Labour Productivity helped higher GDP

Growth in labour productivity has helped India and other fast growing economies including China, Cambodia and Vietnam, register higher GDP growth than the rest of the world, according to the International Labour Organization.

Favourable demographic and labour force trends and shift in employment from lower-productivity agriculture to higher value-added industry and service sector has helped the Asia-Pacific region drive growth, says the ILO. The growth has also been fuelled by the rise in aggregate education and skill levels of the Asian workforce.

These are some of the highlights of ILO’s Visions for Asia’s Decent Work Decade: Sustainable Growth and Jobs to 2015, report.

According to the report, output per worker in the Asia-Pacific region grew by 30% since 2000 compared to only 7.8% outside the region. Between 2000 and 2006, real GDP growth in the Asia-Pacific region rose at an average annual rate of 6.3%, compared with growth of 3.1% in the rest of the world, the report reveals.
India’s share of the Asia-Pacific region’s GDP is expected to rise from 7.2% to 8.7-10% by 2020, while China’s contribution to regional output is expected to rise from 20.4% to between 31% and 33% by 2020.

With the growth of India and China, Japan’s share of regional output is expected to decline. In 2005, Japan accounted for over 41% of the region’s GDP but its share is projected to fall to between 27% and 28% by 2020, the report says.

The report says, economic growth in the recent years has been less “employment-intensive” in many Asian countries compared to 1990s. Despite rapid GDP growth, employment grew at an average annual rate of less than 1.6% between 2001 and 2006, compared with slightly more than 1.7% between 1991 and 1996 in the entire Asia-Pacific region. “Much of this change is due to shift from labour-intensive to technology and capital-intensive industries,” says J. John, editor, Labour File, a bimonthly journal of labour and economic affairs. “The fact is highlighted by the decline in the number of casual labourers, who work less than 185 days a year, in India,” he adds.

China and India have opportunity to progress faster since both countries are already developing social and labour institutions that can support a dynamic market economy and address anxieties arising from changing taking place in labour markets throughout Asia, the report says.