The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) said on April 28 in its annual publication, the Economic and Social Survey for Asia and the Pacific 2016 launched in Bangkok, Thailand, that a productivity slowdown was reflected in the recent economic slowdown in the region from an average of 9.4 percent during 2005-2007 to an estimated 4.6 percent in 2015.
The U.N. Under Secretary-General and ESCAP Executive Secretary, Dr. Shamshad Akhtar said at the launch of the survey in Bangkok that productivity is important as it is an ultimately deciding factor for steady growth in real wages, which is in turn critical for tackling poverty and inequality as well as expanding domestic demand. She called for “concerted efforts” to revive the region’s economic dynamism at a time when prospects for export-led growth remain subdued across the region.
“Such interventions, particularly through fiscal measures, could support not only domestic demand but also strengthen the foundations for productivity-led growth, while fostering real demand through social safety nets and wage increases,” said Dr. Akhtar.
According to ESCAP, a productivity-driven and wage-led approach would enable countries to increase their aggregate supply and demand, thereby enhancing people’s livelihood.
Higher income is also essential as many countries in the region are currently experiencing massive urbanization; however, rural people will only move to cities as long as they can financially afford to make the change.
At the same time, the ESCAP survey warns of deindustrializing too early in several countries in the region as they make a hasty shift from agriculture-based to service led economies.
The reason, as the survey explained, is that more than half of the region’s population now lives in rural areas, and 40 percent of people work in agricultural sectors. Agricultural productivity gains and rural industrialization should be given higher priorities.
A similar U.N. report on regional human development in the Asia Pacific Region, launched two days earlier in Dhaka, Bangladesh, highlighted that a change in the demographic of the region would be consequential to the region’s growth.
Vatcharin Sirimaneetham, an officer of economic affairs at ESCAP, said in Beijing during the report’s simultaneous global release that an aging society is not necessarily associated with lower productivity, as senior workers are likely to be more dependent in relation to how the general workforce is managed and whether sound education and health care systems exist.