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

Labour productivity in South-East Asia and the Pacific[1] is “stagnant” compared to the rest of Asia , and not enough employment opportunities are being created, the International Labour Office (ILO) said in a new report published today.

Press release | BANGKOK | 03 September 2007

BANGKOK(ILO News) – Labour productivity in South-East Asia and the Pacific[1] is “stagnant” compared to the rest of Asia , and not enough employment opportunities are being created, the International Labour Office (ILO) said in a new report published today.

The ILO report, “Key Indicators of the Labour Market (KILM), fifth Edition” found that productivity – measured as output per person employed - in South-East Asia and the Pacific “was stagnant and much slower than other regions” with an average annual increase of only 1.6 percent between 1996 and 2006. Workers in the region produced only a seventh of their developed economy counterparts.

By comparison 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 Asia [3], productivity rose by around 50 per cent. However, despite this South Asia ’s workers still only produces one eighth of what a developed economy worker does.

However, the percentage of working poor in South East Asia and the Pacific almost halved, from 22.1 per cent in 1996 to 13.6 per cent in 2006. The reduction in the share of vulnerable employment – when a worker is at risk of falling back into poverty - was also considerable, down 5.7 percentage points to 59.2 per cent, placing the region ahead of South Asia (78.2 per cent) but behind East Asia (56.2 per cent).

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 United States still leads the world by far in labour productivity.

“Development in South-East Asia & the Pacific has been less impressive than in East Asia . Nevertheless, the region has profited from the economic boom in China and India and the good economic performance of most developed economies in recent years”, the report says. However unemployment remains higher than before the Asian economic crisis.

“In order not to fall behind other regions, in terms of productivity, but at the same time, use the potential of all those who, after the Asian crisis, have not participated in labour markets again, it is important to find the right balance between productivity and employment increases in years to come,” the report says.

The agricultural sector continues to be an important source of livelihoods, and around half the workers in both South East Asia and the Pacific and South Asia still work in agriculture, the report says.

“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.

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$48,694), Singapore (US$ 47,975), Malaysia (US$22,112), Thailand (US$13,915), Indonesia (US$9,022) and the Philippines (US$7,271).

“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.”

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. This means that full potential of the female labour force potential remains untapped.

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.

For more information, please contact:

Minette Rimando
ILO Sub Regional Office for South East Asia and the Pacific

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

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

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

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