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ILO raises concerns in run-up to AEC

Low skills, lack of awareness of challenges ahead singled out

Enterprises throughout the Asean region are extremely concerned about the lack of a skilled workforce as the 2015 deadline for the start of the Asean Economic Community approaches, according to a new report by the International Labour Organisation (ILO).

The report, "The Road to Asean Economic Community 2015: The Challenges and Opportunities for Enterprises and Their Representative Organisations", was launched in Kuala Lumpur yesterday at a meeting of experts convened to consider the labour-market challenges created by the more integrated Asean economy that will follow the introduction of the AEC next year.

There is substantial evidence that enterprises are not fully aware of the challenges of the AEC or ready to capitalise on its opportunities. While enterprises are largely optimistic that greater labour mobility, lower trade barriers and freer investment flows will boost competitiveness - particularly if combined with investment in training and education - there is a significant lack of readiness to face the competition created by an integrated regional labour market.

Only 46 per cent of respondents indicated they fully understood the impact the AEC will have on their business.

Skill mismatches are a major concern across the region. Nearly 50 per cent of the Asean employers surveyed said secondary-school graduates do not have the skills they need. At the same time more than 50 per cent said university graduates had value-adding skills, but enrolment in tertiary education remains low.

The skills most in demand are management and leadership, followed by vocational and technical skills, and customer service.

After 2015, Mutual Recognition Arrangements (MRAs) will be the main vehi?cle for recognising equivalent skills across Asean. However, the report found that a lack of awareness of the MRAs might create barriers, and businesses needed to become more engaged with the process.

Some 54 per cent of respondents believed that increasing labour mobility would have a positive or very positive impact on their enterprise, irrespective of skill levels (although the impact varies depending on the size and sector of enterprises), while just 14 per cent foresaw a negative or a very negative effect.

But businesses in migrant-sending countries are concerned about the outflow of skilled workers. These concerns appear to be greatest in the Philippines - perhaps because of their advanced English-language skills.

There is concern about labour demand and supply inequities and the unclear impact on the informal labour market.

The report also noted that the number of intra-Asean migrants has increased, from around 1.5 million in 1990 to about 6.5 million now, a number that is expected to continue to rise.

The recommendations include greater investment in human resources, underpinned by sound and stable labour-market institutions, along with a major push by employers and business organisations to promote the AEC's challenges and opportunities.

The authors also argue that more attention needs to be paid to labour and social policies (especially those relating to skills and education), intra-regional labour mobility, and improved legislative processes to support inclusive and sustainable growth.

The report is based on a survey of employers in 10 countries and an assessment of business membership organisations in four countries. The background research was supplemented by a set of technical meetings, focus-group discussions and key stakeholder interviews with experts at the Asian Development Bank, the Business and Industry Advisory Committee to the Organisation of Economic Cooperation and Development, the World Bank, and the Asean Secretariat.


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