>> APABIS Website >> Singapore 2008 Conference >> Plenary Speakers >> J Felipe

 

 

Research Associate at the Australian National University, Centre for Applied Macroeconomic Analysis; and at the Cambridge Centre for Economic & Public Policy, University of Cambridge, U.K

 

 

 

With developing Asia being home to about 500 million people unemployed and underemployed, it is difficult not to link poverty to lack of employment opportunities. If Asia cares about growth with equal opportunities, then, achieving full employment should be the Government’s paramount objective. While full employment was an objective of central banks and Governments across the developed world between World War II and the 1970s, during the last thirty years this goal has been abandoned. This has had terrible consequences, the worst of which is that societies have been forced to learn how to accept unemployment and underemployment as unwanted, but unavoidable, permanent guests. The result is that for decades the debate has centered on the question of at what point policymakers should start restricting economic expansion and slowing the reduction in unemployment. There seems to be no room in the debate for full employment. There has also been an important change in perception. This is that while before it was thought that unemployment was the result of insufficient aggregate demand, now the burden has been shifted to the individual: one is unemployed because he/she did not invest in the appropriate skills; because he/she did not make an effort at searching; or because he/she became too picky. It is also argued that unemployment is due to excessively nice welfare provision; or, at the extreme of all explanations, some think that it is a voluntary state, the outcome of optimizing choices by individuals between work and leisure, i.e., individual preference! Developing Asia has been growing fast for decades, and it is the envy of most other regions of the world. This perception, however, is lopsided. While growth is seen as the key result of developing Asia’s success, there is abundant evidence that this growth is not translating into sufficient employment creation. Policy makers across developing Asia need to understand this; otherwise, the problem may haunt them in the not-too-distant future.