(ILO BANGKOK) – 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 2nd ASEAN Human Resource Conference, being held in Hanoi, Viet Nam, on Tuesday 25th May.

“Recent labour productivity trends highlight a serious competitive challenge to the ASEAN region, particularly for the more developed member countries,” said Gyorgy Sziraczki, Senior Economist, ILO. “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”.

The study suggests some policy priorities to sustain the region’s recovery.

Improved competitiveness and productivity must translate into more, better work. Growth in employment and incomes is critical and stronger private sector growth is a precondition for sustainable recovery.

Training should equip workers with the skills needed now and in the future, as regional integration deepens, and both workers and businesses prepare for green growth and green jobs.

Investment in infrastructure and support for small and medium-sized enterprises (SMEs) – which account for the bulk of employment in the region – are also important.

Social protection policies have shown that they can act as “automatic stabilizers”, cushioning economic shocks and helping maintain demand. In the post-crisis era they can also facilitate structural change.

“To sustain the recovery ASEAN needs balanced, realistic policy options that will support economic, social and environmental sustainability and foster decent work,” said Sachiko Yamamoto, ILO Regional Director, Asia and the Pacific. “The ILO’s Global Jobs Pact offers just such measures, aimed at promoting a productive recovery, centred on investment, employment and social protection”.

The Global Jobs Pact was adopted unanimously by the ILO’s member countries at the 2009 International Labour Conference. Its aim is to reduce the time lag between economic recovery and employment recovery by promoting a set of policy options that support job-rich growth and which countries can adapt to their specific needs and circumstances.

The Report was put together by the ILO’s Regional Office for Asia and the Pacific in Bangkok. Copies can be found at www.ilo.org/asia or are available on request. Interviews with the authors can also be arranged.

For more information please contact:
Sophy Fisher, Regional Information Officer, ILO Bangkok
Email , Tel: +66 (0) 2288 2482

Krisdaporn Singhaseni, Information Officer, ILO Bangkok
Email , Tel: +66 (0) 2288 1664