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Labor Markets in Asia: Promoting Full, Productive, and Decent Employment
Labor Market Outcomes in Asia: An Overview..................................................................... 5
2.1 Labor Force...................................................................................................................... 5
2.2 Unemployment and Underemployment........................................................................... 11
2.3 Urban Labor Markets and Dualism................................................................................. 15
2.4 Summary......................................................................................................................... 20
3. Labor Markets in a Globalizing World................................................................................... 22
3.1 The Economic Context in which Labor Markets Operate............................................... 22
3.2 Functions of the Labor Market ....................................................................................... 25
3.3 The Mainstream Argument for Labor Market Reforms .................................................. 25
3.4 Growth, Productivity, Employment, and the Role of Technology................................... 29
3.5 Wage-Led Growth............................................................................................................ 32
4. Labor Market Policies in Asia.................................................................................................. 34
4.1 Overview of the International Experience....................................................................... 34
4.2 Labor Market Policies in Asia: An Overview.................................................................. 38
4.3 Labor Market Policies in India........................................................................................ 46
4.4 Labor Market Policies in Indonesia ................................................................................ 51
4.5 Labor Market Policies in the Philippines......................................................................... 54
4.6 Labor Market Policies in Viet Nam................................................................................. 59
4.7 The Labor Market in the PRC......................................................................................... 61
4.8 Summary......................................................................................................................... 63
5. Reforming the Labor Market to Achieve Decent Employment............................................. 64
5.1 Promoting Basic Rights for Workers in the Informal Sector........................................... 64
5.2 Strengthening Social Protection...................................................................................... 65
6. Toward Full and Productive Employment: Promoting Formal Sector Employment
and Raising Incomes in the Informal Sector .......................................................................... 68
6.1 Growth-Promoting Policies............................................................................................. 68
6.2 Human Capital Policies................................................................................................... 76
7. Conclusions: Making Full, Productive, and Decent Employment in Asia a Reality........... 80
Boxes
1.1 Growth without Employment.......................................................................................... 2
2.1 Definitions...................................................................................................................... 6
2.2a Labor Force Participation................................................................................................ 8
2.2b Child Labor...................................................................................................................... 9
2.3 The Costs and Benefits of Population Growth................................................................ 10
2.4 Poverty and the Labor Market......................................................................................... 12
2.5 Some Issues of Formal and Informal Sector Work.......................................................... 21
3.1 Unemployment, Underemployment, and Mismatches in the Labor Market................... 26
3.2 The Cases For and Against Labor Market Regulation..................................................... 27
4.1 Thailand: Wage Hike Will Scare Investors...................................................................... 37
4.2 Labor Market Regulations in Industrial Countries: The Empirical Evidence................. 39
4.3 Liberalization and its Impact on Workers in Formal Manufacturing............................... 50
4.4 Minimum Wage Setting in the Philippines...................................................................... 57
4.5 Do Minimum Wages Cause Unemployment in the Philippines?..................................... 58
4.6 Labor Market Distortions and the Opening of the PRC Economy:
Some Simulation Results................................................................................................. 63
5.1 Components of Social Protection as Defined by the Asian Development Bank............. 65
5.2 Nonformal Workers in Thailand to Contribute to Social Security Fund......................... 66
6.1 National Economic Consequences of the Costs of Informality....................................... 71
6.2 The Role of Economies of Scale and the Importance of Industry: Can Call Centers
Provide the Growth and Employment Impetus Needed in the Philippines?.................... 76
6.3 Labor Migration, “Brain Effect”, and “Brain Drain”...................................................... 79
6.4 Importance of Human Resources Development.............................................................. 80
6.5 Policies to Reduce Mismatches in the Labor Market...................................................... 81
Figures
1.1 Blueprint for Full, Productive, and Decent Employment................................................ 4
2.1 Percentage Change in Labor Force Projections, 2005–2015........................................... 7
2.2 Change in Unemployment Rates, 1996–2003................................................................. 13
2.3 Philippines–Unemployment, Underemployment (time-based),
and Labor Underutilization Rates.................................................................................... 14
2.4 Employment Shares and GDP per Capita (constant US$), 2000..................................... 15
2.5 Employment Shares by Sector, Selected DMCs.............................................................. 16
2.6 Share of Informal Sector Employment in Nonagriculture/Urban Employment
and GDP per Capita, Various Years................................................................................. 19
2.7 Share of Formal and Informal Sector Employment, Indonesia....................................... 20
2.8 Share of Nonregular Workers to Total Workers (in establishments employing
10 or more workers), Philippines..................................................................................... 20
3.1 Near Halving of the Global Capital-Labor Ratio, 1990 and 2000................................... 22
3.2 Real Wage and Salary Earnings in India (rupees)........................................................... 24
3.3 Employment Growth and Real GDP per Worker Growth............................................... 32
4.1 ILO Conventions Ratified, 1980 and 2000...................................................................... 40
4.2 Labor Force and Formal Sector Employment in India, Various Years............................. 47
4.3 Working Days Lost from Strikes and Lockouts, India, 1961–2002................................ 50
4.4 Real Minimum Wages in Indonesia, and its Major Industrial Centers, 1992–2002
(Rp’000 per month, in 1996 prices)................................................................................. 52
4.5 Legally Payable Severance, Number of Months Pay by Years of Service,
Indonesia, 1986–2003...................................................................................................... 52
4.6 Memberships in Labor Organizations, Philippines, 1980–2001..................................... 55
4.7 Number of Part-Time and Full-Time Workers, Philippines, 1991–2003......................... 57
4.8 Share of Firms with Violations of Labor Standards and Noncompliance
with Minimum Wage, Philippines, 1980–2003............................................................... 59
5.1 Social Protection Expenditures as Share of GDP............................................................ 67
6.1 The Mystery of Capital: Developing Countries’ Inability to Produce Capital................ 73
6.2 Breaking the Cycle: Reducing Poverty through Skills Training..................................... 77
Tables
2.1 Labor Force Estimates/Projections, 2005–2030.............................................................. 5
2.2 Total Unemployment Rate and Number of Unemployed, Selected DMCs, 2003........... 11
2.3 Time-Based Underemployment Rates for Selected DMCs............................................. 13
2.4 Value Added per Worker by Sector (constant 2000 US$), Selected DMCs.................... 14
2.5 Wages and Earnings in Selected DMCs.......................................................................... 14
3.1 Employment Elasticities.................................................................................................. 31
3.2 Growth in Real GDP, Real GDP per Worker, and Employment, Selected DMCs........... 33
4.1 Minimum Wage Levels, Selected DMCs ........................................................................ 36
4.2 Philippines: Minimum Wages by Region, 2003–2004.................................................... 37
4.3 Regional Scores............................................................................................................... 41
4.4 Scores on Worker Protection, Selected East Asian and Southeast Asian Economies...... 44
4.5 Scores on Worker Protection, Selected South Asian and Transition Economies............. 45
4.6 Nonregular Workers in Establishments Employing 10 or More Workers,
1991–1997....................................................................................................................... 56
Appendixes
2.1 Age Distribution as a Share of Total Population............................................................. 83
2.2 The Lewis and Harris-Todaro Models............................................................................. 84
2.3 Definitions of Informal and Formal Sector Employment in Selected
Asian Countries............................................................................................................... 87
3.1 Unit Labor Costs and Competitiveness........................................................................... 88
3.2 Some Theoretical and Empirical Problems with the Standard Analysis of
the Labor Market............................................................................................................. 91
3.3 Neo-Keynesian Labor Market......................................................................................... 92
3.4 Keynesian and Marxian Theories of Unemployment...................................................... 93
3.5 Can a Reduction in Nominal Wages Stimulate Employment? ....................................... 94
3.6 Employment Growth and Real GDP per Worker Growth, Selected DMCs.................... 96
3.7 Wage-Led Employment Regime...................................................................................... 100
References ........................................................................................................................................ 102