Asia’s Unemployed: Some Key Observations
Asia’s economies are set to slow sharply in 2009, and this could lead to serious job losses, with potential political and social consequences. Although unemployment in Asia is lower than in most developed states, this comparison is not so relevant, since Asia has become accustomed to its own lower benchmarks.
Here are my thoughts on unemployment in Asia (which mostly apply to other countries too):
Official unemployment figures are somewhat dubious. Definitions differ from country to country, as do the intervals of data collection, and the reliability of data. Regarding the latter, there is the problem of unregistered workers. For example, China’s official unemployment rate measures urban unemployment, which is reasonably low at 4%, but this excludes perhaps 200 million ‘floating workers’ – those who have left the countryside for the cities and not bothered registering themselves. Another example – Indonesia’s official unemployment rate is around 8%, but a total of 40% are unemployed or underemployed (i.e. working well below their capacity).
Official figures usually understate youth unemployment. Youth unemployment is often higher than the national average. This is significant, because many Asian countries have a demographic youth bulge, i.e. a very high proportion of people aged 20-29. These are also the most physically active and fit people, yet their capabilities are not always being maximised. This age bracket is also historically considered the most susceptible to political radicalisation.
There is a psychological dimension. In several Asian countries (e.g. Japan, China, and Korea), workers have traditionally been accustomed to ‘jobs for life’ and/or receive welfare benefits from their employers. During periods of restructuring, these workers can be transferred to new jobs, but outright redundancy carries a loss of face, with concomitant social problems.
The return of overseas workers could add to tensions. Several Asian countries, such as the Philippines, Indonesia, India, Bangladesh, etc. have millions of their citizens working overseas, in places such as the US or the Gulf. Although I have not yet seen firm evidence of massive retrenchments, the return of overseas workers could exacerbate domestic labour pressures, especially in high unemployment countries such as the Philippines.
Not everyone can just go back to toiling the land. Most Asian countries are still predominantly rural, and in some cases, urban workers can return to their villages. However, highly skilled workers such as medical personnel, engineers, and ‘knowledge’ workers cannot simply take up farming. Even if they could, the sudden availability of a huge pool of farmers would undermine agricultural productivity, since you would have a bigger number of workers per land area.
Rising unemployment could foster black market activities. Inevitably, if jobs are lost and there are inadequate social safety provisions, some redundant workers could seek alternative sources of income. Indeed, Indonesia and Malaysia earlier this week agreed to step up border security in case financial instability leads to increased human trafficking or smuggling.
China faces the biggest danger from unemployment. Not only does it have the biggest absolute number of unemployed, but it lacks the democratic political system through which laid off workers can express their frustrations. China’s entire political and economic system is dependent on creating enough jobs to absorb new workers.