Job creation key to reducing poverty: ADB

Job creation key to reducing poverty: ADB

Dow Jones, Manila

Asia-Pacific governments must focus on promoting full and productive employment to reduce poverty around the region, the Asian Development Bank said in a report released on Tuesday.

The report titled "Labor Markets in Asia: Promoting Full, Productive and Decent Employment" assesses the state of Asia- Pacific labor markets and recommends options to expand employment.

It is published as a special chapter in ADB's Key Indicators 2005 -- an annual statistical data book on economic, financial and social indicators.

"There are many causes of poverty but ultimately the poor are poor because they earn too little from the work they do," said ADB Chief Economist Ifsal Ali.

"To reduce poverty in Asia, governments must do a better job of providing their people with opportunities to engage in productive work for a fair wage."

The Asia-Pacific region is home to several of the world's fastest growing economies, but at least 500 million of its 1.7 billion labor force are either jobless or underemployed, the report noted.

It added that this number could grow over the next two decades when an estimated 245 million are expected to join the job market.

Although high economic growth is a key factor in paring down poverty, it isn't sufficient to generate productive jobs in the required amounts, the report said.

It noted that the share of formal employment, both total and outside of agriculture, has declined or stagnated in a number of countries in recent years, including India, Indonesia, the Philippines and Thailand.

Job creation is constrained by a number of factors, including weaknesses in basic infrastructure, financial systems, property rights regimes, and regulatory barriers that hamper investments and job creation.

Technological progress also makes it possible for firms to expand output with correspondingly smaller job increases.

The report said governments need to develop and adopt growth- promoting policies that generate large numbers of productive jobs.

The report recommends key actions that include raising investments in rural infrastructure, establishing property rights for entrepreneurs in informal enterprises, and providing entrepreneurs with better access to credit and producer services.

"Most of Asia's poor and underemployed live in rural areas or function in urban informal sectors," said Ali. "The most urgent labor challenge facing governments is to increase opportunities for these people to engage in productive labor and earn a decent wage."

At the same time, employment in the formal sector must be expanded by removing regulatory bottlenecks to the entry and expansion of firms, and developing nontraditional but relatively labor-intensive activities throughout each economy, the report said.

Ali said unless governments around the region promote full and productive employment, "Asia could continue displaying high growth rates of output during the next two decades and still be plagued by huge unemployment, underemployment and poverty."