Unless we take decisive action, the AEC risks leaving some behind

Opening speech by Mr Yoshiteru Uramoto, ILO Assistant Director-General and Regional Director for Asia and the Pacific,at the Viet Nam Policy Dialogue on "ASEAN Community 2015: Managing integration for better jobs and shared prosperity"

Statement | Hanoi, Viet Nam | 04 September 2014
Dear Honourable Madame Pham Thi Hai Chuyen, Minister of Labour, Invalids and Social Affairs,
Mr Tomoyuki Kimura, ADB Country Director for Viet Nam,
Representatives from the Viet Nam Chamber of Commerce and Industry and the Viet Nam General Confederation of Labour,
Excellencies and distinguished guests,
Ladies and gentlemen,

On behalf of the ILO, I am pleased to welcome you to this national policy dialogue that has been jointly organized by the Ministry of Labour, Invalids and Social Affairs, the Asian Development Bank, and the ILO. It is an honour for us to share this report “ASEAN Community 2015: Managing integration for better jobs and shared prosperity” with Vietnamese policymakers and the diplomatic community. The report reflects a tremendous undertaking that would not be possible without the dedication and engagement of many people.

Let me thank the ADB for their excellent partnership and collaboration. In December 2012, the ADB President and ILO Director-General signed a joint statement to promote decent work and address poverty, vulnerability and informality in the region. At that time, the ADB and the ILO pledged to conduct joint research and knowledge sharing such as in the context of regional integration. I am very pleased that this joint report is another example of collaboration toward our common goals of achieving social justice, poverty alleviation and inclusive growth in the Asia-Pacific region.

This policy forum comes at a critical juncture as Viet Nam moves towards fulfilling its commitment to the ASEAN Economic Community (or AEC). The AEC will become a reality by the end of 2015, and presents both opportunities and challenges for Viet Nam’s dynamic economy and 90 million citizens.

Our report offers for the first time an examination of the impact of the AEC on labour markets. It goes beyond the trade and GDP numbers and provides evidence-based findings on what the AEC will mean for workers in ASEAN. It draws on model simulations and policy analysis as well as consultations with key stakeholders in Viet Nam and throughout the region. While the report covers the ASEAN region as a whole, it also presents a large amount of country-specific data and analysis to tailor the national policy response.

Excellencies, ladies and gentlemen,

Viet Nam’s dynamic economy, which reached $170 billion in 2013, is heavily dependent on close integration with regional and global markets. The country’s agriculture, garment and footwear industries are driven by consumer demand around the world. External trade has been instrumental in driving growth, while rapidly reducing poverty and boosting living standards in recent decades.

Under the AEC, Viet Nam could see a boom in jobs and growth. The AEC will form a single regional common market and production base. With increased trade and investment flows, the pace of change of Viet Nam’s economy will accelerate. This could allow Viet Nam to compete in global markets based on higher productivity and innovation. In turn, this process could increase incomes and prospects for business.

But the real question is, how will greater regional integration and connectivity affect the lives of Vietnamese people, and all ASEAN citizens? How will it improve the living standards of ordinary women and men? Will these measures help them find a good job that offers security and pays decent wages in decent conditions? Will their children, in time, be able to do the same?

These are the questions that will be discussed and debated extensively this morning by our distinguished speakers and experts. And I am very pleased that our report presents some answers to these questions, and provides sound evidence to base your deliberations.

First, it’s evident that with freer trade and investment, the AEC could generate significant benefits. Our report finds that by 2025, the AEC could spur growth in Viet Nam’s GDP by 14.5 per cent and create millions of additional jobs. It will accelerate changes in the structure of the economy and could more than double productivity in the coming decade.

But these overall gains will not be distributed evenly. While some sectors will flourish, others are likely to see job losses. In Viet Nam, we foresee robust employment growth in sectors such as rice production, construction, transportation, garments and food processing.

In-line with these sectoral changes, our report findings also indicate that between 2010 and 2025, demand overall for medium-skill employment will grow the fastest, by 28 per cent. But those jobseekers without the right skills and experience may not be able to seize these new opportunities.

So unless we take decisive action, the AEC risks leaving some behind. It could worsen inequality, and fail to deliver its promises of equitable development and shared prosperity.

Excellencies, ladies and gentlemen,

To ensure that deeper economic integration benefits all Vietnamese women and men, we need policies that focus on the most vulnerable workers and the sectors most at-risk of decline.

The first is prioritizing measures that will boost productivity in agriculture and diversify manufacturing employment, while continuing to support the garment industry.

Secondly, social protection coverage needs to be extended, including the national unemployment insurance scheme. This will help cushion the effects of structural transformation and ease workers into more productive industries.

Third, targeted efforts are needed to improve vocational training and secondary education to meet the expected growth in demand for medium-skilled workers.

Fourth, a modern collective bargaining system is needed to create a more stable business environment. This would also help ensure that productivity gains translate into better working conditions, and foster a stronger domestic market.

Finally, there is a need to improve the protection of migrants going abroad for work. This should be coupled by better systems to recognize their skills and competencies.

Excellencies, ladies and gentlemen,

While today is an important opportunity to reflect on the findings of this report and the implications for Viet Nam, it also marks another beginning. Your deliberations will guide the ILO’s future operational work in supporting Viet Nam and the ASEAN Community. We stand ready to further our collaboration with the Government of Viet Nam and the social partners to promote better jobs and shared prosperity for all Vietnamese women and men.

I wish you a very productive and rich discussion today and look forward to hearing the outcomes of your proceedings.

Thank you.