The World Bank has urged policy makers in the Philippines and other East Asia Pacific countries to adopt labor regulations and social protection policies that will benefit all workers in the region.
In a newly launched report entitled “East Asia Pacific at Work: Employment, Enterprise and Well-Being,” the Washington-based multilateral lender said rapid economic development has pushed the percentage of people working in most East Asian countries to among the highest in the world.
According to the report, East Asia Pacific saw improving productivity in the last two decades amid a brisk structural transformation, with large movements of people into cities and higher output in agriculture, manufacturing and services.
It said countries that were poor a generation ago have successfully integrated into the global value chain, taking advantage of low labor costs. In most countries in the region, the share of the population working or seeking work, including women, is higher than other countries with similar income levels.
However, the World Bank report noted that constraints of the region’s current labor market and social protection policies are becoming a more pressing issue.
Policies are often poorly enforced, driving more people into unprotected, unregulated and untaxed jobs, or even unemployment, it said.
“It’s time to consolidate growth by adopting social policies that protect people, rather than any particular sector, location or profession. When well-designed, those policies should make sure social protection and labor regulations benefit the most vulnerable workers in society,” said Axel van Trotsenburg, World Bank East Asia and Pacific Regional vice president.
The report said challenges are more pronounced in countries where productivity and living standards have been lagging for some time, citing the Philippines as an example where recent economic growth did not warrant quality jobs that would help to reduce poverty in the country.
“For instance, despite recent economic growth, the Philippines has experienced much slower poverty reduction than its neighbors, reflecting the low productivity of most forms of employment created by the economy,” it said.
The World Bank report said many economies, including the Philippines, Cambodia, Indonesia, and Laos, need to find ways to create and sustain productive work in the midst of more difficult global economic prospects and more intense competition.
To keep the region on the right track, the report recommends that countries look beyond the labor market and focus on fundamentals, such as policies that ensure price stability, encourage investment and innovation, and support a regulatory framework that enables small- and medium-size enterprises which employ most people in the region.
But it also acknowledged that the region’s diverse economies call for different policy priorities.
For the many countries that are still mainly agrarian, the report recommends that policy makers focus on boosting agricultural productivity and encouraging non-farm enterprises.
For countries that are rapidly urbanizing particularly China, Indonesia, Mongolia, the Philippines, and Vietnam, the report suggests that these governments should focus on making cities work better by boosting infrastructure and improving services.
“Since land is the least mobile factor of production, good urban planning becomes the key to increasing the flexibility and efficiency of land use. Urban planning becomes the area of policy with the greatest impact on the incentives of firms in towns and cities to form, to grow, to move up the value chain, and thus to create and sustain demand for labor and human capital,” it said.