Asia urged to close income gaps

Published by reposted only Date posted on April 26, 2012

The International Labor Organization (ILO) has urged the Philippines and other countries in Asia to address rising income disparities and social exclusion as the region faces growing uncertainty due to decreasing export demands and devastating impacts of disasters.

It said the lingering global economic crisis has shown the continent’s vulnerability to external factors. Although Asia continues to outpace Europe and other regions, the ILO said moderate domestic demands and decreasing exports due to the economic crisis in rich countries had taken their toll on poor nations.

“The tenuous global economic recovery is affecting the Asia-Pacific region. Weak export markets, the euro-zone debt crisis and the impact of natural catastrophes resulted in a deceleration in economic activity at the end of 2011 in most economies,” according to the ILO Labor Market Update issued on Wednesday.

The economic slowdown affected labor markets in Asia, ranging from decline in job growth to setbacks in reducing poverty, it said.

The situations of the working poor in the Philippines and Sri Lanka, the ILO market update added,  “are illustrative of the persistence of low-quality jobs in developing countries,” saying the number of  “own-account” workers contributing to family resources stagnated at around 42 percent there.

In the Philippines, according to the market update, “own-account” workers, or those in vulnerable employment sectors, comprise 15 million of the country’s close to 40 million working-age population.

“Widespread working poverty [where workers earn too little to escape poverty] is also indicative of poor job quality,” the update said.

The Asian region has an estimated 666 million workers (or two in five of the region’s workers) living on less than $2 per day, the ILO market update added.

It issued a warning: “Progress in reducing job-related informality and vulnerabilities may halt or even reverse as a result of the deteriorating global economic climate, as has happened in previous crises.”

The young generation is particularly affected by the fragility in Asia, with the update saying investments in job-generating sectors have failed to provide decent jobs for the youth.

The ILO said the region is undergoing a massive urbanization process as more and more people seek new opportunities in the Asia’s cities.

“This transition puts tremendous pressure on urban infrastructure and social services. It also underscores the need to address urban poverty and informality and foster inclusive growth through an integrated strategy based on decent work,” it added.

But in the Philippines, economic growth would not be stunted by a wage increase, according to a local think tank.

Neither would joblessness lead to poor economic growth, Ibon Foundation Inc. said also on Wednesday.

In a statement, Ibon added that during the first Aquino administration, for instance, the largest real minimum-wage increase was made and yet the country enjoyed the second-highest growth rate in the post-Marcos era.

During then-President Corazon Aquino’s time (1986-1992), real wage increased by as much as P73 at the end of her term and the Philippine economy saw an average annual growth rate of 3.9 percent.

“There are many factors affecting growth and employment and wages are not the most substantial among them. Taking the economy as a whole, government’s excessive liberalization thrust, for example, is a bigger factor repressing economic growth and job creation,” Ibon said.

It added that the wage increase during the first Aquino administration was higher than that in the Estrada administration at P23, Arroyo administration at P9 and Ramos administration at P6.

Ibon said the economic growth experienced by the Philippines during the first Aquino administration was second only to the Arroyo administration’s average annual economic growth of 4.5 percent.

“In contrast, the Arroyo administration had the second lowest real-wage increase but by far the worst unemployment—at 11.2-percent average annual unemployment compared to Estrada’s [10.4 percent], Aquino’s [10.1 percent] and Ramos’s [9.3 percent],” it added.

According to Ibon, a wage increase is justified at this time given that in some regions, such as the National Capital Region (NCR or Metro Manila), labor productivity has outpaced the mandated minimum wage.

It said NCR labor productivity increased by 97 percent to P675,907 in 2009 from P342,832 per worker in 2001.

But “the minimum wage only rose by 44 percent over that same period to P382 at year-end 2009 from P265 at year-end 2001.”

The think tank added that NCR’s gross regional domestic product (GRDP) increased to P2.814 trillion and 4.16 million employed persons in 2009 from P1.302 trillion with 3.80 million employed persons in 2001.

Earlier, Ibon urged the national government to implement a significant minimum-wage increase, as this will put a dent on the widening gap between the minimum wage and cost of living.

It said the gap between the mandated minimum wage and family living wage (FLW) in NCR had widened in the past 10 years.

Ibon added that by the end of 2011, it is expected that the gap between the minimum wage and FLW rose to P567. It added that the minimum wage of P426 per day was only 43 percent of the FLW, which was at P993 per day.

This was “significantly higher than the end of 2001 when the gap between the minimum wage and the FLW was at P244.” Ibon said at the time, the minimum wage of P265 per day was 52 percent of the FLW, which was at P509 per day. –With Cai U. Ordinario, Estrella Torres / Reporter, Businessmirror

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