IWS Documented News DAILY POSTINGS

IWS Documented News Service

_______________________________

Institute for Workplace Studies-----------------Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor--------------------Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau

________________________________________________________________________

This service is supported, in part, by donations. Please consider making a donation by following the instructions at http://www.ilr.cornell.edu/iws/news-bureau/support.html

 

World Bank

 

EAST ASIA PACIFIC AT WORK: EMPLOYMENT, ENTERPRISE, AND WELL-BEING [7 May 2014]

by Packard, Truman G.; Van Nguyen, Trang

https://openknowledge.worldbank.org/handle/10986/18198

or

https://openknowledge.worldbank.org/bitstream/handle/10986/18198/9781464800047.pdf?sequence=1

[full-text, 299 pages]

 

The unprecedented progress of East Asia Pacific is a triumph of working people. Countries that were low-income a generation ago successfully integrated into the global value chain, exploiting their labor-cost advantage. In 1990, the region held about a third of the world's labor force. Leveraging this comparative advantage, the share of global GDP of emerging economies in East Asia Pacific grew from 7 percent in 1992 to 17 percent in 2011. Yet, the region now finds itself at a critical juncture. Work and its contribution to growth and well-being can no longer be taken for granted. The challenges range from high youth inactivity and rising inequality to binding skills shortages.

 

 A key underlying issue is economic informality, which constrains innovation and productivity, limits the tax base, and increases household vulnerability to shocks. Informality is both a consequence of stringent labor regulations and limited enforcement capacity. In several countries, de jure employment regulations are more stringent than in many parts of Europe. Even labor regulations set at reasonable levels but poorly implemented can aggravate the market failures they were designed to overcome.

 

 This report argues that the appropriate policy responses are to ensure macroeconomic stability, and in particular, a regulatory framework that encourages small- and medium-sized enterprises where most people in the region work. Mainly agrarian countries should focus on raising agricultural productivity. In urbanizing countries, good urban planning becomes critical. Pacific island countries will need to provide youth with human capital needed to succeed abroad as migrant workers. And, across the region, it is critical to 'formalize' more work, to increase the coverage of essential social protection, and to sustain productivity. To this end, policies should encourage mobility of labor and human capital, and not favor some forms of employment - for instance, full-time wage employment in manufacturing - over others, either implicitly or explicitly. Policies to increase growth and well-being from employment should instead reflect and support the dynamism and diversity of work forms across the region.

 

CONTENTS

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv

Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii

About the Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxi

Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxxv

Part I

1. Introduction and Road Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

The context for work in East Asia Pacifi c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Has growth in East Asia Pacifi c been "jobless"? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Road map to the report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

2. The Demand for and Supply of Labor and Human Capital . . . . . . . . . . . . . . . . . . . . . . . . 15

The demand for work: A profi le from fi rm surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

A profi le of the labor force in East Asia Pacifi c: Who is working and where? . . . . . . . . . . . 19

Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Spotlight 1. Work in the Informal Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

What is the informal economy? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Why does it matter? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

How is informal employment measured? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Informal employment in East Asia Pacifi c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

3. Is Work in East Asia Pacific Transformational? Greater Productivity, Living Standards, and Social Cohesion . . . . . . . . . . . . . . . . . . . . . . . 37

Work and productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Work and living standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Work and social cohesion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Conclusion: Do not take the transformative role of work for granted . . . . . . . . . . . . . . . . 59

Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Part II

4. The Fundamentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Prices and exchange rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Public spending and taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

An enabling environment for enterprise? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

Are the "fundamentals" in East Asia Pacifi c pro-work? . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

Annex 4A Supplementary data for chapter 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

5. Building Human Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

Progress in health and education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

Supply, demand, and skills gaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

Why do skills gaps exist and persist? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

Policy priorities and examples of success in skills development . . . . . . . . . . . . . . . . . . . . 116

Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119

6. Labor Market Regulations, Interventions, and Institutions . . . . . . . . . . . . . . . . . . . . . . . 123

Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

Interventions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

Institutions: Organized labor in East Asia Pacifi c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141

The impact of labor policy on work and earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144

Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155

Annex 6A Supplementary Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159

Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167

Part III

7. Priority Policy Challenges to Well-being from Work in East Asia Pacifi c . . . . . . . . . . . . . 171

The "jobs challenges" typology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173

Country categorization by level of development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174

Country categorization by demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180

Country categorization by endowments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185

Country categorization by institutional factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188

Implications for policy makers concerned about work . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191

Spotlight 2. Past Jobs Strategies in East Asia: Could They Work Today? . . . . . . . . . . . . . 193

What exactly are employment—or jobs—strategies? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193

East Asia's experience with employment strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194

Are these strategies viable for emerging East Asia Pacifi c countries now?. . . . . . . . . . . . . 195

Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197

8. Well-being from Work in the Pacifi c Island Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . 199

Employment challenges of the small Pacifi c island countries . . . . . . . . . . . . . . . . . . . . . . 201

Five employment priorities for Pacifi c island countries . . . . . . . . . . . . . . . . . . . . . . . . . . . 205

Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236

Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238

9. A Region at a Crossroads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241

What should an employment strategy set out to achieve? . . . . . . . . . . . . . . . . . . . . . . . . . 243

Remove biases that hurt working people . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246

Make labor regulation and social protection work for all working people . . . . . . . . . . . . 248

Take proactive measures to address remaining failures and capture externalities . . . . . . . 253

Why should this approach to crafting employment strategies appeal to governments

in East Asia Pacifi c? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259

 

________________________________________________________________________

This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.