Asian lessons

Published : Oct 20, 2006 00:00 IST

A PROCESSION OF labourers working in public sector units, in Bhubaneswar. A file picture. The report states that collective bargaining has shown a marked decline. - ASHOKE CHAKRABARTY

A PROCESSION OF labourers working in public sector units, in Bhubaneswar. A file picture. The report states that collective bargaining has shown a marked decline. - ASHOKE CHAKRABARTY

The ILO's new report on "Labour and Social Trends in Asia and the Pacific" has important lessons for labour market governance.

IN recent times, in the Asia-Pacific region, which is home to more than four billion people, economic growth has been the most rapid in the world and intra-regional trade has grown much faster than trade with the rest of the world. It is only natural that the labour and social trends here would be an object of study.

Such a study becomes especially useful when increasing labour productivity has not resulted in higher wages and better employment: of the 1.71 billion workers in the region, over one billion still do not earn enough to lift themselves and their families above the $2-a-day poverty line. In fact, in 2005, as many as 336 million families among the working poor or every fifth worker in the region lived on less than $1 a day. An International Labour Organisation (ILO) report, "Labour and Social Trends in Asia and the Pacific 2006: Progress towards decent work", brings out all this and much more.

It is not so much unemployment among the youth that is worrisome but the deteriorating working conditions, especially of those in the informal economy. Despite strong economic growth, unemployment rose by 1.4 million in 2005 in the region; in percentage terms, it was 1.7 per cent higher than the previous year. In fact, the rate of unemployment rose in East Asia, went down marginally in the Pacific and South-East Asian region, and remained stagnant in South Asia.

The report reveals strange paradoxes as well. While numerically rapid increases are expected in the labour force in countries such as Afghanistan, Bangladesh, Nepal, Pakistan, Papua New Guinea, the Philippines and the Lao People's Democratic Republic, other countries of the Asian region, such as China, the Republic of Korea, Singapore, Sri Lanka and Thailand, where demographic trends have resulted in rapidly aging populations, will face labour shortages.

But the most important finding is that there has been a rise in wages, especially in the manufacturing sector, but the increase has not been commensurate with labour productivity. Neither has increased worker productivity translated itself into shorter working hours, better conditions and better bargaining power. Collective bargaining has in fact shown a marked decline. It is an irony that despite the economic crisis, the level of unionisation has been on the decline, past gains are renegotiated and making their voices heard has become a challenge for workers. The report says that workers in "developing Asia" still put in considerably longer working hours than most of their counterparts in the rest of the world. The average hard-working Asian worker simply is not getting his or her due.

While there has been marked increases in wages in China and Sri Lanka, in India and Pakistan real wages in the manufacturing sector actually fell despite an increase in labour productivity - over 84 per cent between 1990 and 2001 in the case of India.

Labour force participation, defined as the proportion of the working-age population that is either working or looking for work, differed across the region. In East Asia it is rather high but in China it seems to be declining. It seems peculiar, but along with increasing unemployment, labour shortage has emerged in China, coupled with rising labour costs. Apart from a slowdown in population growth, this may have been caused by the decline in economic activity among young persons owing to their increasing and prolonged school attendance. China is also one of the few countries in the region to have eliminated child labour.

Some South-East Asian countries are yet to recover from the Asian financial crisis. These went through adverse labour market trends: for example, the release of a large number of workers from state-run enterprises coupled with low private investment. But in much of South Asia, the employment to population ratio continued to be one of the lowest in the world, which the report says, meant that people were actively but unsuccessfully looking for work.

An interesting feature is of low work force participation rates of adult women. In all South Asian countries, the gender divide was accentuated, though the report concurred that the low rates may be a consequence of the "enormous discrepancy between the reported rates for men and women". It is quite possible - but unexplored in the report - that there may be kinds of work that are not enumerated as productive work at all.

The report manages to demystify certain notions. If there has been anything much talked about in the region in the context of its strengths, it is Asia's cost- competitiveness and expansion of Information and Communication Technologies (ICTs). But the situation may not be as rosy as imagined. Basically, this translates into a condition where the wages are not perhaps as good as in the developed world though better than what most people earn in the developing world. For instance, a software engineer in the United States is likely to earn five times as much as a software engineer in India. For the bulk of those engaged in manufacturing activities, increased labour efficiency has not meant an improvement in incomes. The gap between productivity and wages is further accentuated where women are concerned. The hype about the ICT sector generating lots of employment is also unfounded, according to a study quoted in the report.

Another trend noticed is the high scale of inter-regional migration, with women accounting for nearly 47 per cent of all migrants in Asia. The majority of Asian migrants are doing what are called "3 D" jobs - jobs that are shunned by the local people. These occupations include jobs in commercial agriculture, construction, labour-intensive manufacturing, cleaning and catering services and domestic work. At the other end of the spectrum are the "brain drain" jobs involving migration of high-skilled professionals, including nurses and software engineers, moving either within Asian countries or to developed countries. For instance, the report quotes a study of the Organisation for Economic Cooperation and Development (OECD) on the international mobility of the highly skilled. In the decade between 1990 and 2000, India alone supplied 300,000 workers to the Silicon Valley in the U.S.

It is estimated that on an average 60,000 Indians emigrate to the U.S., Canada, Australia and the United Kingdom. Although it is not known what percentage of those migrating are women, the trend has been that the bulk of the Asian female labour migration is not from the ICT sector but from less glamorous areas. This could be owing to the overall gender gaps in wages, work participation, education, literacy and employment levels. Most female migration, therefore has been concentrated in a very limited number of female-dominated occupations associated with gendered roles such as housekeeping, domestic work and even the entertainment industry. In the coming years, it is expected that overall migration, male and female, will not only continue but grow.

Given the broad trends involving labour, the ILO report stresses the need for labour market governance. The ILO has continually underscored the need for institutional mechanisms to coordinate and control activity at the workplace in order to achieve the broad objective of decent work goals. It has been observed for long that employers crave labour flexibility more in terms of hiring and firing, rather than flexible working arrangements or functional flexibility. The range of labour flexibility therefore varies in the region. In Indonesia, dismissal regulations, severance allowances and the use of contract workers are contentious issues while in China and Japan, there is stress on strengthened protection for workers in what are called non-standard forms of employment. The report emphasises that countries need to be aware that labour law reforms alone cannot bring about a balance between flexibility, stability and security; these must be accompanied by labour market governance structures.

The report on labour and social trends in Asia and the Pacific is a relatively new publication of the ILO. Evidently, there has been a need to study the impact of the specific kind of economic growth pursued in this region, particularly in the context of labour. This is one area that tends to get ignored as countries get carried away by their own rhetoric of economic growth and development. The relevance of this kind of a report focussing on labour and related trends, therefore, cannot be underscored enough.

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