Key Indicators of the Labour Market (KILM) in East Asia

ILO report says East Asia's labour productivity doubles in 10 years, but still lags behind the US.

Press release | BANGKOK | 03 September 2007

BANGKOK (ILO News) – East Asia ’s[1] productivity levels have doubled in the last decade and the share of working poverty more than halved, the International Labour Office (ILO) said in a new report published today.

The ILO report, “Key Indicators of the Labour Market (KILM), fifth Edition” shows that while U.S. still leads the world by far in labour productivity – measured as output per person employed - a rapid increase of productivity in East Asia  means workers there now produce twice as much as they did 10 years ago (2006 figs).  However, despite the most considerable productivity increases in the world East Asia ’s workers still only produce one fifth of what a worker in the developed economies produces.

In South Asia[2] labour productivity increased by almost 50 per cent in the past decade, although a worker there still only produces one eighth of what a developed economy worker generates. In South-East Asia and the Pacific[3] labour productivity “was stagnant and much slower than other regions” with an average annual increase of only 1.6 percent between 1996 and 2006 and workers in the region produced only a seventh of their developed economy counterparts.

Increases in productivity are mainly the result of companies combining capital, labour and technology better. A lack of investment in people (training and skills), equipment and technology can lead to an underutilization of the productive potential of labour and so perpetuate poverty.

The report found positive trends in three other key labour market indicators for East Asia; vulnerable unemployment (which decreased almost 10 per cent) and the level of working poor (which fell from 56.6 per cent to 33.5 per cent in 10 years), and a decrease in the youth employment-to-population ratio, which is taken to indicate an increase in the number of young people staying in education. The region has already achieved the Millennium Development Goal of halving those in poverty and in fact could face a labour shortage in future.

“While there is scope for improvement in the quality of many jobs, nowadays, at least, most jobs allow workers to keep themselves and their families out of poverty”, the report says.

Worldwide, the report shows that the productivity gap between the US and most other developed economies continued to widen. With US$ 63,885 of value added per person employed in 2006, the United States was followed some distance in Asia by Hong Kong (US$56,223), Australia (US$48,694) and Singapore (US$ 47,975). 

“The huge gap in productivity and wealth is cause for great concern,” said ILO Director-General Juan Somavia. “Raising the productivity levels of workers on the lowest incomes in the poorest countries is the key to reducing the enormous decent work deficits in the world.”

Substantial decent work deficits

This fifth edition of the KILM provides more insight into what the ILO calls “decent work deficits” and the important role of decent and productive work as a vehicle for poverty reduction. Decent work is labour that is productive, delivers a fair income, security in the workplace, social protection, and allows people to express their concerns, organize and participate in the decisions that affect their lives.

According to the KILM, 1.5 billion people in the world – or one-third of the working-age population – are “potentially underutilized”. This new estimate of labour underutilization is comprised of the 195.7 million unemployed people in the world and nearly 1.3 billion working poor who live with their families on less than US$ 2 per day per person. Whereas the unemployed want to work but lack the opportunity to do so, the working poor work but do not earn enough to escape poverty.

The report also estimates that half of all women and men employed are considered vulnerable to poverty and more than 70 per cent of the workers in South Asia are in such vulnerable employment. Viewed globally, most of these people work in the informal economy and carry a higher risk of being without social security or a voice at work.

“Hundreds of millions of women and men are working hard and long but without the conditions they need to lift themselves and their families out of poverty; they risk falling deeper into poverty. Releasing their underutilized capacities by raising their productive potential must be at the top of the international development agenda,” said Mr. Somavia.

In addition to the underutilized labour force, a large number of people – about one-third of the working-age population worldwide – are not participating in labour markets at all. For the last 10 years this inactivity rate has remained much higher for women than for men, with only two out of ten men of working age inactive compared to five out of 10 women.  This shows that the potential of the female labour force potential remains untapped. Within Asia the situation varies greatly; in East Asia the gender gap is less than 13 per cent, but in South Asia the gap is more than 45 percentage points.

The KILM, uses 20 indicators including type, status and levels of employment, remuneration, characteristics of jobseekers, labour productivity and working poverty.

[1]China, Hong Kong SAR, DPR Korea , Republic of Korea , Macau SAR, Mongolia , Taiwan ( China )

[2]Afghanistan, Bangladesh , Bhutan , India , Maldives , Nepal , Pakistan , Sri Lanka

[3]Brunei Darussalam, Cambodia, East Timor, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, Viet Nam

For more information, please contact:

Qiaoling Chen
ILO Office for China and Mongolia - Beijing
+86 10 6532 5091

Sophy Fisher
Regional Office for Asia and the Pacific
e-mail +66 (0) 2288 2482

Krisdaporn Singhaseni
Regional Office for Asia and the Pacific
 +66 (0) 2288 1664