AEC can benefit everyone

Queen Sofia of Spain talks to a weaver at AFESIP Tom Dy Rehabilitation and Vocational Training Center in Phnom Penh
Queen Sofia of Spain talks to a weaver at AFESIP Tom Dy Rehabilitation and Vocational Training Center in Phnom Penh. Better education and vocational training can help Cambodian workers match their skills to jobs that open up as part of the ASEAN Economic Community. AFP

AEC can benefit everyone

Policymakers talk a lot about the impact of the ASEAN Economic Community’s launch in 2015. But the real question is: How will the AEC affect the 600 million people who live in the region? Together, the International Labour Organization and the Asian Development Bank set out to find some answers, and this week we delivered our findings in a report presented to ASEAN Secretary-General Le Luong Minh.

Ordinary men and women first experience economic change through the labour market. What matters to them is whether they can find a good job that offers security, pays decent wages in decent conditions and whether, in time, their children will be able to have the same.

Our findings are encouraging. If managed well over the next decade, the AEC could boost the region’s economies 7.1 per cent and generate 14 million additional jobs. However, there are some big “ifs” and “buts”.

While some sectors will flourish, others are likely to see job losses, and those workers will not necessarily have the right skills to seize the opportunities created by the AEC. Also, while improved productivity may raise incomes for some, this could bypass a large majority of people unless more effective wage-setting institutions are created.

To realise the full potential of closer economic integration, countries across the region need to take decisive action, right now. This is the core, take-away message from our study, ASEAN Community 2015: Managing integration for better jobs and shared prosperity.

Here are three priorities for ASEAN’s leaders to focus on.

The first priority should be to proactively manage and facilitate structural change. This means not only investing in infrastructure and implementing sound industrial and sectoral policies; it also means improving “soft” infrastructure – investing in better education and vocational training systems so that workers’ skills match those that enterprises need. To be successful, this adjustment process will also require support for small- and mid-sized enterprises and for the most vulnerable members of our communities. One route is through stronger social protection systems.

Secondly, economic gains must lead to shared prosperity. By linking wages to productivity, workers can benefit from economic progress while enterprises can remain competitive. This requires wage-setting systems that deliver minimum wages that protect the vulnerable and stronger collective bargaining procedures that allow employers and unions to negotiate improvements in working conditions and to find solutions that raise productivity.

But shared prosperity is not just about creating better systems for spreading the wealth – it’s also about equitable development and reaching more people. So ASEAN needs to act to realise true gender equality, and more respect for the rights of migrant workers.

Finally, ASEAN countries need to strengthen regional cooperation. Some of the architecture for this is already in place. For example, ASEAN’s leaders agreed to “promote decent, humane, productive, dignified and remunerative employment for migrant workers” in the Cebu Declaration. And in the ASEAN Declaration on Social Protection, they set out the principle of “equitable access to social protection”. What is needed now is concrete action to turn these documents into practical change. Cooperation also needs to expand into other areas, such as skills recognition, labour market information, research and analysis.

The ASEAN Economic Community 2015 will place ASEAN at a crossroads. If these priorities are effectively addressed, the region can make great strides towards equitable economic development and shared prosperity. But if ASEAN’s leaders fail to act, the AEC will increase inequalities and will bypass the majority of the region’s population.

Yoshiteru Uramoto is the ILO’s assistant director-general and regional director for Asia and the Pacific.

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