"Jobless Growth" in Asia fails to tackle poverty - UN Report

The stunning economic growth enjoyed by many Asian developing countries has failed to create enough jobs, improve income distribution and reduce poverty; and this worrisome trend of “jobless growth” has profound implications for the achievement of the Millennium Development Goals (MDG) in Asia-Pacific because productive employment is the main channel for poverty reduction.

These are the findings of a new joint report by the United Nations Development Programme (UNDP) and the International Labour Organization (ILO) that looks at eight countries; Cambodia , China , India , Indonesia , Malaysia , the Philippines , Sri Lanka and Thailand .

The study, “Asian Experience on Growth, Employment and Poverty” focuses on the employment intensity of economic growth as a means of poverty reduction and provides insights into why the employment intensity of growth is declining in some of the fastest-growing Asian economies. The report is being unveiled at ILO/UNDP meeting on MDG-based development at the Amari Watergate Hotel, Bangkok , Thailand , 19-21st February.

The report says that with one exception – Malaysia – all the Asian countries studied experienced inadequate employment growth, and the problem has got worse in recent years. “This has been major factor in weakening the impact of economic growth on the earnings of the poor and in making growth less poverty alleviating than it might have been”, the study concludes.

The causes of inadequate employment growth vary. In China and India , the two largest developing countries, the sharp fall in the employment intensity of growth[1] has been the problem. In Indonesia and Thailand , the cause was both a reduction in employment intensity and a reduction in the rate of growth. In Cambodia , the Philippines and Sri Lanka poor employment performance was, by and large, due to inadequate growth or growth bypassing the large sectors where poor workers are concentrated.

While stressing that more study is needed, the report identifies several factors behind this phenomenon. One major cause is the nature of the transition from an inward-looking, regulation-based, import substitution economy to one based on competition and integration with the global economy. The transition itself entails restructuring and job losses in inefficient enterprises and sectors and the reallocation of workers to new export-oriented industries, the report says.

A second source is a sharp sudden shift away from labour intensive economic activities towards capital intensive ones. A third is “inappropriate market interventions” affecting relative costs.

Employment performance is powerfully influenced by macroeconomic policies; and public policy can mitigate the effects of those factors that are inevitable and remove the ones that are not. Too often national efforts at macroeconomic stabilization have reduced economic growth to rates that are too low to allow adequate employment growth, the study cautions.

“Asia-Pacific clearly has reason to be proud of its significant contribution to world economic growth over the past two decades,” said Hafiz A. Pasha, United Nations Assistant Secretary-General and Regional Director of the United Nations Development Programme Bureau for Asia and the Pacific. “Yet while this has been the case, we also see the region facing a continuing decline in employment growth.”

“This report shows once again that economic growth itself is not enough, it must be growth that creates quality employment,” said Mr Ng-Gek Boo, ILO Regional Director for Asia and the Pacific. “Development must be equitable if it is to be sustainable. We need to ensure that the benefits of economic development and globalization are felt by all”.

The 52-page report is available athttp://www.undprcc.lk/Our_Work/IPS.asp

[1]Defined as the rate at which employment growth when output grows by one percentage point.

For more information or to arrange interviews please contact:

Aisha Jeelaan,
UNDP Regional Centre, Colombo ;
T : +94 77 350 1776
e-mail

Sophy Fisher
ILO Regional Office for Asia and the Pacific, Bangkok ;
T: +66 2288 2482
e-mail

The United Nations Development Programme is the UN’s global development network, advocating for change and connecting countries to knowledge, experience and resources to help people build better lives. UNDP works in 37 countries in Asia-Pacific.

The International Labour Organization is the UN agency devoted to advancing opportunities for women and men to obtain decent and productive work in conditions of freedom, equity, security and human dignity. Its main aims are to promote rights at work, encourage decent employment opportunities, enhance social protection and strengthen dialogue in handling work-related issues. The Regional Office for Asia and the Pacific covers 30 countries.