BANGKOK (ILO News) –As Asia-Pacific continues to create jobs at a very fast rate, unemployment in the region is expected to remain low by international standards, at around 4.2 per cent in 2018, according to a new report by the International Labour Organization (ILO). The ILO’s “World Employment and Social Outlook: Trends 2018” projects that the number of employed persons in the region will grow by some 23 million (or 1.2 per cent) between 2017 and 2019.

Southern Asia, driven by fast labour force growth, is expected to account for almost 90 per cent of the regional employment growth. Conversely, employment growth in Eastern Asia is expected to be marginal mostly as a result of the shrinking workforce in China.

Pervasive vulnerable employment

A large part of the jobs created in the region remain of poor quality: vulnerable employment affects almost half of all workers in Asia-Pacific, or more than 900 million men and women. Projections indicate that 72 per cent of workers in Southern Asia, 46 per cent in South-Eastern Asia and the Pacific, and 31 per cent in Eastern Asia will be vulnerable employment by 2019, showing very little change from 2017.

“The high and persistent incidence of vulnerable employment in the region largely reflects the fact that structural transformation processes, whereby capital and workers transfer from low to higher value-added sectors, are lagging behind in large parts of the region, with the exception of Eastern Asia,” explains ILO economist Stefan Kühn, lead author of the report.

Eastern Asia, mostly driven by China, has seen the share of agricultural employment first, and that of manufacturing later, decreasing at a fast rate, with workers increasingly relocating to services.

In Southern Asia structural transformation proceeds much more slowly: agriculture employment still represents 59 per cent of total employment, manufacturing accounting for only 12 per cent, and services for about 24 per cent.

South Eastern Asia and the Pacific’s economy has increasingly become service-based without having had a proper experience of industrialization.

Decreasing working poverty

According to the report, the incidence of working poverty in the Asia-Pacific region is expected to continue its downward trend for the next couple of years. As of 2017, 23.4 per cent of the working population was in extreme or moderate poverty (living on income per capita below US$3.10 per day (PPP)), down from over 44 per cent in 2007.

Despite remarkable progresses, working poverty remains high in some parts of the region, notably in Southern Asia. Over 41 per cent of workers in this region are estimated to be in either extreme or moderate poverty in 2017, accounting for more than two thirds of all working poor in Asia-Pacific.

Extreme and moderate working poverty rates continue to decline in South-Eastern Asia and the Pacific, although they remain among the highest globally, at a combined rate of 19.6 per cent in 2017. Conversely, Eastern Asia exhibits the lowest extreme and moderate working poverty rates with 9.7 per cent of workers in the region falling below the moderate poverty line in 2017.

Stubborn informality

The high incidence of informality continues to challenge prospects of further reduction in working poverty, especially in Southern and South-Eastern Asia. Informality affects close to 90 per cent or more of all workers in Bangladesh, Cambodia, India, Indonesia, Myanmar and Nepal.

Share of informal jobs by sector, latest year (percentages of employment)

Such high incidence of informality only partly reflect high shares of employment in agriculture – a sector where informality is usually higher than in the rest of the economy. In fact, informality in these countries remains pervasive also in the non-agriculture sectors, such as construction, wholesale and retail trade, and accommodation and restaurants.

In addition, the report also notes that informality continues to affect more than half of workers in China, and more than one of every four workers in the Republic of Korea, with no significant difference between the agriculture sector and the rest of the economy.

GLOBAL TRENDS

As the global economy recovers but with a growing labour force, global unemployment in 2018 is projected to remain at a similar level to the rate in 2017. The global unemployment rate has been stabilizing after a rise in 2016. It reached an estimated 5.6 per cent in 2017, with the total number of unemployed exceeding 192 million persons.

As the long-term global economic outlook remains moderate despite stronger than expected growth in 2017, the report attributes the positive trend between 2016 and 2017 mainly to the strong performance of labour markets in developed countries, where the unemployment rate is projected to fall by an additional 0.2 percentage points in 2018 to reach 5.5 per cent, a rate below pre-crisis levels.

In contrast, employment growth is expected to fall short of labour force growth in emerging and developing countries, but has nevertheless improved compared to 2016.

“Even though global unemployment has stabilized, decent work deficits remain widespread: the global economy is still not creating enough jobs. Additional efforts need to be put in place to improve the quality of work for jobholders and to ensure that the gains of growth are shared equitably,” ILO Director-General Guy Ryder said.

Structural shifts and ageing: further pressures on the global labour market

Looking at shifts in the sectoral composition of employment, the report notes that service sector jobs will be the main driver of future employment growth, while agriculture and manufacturing employment continues to decline. Since vulnerable and informal employment are prevalent in both agriculture and retail (market) services, the projected employment shifts across sectors may have only limited potential to reduce decent work deficits, if not accompanied by strong policy efforts to boost job quality and productivity in the service sector.

The report also looks at the influence of population ageing. It shows that the growth of the global workforce will not be sufficient to compensate for the rapidly expanding pool of retirees The average age of working people is projected to rise from just under 40 in 2017 to over 41 in 2030. “Besides the challenge a growing number of retirees creates for pension systems, an increasingly ageing workforce is also likely to have a direct impact on labour markets. Ageing could lower productivity and slow down labour market adjustments following economic shocks,” says the ILO’s Director of Research Department a. i., Sangheon Lee.

For more information on the findings of the World Economic and Social Outlook: Trends 2018

• Ms. Jiraporn Wongpaithoon – jiraporn@ilo.org
• Ms. Laetitia Dard – dard@ilo.org
• Or the ILO’s newsroom at newsroom@ilo.org

Improved methodology and data: Global estimates for unemployment and working poverty have been revised in the 2018 WESO Trends report following improvements in data and estimation methodologies but numbers are still comparable and trends are consistent given that the improved methodology is applied to earlier years.

“The improved methodology is part of the ILO’s continuous effort to make indicators more accurate and comparable across countries and regions,” says Steven Kapsos, Head of the Data Production and Analysis Unit at the ILO Department of Statistics.

“Even though the number of unemployed people has been revised downward compared to those presented in the WESO Trends 2017, the revision only reflects the use of improved data and estimates. The new numbers do not reflect a better-than-expected global labour market outlook or sinking unemployment numbers,” says Stefan Kühn.