Statistical Yearbook for Asia and the Pacific 2012
 
   
G. Economy
 
G.4. Employment

The Asian and Pacific labour market faced varied employment challenges in 2012. Employment growth decelerated and unemployment among young people remained high. Low job quality persisted. Poor working conditions were pervasive in developing economies in the region, characterized by widespread vulnerability and working poverty. In the context of a fragile global economic recovery, creating more productive jobs, and opportunities for women in particular, is critical throughout the region.

Employment growth in Asia and the Pacific was weak in 2012 and lagged behind pre-crisis trends.

In 2012, employment in the region expanded by only 1.2 per cent, which was notably slower than its annual average increase of 1.6 per cent during the period before the global financial crisis (2002- 2007). This trend was heavily influenced by weak employment growth of 0.5 per cent in East and North-East Asia. By contrast, employment growth was stronger, at 2 per cent, in South and South-West Asia. In Afghanistan and Timor- Leste, employment was estimated to increase by more than 4 per cent, driven partly by rapid population growth.

Despite weak overall employment growth, the Asian and Pacific region remained home to nearly 2 billion workers, or about two thirds of the global workforce. Moreover, the three developing economies of China (775.8 million), India (473.1 million) and Indonesia (113.7 million) collectively accounted for nearly 7 out of 10 workers in the region.

Throughout the region, demographic and population pressures highlight the massive policy challenge of fostering strong economic growth that can create jobs of a sufficient quality and opportunities for women in particular. In Asia and the Pacific, the employment-population ratio was 62.1 per cent, but it was significantly lower for women (48.0 per cent) than for men (76.0 per cent). The largest male-female gap was in South and South-West Asia (47.9 percentage points), while the lowest gaps were in the Pacific (11.9 percentage points) and East and North- East Asia (12.3 percentage points). Subregional figures, however, mask significant variations between countries. In East and North-East Asia, for instance, the gender gap was 10.9 percentage points in China but 21.0 percentage points in the Republic of Korea.

Industry and services have become the predominant sectors of employment.

During the past two decades, the concentration of jobs in the region has shifted rapidly from agriculture to industry and services. Together, industry and services employed more than three fifths of all workers in the region in 2012. Services alone accounted for 36.9 per cent of total employment in Asia and the Pacific, up from only 25.5 per cent in 1991. The services sector employed about 70 per cent or more of the workforce in some advanced economies, such as Australia, Japan, New Zealand, the Republic of Korea and Singapore as well as Hong Kong, China and Macao, China. However, in 2012, the overall percentage of service jobs in the region still significantly trailed other world regions, such as Latin America and the Caribbean (62.6 per cent) and North America (80.2 per cent). The industrial sector has absorbed a growing share of workers, albeit at a slower pace than services, and accounted for one quarter of employment in the region in 2012. Specific countries where more than one quarter of the workforce held an industrial job include China, the Islamic Republic of Iran, Japan, Malaysia, the Russian Federation and Turkey.

Despite the significant decline of jobs in agriculture, where productivity and earnings are commonly lower, the sector still employed 38.3 per cent of the region’s workers in 2012 compared to 53.6 per cent in 1991. The share of agricultural employment was considerably higher in least developed countries (60.4 per cent), where notable disparities persisted between women (78.9 per cent) and men (47.0 per cent).

Poor job quality remains pervasive in developing economies in the Asian and the Pacific region.

Own-account workers and contributing family workers are often vulnerable due to limited job security and protection. Nearly three in five workers (or approximately 1.1 billion people) in developing economies in Asia and the Pacific were classified as own-account or contributing family workers in 2012, and the region accounted for more than 70 per cent of the world’s total. In South and South-West Asia the vulnerable employment rate was 73.7 per cent and exceeded the comparable share in Africa (71.1 per cent). Women are significantly more likely to be employed as own-account or contributing family workers than are men, with the gender gap in the vulnerable employment rate as high as 6.3 percentage points in East and North-East Asia, 6.8 percentage points in South- East Asia, and 7.7 percentage points in South and South-West Asia.

However, some progress has taken place in the past two decades. While the overall share of ownaccount workers has fluctuated only slightly, the share of contributing family workers in developing economies in the region has fallen by 10.9 percentage points with a concomitant increase of 9.6 percentage points in the share of employees. Moreover, the positive change in the proportion of employees has benefited women in particular. Outside of agriculture, the ratio of women to men in wage employment increased from 47.5 per cent in 1992 to 55.1 per cent in 2012.

Poor job quality is also reflected in the prevalence of low earnings. In this regard, developing economies in the region have made remarkable progress as the working poverty rate at $2 per day at 2005 PPP has declined by 43.4 percentage points since 1991. Nevertheless, in 2012, 612 million workers (32.0 per cent of total employment) still earned too little to lift themselves and their families above the $2 per day poverty line. There were wide subregional variances, which ranged from 6.6 per cent in North and Central Asia, to 32.3 per cent in South-East Asia, to 57.2 per cent in South and South-West Asia.

Figure G.4-1
Labour productivity growth rate, Asia and the Pacific, 2002-2007 and 2007-2012

Figure G.4-1 Labour productivity growth rate, Asia and the Pacific, 2002-2007 and 2007-2012Boosting labour productivity is critical for improving working conditions and living standards. Since the onset of the global financial crisis, labour productivity growth has decelerated or stagnated across the region (see figure G.4-1). Comparing the five-year period before and after 2007, annual average productivity growth decreased from 5.4 per cent to 4.0 per cent in Asia and the Pacific. By subregion, the largest decline took place in North and Central Asia (4.9 percentage points), followed by South and South-West Asia (1.8 percentage points).

Despite the lower overall unemployment rate in Asia and the Pacific, young people face an alarming jobs deficit.

In 2012, the unemployment rate in the region remained low overall at 4.5 per cent, with marginal differences between women and men. The rate was considerably lower than the global average of 5.9 per cent and rates in other regions such as Africa (7.9 per cent), Europe (10.5 per cent) and North America (8.0 per cent). By subregion, unemployment ranged from 4.3 per cent in South and South-West Asia to 6.8 per cent in North and Central Asia.

Figure G.4-2
Total and youth unemployment rates, world regions and Asian and Pacific subregions, 2012 (percentage)

Figure G.4-2 Total and youth unemployment rates, world regions and Asian and Pacific subregions, 2012 (percentage)By contrast, unemployment among young people aged 15-24 years remained a prominent challenge throughout the region (see figure G.4-2). This is due to various factors, such as the mismatch between education systems, and youth aspirations and employers’ requirements, as well as limited access to business finance. In 2012, the youth unemployment rate in the Asian and Pacific region was 10.6 per cent, more than double the total unemployment rate, and it remained higher than the pre-global financial crisis level of 10.2 per cent in 2007. By subregion, the share of unemployed young people in the labour force was as high as 13.2 per cent in South-East Asia and 16.0 per cent in North and Central Asia. Particular countries where the youth unemployment rate was comparatively elevated include Armenia, Georgia, Indonesia, the Islamic Republic of Iran, New Zealand, the Philippines, Sri Lanka and Turkey.

Box G.4-1
New International Labour Organization estimates of employment across economic classes in the developing world

Building on earlier work by the International Labour Organization (ILO) to produce global and regional estimates of the working poor, a new methodology has been developed to produce country-level estimates and projections of employment across five economic classes. This has facilitated the production of the first ever global and regional estimates of workers across economic classes, providing new insights into the evolution of employment in the developing world. The aim of the work is to enhance the body of evidence on trends in employment quality and income distribution in the developing world – a desirable outcome given the relative dearth of information on these issues in comparison with indicators on the quantity of employment, such as labour force participation and unemployment rates.

Kapsos and Bourmpoula define the developing world’s middle class as workers living with their families on between $4 and $13 PPP while workers living above $13 are considered either middle class or upper-middle class based on a developed world definition. Growth in employment rates of the middle class in the developing world can provide substantial benefits to workers and their families, with evidence suggesting that the developing world’s middle class is able to invest more in health and education and therefore live considerably healthier and more productive lives than the poor and near-poor classes. This, in turn, can benefit societies at large through a virtuous circle of higher productivity employment and more rapid development.

The econometric model developed in the paper utilizes available national household survey-based estimates of the distribution of employment by economic class, augmented by a larger set of estimates of the total population distribution by class together with key labour market, macroeconomic and demographic indicators. The output of the model is a complete panel of national estimates and projections of employment by economic class for 142 developing countries, which serves as the basis for the production of regional aggregates.

Employment by economic class, Asia and the Pacific, 1991-2012 (percentage)

Employment by economic class, Asia and the Pacific, 1991-2012 (percentage)

 

 

Note: “p” indicates projection. “*” indicates preliminary estimates.

On the basis of this new data set, Huynh and Kapsos have analysed trends in employment across different economic classes in Asia and the Pacific. They have found that, over the past two decades, and particularly since the start of the new millennium, the Asian and Pacific region has undergone a dramatic shift in the distribution of workers across economic classes (see figure). In 1991, about 55 per cent of the region’s workers were living in extreme poverty, with a further 25 per cent living in moderate poverty and nearly 14 per cent in the “near poor” category. More than 80 per cent of the region’s workforce was poor, and only 5 per cent of the workforce was living with their families on more than $4 per person per day (in the middle class and above category).

As of 2012, the share of extreme working poor had been slashed to about 13 per cent while the share of moderate working poor declined to just over 20 per cent, for a total of 34 per cent of the workforce living in poverty – a remarkable decline of 46 percentage points over two decades. Over this period, however, the share of near poor rose to about 28 per cent of the workforce. This increase in workers above but near the poverty line is not surprising given that many workers have escaped poverty but have not increased their productivity to an extent great enough to join the middle class. Yet, many workers are now productive enough to have a middleclass standard of living – nearly 38 per cent of the region’s workforce was middle class or above in 2012, an increase of 33 percentage points since 1991. Moreover, in every year since 1998, the largest growth in absolute employment in Asia and the Pacific has been middle-class employment. Most new jobs in the region are middle-class jobs, which is a remarkable development given the extremely small base from which the region’s middle class has grown.

Sources: International Labour Organization, Global Employment Trends 2013: Recovering from a Second Jobs Dip (Geneva, 2013); P. Huynh and S. Kapsos, Economic Class and Labour Market Inclusion: Poor and Middle Class Workers in Developing Asia (Bangkok, ILO, 2013); and S. Kapsos and E. Bourmpoula, “Employment and economic class in the developing world”, ILO Research Paper, No. 6 (Geneva, ILO, 2013).

Further reading

Cazes, S. and S. Verick, eds. Perspectives on Labour Economics for Development. Geneva: International Labour Organization, 2013.

International Labour Organization. Asia-Pacific Labour Market Update. Bangkok (April 2013).

_______. Global Employment Trends 2013: Recovering from a Second Jobs Dip. Geneva, 2013.

–––––––. Guide to the Millennium Development Goals Employment Indicators, 2nd edition. Geneva, 2013.

Majid, N. How not to count the employed in developing countries. Employment Working Paper, No. 136. Geneva: International Labour Organization, 2013.

Technical notes

Total employment (thousands, percentage change per annum)
All persons above a specified age who, during a specified brief period of either one week or one day, were in paid employment or selfemployment. Persons temporarily not at work with or without leave should be considered to be in paid employment provided they had a formal job attachment. For operational purposes, the notion of “some work” may be interpreted as work for at least one hour. Aggregate calculations: ILO Employment Trends Unit (thousands); average annual growth of aggregate values (percentage change per annum).

Labour productivity growth rate (percentage change per annum)
The output (measured as value added in 2005 PPP dollars) divided by the total number of employed persons, expressed as the average annual rate of change. Aggregate calculations: average annual growth of aggregate values.

Employment-to-population ratio: total, female and male (percentage of total, female or male population aged 15 years or above)
The proportion of the total, female or male working-age population that is employed. For most countries, the working-age population is defined as persons aged 15 years or above, although this may vary slightly from country to country. Aggregate calculation: ILO Employment Trends Unit.

Employment by sector: agriculture, industry and services (percentage of total employment)
Agriculture: Includes employment in agriculture, hunting, forestry and fishing as a percentage of total employment. Industry: Employment in mining and quarrying, manufacturing, construction, electricity and gas, and water as a percentage of total employment. Services: Employment in wholesale and retail trade, restaurants and hotels, transport, storage and communications, finance, insurance, real estate and business services, and community, social and personal services, as a percentage of total employment. Aggregate calculations: ILO Employment Trends Unit.

Employment, by status in employment: employees, employers, own account workers and contributing family workers (percentage of total employment)
Employees: All those workers who hold the type of jobs defined as “paid employment jobs,” where the incumbents hold explicit (written or oral) or implicit employment contracts that give them a basic remuneration that is not directly dependent upon the revenue of the unit for which they work. Employers: Those workers who, working on their own account or with one or a few partners, hold the type of jobs defined as “self-employment jobs” (that is, jobs where the remuneration is directly dependent upon the profits derived from the goods and services produced), and, in this capacity, have engaged on a continuous basis one or more persons to work for them as employee(s). Own account workers: Those workers who, working on their own account or with one or more partners, hold the type of jobs defined as “self-employment jobs,” and have not engaged on a continuous basis any employees to work for them. Contributing family workers: Those workers who hold “self-employment jobs” as own-account workers in a market-oriented establishment operated by a related person living in the same household. Aggregate calculations: ILO Employment Trends Unit.

Unemployment rate: total, female and male (percentage of total, female or male labour force)
Persons, females or males, of working age who, during the reference period, were without work, available for work and seeking work. National definitions and coverage of unemployment may vary. Aggregate calculations: ILO Employment Trends Unit.

Youth unemployment rate: total, female and male (percentage of total, female or male labour force aged 15-24 years)
The number of young persons, females or males, aged 15-24 years who, during the reference period, were without work, available for work and seeking work. National definitions and coverage of unemployment may vary. Aggregate calculations: ILO Employment Trends Unit.

Share of working poor at $1.25 and $2 per day in 2005 PPP in employment: total, female and male (percentage of total employment, employed females or males)
The national estimates of working poverty or the share of working poor of total, female or male employment is measured as the proportion of total, female or male employed people aged 15 years or above living below the international poverty lines of $1.25 and $2 per day and generated using microdata from national household income and expenditure surveys. Employment status is determined at the individual level. In order to be classified as working poor, a person must be both employed and living in a household with per capita expenditure below the poverty line. For countries and years with poverty estimates available from the World Bank’s PovcalNet database but for which no national working poverty estimates are available, working poverty estimates are derived from the ILO econometric model described in chapter 1, section A, part 4 of Key Indicators of the Labour Market (KILM), 7th ed. (available from www.ilo.org/global/publications/ilobookstore/order-online/books/WCMS_166348/lang—en/index.htm). It is computed as the number of employed persons living in poor households divided by the total number of employed multiplied by 100. This definition depends on the availability of household survey data that include poverty and employment variables together.

Sources

Source of status in employment data: ILO, Key Indicators of the Labour Market (KILM), 7th ed. (available from www.ilo.org/empelm/pubs/WCMS_114060/lang—en/index.htm). The ILO Employment Trends Unit has designed and maintains three econometric models that are used in estimating labour market indicators of the countries and years for which no real data exist. Most of the information was gathered from international repositories of labour market data, including the ILO Department of Statistics Yearbook of Labour Statistics (LABORSTA) database, Eurostat, and the Latin America and Caribbean Labour Information System (QUIPUSTAT), with additions from websites of national statistical offices. Data obtained: 18 April 2013.

Source of total employment, unemployment rates, youth unemployment rates, employmentpopulation ratio and employment by sector data: ILO, Key Indicators of the Labour Market (KILM), 7th ed. (available from www.ilo.org/empelm/pubs/WCMS_114060/lang—en/index.htm). The ILO Employment Trends Unit has designed and maintains three econometric models that are used in estimating labour market indicators of the countries and years for which no real data exist. Information was derived from a variety of sources, including household and labour force surveys, official estimates and censuses provided by countries to ILO. In a very few cases, information was derived from insurance records and establishment surveys. Data obtained: 18 April 2013, except unemployment rates obtained on 10 January 2013 and youth unemployment rates obtained on 20 Feb 2013.

Source of labour productivity data: The Conference Board Total Economy Database (available from www.conference-board.org/data/economydatabase). The output measures in the database represent GDP at market prices, which are obtained from national accounts sources from international organizations and national statistical institutes. United States dollar market prices are converted to PPPs using EKS PPPs1 unpublished estimates from the Center for International Comparisons at the University of Pennsylvania (available from http://pwt.econ.upenn.edu), which are benchmarked on 2005 PPPs from the International Comparison Program of the World Bank (available from http://siteresources.worldbank.org/ICPEXT/Resources/ICP_2011.html). Some adjustments have been made by the Conference Board. A consistent and comparable measure of employment for all countries does not currently exist. Data obtained: 27 February 2013.

Source of share of working poor data: ILO, Key Indicators of the Labour Market (KILM), 7th ed. (available from www.ilo.org/global/publications/ilo-bookstore/order-online/books/WCMS_ 166348/lang—en/index.htm). The preferred data source is a household survey with variables that can identify both the poverty status of households and provide information on the economic activity of the household’s members. Examples include household income and expenditure surveys, living standards measurement surveys with employment modules, or labour force surveys that collect information on household income. More details on concepts or definitions, recommended data sources and interpretation guidelines are available from www.ilo.org/wcmsp5/groups/public/—dgreports/—stat/
documents/publication/wcms_183859.pdf
, pp. 72 and 73. Data obtained: 18 April 2013.

____________________
1 EKS PPPs (developed by O. Elteto, P. Koves and B. Szulc) is used in computing the nth root of the product of all possible Fisher indices between n countries and in obtaining GDP parity. EKS has the properties of base-country invariance and transitivity.
 
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