East Asia Pacifi c At Work WORLD BANK EAST ASIA AND PACIFIC REGIONAL REPORTS Known for their economic success and dynamism, countries in the East Asia and Pacifi c region must tackle an increasingly complex set of challenges to continue on a path of sustainable devel- opment. Learning from others within the region and beyond can help identify what works, what doesn’t, and why, in the search for practical solutions to these challenges. This regional fl agship series presents analyses of issues relevant to the region, drawing on the global knowledge and experience of the World Bank and its partners. The series aims to inform public discussion, policy formulation, and development practitioners’ actions to turn challenges into opportunities. TITLES IN THE SERIES East Asia Pacifi c At Work: Employment, Enterprise, and Well-being Toward Gender Equality in East Asia and the Pacifi c: A Companion to the World Development Report Putting Higher Education to Work: Skills and Research for Growth in East Asia All books in this series are available for free at https://openknowledge.worldbank.org /handle/10986/2147 World Bank East Asia and Pacifi c Regional Report East Asia Pacifi c At Work Employment, Enterprise, and Well-being Truman G. Packard Trang Van Nguyen © 2014 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 17 16 15 14 This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily refl ect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guar- antee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifi cally reserved. Rights and Permissions This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) http:// creativecommons.org/licenses/by/3.0/igo. Under the Creative Commons Attribution license, you are free to copy, distribute, transmit, and adapt this work, including for commercial purposes, under the following conditions: Attribution—Please cite the work as follows: World Bank. 2014. East Asia Pacifi c At Work: Employment, Enterprise, and Well-being. Washington, DC: World Bank. doi:10.1596/978-1-4648-0004-7. License: Creative Commons Attribution CC BY 3.0 Translations—If you create a translation of this work, please add the following disclaimer along with the attribution: This translation was not created by The World Bank and should not be considered an offi cial World Bank translation. The World Bank shall not be liable for any content or error in this translation. Adaptations—If you create an adaptation of this work, please add the following disclaimer along with the attribution: This is an adaptation of an original work by The World Bank. Responsibility for the views and opinions expressed in the adaptation rests solely with the author or authors of the adaptation and are not endorsed by The World Bank. Third-party content—The World Bank does not necessarily own each component of the content con- tained within the work. The World Bank therefore does not warrant that the use of any third-party-owned individual component or part contained in the work will not infringe on the rights of those third parties. The risk of claims resulting from such infringement rests solely with you. If you wish to re-use a component of the work, it is your responsibility to determine whether permission is needed for that re-use and to obtain permission from the copyright owner. Examples of components can include, but are not limited to, tables, fi gures, or images. All queries on rights and licenses should be addressed to the Publishing and Knowledge Division, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@ worldbank.org. ISBN (paper): 978-1-4648-0004-7 ISBN (electronic): 978-1-4648-0005-4 DOI: 10.1596/978-1-4648-0004-7 Cover image: Bill Pragluski of Critical Stages Cover design: Critical Stages Library of Congress Cataloging-in-Publication Data has been applied for Contents Foreword . xv Acknowledgments . xvii About the Authors . xix Executive Summary . xxi Abbreviations . xxxv Part I 1. Introduction and Road Map . 1 The context for work in East Asia Pacifi c . 3 Has growth in East Asia Pacifi c been “jobless”? . 8 Road map to the report . 11 Note . 13 References . 13 2. The Demand for and Supply of Labor and Human Capital . 15 The demand for work: A profi le from fi rm surveys . 16 A profi le of the labor force in East Asia Pacifi c: Who is working and where? . 19 Note . 28 References . 28 Spotlight 1. Work in the Informal Economy . 31 What is the informal economy? . 31 Why does it matter? . 31 How is informal employment measured? . 32 Informal employment in East Asia Pacifi c . 33 Notes . 35 References . 35 v vi CONTENTS 3. Is Work in East Asia Pacifi c Transformational? Greater Productivity, Living Standards, and Social Cohesion . 37 Work and productivity . 38 Work and living standards . 44 Work and social cohesion . 51 Conclusion: Do not take the transformative role of work for granted . 59 Notes . 60 References . 61 Part II 4. The Fundamentals . 65 Prices and exchange rates . 66 Public spending and taxation . 72 An enabling environment for enterprise? . 82 Are the “fundamentals” in East Asia Pacifi c pro-work? . 86 Annex 4A Supplementary data for chapter 4 . 89 Notes . 91 References . 91 5. Building Human Capital. 95 Progress in health and education . 96 Supply, demand, and skills gaps . 99 Why do skills gaps exist and persist? . 107 Policy priorities and examples of success in skills development . 116 Notes . 118 References . 119 6. Labor Market Regulations, Interventions, and Institutions . 123 Regulations . 125 Interventions . 135 Institutions: Organized labor in East Asia Pacifi c . 141 The impact of labor policy on work and earnings . 144 Conclusions . 155 Annex 6A Supplementary Tables . 159 Notes . 165 References . ..