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Decent Work for All ASIAN DECENT WORK DECADE 2006-2015
Trade, informality and jobs
Kee Beom Kim
ILO Regional Office for Asia and the Pacific
Outline
Introduction: Linkage between trade, jobs and informality
(working poverty)
Asia’s labour markets in the global economic crisis
Informality and trade performance
Policy implications
Some contextual observations
Being connected may not be guarantee for economic
growth, but few examples (if any) of significantly
enhancing growth while being disconnected
Openness tends to increase exposure to external
shocks with adverse short-term effects on employment
and wages
Openness and trade simultaneously destroy and create
jobs – in medium-term more jobs appear to have been
created than destroyed
Jobs created are of higher quality than jobs destroyed?
Quality of jobs and informality
Informal economy is diverse and segmented
Typically low-quality, unproductive and poorly
remunerated jobs, not recognized or protected by law,
with little or no social protection and lacking rights at
work and representation
Most of working poor engaged in informal
employment
Employment earnings main source of income for poor
– quantity and quality of work critical in determining
poverty
Asia’s labour markets during the
global economic crisis
Source: ILO, Labour and Social Trends in ASEAN 2010.
Unemployment rate (%)
…labour market recovery but
manufacturing continues to shed jobs
More open economies experienced larger
labour market shocks
Source: ILO, Labour and Social Trends in ASEAN 2010.
Share of employment in industry and services (%)
…shift may entail movement of workers from relatively
high value-added (and higher-paid) to lower value-
added (and lower-paid) work
Industry
10
15
20
25
30
2008 Q2 2008 Q4 2009 Q2 2009 Q4
Philippines Thailand Malaysia
Services
35
40
45
50
55
60
65
2008 Q2 2008 Q4 2009 Q2 2009 Q4
Philippines Thailand Malaysia
Decline in share of employment in industry
and rise in services
Indonesia: Informal employment expands
Source: Statistics Indonesia.
Thailand: More workers in vulnerable
employment
Both sexes Men Women
2007-08 2008-09 2007-08 2008-09 2007-08 2008-09
Total employment 1109 840 383 471 727 369
Employers -126 61 -116 56 -9 4
Government employees 139 92 74 -2 65 94
Private employees 407 -206 158 -49 249 -158
Own-account workers 169 509 102 255 67 255
Unpaid family workers 524 372 161 203 363 169
Vulnerable employment 693 882 263 458 429 424
Status in employment in Thailand, annual change in Q2, thousands
Source: Thailand National Statistical Office.
More than 60% of Asia’s workers in
vulnerable employment
Wage & salary workers Employers Own-account workers Unpaid family workers
Source: ILO, Global Employment Trends 2009.
How does informality affect trade and growth?
Persistence in informality: Twice as likely to stay remain informally
employed than return to formal employment
Informality can act as barrier to
necessary economic restructuring
Source: ILO/WTO, Globalization and informal jobs in developing countries.
Informality may narrow the degree export diversification
Informality weakens export performance
in developing countries
Contribution to export concentration (%)
Source: ILO/WTO, Globalization and informal jobs in developing countries.
Informality limits firm size, talent and
productivity growth…
…hampering ability to trade internationally
Source: ILO, Laour and Social Trends in ASEAN 2008.
Policy implications
Enhancing social protection
Reduces the adjustment costs of changing economy
Provides the reassurance for innovation and risk-taking
Can also contribute to rebalancing of economies
Strengthening the social protection system to better respond to shocks (e.g. automatic stabilizers) and extending social protection to the informal economy
A social floor (composed of health care, child benefits, assistance to unemployed and working poor and income support for elderly) can be provided at affordable cost without jeopardizing fiscal sustainability
Asia: Low-levels of investment in social
protection
26.7
18.3
16.2
13.1
10.59.7
5.6
4.2
8.6
0
5
10
15
20
25
30
Western
Europe
Central and
Eastern
Europe
North
America
CIS Latin
america
and the
Carribean
Middle
East
Asia and
the Pacific
Africa Total
Regions
Per
cent
age
of G
DP
Total public social protection expenditure
Non-health public social security expenditure
Public health expenditure
Source: ILO, Social Security Department.
Greater capacity of persons to adjust to structural change
and take advantage of new opportunities arising from
trade
More productive and higher performing enterprises
Higher levels of economic output and living standards
Producing quality LMI for informed decisions
Making employment, career and training services broadly
available
Encouraging partnership between policy-makers, business
community, education sector and workers’ representatives
Expanding skills recognition and portability to improve
migration management
Multiple benefits of skills development
Source: UNESCO Institute for Statistics.
Gross enrolment rate, most recent year (%)
0 20 40 60 80 100
Cambodia
Lao PDR
Myanmar
India
Malaysia
China
Indonesia
Philippines
Brunei Darussalam
Korea, Rep. of
Japan
Secondary
0 20 40 60 80 100
Cambodia
Myanmar
Lao PDR
India
Brunei Darussalam
Indonesia
China
Malaysia
Japan
Korea, Rep. of
Tertiary
Different stages of development,
different challenges in education
Source: ILO, LABORSTA, Economically Active Population Estimates and Projections (5th Edition).
Labour force growth in ASEAN + 3 and India, 2010-2010 (%)
-10 -5 0 5 10 15 20 25 30
Japan
China
Korea, Republic of
India
ASEAN
Thailand
Singapore
Viet Nam
Myanmar
Indonesia
Malaysia
Brunei
Philippines
Cambodia
Lao PDR
Challenges to social protection, training
and skills development
Decent and productive work for all
Placing employment at the heart of economic and social policies
Enabling a sound policy environment
Dialogue between government, workers and employers in policy
design
Fundamental principles and rights at work
Improved policy coordination (e.g. between trade and labour
market policies) and administrative capacity to implement
measures
Strengthening regional and international cooperation (G-20,
ASEAN, ASEAN+3 etc)
Decent work plays critical role in addressing Asia’s challenges
and shaping a socially just, fair globalization
Thank you
For more information, please contact:
Kee Beom Kim ([email protected])
ILO Regional Office for Asia and the Pacific
www.ilo.org/asia
ASIAN DECENT WORK DECADE 2006-2015
Decent Work for All