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4 Sep, 2013

Asia-Pacific on the road to middle-class employment


GENEVA, 30 August 2013 (ILO News) –Strong economic growth in the Asia-Pacific region over two decades has helped lift millions of people out of poverty, with middle class jobs now accounting for nearly two-fifths of all employment in the region. However, there’s also been an increase in inequality.

According to a recently published ILO working paper, there were more than 670 million middle class workers in the region (those living with their families on US$4 and above per day) in 2012, up from 65 million in 1991.

Middle class employment growth was particularly strong in East Asia, which rose from less than 5 per cent to more than 60 per cent in twenty years.

Projections for 2012-2017 show that middle class employment in the Asia-Pacific region will continue to grow and could reach half of the total workforce by 2017.

“Asia’s development, with the rise in middle class jobs over the past two decades, has been a tremendous success. However, rapid economic progress has also coincided with increasing inequality and persistent vulnerability,” says Phu Huynh, co-author of the report.

In fact, more than 600 million workers in the region were living under the US$2 poverty line in 2011 and almost 500 million others were living just above it. Working poverty was particularly high in South Asia.

One major constraint for the working poor in the region is the lack of access to higher education, which in many cases prevents them from finding middle class jobs.

For example, middle class workers in Viet Nam were 32 times more likely to be engaged in a high-skilled occupation than extremely poor workers.

“Improved access to quality primary and secondary education, and increased numbers of workers completing tertiary education, would help develop the higher-level skills that are needed to compete for more productive jobs, which in turn pay better wages and generate more earnings,” says Steven Kapsos, co-author of the report.

Employment by economic class, 1991-2017, Asia and the Pacific and Asia-Pacific subregions (millions)

From agriculture to industry and services

The difference between middle class workers and the working poor is also reflected in the quality of jobs they have and the industries they work in.

While agriculture was the predominant employer of most poor workers in countries like Cambodia, India, Indonesia and Vietnam, it engaged merely one in ten middle class workers in Indonesia, one in six in Viet Nam, one in five in Cambodia and around one in four in India.

On the other hand, the services sector provided jobs for 55-70 per cent of all middle class workers in the four countries, but only 8-33 per cent of jobs for poor workers.

Across the four countries, almost 270 million workers (more than one in two) were vulnerable as a self-employed or contributing family worker, reflecting the poor quality of jobs overall.

“Part of the solution is to increase infrastructure investment to facilitate shifts from agriculture to higher value-added industry and services,” explains Huynh. “Better labour market governance could also help improve working conditions and boost wages.”

Finally, gender disparities in terms of job quality are also persisting in Asia-Pacific, with women facing greater challenges than men, regardless of economic class.

But the study shows that gender gaps tend to be lower when family incomes are higher, a trend that highlights the potential impact of expanding middle class employment opportunities on reducing gender discrimination in society and the labour market.