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  • Asia-Pacific Labour Market Update ILO Regional Office for Asia and the Pacific | December 2011

    Overview1

    The global outlook is increasingly uncertain. Asia will not be immune from turbulence and weak demand. While the

    regions economic performance remains positive in some countries impressively so there are signs of slowing

    growth, with economic and social vulnerabilities appearing in both industrialized and developing Asia.

    The region must not lose the economic and social gains it has made. Policy makers must base their strategies to

    reinvigorate economic growth on job creation, social inclusion and better regional integration. Young people require

    particular attention; youth unemployment is disproportionately high, yet renewed economic growth will depend on

    their skills, drive and talent for innovation.

    Small and medium-sized enterprises are the regions main engine of job creation and it will be critical to unlock their

    potential with properly designed finance and support services. Green jobs and industries are one area of opportunity

    leveraging the shift towards a low-carbon, sustainable development path.

    Progress on tackling persistent gender equalities must also not be lost. The regions informal economy remains

    massive. Extending affordable social protection can help create resilience, reduce poverty, boost domestic

    consumption and strengthen social stability, while preparing for tomorrows ageing workforce. Respect for rights

    and constructive dialogue (between government, workers and employers) must be supported with the same

    diligence as maintaining low inflation, balanced public finances and other macroeconomic goals.

    Quality employment, underpinned by productivity growth, fair wages and decent working conditions, determines the

    quality of lives and societies and is key to Asias future growth and prosperity.

    Renewed policy focus needed on balanced growth and quality jobs

    Economic growth decelerating as outlook

    uncertain Figure 1: Real gross domestic product, most recent quarter and Q1 2011 (12-month change, %)

    Note: Period in parentheses represents most recent quarter. Source: CEIC Global Database; National statistical offices.

    Economic activity during the year moderated in Asia and Pacific due to short-term supply-chain

    disruptions resulting from the Japan earthquake

    and tsunami in March and weakening external

    markets. 2 The deceleration was stronger in

    export-oriented economies.

    Thailands growth stood at 3.5% in Q3 and will certainly slow in the last quarter of the year as a

    result of the increasing costs of the flooding that

    has crippled key parts of the country, causing

    widespread factory closures and work

    stoppages.

    However, year-on-year growth remained robust in China (9.1%), Sri Lanka (8.2%), India (7.7%)

    and Indonesia (6.5%), and was underpinned by

    resilient domestic demand.

    Growth in the more industrialized Asian economies was slower than in developing Asia,

    and was particularly weak in Australia and New

    Zealand in Q2. In Japan the impact of the

    earthquake and tsunami led to an overall

    economic contraction of 1.0% in Q2 and zero

    growth in Q3.

    Having focussed on countering inflationary pressures, a number of Asian central banks are

    now shifting to monetary easing to alleviate

    0.0 1.1 1.5 3.4 3.4 3.4 3.5

    4.3

    5.8 5.8 6.1 6.5

    7.7 8.2 9.1

    -2

    0

    2

    4

    6

    8

    10

    12

    Q1 Most recent quarter

  • 2

    concerns about the euro area debt crisis, weak

    confidence in US markets and a possible

    contraction in global trade.3 In China, however,

    policymakers are juggling these fears while still

    striving to contain price inflation which stood at

    6.1% in September and 5.5% in October.

    The level of external downside risks and increasing uncertainty suggests further economic

    slowdown in 2012 for much of Asia, with a

    concomitant deceleration in job creation and

    worsening job quality.

    As well as rebalancing growth towards domestic demand, policymakers must also ensure growth

    is inclusive and efficient, to reverse the

    increasing inequality seen in many parts of the

    region in recent years.

    while job creation remains uneven Figure 2: Employment, most recent and prior periods 2011 (12-month change, %)

    Note: Ages 15+, except Macau, China (ages 16+) and Sri Lanka (ages 10+); Sri Lanka excludes Northern province. Periods in parentheses represent prior period followed by most recent period. Source: ILO: Laborsta; National statistical offices.

    Job creation was robust in Hong Kong (China), Macau (China), Malaysia and Sri Lanka, with year-

    on-year employment growth of 4% or higher.

    Singapore also saw significant employment growth of 3.9%, driven by job creation in the

    services sector.

    On the other hand, employment levels improved less notably in Indonesia (1.4%) and the

    Philippines (2.4%), reflecting a marked slowdown

    in job creation compared to the previous period.

    Job growth was weak in some industrialized economies. In Australia job increases remained

    mostly flat at 0.9% in October, and only 1.1% in

    New Zealand in Q3. In Japan employment

    contraction coincided with the decreasing

    economically active population.

    In light of the projected deceleration in economic growth in the region, the pace of

    employment creation could also moderate

    during the latter part of 2011.

    and unemployment is falling Figure 3: Unemployment rate, most recent period 2011 and same period 2010 (%)

    Note: Rates are not seasonally adjusted; ages 15+, except Macau, China (ages 16+), Pakistan (ages 10+) and Sri Lanka (ages 10+); Sri Lanka excludes Northern province. Source: ILO: Laborsta; National statistical offices.

    Employment growth underpinned progress in reducing unemployment rates in ten of fourteen

    economies where official data are available.

    In Sri Lanka and Thailand unemployment continued to fall, to 4.2% and 0.6% respectively.

    However, concerns are warranted regarding job

    quality for the newly employed (see below) as

    well as the adverse employment impact of

    Thailands flooding crisis.

    In the Philippines some progress in employment creation was unable to prevent higher

    unemployment of 7.1%, as the economy

    struggled to generate sufficient jobs to match its

    expanding labour force of nearly one million new

    labour market entrants in the last year.

    but joblessness among young people still a major challenge Figure 4: Youth unemployment rate, most recent period 2011 and same period 2010 (%)

    Note: Rates are not seasonally adjusted; ages 15-24, except Hong Kong, China (ages 15-19); Macau, China (ages 16-24); Pakistan (ages 15-19); and Singapore (Residents ages 15-29); Sri Lanka excludes Northern province. Source: ILO: Laborsta; National statistical offices.

    -0.5

    0.9 1.1 1.4 1.4

    2.1 2.1 2.4

    3.9 4.0 4.4 4.5

    4.7

    -1

    0

    1

    2

    3

    4

    5

    6

    Prior period Most recent period

    0.6

    2.5 2.6 2.9

    3.3 3.3

    4.2 4.2 4.3

    5.0

    5.7

    6.4 6.6 7.1

    0

    1

    2

    3

    4

    5

    6

    7

    8

    2010 2011

    2.2 6.7 6.8 7.2

    8.3 10.3 10.6

    13.8 15.6 16.2

    17.9 19.0

    23.9

    0

    5

    10

    15

    20

    25

    2010 2011

  • 3

    A lack of decent and productive jobs for young people is a drag on Asias economic potential,

    and may also threaten social stability. Young

    people account for around 20% of the

    population in Asia and the Pacific yet make up

    almost half of the regions jobless.

    Compared to adults, young people are at least three times more likely to be unemployed in the

    region as a whole and nearly five times more

    likely in South-East Asia and the Pacific.

    Although youth unemployment fell in 2011 in seven of the thirteen economies, only in Hong

    Kong (China), Sri Lanka and Thailand was the

    decline greater than 1.5 percentage points.

    However, despite progress, the situation

    remains alarming; for example, in Hong Kong

    (China) nearly one in six youth in the labour

    force was still unemployed in September.

    In Pakistan, the Philippines and Indonesia youth unemployment rates increased in 2011

    (following some declines in 2010) and remain

    higher than at the 2009 peak of the global

    economic crisis. Moreover, in Indonesia the

    percentage of unemployed young people rose

    even as adult unemployment fell, resulting in a

    worsening youth-to-adult unemployment ratio.

    Unemployment figures tell only part of the story. In low-income economies, there are far more

    young women and men stuck in circumstances of

    working poverty than are without work. Other

    countries face problems related to skills deficits,

    graduate unemployment, and a lack of support

    services to smooth school to work transitions.

    Many of these challenges are particularly acute in

    the Pacific Island States (see Box 1).

    Box 1: Youth employment challenge in the Pacific Island States

    While the challenge of giving youth a better start is common throughout the region, the labour market constraints

    faced by young people are perhaps most acut