AEC, warts and wonders


AEC, warts and wonders

A recent report entitled ‘Asean Community 2015: Managing Integration for better Jobs and Shared Prosperity’ highlighted the many positives that are expected to accrue to the region when the AEC becomes a reality. Equally, however, the report also looked at some of the potential downsides of the new economic bloc.

Prepared by the International Labour Organisation (ILO) in conjunction with the Asian Development Bank (ADB), the report noted the AEC’s potential to lead to the creation of up to 14 million new jobs for the region’s 600 million citizens. It should help accelerate economic growth among the 10 member states and may double productivity in some.

The AEC is designed to allow a freer flow of skilled labour, but not unskilled, a fact some business operators in the expat community in Thailand seem to be blissfully unaware of. The AEC is also meant to improve overall competitiveness, strengthen niche markets, and lead to better education in the region.

The ILO-ADB report claimed high-skill jobs should rise by a substantial 41 percent in the region, a figure that equates to 14 million. Bothy medium-skilled and low-skilled jobs are expected to rise by 22 and 24 percent respectively, or by 38 million and 12 million. All of these forward drives are expected to lure greater foreign investment across Southeast Asia.

The positive spin, which we have been witnessing for many years now, is continued in the ILO-ADB report. Yet, thankfully, the researchers also made the telling point that, ‘The gains will not be distributed evenly among countries, economic sectors or women and men. Unless it is decisively managed, regional integration could increase inequality and worsen existing labour-market deficits, such as vulnerable and informal employment, and working poverty.’

The report’s authors stated it was important the AEC member countries developed policies and created institutions that would ensure fair development. The reality, of course, is this is highly unlikely to happen. They cited ‘an urgent need to improve the quality, coverage and sustainability of social protection, starting with the establishment of a social-protection floor for all.’
The reality will almost certainly be that social policy will take a back seat to economic profits, especially as labour migration ramps up.
The report predicts skill shortages as well as skill mismatches are likely to become worse in the short term because of the poor levels and low quality of education and training in many AEC states, especially in English-language skills.

Labour will be the big issue, and investment in labour productivity has been seen as of major importance to the AEC, but sadly Thailand, and others, have not paid enough attention to this aspect of AEC preparations.

Basically, there’s still a long road ahead and issues will only start to be properly resolved after the end of 2015.