Quality not quantity the issue for Asia

Data from fast-growing countries such as China and India supports the view that economic power is shifting from the West to Asia.

But while the headline economic growth figures certainly point to the rise of the East, a look at the more mundane realities of the employment markets suggests not all is rosy in the continent.

Flexible employment markets certainly help to ensure that there is work for as many people as possible, but the issue in Asia is not so much joblessness as the quality of jobs that are available.

The manufacturing sector, an important provider of quality jobs, has lagged behind other sectors and it is the service sector, a source of lower quality jobs, which has been the main driver of employment in East Asia in recent years.

In Korea, home to such companies as the television maker LG and the carmaker Hyundai, employment in the manufacturing sector has yet to return to pre-crisis levels.

Taiwan’s manufacturing sector saw considerable job losses in 2009 and these were not fully recovered last year. Manufacturing wages contracted by 1.8% between the first halves of 2008 and 2010.

And in Hong Kong, the ill-effects of the global crisis continued to pressure manufacturing employment levels and wages into 2010.

In South East Asia, home to emerging economies such as Indonesia and Malaysia, the unemployment rate fell to 5.2% from 5.1%. Again, the main issue with employment is one of quality, not the number of jobs available.

This region has also seen a shift from manufacturing to services and the problems associated with this are even more acute in East Asia. Productivity in manufacturing is significantly higher than in services in countries such as Indonesia and Malaysia.

“Vulnerable” employment accounts for 62% of the workforce in the region. According to the ILO, “some 143m workers in the region (around half of the region’s workers) are living with their families on less than $2 a day, with 73m of these workers living in extreme deprivation on less than $ 1.25 a day.”

Low unemployment rates in themselves are clearly only part of the picture in depicting the state of employment markets.

Perhaps this is best demonstrated by the figures from South Asia. Notwithstanding India’s reputation as a twin pillar of the Asian growth story and an unemployment rate that has ranged between 4.3% and 4.5% between 2007 and 2010, 78.5% of South Asian workers were classed as being in vulnerable employment in 2009, a modest decline from 81.1% in 1999.

While India is often depicted as a democratic country on the road to Western-style prosperity, it seems that much of its new wealth is on the back of an uneducated, largely infant workforce.

The ILO sees education as a main problem and points out that India invests a smaller proportion of national income (about 3.3%) than the median among countries in sub-Saharan Africa.

Asia is still growing fast and may yet see this translate into improved conditions for workers. There was a summer of unrest in China last year and it is likely that workers will become more and more vocal in demanding a slice of the pie as China becomes more prosperous. Several Chinese provinces saw significant wage hikes last year, according to the UN.

It estimates that Asian wages grew by 8.4% in 2010, up from 5.1% the previous year. Growth is expected to moderate to 7.1% this year, increasing to 7.3% in 2012.

While Asia’s growth has been impressive, the big challenge for its emerging economies is turning growth into real prosperity for its workers.