The Asian labour market is facing a multitude of challenges, from rising inequality fuelled by stimulus programs, potential job losses from automation, high youth unemployment, pervasive informal work, and climate vulnerability. These issues are sparking debates about reskilling, wealth redistribution, social safety nets, and green jobs creation, with a focus on ensuring inclusive growth and protecting vulnerable job markets.
The International Labour Organization (ILO)'s 2024 World Employment and Social Outlook report adds new perspective to this debate and delves into the triumphs and tribulations of employment across Asia, revealing a tapestry woven with uneven recovery, pervasive informality, and widening income gaps.
Automation tsunami
According to the ILO report, Asian labour markets have exhibited remarkable resilience compared to the global decline in employment. However, this recovery is uneven, with South Asia projected to see a slight rise in unemployment to 5.2% in 2024, highlighting emerging challenges amidst economic slowdown. A significant portion of the Asian workforce remains in informal employment, characterized by precarious working conditions and lack of social security. Over 80% of India's and 85% of Bangladesh' garment workers fall into this category, showcasing the pervasiveness of informality across sectors.
The ILO report further argues that East Asia grapples with a rapidly aging population, with fertility rates dipping below replacement levels in many countries. This has economic consequences, like a shrinking workforce and increased pressure on social security systems. South Korea and Japan are projected to see working-age populations decline by 3.7% and 1.7%, respectively, by 2030. Additionally, automation in manufacturing threatens job losses, particularly for low-skilled workers, with over 22 million jobs at risk in South Korea and nearly 80 million in China by 2030, according to this report. 40% of Southeast Asians live in coastal areas, highly vulnerable to sea-level rise, floods, and extreme weather events.
The South Asia region faces a significant unemployment challenge, particularly among young people, with a projected regional unemployment rate of 5.2% in 2024 and youth unemployment reaching 14.4%. India alone grapples with a 7.5% unemployment rate. Furthermore, low female labour force participation (24% compared to the global average of 46%) hinders overall economic growth and social development.
The ILO report further adds that the automation threat is looming as over 22,000 jobs in Singapore are at risk by 2030, particularly in manufacturing and finance. Singapore's youth unemployment rate (4.4%) is lower than the regional average but still a concern. There are around 30% of Singapore's workforce is foreign, highlighting the need for upskilling local talent.
Reframing the narrative on Asia's work landscape
However, Asia's vibrant labour market is often painted with broad brushstrokes, leading to misleading misconceptions. Consider Japan's $5.1 trillion GDP and 2.1% unemployment rate -- worlds away from Laos' $18.2 billion and 4.1%. Such generalizations may obscure the unique challenges and opportunities each country faces. Similarly, automation is often portrayed as a harbinger of job losses, yet it also presents exciting possibilities. Up to 85 million Asian jobs may be at risk by 2025, but China's AI-powered industries already created 50 million new ones in 2021. The informal sector, often demonized as “precarious,” deserves a closer look.
In Asia, it's not just a shadow economy; it's the lifeblood for 57% of the non-agricultural workforce, contributing up to 40% of GDP in some countries. Recognizing its economic significance and exploring ways to formalize it, while ensuring improved working conditions, are crucial steps towards a more inclusive future. The narrative around youth unemployment also needs reframing. While one in five young Asians currently struggle to find work, Vietnam's successful vocational training programs offer a glimmer of hope. By reducing youth unemployment by 10% in just five years, they demonstrate the power of targeted investments in education and skills development.
Finally, technology, while undoubtedly a catalyst for progress, can also exacerbate existing inequalities. The World Bank estimates that 67% of low-wage workers are most vulnerable to automation, potentially widening the income gap. South Korea's pro-active approach, upskilling three million workers in 2022, offers a valuable model for ensuring responsible technological advancement that benefits all. By moving beyond simplified narratives and embracing Asia's rich tapestry of economies and workforces, we can tailor solutions that unlock its full potential.
From navigating the complexities of automation to fostering youth opportunity and harnessing the informal sector's strength, Asia's diverse labour market demands nuanced understanding and innovative approaches. Only then can we build a future where its diverse workforce thrives in the face of a rapidly changing world.
So what?
However, the "so what" of the ILO analysis on Asia's labour market is clear: It stands at a crossroads. Embracing opportunity and addressing challenges head-on is not just an economic imperative, but a moral one. The proactive policy interventions, investments in education and skills development, and a commitment to social justice are the cornerstones of building an equitable and sustainable future for all.
By focusing on solutions and quantifying the risks and rewards, we can transform Asia's labour market from a ticking time bomb into a powerful engine for shared prosperity and progress.
Sachi Satapathy is the Director of Asia-based development research and evaluation agency AF Development Care, New Delhi. He can be reached at [email protected].
