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21. COVID-19 Impact on the Policy Brief Value Chain in Latin America

Author:
Karolien van Teijlingen and Barbara Hogenboom
Publication Date:
07-2020
Content Type:
Policy Brief
Institution:
Clingendael Netherlands Institute of International Relations
Abstract:
COVID-19 struck Latin America in the middle of what was already a tough economic, political and social period. This policy brief looks into the effects of the pandemic on employment and labour rights in the Colombian and Peruvian large-scale mining sectors. Mining has been severely affected by low commodity prices and demand, interrupted supply chains, national lockdowns and the (partial) closure of operations. Companies have tried to cut costs on the back of their labour force, resulting in layoffs, renegotiations and suspension of contracts. Informal economies around mining operations also suffer from the fall in demand for services and goods. The most impacted groups are outsourced workers and workers in the informal economy, the latter being predominantly women. On the long-term, these countries risks a race to the bottom in terms of labour rights. The brief calls upon (Dutch) companies and investors working in the Latin American commodity sectors to put social and economic justice at the centre of their operations.
Topic:
Labor Issues, Mining, Global Value Chains, and COVID-19
Political Geography:
South America and Latin America

22. An Aging Population in Asia Creates Economic Challenges

Author:
Andew Mason, Sang-Hyop Lee, and Donghyun Park
Publication Date:
05-2020
Content Type:
Commentary and Analysis
Institution:
East-West Center
Abstract:
Elderly populations in Asia are expanding more quickly than other age groups. This shift in population age structure had two major impacts: demand for income support for the elderly will rise because their labor income tends to be extremely low; and gross domestic product (GDP) and other aggregate economic indicators will grow more slowly as growth in the effective labor force declines. In countries where government programs play an important role in old-age support, tax rates will have to rise or benefits will have to be curtailed or both—all options with significant political costs.
Topic:
Demographics, Labor Issues, Population, GDP, and Economy
Political Geography:
Asia and Asia-Pacific

23. Labour Market Impacts of Import Penetration from China and Regional Trade Agreement Partners: The Case of Japan

Author:
Kazunobu Hayakawa, Tadashi Ito, and Shujiro Urata
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The impacts of imports on the domestic labour market have been hotly debated recently. The purpose of this paper is to empirically examine the effects of not only imports from China but also those under regional trade agreements (RTAs) on employment in Japan. As in previous studies in the literature, we found that the rise in import penetration from China significantly decreases employment in Japan. However, import penetration under RTA regimes is found to have insignificant effects on employment. The finding suggests that the increase in imports under RTA regimes might not be harmful to the domestic labour market. In addition, we did not find significant effects of import penetration via input–output linkages. This insignificant result may be because imports by Japanese manufacturing firms are mostly conducted in the form of intra-firm trade, enabling them to avoid negative impacts on employment.
Topic:
International Trade and Finance, Regional Cooperation, Labor Issues, Employment, and Manufacturing
Political Geography:
Japan, China, and Asia

24. Analysis of Global Value Chain Participation and the Labour Market in Thailand: A Micro-level Analysis

Author:
Upalat Korwatanasakul and Youngmin Baek
Publication Date:
05-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This study assesses the links between global value chain (GVC) participation and the labour market to examine the relatively unexplored employment-related distribution effects of GVC integration. Based on the Mincer wage model, we examine the relationship between GVC participation and worker productivity and wages at the individual level. Our main estimation method is a simple ordinary least squares estimation using pooled cross-sectional data from the Thai Labour Force Survey for the period 1995–2011. We also separately examine the effects of forward and backward GVC participation on wages and wage distributions. Our results show that GVC participation induces higher monthly wages for individuals and increases productivity in the labour market through either the forward linkage or backward linkage. We even find that GVC participation can help mitigate inequality. Our findings show that GVC participation promotes inclusive job creation and provides more job opportunities for rural, female, and low-skilled workers. Policies to support leveraging the existing strong industries through upgrading, smoothing labour movements while improving agricultural productivity, and preparing to move towards a services economy can help prepare Thailand, and other developing countries in general, to upgrade to higher value chains. Although GVC participation may be a catalyst for higher wages, greater labour productivity, and more inclusive job creation, its employment effects are complicated. An unbalanced policy framework might contribute to uneven income distributions and exclusive job creation as participating in GVCs through different linkages can benefit different stakeholders in varying ways. Therefore, a policy framework that balances the benefits among stakeholders in terms of wage distributions and job inclusion is ideal.
Topic:
Labor Issues, Work Culture, Global Value Chains, and Labor Market
Political Geography:
Asia and Thailand

25. Technological Advancement, Import Penetration, and Labour Markets: Evidence from Thai Manufacturing

Author:
Đoàn Thi Thanh Ha
Publication Date:
08-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This paper examines the impacts of advanced technology on a possible change in workers’ skills, wages, and employment due to such technological advancement. Three proxies of advanced technologies are used in the study: (i) information and communications technology, (ii) intensity of robot use, and (iii) value of e-commerce. Our study compares the effects of technological advancements on labour market outcomes with import penetration, delineating into raw materials, capital goods, and final products. Our results show that in Thailand, the impact of advanced technology in pushing workers out of the job market is limited. Instead, it tends to affect reallocation of workers between skilled and unskilled positions. The results vary amongst proxies of technology and sectors. It seems that workers in comparatively capital-intensive industries, including automotive, plastics and chemicals, and electronics and machinery, are the most affected by advanced technology. Dampened wage/income is found only in some proxies of technology and sectors. Our results show less concern of negative impacts induced by imports, particularly imports of capital goods and raw materials, on employment status and income than technological advancement.
Topic:
Science and Technology, Labor Issues, Employment, Manufacturing, Job Creation, and Labor Rights
Political Geography:
Asia and Thailand

26. The Value-Added Tax Reform and Labour Market Outcomes: Firm Level Evidence from China

Author:
Yuxiang Yang and Hongyong Zhang
Publication Date:
08-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The tax incentives designed to stimulate firm investment may have a large impact on labour market outcomes. Using a comprehensive data set containing more than 1 million Chinese manufacturing firms during the period 2000–2013 with a difference-in-difference approach, we examine the impact of the value-added tax reform in 2004–2008 on the firm-level labour market outcomes. We find that firms in eligible industries and regions (treated firms) enjoying lower costs of purchasing fixed assets under the reform tended to increase capital investment and reduce employment relative to firms that did not have tax incentives (the control firms). Compared with the control firms, the treated firms became more capital intensive and had an increase in average wage but a decline in labour income share. We also provide evidence that the substitutions of labour input by capital input is associated with increases in firm productivity and the share of skilled workers, but not imported capital goods.
Topic:
Labor Issues, Reform, Tax Systems, and Labor Market
Political Geography:
China and Asia

27. Does Change in Intellectual Property Rights Induce Demand for Skilled Workers? Evidence from India

Author:
Pavel Chakraborthy and Prachi Gupta
Publication Date:
11-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Do incentives to innovate create demand for skilled workers more than proportionately? We study the question using the implementation of the Patent (Amendment) Act in India in 2002 to comply with the Trade-Related Intellectual Property Rights agreement. We find, first, stronger intellectual property protection has a sharper impact on demand for skilled workers for high patentable industries. Demand for skilled workers increased by 0.5%–2.9% for industries that are more patentable. The average compensation for skilled workers went up by 10% in high patentable industries but decreased for unskilled workers by about 2%. Second, the increase in wage inequality can partly be attributed to the increase in wages rather than incentives. Third, the increase in demand for skilled workers is due to both the increase in intensive margin (or price) and extensive margin (number). Fourth, the aggregate effect is completely driven by industries producing intermediate goods and big plants. Finally, the reforms led to a significant reallocation of resources between industries. The high patentable industries invested more in technology adoption, started to produce more product varieties at higher quality, and filed for more product patent claims. Broadly, we demonstrate that stronger intellectual property protection leads to higher wage inequality between industries.
Topic:
Science and Technology, Labor Issues, Intellectual Property/Copyright, and Skilled Labor
Political Geography:
India and Asia

28. Minimum wage and the EU: Happily ever after?

Author:
Claire Dhéret and Mihai Palimariciuc
Publication Date:
05-2020
Content Type:
Working Paper
Institution:
European Policy Centre
Abstract:
Once deemed a pipe dream, a concrete plan for a European framework on minimum wages might finally be in the cards. The framework will have to be ambitious enough to deliver progress for low-wage workers, but also flexible enough to accommodate the very diverse wage-setting regimes present across the EU. On top of that, the Commission must deal with the opposition to EU interventions in determining wages, and convince sceptics of the economic, social and political benefits of having a European framework. The Commission should, therefore, strive for (i) the creation of an egalitarian wage structure that supports decent living standards; and (ii) building broad political consensus.
Topic:
Labor Issues, Reform, European Union, and Minimum Wage
Political Geography:
Europe

29. Intended and Unintended Consequences of a New Limit on Working Hours in South Korea: Implications for Precarious Employment

Author:
Sungchul Park and Hansoo Ko
Publication Date:
06-2020
Content Type:
Working Paper
Institution:
Walter H. Shorenstein Asia-Pacific Research Center
Abstract:
Effective as of July 1, 2018, South Korea set a new cap on employees’ weekly working hours, decreasing the maximum number from 68 to 52. In this study, we comprehensively analyze the effectiveness of the law’s implementation by observing changes in work time, health status, health care utilization, health behavior, monthly expenses, and satisfaction between pre- and post-implementation periods (2014–2017 vs. 2019). We find evidence of both intended and unintended consequences—and, in this last category, some are beneficial and some not. As intended, employees eligible for the 52-hour work week saw their average working hours decrease, while their monthly spending on leisure increased substantially. A beneficial unintended consequence was that work time also decreased in firms with less than 300 employees that had not yet implemented the 52-hour work schedule (they have done so since, in January 2020). Among adverse unintended consequences, the most notable were heterogeneous effects across employment types (full-time vs. precarious employment) and, in particular, negative impacts on precarious employees (that is, those facing relatively high levels of job insecurity). Despite almost no change in their work time, precarious employees saw substantial increases in outpatient visits and monthly expenses for health care, indicating suggestive evidence of adverse health consequences. Another adverse unintended consequence was that overall job satisfaction decreased among several groups of employees. This may reflect a heavy workload among employees still expected to work overtime, especially experienced employees or those working in large firms. While employment rates increased after the new schedule’s implementation, the majority were in precarious jobs. This has negative implications because of the adverse health impacts of being in precarious employment; also, the workload of experienced employees in this field might have intensified amid all the new hiring. Our findings suggest key policy recommendations for how to leverage the benefits of the 52-hour cap on weekly working hours while addressing its negative unintended consequences.
Topic:
Health, Labor Issues, Employment, and Labor Policies
Political Geography:
Asia and South Korea

30. Back to Economics: How Socially Innovative Business Models Can Be a Pathway to Jobs and Stability in the Middle East

Author:
Dina H. Sherif and Salma El Sayeh
Publication Date:
01-2020
Content Type:
Journal Article
Journal:
Harvard Journal of Middle Eastern Politics and Policy
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
In 2010, the Arab region was regarded as having very little potential for serious political transformation. The outside world perceived “stable” authoritarian regimes with iron-fist control over citizens who would surely never demand drastic change. Amal Ghadour described the regional landscape best: “These are the lifeless landscapes you are sure to behold if you were standing and peering down. Crouch and you begin to brush against the faint gusts of wind delicately working their way through them.”1 Engagement comes in many forms besides political, and in 2010, countries like Egypt, Tunisia, Jordan, and Syria were seeing significant increases in the number of NGOs, private sector engagement in social development, philanthropy, and youth volunteerism. None of these was viewed as a threat to the existing regimes at the time, but they represented a new coalescence of power amid increasing human rights abuses, youth exclusion, unemployment rates, and social inequity. The ingredients for change were there and finally ignited by the self-immolation of street vendor Mohamed Bouazizi on 17 December 2010 in Tunisia, which launched the cycle of mass uprisings and the falling of dictators in Tunisia, Egypt, and Libya in 2011.
Topic:
Economics, Labor Issues, Business, Youth, and Innovation
Political Geography:
Middle East, North Africa, Syria, Egypt, Jordan, and Tunisia