Asia Labour Markets

AEC offers major employment, wage and productivity benefits, if decisively managed

This is the press release for the Regional Launch of the joint ILO-ADB study: "ASEAN Community 2015: Managing integration for better jobs and shared prosperity" in Jakarta on 20 August 2014

News | 20 August 2014
JAKARTA (ILO News) - The introduction of the ASEAN Economic Community (AEC) in 2015 could generate 14 million additional jobs and improve the livelihoods of 600 million women and men living in the region, but only if decisive action is taken to manage it effectively, according to a new report.

The study, “ASEAN Community 2015: Managing integration for better jobs and shared prosperity” was prepared by the International Labour Organization (ILO) and the Asian Development Bank (ADB), and launched in Jakarta on Wednesday 20 August, at a ceremony involving the ASEAN Secretary-General, Le Luong Minh, Yoshiteru Uramoto, ILO Assistant Director-General and Regional Director for Asia and the Pacific, and Arjun Goswami, Director, Office of Regional Economic Integration of the ADB.

The AEC, which comes into effect at the end of 2015, will allow for a freer flow of skilled labour, services, investment and goods among the ten ASEAN Member States.

The new report says that that deeper regional integration holds great promise for shared prosperity. The AEC could accelerate economic growth and structural change and double productivity in some ASEAN economies, while generating 14 million additional jobs and creating new opportunities for prosperity for hundreds of millions of people.

However, it cautions that the gains will not be distributed evenly between countries, economic sectors or between women and men. Unless decisively managed this could increase inequality and worsen existing labour market deficits - such as vulnerable and informal employment, and working poverty. To counter this Member States need to develop policies and institutions that support inclusive and fair development. In particular, there is an urgent need to improve the quality, coverage and sustainability of social protection, starting with the establishment of a social protection floor for all.

Demand for high-skilled workers will increase. By 2015 high skill jobs are projected to grow by 41 per cent, or 14 million, (medium skilled jobs will grow by 22 per cent or 38 million and low-skilled by 24 per cent or 12 million). However the report predicts that skills shortages and skills mismatches are likely to worsen, due to inadequate availability and quality of education and training.

On labour migration, the report found that migration within ASEAN currently focuses on low and mediumskilled workers, a flow which is likely to increase in response to demand, particularly in the construction, agricultural and domestic work sectors.

The report also notes that the free flow of skilled workers that will come in with the AEC affects less than 1 per cent of total employment on average and will not satisfy demand. To attract and retain their skilled workers businesses will need to compete on the basis of productivity and develop institutions to better link wages to productivity.

“Investment in labour productivity is critically important for the sustained development of ASEAN,” said Mr Goswami.

Migrant protection and migration management are among other key issues for ASEAN. If countries are to reap the benefits of labour mobility they will need to prioritize three critical areas: ratifying, implementing and enforcing international Conventions; extending the coverage and portability of social security; and implementing the ASEAN Declaration on the Protection and Promotion of the Rights of Migrant Workers.

Other priority areas for action identified by the report include; more decisive management of structural changes, improved alignment of different sectoral and national policies, strengthening of regional cooperation and implementation of existing commitments, stronger labour market institutions (including wage-setting) to support inclusive prosperity and growth, enhanced social protection, support for small enterprises, more effective skills’ recognition systems, and closer links between education and the labour market.

“Ultimately ASEAN’s plan for greater regional integration will be judged on how much it benefits ordinary working men and women in the region,” said Mr Uramoto. “Policy makers must not miss this opportunity to ensure the benefits of the region’s impressive development are enjoyed by all”.

For more information please contact:

Peter van Rooij,
Country Director, Indonesia
Tel.: +62 21 3913112

Sophy Fisher
Senior Communication Officer, ILO Regional Office for Asia and the Pacific, Bangkok
Tel.: +66 89 8950912