Asean Competitiveness Innovatons key to stability Growth, employments under threat: ILO

Combined with recent fuel and food price rises, this will threaten the most vulnerable people and could undermine social stability.

"The only way to sustain economic growth and social progress is to compete through innovation," the report says.

Productivity growth is critical to competitiveness at all levels, it says. However, in recent years China has overtaken Asean in the level of output per worker, while the gap between India and Asean has narrowed markedly. This poses a serious competitive challenge, particularly for Asean's more developed members.

"Labour and Social Trends in Asean 2008: Driving Competitiveness and Prosperity with Decent Work" was prepared for the Asean Human Resource Summit 2008 by the ILO's AsiaPacific office. The meeting takes place on October 22 in Singapore.

The report says Asean's strong economic performance last year resulted in unemployment shrinking by 3.2 per cent, equivalent to 550,000 people. Young people aged 1524 accounted for 530,000 of those jobs, and Indonesia and the Philippines benefited particularly.

The changing global economic environment also increases Asean's policy challenges. As well as rising energy and food prices these include intraregional migration, a growing shortage of highend skills, rising income inequalities and the erosion of social cohesion.

"Relying on exports and foreign investment increases Asean's vulnerability to a prolonged global slowdown," said Gyorgy Sziraczki, a senior economist for the ILO.

"Improving labour productivity and the social aspects of regional integration will be essential if we are to protect recent economic gains, ensure stability and continue development. These challenges also require constructive labour relations among governments, workers and employers organisations."

The report offers some recommendations for promoting productivity, competitiveness and social progress:

Creating a "social floor" is crucial for ensuring people's security and encouraging support for structural reforms

Promoting growth and productivity in SMEs and agriculture is critical, for example by helping businesses form networks, targeting support at some priority sectors and investing in employmentintensive rural infrastructure

Making education and training more relevant, and improving quality

Encouraging greater Asean integration, which could help narrow development gaps. An Asean framework for managing labour migration would support competitiveness and growth and help migrants' rights.

The report says "environmental degradation negates a rising share of the gains of economic growth", and longterm, sustainable growth requires the adoption of new skills and technologies.

"In such times of economic uncertainty it is particularly important for companies to invest in progressive workplace practices, better labourmanagement relations and improved occupational safety and health," Sziraczki said.

These may be some of the few ways they have to improve their productivity and competitiveness, the report adds.