Many of the current members of the ASEAN states are currently undergoing favorable economic shifts. Backed by years of constant growth many in the region are considered as ‘outperforming’ for an emerging economy. But this comes as little surprise. To better understand we take a deeper look. According to a recent McKinsey report, the ASEAN region is home to eight of 18 developing economies that averaged at least 3.5 percent annual per capita GDP growth over 50 years or 5 percent annual growth over 20 years. Labeling them as ‘outperformers’ the study added that Indonesia, Malaysia, Singapore, and Thailand met the 50-year target, and Cambodia, Laos, Myanmar, and Vietnam met the 20-year standard. Despite the similar result, different countries have had their own roadmaps
The growth stories
The growth stories of individual nations have been quite varied and often a result of larger socio-political, geographical, and demographical reasons. For example Singapore dues its history of rapid development, today is a strong economic performer with one the highest per capita income in the region (almost 13 times the regional average) in spite of being one of the smallest countries in ASEAN. This, while most of the wealth in the region is centered around three countries, namely Indonesia, Thailand, and Malaysia which are the top three GDPs in the regions but have comparatively lower per capita numbers, especially for Indonesia. Countries like Malaysia and Singapore being economically stable often face labor shortages and depend on foreign workers annually to contribute their growth. Countries like Vietnam and Cambodia have a booming workforce who often have to go to different neighboring ASEAN countries in search for well-paying jobs. Differences in how the ASEAN economies operate bifurcates the region and points to how diverse each’s journey to economic growth has been.
But under such evidently different of its member states lies the factor which unites the region as one: its people. The demographic strength of the region has been a major force behind shaping the current economic scenario over the past two decades, according to a PwC study. And it still remains one the greatest asset of the region. Estimates point towards a significant expansion of labor markets in this time and some suggest over 100 million people estimated to have joined ASEAN’s workforce over the past 20 years. And its projected to keep rising, albeit at varying rates across the region.
The International Labour Organisation estimates that ASEAN will record the second-largest growth in labor force worldwide between now and 2030 (behind only India); another 59 million people are projected to enter its workforce by 2030. ASEAN would continue to represent the third-largest labor force worldwide, behind only China and India, accounting for a total of 10 percent of the global labor force by 2030. To understand what this would mean, the next ranked labor market in 2030 is projected to be the US. Of course, this type of demographic growth would vary across the different ASEAN members; while Countries like Cambodia and Vietnam would see the largest increase, Singapore is projected to be in need of more foreign workers to maintain the country’s economic rise. But that is if job creation and skill level maintain pace with the demographic expansion.
Transition to tech-driven future
Given today's market changes like the transformation of the business process and technological adoption, the growing working population could also make the region vulnerable to shocks. Today ASEAN also faces the risk of underutilizing this demographic opportunity. If the region fails to generate quality employment at the required scale while training this growing workforce in the skills needed to shift to better and more productive jobs, it would soon face problems of mass unemployment. According to the Oxford Economics and Cisco study, the transition to a more tech-driven future will cause job displacements in the regions as many would need to shift to a newer role, often requiring new and up to date skillsets. This transition is expected to lead to the displacement of 28 million full-time equivalent jobs within the region's six leading economies in the next decade. This roughly equates to 10 percent of the total working population of those countries: Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. Although and transition of this kind will be over a period of time, such shifts will also lead to the emergence of new careers in growing industries. But, as the study notes, it will also cause net job losses of 6.6 million as workers lack the necessary skills to move to different roles.
In 2015, ASEAN established the ASEAN Community agenda in efforts to better relations within the region and achieve more cohesive growth through greater regional cooperation and sharing market and resources. This came in a long line of efforts in the region to establish favorable business and trade conditions and most were aimed at building economic and political stability within ASEAN by improving access to each others markets, promoting self-sustenance and establishing a deeper and more unified ASEAN identity by 2025. But given the shifts in staffing and job trends that the region is bound to face, such economic and political cooperation has to address the need to create more jobs and improving skill levels. Today factors like demographic change, increasing urbanization, and technological disruption from automation and AI are bound to reshape the jobs landscape and create opportunities and challenges for ASEAN members. To ensure that the region continues charting the upward growth trajectory, policymakers and business leaders will need to focus on how they digitally drive productivity, are able to reinvent labor force, and along with infrastructure development are able to create jobs at a pace that matches their increasing working population. To leverage these opportunities and building on it together in a cohesive manner, ASEAN can support renewed productivity growth moving into the new decade.