ASEAN faces competitiveness, productivity, challenge says ILO report innovation, skills, good workplace practices critical

Competitiveness in the ASEAN economies will depend increasingly on the quality of their workforces and good human resources management, according to a new International Labour Organization (ILO) report.

Press release | 20 October 2008

Monday, 20 October 2008

Bangkok (ILO News): Competitiveness in the ASEAN economies will depend increasingly on the quality of their workforces and good human resources management, according to a new International Labour Organization (ILO) report.

The report cautions that if growth drops because of the current financial crisis ASEAN’s falling unemployment trend could be reversed and unemployment rise from 5.7 percent in 2007 to 6.2 percent by 2009, with the more developed economies facing the largest relative increase. Combined with recent fuel and food price rises, this will threaten the most vulnerable people and could undermine social stability.

“The only way to sustain economic growth and social progress is to compete through innovation” the report says.

The report says productivity growth is critical to competitiveness at all levels. However, in recent years China has overtaken ASEAN in the level of output per worker, while the gap between India and ASEAN has narrowed markedly. This poses a serious competitive challenge, particularly for ASEAN’s more developed members.

“Labour and Social Trends in ASEAN 2008: Driving Competitiveness and Prosperity with Decent Work”, has been prepared for the ASEAN Human Resource Summit 2008 by the ILO’s Regional Office for Asia and the Pacific. The meeting takes place on Wednesday 22nd October in Singapore

The report says that ASEAN’s strong economic performance in 2007 resulted in unemployment shrinking by 3.2 per cent, (equivalent to 550,000 people). Young people (aged 15-24) accounted for 530,000 of those jobs, and Indonesia and the Philippines benefited particularly.

The changing global economic environment also increases ASEAN's policy challenges. As well as rising energy and food prices these include intra-regional migration, a growing shortage of high-end skills, rising income inequalities and the erosion of social cohesion.

“Relying on exports and foreign investment increases ASEAN’s vulnerability to a prolonged global slowdown,” said Gyorgy Sziraczki, Senior Economist, ILO. “Improving labour productivity and the social aspects of regional integration will be essential if we are to protect recent economic gains, ensure stability and continue development. These challenges also require constructive labour relations between governments, workers’ and employers’ organizations.”

The report offers some recommendations for promoting productivity, competitiveness and social progress:

Ø Creating a “social floor” is crucial for ensuring people’s security and encouraging support for structural reforms

Ø Promoting growth and productivity in small and medium sized enterprises and agriculture is critical, for example by Helping businesses form networks, targeting support at some priority sectors and investing in employment-intensive rural infrastructure

Ø Education and training must become more relevant, and quality improved

Ø Greater ASEAN integration could help to narrow development gaps. An ASEAN framework for managing labour migration would support competiveness and growth and help migrants’ rights.

Ø The report says “environmental degradation negates a rising share of the gains of economic growth”, and long-term, sustainable growth requires the adoption of new skills and technologies.