Asean's strong recovery faces challenges -ILO

Productivity, skills, job quality critical:

Bangkok (ILO News)

Asean countries have rebounded remarkably from the global economic crisis and many are recording pre-crisis economic growth levels.

But they face key challenges, including rebalancing growth, improving workforce skills, rebuilding employment and - critically - accelerating productivity to compete with India and China, according to a new International Labour Organization (ILO) report.

The report finds that while the impact of the crisis was large the region is rebounding better than many predicted and is expected to grow by 5.4 per cent in 2010 compared to a mere 1.4 per cent in 2009.

Fiscal stimulus packages and demand from China have played important roles in this. However during the crisis ASEAN's labour productivity relative to China and India deteriorated.

Average annual labour productivity in the ASEAN region contracted by 0.3 percent between 2007 and 2009, while in China and India it surged by 8.7 per cent and 4.0 per cent respectively.

Investing in skills and improving job quality are two critical preconditions for improved productivity, the report says.

With the strong recovery, unemployment has fallen to pre-crisis levels in some countries, however rolling back informal employment (where productivity is low, working conditions poor and social protection minimal) will take longer.

In 2009, more than 61 per cent of all ASEAN workers were estimated to be in the informal sector. Meanwhile, the number of working poor (earning less that US$2 per day) is believed to have risen in the past two years, from 140 million to 158 million people (or from 51 per cent to 57 per cent of the region's workers).

Labour and Social Trends in ASEAN 2010, Sustaining Recovery and Development through Decent Work, has been prepared for the second ASEAN Human Resource Conference, being held in Hanoi, Viet Nam, on May 25. "Recent labour productivity trends highlight a serious competitive challenge to the ASEAN region, particularly for the more developed member countries," ILO Senior Economist Gyorgy Sziraczki, said.

"Increasing productivity is critical for sustained growth and must also be reflected in higher wages, better jobs and working conditions.

Without higher wages domestic consumption can't increase and economies will remain dependent on exports. On the other hand sharing the gains supports a virtuous circle, with productivity leading to better wages and conditions, higher living standards, and stronger competitiveness", he said.