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

South Asia shows significant progress in productivity and working poverty, but low female labour force participation misses productivity potential

Press release | BANGKOK | 03 September 2007

BANGKOK(ILO News) – South Asia ’s[1] productivity levels have risen by around 50 per cent in the last decade and the share of working poverty has “decreased tremendously”, 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 a rapid increase of productivity – measured as output per person employed - in South Asia , from US$5,418 in 1996 to US$7,998 in 2006.  However, despite this South Asia ’s workers still only produce one eighth of what a developed economy worker does.

The United States still leads the world by far in labour productivity. Elsewhere in the Asian region, East Asia’s[2] workers now produce twice as much as they did 10 years ago, the most considerable productivity increases in the world. But this is still only one fifth of what a worker in the developed economies produces. 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 a positive trend in the amount of working poverty in South Asia , which fell from 56.6 per cent in 1996 to 33.5 per cent in 2006. However the proportion of vulnerable employment – when a worker is at risk of falling back into poverty - only decreased slightly, from 81.4 per cent to 78.2 per cent. Often these people work in the informal economy and carry a higher risk of being without social security or a voice at work.

The report also found that half the workers in South Asia and South East Asia and the Pacific still work in agriculture. Many work long hours – Bangladesh and Sri Lanka are among six Asian countries where annual hours worked surpassed 2,200.

“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 ILO Director-General  Juan Somavia.

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.

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. Within Asia the situation varies greatly; in South Asia the gender gap is more than 45 percentage points while in East Asia it is less than 13 per cent. This shows that the potential of the female labour force remains untapped.

“For the time being South Asia has an enormous deficit in decent work, but if the region can manage to develop, as has in recent years, it can reach the goal of halving poverty. It could also further increase productivity levels which, in turn, will possibly foster better jobs and hopefully further decrease its share of workers in vulnerable employment,” 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 at some distance in Asia by Hong Kong (US$56,223), Australia (US$48,694) and Singapore (US$ 47,975), Sri Lanka (US$11,32,), Pakistan (US$8,247), India (US$6,587) and Bangladesh (US43,315).

“The huge gap in productivity and wealth is cause for great concern,” said Mr.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.”

The KILM uses 20 indicators including type, status and levels of employment, remuneration and characteristics of jobseekers. This fifth edition 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.

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

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

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

For more information, please contact:

Neelam Agnihotri
ILO Sub Regional Office for South Asia

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