AEC inequalities must not be overlooked

The study report has been dressed up and presented with a positive spin. Entitled “Asean Community 2015: Managing integration for better jobs and shared prosperity”, it expresses the researchers’ hopes that the Asean Economic Community (AEC) to be introduced late next year could accelerate economic growth and structural change and double productivity in some Southeast Asian economies. The report’s authors say the regional free market could create 14 million new jobs as well as fresh opportunities for prosperity for 600 million citizens. 

More growth, more jobs and more income contitute the advertising theme of the AEC. But the real context of the study is in the following observations: “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.”

In the report on the study undertaken by the International Labour Organisation and Asian Development Bank was released in Jakarta a few days ago, the researchers urge the bloc’s 10 member-countries to develop policies and institutions that support inclusive and fair development. They cite “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 AEC will allow a freer flow of skilled labour, services, investment and goods among member-countries. The positives include increased competitiveness, better niche markets and better education. 

The AEC will raise cultural awareness and should benefit the region’s rich culture and boost tourism. Next year the number of high-skill jobs is projected to grow by 14 million (41 per cent), medium-skill jobs by 38 million (22 per cent) and low-skill jobs by 12 million (24 per cent).

The region is expected to be far more attractive to foreign investors. Together with its key trade partners, it will form a huge market. 

Younger citizens will experience a whole new world when it comes to job seeking, culture and foreign travel. 

The downsides include widening gaps in society across the region, the demise of some domestic businesses, and lopsided labour migration as workers from poorer countries seek out better lives. 

The researchers also predict that skill shortages and skill mismatches are likely to worsen due to inadequate quality and availability of education and training.

Labour will become a big issue. Investment in labour productivity has always been deemed critically important, but some of the member-countries – including Thailand – have not paid enough attention to this aspect of AEC preparations. 

English, for example, will become much more important, but few private firms have sought to improve their employees’ English skills. Asean members will soon enter uncharted territory. Some are more excited and better prepared. Risks have been identified, and yet few have been tackled properly. 

The research reportpoints out the likelihood of uneven gains too casually – inequality can lead to serious problems, such as crime and ethnic tension. Most of the member-countries experience these problems already. A key warning in the report is that any complacency they’ve developed about the issue could lead to the problems occurring on a regional scale.