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ASEAN’s Demographic Dividend Is Not the Only Labour Market Issue

Economic growth in the ASEAN region continues to lag behind that of East Asia as a whole, powered as it is by the continued rise of China. In 2006, overall GDP increase averaged 5.4%, although there was considerable variation across the region. The best performers were Cambodia and Viet Nam. Cambodia’s rise is fuelled by strong tourism, export of garments and better agricultural production, with the promise of the profits from oil and gas extraction to come in the future. Viet Nam races ahead on a tide of private investment and rapidly developing domestic demand.

Yet there is still the threat of rising unemployment. The rate of unemployment increased by 2.9% across Southeast Asia and the Pacific in the decade up to 2006 and many more are underemployed or are part of pockets of hidden unemployment. Officially, the unemployment rate is 6.6% region wide. At the same time, the employment-to-population rate has declined from 67.5% to 66.1%, which is a measure of changing demography generally. Most countries have already passed though the demographic dividend phase or are doing so now. The demographic dividend refers to that brief window of time, just a few years in length, in which the proportion of income that workers earn must be redistributed to non-working members of the population is at its lowest.

The fertility of women has declined enormously within a generation – at the turn of the last century, the number of children women would bear could commonly reach double figures. Some forty years ago in Thailand, average fertility exceeded six children per women and, today, it is less than two – below the rate of replacement. Driving forces for the reduction of fertility include the improvements in health care which means children are much ,ore likely to survive until adulthood now, the empowerment of women to work outside the house and control over their own fertility. Although average spending per child has risen, the total proportion of income devoted to children has declined, especially when women too are able to work to earn a salary. However, a balancing force is the increase in the number of elderly people who have left the labour market. These are people supported by the labour market and, as health and nutrition continues to improve, their ability to live longer and longer lives will also continue.

The proportion of income that used to be spent on the young will in the future be spent on the elderly (at least until effective pensions provision is put in place, which seems a while away yet). Those societies in which the minimum level of income is transferred from the working people to either the young or the old are said to be enjoying the demographic dividend. Those people benefiting from it might spend the additional income on increased consumption in the short time or increased investment in themselves for future productivity. It is clear what governments should be trying to promote.
However, not everyone is in a position to claim this dividend. In ASEAN, several countries are releasing workers from state owned enterprises and there are insufficient new opportunities for them. Almost 57% of all workers in the region remain below the poverty line and the inability to survive as an unemployed person in most cases makes them vulnerable to risky or indecent work.

According to the International Labour Organisation (ILO), five issues will dominate labour markets in ASEAN for the foreseeable future:
• Finding the right balance between productivity growth and decent employment creation.
• Promoting decent jobs for young people.
• Managing labour migration.
• Adapting and modernizing labour market governance.
• Extending social protection coverage.

It is inevitable that private sector companies will be involved in these issues in one way or another.

The ILO’s “Global Employment Trends Brief, 2007,” is available online at:


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