By Mr Yoshiteru Uramoto, ILO Assistant Director-General and Regional Director, ILO Regional Office for Asia and the Pacific at the 23rd Meeting of ASEAN Labour Minsters, Nay Pyi Taw, Myanmar, on 22 May 2014

Mr Chairman, Excellency U Aye Myint, Union Minister for Labour, Employment and Social Security
Excellencies, Distinguished Delegations, Ladies and Gentlemen,

It is my great pleasure and honour to address this twenty-third meeting of the ASEAN Labour Ministers in this special open session, in the capital city of the Union of Myanmar. I am grateful for H.E. Aye Myint’s initiative to invite the ILO to this auspicious and important meeting.

Before I begin please allow me to extend greetings of the ILO Director-General, Mr Guy Ryder to the ASEAN Labour Ministers. ILO has been a regular participant to the SLOM meetings, however, we weren’t regularly participating in the ALMM. I am privileged to be here today and I believe ILO’s experience, information and knowledge may be useful for Labour Ministers gathered here today.

ASEAN, for the last four decades since its establishment in 1967, has gone through more than a few transformations. Your 2007 AEC Blueprint and the ASEAN Bali Declaration promising shared prosperity for its people through increased trade, economic integration and growth is one of the most recent and a boldest commitments in the history of ASEAN.

ASEAN today is a force to be reckoned with. Already by 2013 the region’s combined market size stood at $2.4 trillion, 160 per cent increase in eight years from 2005. The region has consistently witnessed remarkable economic growth.

ASEAN today is one of the most dynamic regions in the world – it has increased its share of world FDI inflows quite significantly. In 2012 the total world FDI fell by 18 per cent globally and 6.7 per cent in developing Asia. In ASEAN, however, it grew by 2 per cent – an all-time high and a 30 per cent increase from the pre-crisis level of 2007. FDI flows into ASEAN are now similar to those into China and substantially more than those into India.

In the meantime, intra-ASEAN labour migration has increased from 1.5 million workers in early 1990s to 6.5 million in 2013, an indication of increasing interconnectedness of labour markets in the ASEAN.

ASEAN today is surely FDI competitive, and is connected as its workers move across borders responding to demand.

Establishing a globally integrated and competitive single market and production base is an important part of the ASEAN 2015 vision. Such integration is expected to be built on the principles of equitable economic development and shared prosperity. This is to be achieved through the ASEAN Economic Community, calling for accelerating transition from growing with low-wage export to a middle-income status with robust regional aggregate demand from 600 million people.

I believe this meeting therefore comes at an important juncture of the ASEAN as its members are moving towards the ASEAN Economic Community 2015 which has important implications for labour markets – a fact that nevertheless has remained somewhat obscured, though entirely neglected.

It is against this background and for this reason that the Asian Development Bank and the ILO came together to undertake to analyse the labour market dimension of the AEC in a joint study on the ASEAN Community 2015 – Managing Integration for Better Jobs and Shared Prosperity.

Your Excellencies, Ladies and Gentlemen,

The study is unique as it goes far beyond a macro-analysis with a focus on labour market analysing its impact on 24 occupations by wages, skills and movement and gender, to list a few, by drawing on micro-data sets in 21 industries across ASEAN. We therefore have data on employment by industry, occupation and gender of workers, their skills and their wages. We also attempted to predict whether they are likely to have to change jobs due to structural changes. We are also analysing what jobs are better paid and attempt to predict who will be the winner and loser in terms of industry, occupation and gender.

Obviously we expect big GDP gains due to the AEC. We estimate that the potential GDP growth by 2025 as the result of AEC is 8 per cent or US$267 billion. We estimate that additional growth due to the Regional Comprehensive Economic Partnership, also by 2025, will even accelerate more growth.

However our analysis does not end here. As discussed at the SLOM on Tuesday the study covers relevant socio-economic issues ranging from structural change to migration. The two most striking findings, against the backdrop of the rosy future of the ASEAN are: (1) the AEC risks aggravating inequalities; and (2) a predominance of poor-quality jobs.

Let us first have a closer look at the quality of jobs: Globally 48 per cent of workers are in ‘vulnerable employment’, as own-account workers or contributing family workers. In ASEAN the rate is higher at 59 per cent or 179 million in 2013. Low quality jobs often mean low wages and low earnings. About one-third of workers in ASEAN live in poor households, as compared to globally 26.7 per cent and 11.2 per cent in East Asia.

Social protection coverage remains Inadequate. Global average investment in social protection is 8.4 per cent of GDP while in ASEAN the range is between 1.3 per cent and is 6.4. Low protection, we all know, leads to increased vulnerability.

Poor quality jobs are also a consequence of the lack of commitment to international core labour standards. Labour standards will help to avoid a “race to the bottom” by establishing a level playing field for businesses, trade and investment throughout ASEAN. Globally two-thirds of ILO member States have ratified the ILO eight fundamental Conventions but only three of the ten ASEAN members have done so.

Your Excellencies, Distinguished Delegations, Ladies and Gentlemen,

I do not need to underline the importance of well-functioning labour markets to you. As we all know, a well-functioning, effective and efficient labour markets connect people to their society and the economy through decent jobs. The impact of economic changes of AEC are most directly felt through the labour markets.

Access to safe, productive and fairly remunerated work – as a wage employee or as an own-account worker – is a key vehicle for individuals and families to gain self-esteem, a sense of belonging to a community and a way to make a productive contribution.

And the importance of all this could hardly be overestimated as we near 2015.

However, our analysis also indicates that this growth will not be evenly distributed across countries, sectors, gender or skill groups. This is particularly of concern since the ASEAN region today – prior to the full implementation of AEC 2015 – already has too many women and men in poor quality jobs. Its impressive growth has not been translated into decent jobs – and inequalities have been aggravating in recent years. Equity does not come automatically.

Excellencies, Distingueshed Delegates, Ladies and Gentlemen,

The AEC will deliver benefits to the region, such as the potential it has to create 14 million new jobs by 2025, as well as rises in productivity in the region.

Please allow me to also highlight a few specific analysis and concerns in relation to the second issue, inequality.
A growing demand for high-skilled workers will worsen skill shortages and put growth at risk unless skill development systems are able to satisfy demands for new skills and higher skills in this fast changing world of technology.
As some sectors lose out, workers will suffer unless social protection policies and employment policies are in place.
Less than 1 per cent of workers will benefit from the free flow of skilled labour under AEC as currently envisaged, unless Mutual Recognition Agreements are extended to cover more occupational groups from the medium skill levels.
The migration of medium and low-skilled workers will increase and since many of these low skilled workers are particularly vulnerable, this risks increasing vulnerability, unless managed properly.
Excellencies, Distingueshed Delegates, Ladies and Gentlemen,

Obviously we recognize that numerous studies have already been conducted on the AEC. As a consequence, numerous policy recommendations must have been made at the country level as well as for the region.

Allow me, Excellencies, to present the recommendations of the ADB-ILO study with its unique and unprecedented focus on labour markets:
ASEAN needs to manage structural change through harmonised economic and social policies. There is particularly a need for social protection policies to mitigate the negative effects of integration

Share prosperity – by having in place sound wage setting mechanisms, linking wages to productivity, and creating a fair business environment through ratification and implementation of international labour standards.

Enhancing regional Labour Market Information systems to monitor and manage labour market outcomes of integration.
Within these broad policy areas, country-specific policies would depend on the country priorities and some countries have already asked for ILO assistance for country specific analysis. Our report is on ASEAN in general, but also have a large amount of country-specific data. This will allow for more tailored approaches and policies. For those of you who require support from ILO In analysis or policy development, we stand ready to respond to such requests. We will be officially launching the report in June or July at the latest.

Excellencies, Distinguished Delegates, Ladies and Gentlemen,

In the key policy areas mentioned earlier, ASEAN has already achieved remarkable progress.

The 2007 Cebu Declaration on Migrant Workers, the 2010 Hanoi Human Resources Development Declaration, and the Declaration on Social Protection, adopted in Bandar Seri Begawan in 2013 are just a few of such achievements. Now ASEAN needs to consolidate these towards achieving the AEC.

Your deliberations at this ASEAN Labour Ministers Meeting are therefore critical to the success of the AEC. The ILO stands ready to support this journey through technical assistance and sharing experiences from within and outside the region in close collaboration with the ASEAN Secretariat.

We believe that the ILO-ADB study is a first step in the right direction. It gives evidence to the policy recommendations and it establishes the need for greater coherence between economic and labour policy areas. And as the ASEAN Labour Ministers you have the opportunity to seize the moment and rise to the challenge of leading a process that will ensure that the women and men of ASEAN gain from the integration, and partake in the shared prosperity that the ASEAN has envisioned in its Blueprint.

I look forward to a fruitful discussion here today.