Weak global economy dents Asian employment outlook: ILO

Economy April 26, 2012 00:00

By The Nation

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Asia's labour-market outlook faces growing uncertainty, with the weak global economy having affected this region and its resilient performance now showing growing signs of fragility, according to research by the International Labour Organisation (ILO).

Although economically Asia continues to outpace other regions, the worsening external environment is hampering exports and domestic demand is moderating.

Moreover, the flooding that devastated a number of countries in Southeast Asia at the end of last year again demonstrated that the region is economically and socially vulnerable to natural disasters, as well as to economic crises.

While job growth is robust in some economies, there has been an overall slowdown since the middle of last year, the ILO said.

Unemployment for young people remains a particular concern, while progress in improving job quality has also decelerated. Current forecasts indicate that Asia and the Pacific will face various challenges throughout this year in regard to generating decent and productive jobs and reducing unemployment.

As well as addressing a range of short-term labour-market challenges, policy-makers must also consider long-standing problems that profoundly shape the quality of Asian societies, namely high and rising income disparities and social exclusion, the United Nations agency said.

To this end, it is essential that efforts continue across the region to reform labour legislation, strengthen social dialogue and wage-setting institutions and build social protection systems.

Moreover, the region is undergoing a massive urbanisation process as more and more people seek new opportunities in cities. This transition puts tremendous pressure on urban infrastructure and social services. It also underscores the need to address urban poverty and informal economies and foster inclusive growth through an integrated strategy based on decent work, the ILO


China and India, which – in the context of feeble activity in the euro area and the United States in the past couple of years – have functioned as key drivers of global growth, are both slowing, raising new concerns for the world economy.

While still resilient, growth of China’s gross domestic product declined to 9.1 per cent in the third quarter of last year and 8.9 per cent in the fourth. Notably, GDP growth in India fell to 6.9 per cent in the third quarter and to 6.1 per cent in the fourth, the lowest rate since the height of the global economic crisis in early 2009.

On the other hand, the ILO said, the fourth-quarter GDP growth figure for Indonesia remained steady at 6.5 per cent, driven by strong domestic demand.

Thailand’s economic output plummeted by 9 per cent in the final quarter of 2011 as a result of the widespread flooding that devastated the country and caused extensive disruption to production.

Japan’s economy contracted by 1 per cent in the same period, partly because of its close integration with these Thai manufacturing suppliers as well as sluggish export markets.

Weak external demand also prompted a slowdown in other export-oriented economies such as Malaysia and Singapore.

The ILO said fiscal positions, while not as strong as before the 2008 global economic crisis, provide some room for fiscal stimulus in a number of countries. However, fiscal and monetary policy interventions must also deal with the additional problem of the recent high price inflation in countries such as Bangladesh (10.1 per cent), India (8.8 per cent) and Vietnam (14.2 per cent).

Global prospects for this year indicate a further slowdown. Economic-growth projections have been lowered for many economies in the region as downside risks continue to loom.

These risks include continued uncertainty over the sovereign-debt situation in the euro zone and fears that instability in the Middle East could trigger high global oil-price inflation.

The implications for labour markets in Asia could include a deceleration in job growth and setbacks in reducing job-related informality and working poverty, the ILO said.

Reflecting this deceleration in economic activity, growth in employment has moderated in comparison with the second and third quarters of last year. Overall, the latest employment figures for the region, since the beginning of 2012, show mixed progress.

Employment trends remained strong in Hong Kong, Macau and Singapore. Job growth in the Philippines was also robust at 3 per cent in January, although this is considerably weaker than the October figure of 5.6 per cent.

On the other hand, the net increase in employment in Thailand slowed to merely 0.9 per cent in the fourth quarter, partly as a result of the economic contraction caused by the flooding.

Job growth was also weak in the industrialised economies of Japan (0.1 per cent in February) and Australia (0.3 per cent in March).

In light of the uncertain global economic environment, the ILO projects employment growth across the region to remain largely unchanged this year – at 0.6 per cent in East Asia, 1.6 per cent in Southeast Asia and the Pacific, and 2 per cent in South Asia.