingredient in establishing the linkages and in promoting the modernization and growth of the informal sector.

Considering that a large proportion of the poor in many countries in the region are in rural areas, priority should be given to expanding rural employment. The opening up of global markets for agricultural exports, for example, through the implementation of the Uruguay Round, provide new opportunities for developing countries. Recent cutbacks in support for the agricultural sector should be rescinded with a particular focus on support to the small-farm sector to produce and export high-value products. Promotion of rural non-farm activities has proven to be another important way of reducing underemployment, improving skills and facilitating linkages with the formal sector (for example, the Republic of Korea and Thailand). Relief programmes for the poor through public employment schemes including food-for-work programmes should be improved to create tangible infrastructure and facilities that would benefit the communities.

Policies for reducing child labour should take into account the economic survival imperatives of the families and their dependence on the children’s work contributions. The provision of appropriate educational services and economic incentives compatible with the needs and demands of poor children and their families is also critical. The latter may include organization of classes to fit better with the work contributions of the children. It may also involve the design of curricula and schedules that cater better for the needs of the children and their families.

Next: Part 3 of 4 of this paper: Social Integration in the Region

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