Conference on Employment in the Postcrisis Context

A three-day Conference on Employment in the Post-Crisis Context was held at the Asian Development Bank Institute, from 15 to 17 December 2009. As the global financial crisis has now become a full-blown jobs crisis, this conference discussed trends, prospects and policy issues for labor markets in developing Asia and globally. Its main objective was to gain a better understanding of employment policy challenges in the post-crisis world, especially in the context of the need to “rebalance growth”.

The conference was organized in partnership with the Geneva-based International Institute of Labor Studies (IILS) of the ILO, as well as the Tokyo office of the ILO, following the release of the IILS’s recently released “World of Work” flagship publication. In attendance were policy makers from employment and economic planning ministries from Developing Asia.

The first session considered the short and medium term outlook for jobs. Nearly 10 million jobs have been lost in Asia since the onset of the crisis. Many workers are still at risk. And employment might not return to pre-crisis levels before 2011. Job-focused stimulus is still needed. Although public debt is mounting, premature exit from stimulus measures would be counterproductive and more expensive for budgets in the long term. Employment, and especially decent work, is the key element of inclusive growth, as it allows all members of society to participate in the growth process. But fast growth in developing Asia is not generating enough employment to accommodate all entrants into the labor force.

The second session addressed informal and non-regular employment which is on the rise, even in developed economies like Japan, Korea and Europe, and can have perverse economic and social effects. Informal employment is much higher in Asia than in Africa or Latin America, and is a characteristic of poorer countries in Asia. But, the evidence suggests that the trend rise is linked to globalization and new technologies. While workers in the informal sector are among the most hit by the crisis, the informal sector has also provided a “cushion” as some people who have lost formal sector jobs have moved into the informal sector. Nevertheless, there is a risk of a more permanent “informalization” of the labor market.

Unemployment insurance and social protection in Developing Asia was the topic of the third session. Such policies can provide income support, and employment support for job searching and skills training. But the reality is that in many emerging and developing countries the majority of workers do not receive unemployment benefits. Some countries are making efforts to strengthen their unemployment benefit provisions and broader social protection schemes. But less than 10% of stimulus measures globally have gone to support employment and social measures. The crisis represents an opportunity to create new and enhance existing unemployment benefit schemes in order to support the recovery, provide greater security to workers and to reduce precautionary savings.

The fourth session dealt with the implications of enterprise financing for employment. Enterprise financing is still affected by the credit crunch, and lending standards have tightened considerably. SMEs are particularly affected by this. Obtaining finance is especially difficult for SMEs in developing countries, as most are in the informal sector. Improving access to finance for SMEs is critical, as they account for up to 95 per cent of enterprises. Many government took initiatives to improve access to finance, including through loan guarantees. Developing an active microfinance sector can also be a very promising means of improving SME access to finance.

Green growth and green jobs was the theme of the fifth session. As part of their economic stimulus packages, a number of countries in the region have been undertaking and encouraging green investment. This is contributing to both economic recovery and the creation of green jobs (positions that help alleviate the myriad environment threats faced by humanity). Green growth will be very important looking beyond the current crisis in light of the urgent challenge of fighting climate change and other environmental degradation. The potential for green jobs in a low carbon Asia is immense. But much of this will not materialize without massive and sustained investments, and R&D, and above all green skills development. A green jobs strategy needs to be mainstreamed into the overall development strategic agenda.

The sixth session treated migration. Migrant workers have been especially vulnerable in the crisis, since they often do not enjoy the same rights and protection as nationals of destination countries. And the crisis has given rise to situations of discrimination and xenophobia. Return migration has been limited in part out of fear of tighter immigration controls in the future. And remittances have remained strong in South and East Asia, as some migrants may have drawn on their savings to support their families.