Opinion article: Realising ASEAN's potential

As the 40th anniversary of its creation approaches ASEAN is entitled to feel well-placed to meet its target of full integration by 2015. It’s been said before that the person who takes away the punchbowl just as the party gets started is not likely to be popular. Nevertheless I would like to raise a note of caution. Challenges remain, in particular the question of how to combine economic growth with social inclusion.

Economically ASEAN’s record is unquestionably impressive. Although the region accounts for less than 10 per cent of total Asian GDP, it produces around 22 per cent of Asia ’s total exports. This is more than Japan , although less than China . In addition, since 2000 average labour productivity has grown by 2.9 per cent annually and employment by 1.8 per cent. Not surprisingly some of the ASEAN economies have poverty reduction records that are the envy of other parts of the world.

Yet we know that in far too many cases, economic success has not provided enough quality jobs to lift people out of poverty once and for all. More than 148 million workers in ASEAN – over 56 per cent of the total workforce – live with their families on less than US$2 per family member per day.28.5 million of these workers live in what is internationally recognized as extreme poverty, meaning less than US$1 per person per day.It would seriously dampen the 2015 celebrations if, despite decades of remarkable growth, this region was still home to millions of working poor.

Let me highlight some of the major challenges ASEAN must tackle if it is to avoid this and realize its full potential.

First, creating the right conditions to generate enough jobs. Between 2005 and 2015 ASEAN needs approximately 55 million more jobs just to match labour force growth.

It’s well understood that a precondition for job creation is economic growth, and there is much support in ASEAN for policies that encourage investment. But this alone is not enough. Quality as well as quantity counts. The jobs created must be decent ones.

A particular challenge will be providing enough decent work for young people. 15-24- year-olds are disproportionately affected by unemployment. Last year they made up 21.6 per cent of ASEAN’s labour force but 58.7 per cent of the region’s total jobless. This is a waste of talent, a break on competitiveness and potentially a source of social problems.

The second challenge is tackling poverty. The International Labour Organization (ILO) projects that by 2015 just 8 per cent of ASEAN’s workers will live in extreme poverty but nearly half of ASEAN’s workers, and their families, will still be trapped below the US$2 poverty line. The somewhat controversial implication of this is that poverty reduction strategies need to move from targeting extreme poverty to mitigating the vulnerability of many millions more. New approaches will be needed, for example focusing on upgrading the informal economy and assisting small businesses.

Third, workers, businesses and communities will need help adjusting to the enormous changes taking place. By 2015 the number of agricultural workers in ASEAN is expected to drop by 6.6 million while employment in industry and services will increase by around 24 million and 35 million respectively. Services will become the largest employment sector, accounting for about 40 per cent of workers. Individuals, businesses and communities will all need help coping with these changes, in particular ASEAN states will need to design appropriate social protection mechanisms for their workers.

Fourth, we must focus on increasing labour productivity. ASEAN’s strong export orientation means that this is critical for continued competitiveness. It’s also essential for creating quality jobs and reducing poverty because better labour productivity has the virtue of allowing higher wages, better working conditions and more investment in human resources, without creating inflationary pressures.

Sound labour market governance and policies that encourage companies to invest in workers’ skills and new technologies can help. Close cooperation between business and the education sector will be key.

Fifth, migration must be managed effectively. Increased movements of workers have raised concerns about security and human rights and as a result migration is often characterized as a problem. But from an economic standpoint migration represents an opportunity that can benefit all sides.For sending countries, migration helps to reduce poverty, while receiving countries can reduce labour shortages and achieve higher economic growth.

But the large and growing numbers of irregular migrants mean that the issue of managing migration and protecting migrant workers is pressing. The recent ASEAN Declaration on the Protection and the Promotion of Rights of Migrant Workers shows that Member States recognize both the benefits of well-organized migration and their responsibilities.

Last autumn the ASEAN member economies joined the rest of the ILO’s Asia Pacific membership in agreeing to an Asian Decent Work Decade that will culminate in 2015. The fact that this deadline is shared with ASEAN’s own integration goal creates a great opportunity for us to work together, because the ILO’s target, therealization of decent work for all, synchronizes with ASEAN’s goal of balancing economic and social development.

Equitable economic integration is achievable. ASEAN members have a tremendous opportunity. Their energy, ideas and political leadership can set them, and their peoples, on a development path that combines economic prosperity with security, hope and dignity - in other words, decent work.