By Ding Gang Source: Global Times Published: 2018-8-8
The development of emerging Asian economies is entering a bottleneck due to the structure of employment. On the surface, boosting employment is the main challenge, but in essence, the existing employment structure is unstable. This jeopardizes sustainable development.
According to the latest survey by the Asian Development Bank (ADB), the proportion of self-employed employers in emerging economies in Asia has reached more than 60 percent of the entire labor force, and in some countries it is even more than 90 percent.
Most of these people are engaged in low-end jobs, such as street vendors, domestic helpers, small business operators, and courier staff. Their job and income are extremely unstable. They don't have social and medical insurance, and their children even don't go to school.
In China, such workers comprise a large proportion of the labor force. Recently, some long-distance truck drivers asked the government to reduce logistics costs to guarantee their minimum income. The information at the time revealed that at least 30,000 people were self-employed truck drivers. This does not include the minivan drivers in cities. A large number of the courier delivery personnel that has emerged in China in recent years is also composed of such self-employed workers.
From my visits to many Asian countries, I noticed this phenomenon to be typical in Asia's development. In Thailand, street vendors account for almost a third of the country's labor force. Philippine women working abroad as maids are the main source of the country's foreign exchange earnings.
When the economy is booming, most of these workers might be put in the middle-income bracket. But they are at the low end of the entire economic chain, with one foot in the "middle-income" bracket and the other one out. A little adversity or economic headwinds may sweep them back into the "middle-income trap."
In the development course of the past few decades, this group of people has been living constantly in the midst of turbulence. Besides their own future, their children's future is also at stake.
If the emerging economies in Asia want to keep moving forward steadily, the key is to improve job security and provide a social safety net for those workers and their families.
Judging from China's experience, there are three areas that need to be strengthened.
First, a large number of self-employed workers need to be transferred to manufacturing by increasing its share in the economy. This is a basic step for countries with low average incomes. They must focus on cultivating labor that meets the development needs of the manufacturing sector.
Second, the management of the services sector needs to be improved so that self-employed workers can have relatively stable jobs. In particular, the service fees need to be reduced so that their income can be improved.
Third, a network of social and health security needs to be established so that self-employed workers and their families can enjoy basic welfare benefit. Special care needs to be given so that their children can receive formal education.
The ADB and the Asian Infrastructure Investment Bank should adjust the focus of future development projects and appropriately transfer investment in infrastructure to the above three areas to help emerging Asian economies gain a footing for sustainable development.
Emerging Asian economies are key areas of the Belt and Road initiative that China is pushing forward. In the future, China's investment and cooperation in these economies will also need to focus on the above three aspects. Achievements in these areas will enhance the attractiveness of the Belt and Road platform.
The author is a senior fellow at the Chongyang Institute for Financial Studies at Renmin University of China.