ASEAN Community 2015: Managing integration for better jobs and shared prosperity

The ASEAN Economic Community (AEC) will create a single market and production base and new opportunities for prosperity for the region’s 600 million women and men…

Strong economic performance has made ASEAN one of the world’s most dynamic regions (Chapter 1). Since 2007, while annual average growth in the global economy has been 3.3 per cent, in ASEAN it has been 5.1 per cent. This has boosted living standards: between 1991 and 2013, 83 million workers moved out of poverty into the middle class. The region also has one of the world’s highest foreign investment inflows – attracted by its workforce of 300 million, growing consumer markets and expanding networks of infrastructure.

Despite progress, challenges remain. In some countries, poverty persists and economic growth has been accompanied by rising disparities in income and opportunities. Too many workers are trapped in poor quality jobs. Approximately 179 million workers (or three in five) are in vulnerable employment and 92 million earn too little to escape poverty. Securing decent employment is particularly difficult for young people and women. These labour market concerns are exacerbated by limited commitments to labour standards and social protection.

…but unless managed properly the AEC may add to existing labour market deficits and increase inequality

The AEC has the potential to accelerate growth – by increasing flows of trade and investment, enabling the freer movement of skilled workers, and by strengthening institutions. This will necessarily change the composition and distribution of jobs across the region. Consequently, ASEAN Member States will face challenges related to job gains and losses, skills development, wages and productivity, labour migration and social protection systems. Addressing these key issues will help ensure that more women and men benefit from deeper integration, and vulnerable groups are not left behind.

Building connectivity is key to the AEC vision of sustained growth and equitable development

Cross- border infrastructure has helped develop isolated areas and spread the economic benefits of integration more equitably (Chapter 2). Linking communities through physical networks facilitates the movement of goods, capital, labour and ideas and reduces overall transaction costs. Maximizing such benefits will require greater coordination among decision makers to provide the appropriate “hard” and “soft” infrastructure.

In this regard, previous integration agreements provide the momentum for further cooperation. A variety of subregional economic zones have emerged since the 1990s with the aim of transforming transnational but contiguous areas into attractive economic platforms. In addition, ASEAN has a series of trade agreements with prominent Asian partners such as Australia, China, India, Japan, Republic of Korea and New Zealand. As a result of these initiatives, ASEAN is in a dominant position to drive economic integration further.

The AEC will accelerate the pace of structural change…

The AEC has significant potential to spur structural change from lower- to higher- productivity economic sectors (Chapter 3). Reaping the potential benefits will depend on putting in place policies to manage this transformation, including employment policies for high-quality jobs, robust measures for social protection and support to smaller enterprises.

One ongoing structural change is a decline in the significance of agriculture – which accounts for 40.0 per cent of total employment, having been overtaken by services at 40.6 per cent, with the remaining 19.4 per cent accounted for by industry. A challenge for some countries is that the bulk of job creation is taking place in sectors where levels of productivity are not significantly higher than in agriculture – and sometimes lower.

...and could generate 14 million additional jobs, but the gains will not be distributed evenly across countries or sectors, or between women and men

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